BioteQ Environmental Technologies Inc. (TSX:BQE) has settled a legal dispute with a mining company over unpaid lease payments for a treatment plant BioteQ built in Mexico.
BioteQ, which specializes in industrial wastewater treatment, built a $6 million mining tailings treatment plant in Mexico between 2008 and 2009.
It was to be sold to NWM Mining Corp. on a lease-to-own basis, but the financially troubled mining company didn’t make the payments, so BioteQ sued.
“Eventually the company wrote it off entirely off of its books because it didn’t look like this dispute was going to get resolved,” BioteQ CEO Jonathan Wilkinson told Business in Vancouver.
But the two companies have now agreed to an out-of-court settlement, in which NWM has agreed to pay BioteQ $1.3 million in cash over the next two years. BioteQ will retain ownership of the treatment plant and will dismantle it from the mine site.
If NWM fails to make the specified payments, BioteQ has been provided with a $2 million consent to judgment that it can enforce against NWM. The $2 million figure remains in place until the final payment has been made to BioteQ.
BioteQ will take a loss on the project, but Wilkinson told BIV that settling for $1.3 million and taking the plant equipment back for reuse elsewhere was better than the alternative – a long court battle.
“The agreement enables both BioteQ and NWM to avoid a potentially expensive and time consuming legal process, and provides certainty to the shareholders of both companies,” Wilkinson said.
A long lawsuit is something BioteQ is keen to avoid, particularly because the company has struggled recently to get out of the red.
In March, BioteQ posted 2011 net losses of $5.1 million. In 2010 the company lost $10.9 million.
And earlier this month, BioteQ announced cost-cutting measures, including reduced compensation for its board of directors.
