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BacTech Mining set to split in two to tackle refractory gold and tailings reclamation

Last updated: 16:46 17 Nov 2010 EST, First published: 17:46 17 Nov 2010 EST

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BacTech Mining (TSX.V:BM) shareholders recently approved a Plan of Arrangement that will split the company into two public companies - REBgold and BacTech Environmental. Assuming Court approval is secured next week BacTech Mining will cease trading and trading will commence in REBgold (TSXV: RBG), and BacTech Environmental (CNQ:BAC).

Shareholders in BacTech Mining will receive 1 new share in REBgold and 1/5th of a share in BacTech Environmental for each BacTech Mining share.

REBgold will continue to pursue mining projects, where its bioleach technology can make a significant economic difference. BacTech Environmental will pursue reclamation projects for mine tailings using technology licensed from REBgold.

The strategy for identifying and acquiring suitable projects for each company is quite separate, and market perception and valuation parameters applied to a hard rock ore body are completely different to tailings dumps, containing a fixed volume of variable grade and hard to process material.

The first bioleach plant was commercialized in South Africa in 1986, and has been followed by 20 plants operating worldwide. BacTech Mining commenced operations in Australia in 1994, utilizing its own patented technology, building a bioleach plant at Youanmi, Western Australia, producing 65,000 ounces per year.


A second plant was built at Beaconsfield, Tasmania, capable of processing refractory ore, producing 100,000 ounces of gold per year.


 A third plant was built in Laizhou, China, capable of processing 150,000 ounces per year. A 200 tonne per year copper cathode demonstration plant was also built in Peñoles, Mexico in 2001. This led to a feasibility study for a commercial bioleach plant, with an initial capacity of 25,000 tonnes of copper with ability to scale up production.

Two of these plants are still operating to-day, but BacTech Mining does not retain any financial interest or revenue from them.

Bioleach technology utilizes naturally occurring bacteria that is harmless to operators and the environment in a reactor / tank setting.  Controlled conditions optimize the interaction of the bacteria to the feed stock material to speed up the normal process of oxidization from many years to as little as 5 – 6 days.

Bioleach is an environmentally benign process route when compared to smelting or burning of ore that produces noxious reactions and large volumes of greenhouse gas emissions and is very capital intensive.

Bioleach is ideally suited to the extraction of precious and base metals from complex refractory and arsenic loaded ores and concentrates. The bacteria devours the sulphide, which releases the metal for conventional processing. The “devoured” sulphide can be recovered as benign gypsum and arsenic can be stabilized for re-burial.   

BacTech Mining has a joint venture with Caldera Resources (TSX.V:CDR) to obtain an interest in the Armenian Lichkvaz Tey Gold Project, which has a soviet era approved mineral reserve of 575,000 ounces of gold at 5.1 g/t, 3.7 million ounces of silver at 33.2 g/t and 33.4 million pounds of copper at 0.41%.

The company has had independent consultants access the property for visual evaluation and sampling. Successful bioleach trials have resulted in 93% gold recoveries and 99% recoveries of copper and zinc. Lichkvaz Tey was confiscated by the Armenian Government after the previous owner became insolvent and BM expects a quick resolution to its application. The project contains vein sets that are 4-5 meters wide and run for up to 800 meters in length. Underground development has progressed over 350 meters, on 8 horizons over a distance of 350 meters, spaced 40-80 meters apart. The vein sets have a vertical extent of 400 meters and are open at depth. CDR will hold 51%, BM 40% and a local partner 9%.

BacTech also has an MOU with Blackstone Development Corp of Cobalt, Ontario to recover precious and base metals from 10 – 12 million tonnes of tailings within Blackstone ground.

BacTech will issue 1 million shares in BacTech Environmental and 100,000 shares per year for each year of the venture, plus a 2% Net Smelter Return. BacTech Environmental plans a 100,000 tonne per year trial plant at a cost of $12 million and will seek a mix of Government and private money to establish the project. Successful trials will lead to the establishment of a full scale plant processing 1 million tonnes per year plant for 15 years.

One tonne of tailings has been estimated to contain 2.64 pounds of cobalt, 1.32 pounds of nickel. 0.88 pounds of copper and 75 g/t of silver, along with 9.24 pounds of arsenic and 3.3 pounds of sulphur, based on sampling conducted in 2007.

The massive amount of tailings is continually subjected to weathering, where rainwater mixes with oxygen and sulphur to produce a low grade sulfidic acid that eats at the metals and arsenopyrites producing acid mine water drainage, with dissolved arsenic and base metals content flowing into the local environment. Local well water readings have recorded 6.97 ppm of arsenic, where water for human consumption must not exceed 0.010 ppm. Reprocessing of the tailings will recover valuable metals and stabilize the contamination of the area. 

Agnico Eagle (TSX:AEM) are the vendors on the project and have placed a hold on any development pending a review. 

BacTech Environmental also has ongoing negotiations with the Manitoba Government  after completing successful trials on the Snow Lake, Manitoba arsenopyrite stockpile, containing 300,000 tonnes of concentrate  that are leaching metals, arsenic and acid mine water into local waterways.

The University of Manitoba says the stockpile grade is 10 g/t or 100,000 ounces of gold. The estimated capex to recover this gold is US$20 million, producing a revenue stream of $130 million. BAC is seeking government approval to commence a 6-8 month feasibility study to evaluate the gold content of the tailings, treatment method and stabilization of arsenic and other contaminants flowing from the tailings.

Back in Europe, BacTech Environmental is also seeking government approval to commence scoping studies in Armenia on 12 government owned tailings piles containing more than 650 million tonnes. These tailings contain payable grades of gold, silver, molybdenum, copper and some rare earths, and are currently being exported to overseas refineries. The Armenian Government is keen to add to the local tax base and have the reprocessing completed locally.

So what does this all mean for shareholders in BacTech Mining?

The argument behind splitting the company is that each business will be able to apply the company’s proven technology to very different types of projects. BacTech Environmental and REBgold will be more sharply focused, offering current shareholders in BacTech Mining equity in two companies with potential to tackle two very common issues in the mining industry – tailings reclamation and refractory ore.

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