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interesting article - fyi
Monday » July 28 » 2003
B.C. firm cleans up in mining
BioteQ has figured out a way to deal with acid mine drainage and make it pay
Scott Simpson
Vancouver Sun
Rick Lawrence (left) and Brad Marchant of BioteQ have developed a cleaning system that could become an industry standard, and Vancouver-based brokerage house Haywood Securities is recommending BioteQ as a speculative buy.
You want a challenge?
Try selling unproven technology to a raw-knuckled hard rock miner. You'd do better selling Segways to Hells Angels.
Brad Marchant and Rick Lawrence decided in 1988 to take on the real tough guys and etched out a flow chart for a new cleanup process to deal with acid mine drainage.
Fifteen years later that flow chart is pretty much intact, forming the basis for a proprietary treatment process for their company, BioteQ Environmental Technologies.
Marchant and Lawrence say it will slash mine reclamation costs and actually make it easier for new mines with potential problems to win operating permits.
Making the process commercially viable was tough.
"It took a lot of money and a lot of grey hairs," said Marchant, the president and CEO.
Finding somebody who would use it was tougher.
Acid mine drainage is the single greatest environmental liability for the mining industry. U.S. mining corporations, not including U.S. Environmental Protection Agency expenditures, spend more than $1 million US per day treating acid mine drainage.
In Canada, there are at least 130 mine sites that need treatment.
The industry has been pretty much fixed for several decades on lime treatment to reduce the acidity in contaminated water flows, although the disposal of heavy-metal-laden sludge as a byproduct of the process continues to be a challenge.
Companies that can't manage the flow can face huge liabilities, and Marchant said miners were reluctant to try something that could include an element of risk.
"The mining industry tends to be pretty conservative, myself included," Marchant said. "I think we all want to see the other guy be the first to try something, then we'll jump in there and use the technology."
Their first deal was in 2001 with Breakwater Resources, owners of the dormant Caribou Mine in New Brunswick, who made a deal to set up a treatment plant upstream of a conventional lime treatment plant. The plant recovered 35,000 tonnes of zinc concentrate which was sold to the nearby Brunswick mine under contract with Noranda.
Since then, they've announced deals with Falconbridge and Nevada's Phelps Dodge.
The Falconbridge deal has BioteQ building a $1.35 million treatment plant, at its own cost, in exchange for a plant operation fee of $24,5000 per month through January 2009, plus revenue related to the volumes of water they treat at Raglan Mine in northern Quebec.
That plant is already under construction.
This week, BioteQ announced a joint venture construction agreement at U.S. mining company Phelps Dodge's Bisbee property in southern Arizona.
That project calls for BioteQ to build a $1.9-million US water processing plant to recover copper from a waste pile at an old mine site.
That deal provides for a 50-50 split on capital costs and on the expected revenues to be earned by recovering copper from the waste pile.
"It wasn't until we built the first commercial plant, at Caribou, that the mining industry really took an interest. And rightly so -- you have to run the plant for a half-year to a year, to show it can work," Marchant said.
"I guess since signing the Raglan deal a few months ago, the conversation on the telephone has become a lot easier," said Lawrence, the executive vice president.
"When you've got two big companies backing you by signing deals to build plants it gives you a lot of credibility, makes it easier to talk to people."
Some details of the process are proprietary but in essence, the company builds a treatment plant that includes a bacteria tank and a contact tank.
The bacteria are segregated in a bioreactor tank where sulphur and nutrients are introduced.
Once excreted by the bacteria, the ensuing broth is harvested and piped to a separate contact tank where it reacts with contaminated water, causing acids and metals to drop out as a single, marketable, metal sulphide product.
Marchant says it's several steps better than conventional treatment of acid mine drainage with lime, because the latter produces a sludge still containing heavy metals which poses long-term disposal problems.
With the company's methods, the byproduct is commercially viable.
"We can treat thousands of litres a minute. It's very much an industrial process, dealing with large flows of heavily contaminated water, involving all kinds of metals, quite acidic, and detrimental to fisheries both in the acidity of the water and the metal contamination."
The former Britannia copper mine on Highway 99 south of Squamish is a textbook example of the problem. Howe Sound is bereft of marine life in the vicinity of the creek that carries copper-laden acid water from the mine and into the sound.
"Britannia is a long way down on the scale from what we would normally treat," says Marchant. "It's relatively mild compared to sites around the world."
Still, BioteQ remains a penny stock, and while the banks have opened their doors enough to hear the pitch they keep the vaults locked when Marchant and Lawrence come calling.
"We're working on debt financing," Marchant said. "Based on our conversations so far, once we have these next couple of projects up and running, and the cash is flowing, then the banks will like these things because they have one- or two-year paybacks."
Analysts are already perking up. Andrew Mikitchook with Haywood Securities recently issued a eight-page analysis announcing that the Vancouver-based brokerage house is recommending BioteQ as a speculative buy.
The target price is $1, closing Friday at $0.61 on 29,000 shares (BQE-V).
Most shares, 57 per cent on a fully diluted basis, are held either with institutions or management. Toronto's Goldcorp holds 12 per cent.
Mikitchook predicts that there won't be any positive free cash flow to equity until 2006.
He says that there is "no shortage" of potential mine sites, but predicts slow growth based on the size of the company's current workforce. Marchant says BioteQ would restrict itself to building three plants a year for the foreseeable future.
"The market potential for BioteQ's technology is considerable as their plants represent a cost savings compared to existing lime plants," he advised.
"It is our opinion that the company's technology will become the industry standard within 10 to 15 years, and the high margins in the business model will support the price of the shares at a level above our current target."
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