SMC-2026-09-06

Good morning,
 

We're back. Thanks for your patience. Lots to talk about so make sure you read until the end. There is a nice surprise there. 

This past Tuesday we announced a deal covering some 36 million tonnes of tailings in Kazakhstan, historically produced by Kazzinc and now organized through Di-As Company Ltd. — a Kazakhstan-based participant in the development of the Zyryanovsk/Altay project. Di-As is backing the evaluation of modern processing technologies for the historic tailings at the site and is funding the current staged BACOX® technical program. 

The question most of you who reached out asked was the same one: “What does this mean for BacTech?” 

It's a fair question, because we focused the press release on the business and process side rather than the basic financial terms. So here's the layman's version, which I hope makes the significance clear. 

1. Paul Anderson will make a site visit in October. Paul lived in Kazakhstan for eight years, where he met his wife, and he still has close family ties there. He has worked extensively in bioleaching in-country. 

2. Di-As (the Kazakh group that owns the tailings) will fund a conventional bioleach test program to determine recoveries of gold, silver and possibly copper at this stage. The cost is roughly US$400K, covered by Di-As, and the work will take five to six months. 

3. With those results in hand, Di-As will run an economic study on the viability of building a BACOX plant. Call it another two to three months. 

If the decision is made to proceed, BacTech receives a US$3M license fee and a 5% royalty on any metal produced through bioleaching. THIS IS THE BASIC BUSINESS AGREEMENT ONCE WE GET THROUGH THE TESTING AND DECIDE TO MOVE FORWARD. 

On top of that, Di-As can elect to build out a Zero Tailings facility once the technology is commercial. That can only add incremental revenue to the project — and that revenue would fall under the same 5% royalty. Five percent is a very healthy royalty by industry standards, and 

in the case of Zero Tailings it applies to revenue the mining company never even dreamed of producing. 

As of today, Di-As is recovering decent gold grades using a Knelson gravity circuit on the tails — material that doesn't need bioleaching. They've committed to installing a flotation circuit to separate the arsenopyrite from the tailings material. While they sort that out, we'll be getting on with the site visit and the bioleach test work, so it doesn't really affect us over the next 12 months. 

For illustration purposes only: assume we produce 50,000 oz of gold per year using BACOX. At $4,000 gold, that's $200M in gold revenue and $10M in annual royalty payments to us — against our roughly CDN$10M market cap (as of Sept 1). Something is amiss. 

Peru 

On Thursday we also announced that we are starting to gear up for Peru. We have had an eye on 2 separate, but close, tailings that have gold, silver, copper and of course arsenic. In Peru you have to have a company registered to delve into the government’s shopping list so we completed that step last week. Tito Acosta, who has been our source of information in northern Peru, will now extract the information for the 2 tails on our behalf. Should we like what we see the next step would be to negotiate an option on the tails before conducting a systematic drill program to work towards an NI43-101 report on the contained metal for recovery. 

Silver Crown (the surprise) 

Hopefully you recall that we signed an agreement with a new silver royalty company back in 2024. The terms of the deal were $1M in units of Silver Crown (1 share + 1 warrant) on signing followed by 100,000 common shares on the successful closing of a financing for Ecuador and 200,000 shares on commercial production. This past week Silver Crown’s stock topped $42 meaning there is over $12M in stock sitting there waiting to be earned. Again, our market cap is just over $10M CDN. 

A quick note for the lawyers: This Sunday Morning Coffee contains forward-looking statements — including timelines, test results, potential license fees and royalties, and any illustrative production or revenue figures. These reflect management's current expectations only; actual results may differ materially, and any numbers used for illustration are not forecasts or guidance. BacTech undertakes no obligation to update these statements except as required by law. As always, do your own homework — nothing here is investment advice.
 

Cheers,
Ross Orr
President & CEO