BQE:CC - BQE Water Reports Q3 2022 Results

(TheNewswire)

VANCOUVER, BC – TheNewswire –November 23, 2022 - BQE Water Inc.(TSXV:BQE) , a leader inthe treatment and management of mine impacted waters, is pleased to release its interim consolidated financialresults for the three and nine months ended September 30, 2022.

“In the first nine months of 2022, we added three newoperations in North America which contributed to increasing ouryear-to-date revenue by $903,000 or 47% over the comparable period in2021,” stated David Kratochvil, President & CEO of BQE Water.“Additionally, in the same period we nearly doubled our technicalservices revenue compared to last year, providing an indication of thestrength of our project pipeline as well as expected future growth inour recurring revenue.”

1 FINANCIAL HIGHLIGHTS

• Added new recurring operational services revenues of$242,000 in Q3 2022 from a water treatment plantin the Yukon that commenced operations during the quarter.

• Grew Proportional Revenues by $205,000 or 4% andrevenues by $730,000 or 26% compared to Q3 2021.

• Recorded net income of $573,000 and Adjusted EBITDA of$1.4 million in Q3 2022 compared to $1.5 million and $2.1 million inQ3 2021.

• Increased working capital to $7.3 million as atSeptember 30 2022, an increase of $3.2 million from June 302022.

• Increased Proportional Cash to $9.7 million as atSeptember 30 2022, an increase of $2.5 million from June 302022.

Other selected financial results for the three and ninemonths ended September 30, 2022 are as follows:

2 OPERATIONAL SERVICES HIGHLIGHTS

Our operational services consist of the technicalsupervision and plant operation of water treatment plants, whichgenerate recurring revenues from three main sources: sales ofrecovered metals, water treatment fees and operations support fees.Sales of recovered metals are based on the mass of metals recoveredand market prices of metals sold. Water treatment fees mainly consistof a variable fee based on water treated and may include a fixedguaranteed minimum fee regardless of volume of water treated.Operations support fees are fixed fees in exchange for onsite plantsupport services. The Company’s operations by source of revenue areas follows:

JCC-BQE Joint Venture Operations

Our 50/50 joint venture with partner Jiangxi CopperCompany (“JCC”) operates three water treatment plants at DexingMine and at Yinshan Mine in Jiangxi province of China. The volume ofwater treated and pounds of copper recovered by the plants fluctuateseasonally depending on precipitation levels in the region. Theoperating results for the three and nine months ended September 30,2022 are as follows:

In Q3 2022, all three plants met mechanicalavailability and process performance set by the Company. Changes inwater volume and feed grade are largely the result of environmentalconditions beyond the control of the joint venture.

MWT-BQE Joint Venture Operations

Our 20% share of MWT-BQE is with our 80% partnerBeijing MWT Water Treatment Project Limited Company (“MWT”) andtogether we operate a water treatment plant at a smelter in Shandongprovince of China. MWT-BQE generates revenues from the sale of zincand copper recovered from smelter wastewater. Operating results forthe three and nine months ended September 30, 2022 are asfollows:

The smelter periodically operated its production lineswith ores from different sources, leading to varying levels of zincand copper in the feed and a fluctuation in the volume of wastewatertreated by the plant. The joint venture has no control over thecomposition and volume of feed flowing into the plant.

BQE Water Operations

The Company operates four treatment plants at RaglanMine for Glencore Canada Corporation. In May 2022, we mobilized ouroperations team to site to commence our 19th operating season at themine. Due to a drier season, the total volume of water treated acrossall four plants at Raglan Mine in Q3 2022 decreased by 19% compared tothat of Q3 2021.

In August 2022, we entered into an operational servicesagreement with Minto Metals to operate a water treatment plant atMinto Mine. The mine is expected to treat approximately 750,000 to 1million cubic metres of water per year. Our team mobilized to site onAugust 27, 2022 and began treating and discharging cleanwater.

In 2021, we began operations of the Zhongkuang SARTplant and the Zhaojin SART plant for metallurgical facilities inChina. Both plants have been under our technical supervision sincebeginning full production. During Q3 2022, both SART plants operatedfor the full quarter as the upstream circuit returned to normaloperations.

At the end of 2021, we completed the commissioning ofour first project in the power generation industry, a treatment plantutilizing our Selen-IX™ process to remove selenium from ash pondwater for WesTech Engineering. We also began providing ongoing plantoperational services in exchange for water treatment fees with fixedand variable components. During Q3 2022, we recommenced watertreatment with the Selen-IX™ circuit as the upstream feed pumpingsystem resumed operations.

In April 2022, we completed commissioning of atreatment plant utilizing a combination of nanofiltration and ourproprietary selenium electro-reduction process to simultaneouslyremove selenium and sulphate from mine water for a base metal projectin the American Southwest. Upon completion of commissioning, we beganproviding ongoing plant operational services in exchange for watertreatment fees comprised of a fixed guaranteed minimum and a variablefee linked to the volume of water treated. In Q3 2022, due to alimited supply of feed water into our treatment circuits, we receivedonly the fixed guaranteed minimum fee for the months during which theplant was ready to operate.

The number of operating days contributing to watertreatment or support fees for the three and nine months endedSeptember 30, 2022 are as follows:

The volume of water treated for the three and ninemonths ended September 30, 2022 are as follows:

3 TECHNICAL SERVICES HIGHLIGHTS

BQE Water’s technical expertise and IP are applicableglobally across broad areas of water management. The highlights oftechnical services provided to clients and technical innovationprojects during Q3 2022 are summarized below.

Commercial Deployment of Selen-IX™ and DirectSelenium Electro-Reduction (ERC) Technology

• Continued to provide engineering services for a thirdSelen-IX™ plant currently in the construction stage for a USmine.

• Initiated lab testing and preliminary engineering for anew uranium project in North America.

• Initiated lab testing for selenium removal from FlueGas Desulphurization scrubber blow-down water for a US utility.

Cyanide Recovery, Destruction and ThiocyanateManagement

• Initiated technical assessments to improve cyanidedestruction systems at two mines in the US.

• Initiated technical assessment to optimize cyanidedestruction and effluent discharge using reverse osmosis at a largegold heap leach operation in Peru.

Water Consulting Services – Management, Treatability,Permitting Assistance, Toxicity Mitigation

• Continued to provide engineering design services forthree water treatment plants to support permitting of the KSM projectin BC.

• Continued to provide water treatment consultingservices to support permitting of the Blackwater project in BC.

• Initiated a conceptual design study for water treatmentto support the permitting of a new lithium project in Canada.

• Initiated the engineering design for a water treatmentpilot plant to support permitting of a rare earth elements project inSouth America.

• Completed an onsite sulphate removal pilot operationfor Codelco at the El Teniente operation and initiated planning tomove the pilot plant to the Andina operation in Chile.

• Continued to provide engineering design services for awater treatment plant to produce clean water for recycle at a mine inMexico.

4 COMMENTARY AND OUTLOOK

2022 has, to date, been a year of promising growth forBQE Water in terms of our active project list, cash on hand and ourfuture project pipeline. We also recorded another profitable quarter,with multiple encouraging developments, despite uncertainties in theglobal economy and rising inflation.

On the positive side, the success of our long-termbusiness strategy and commercial model was demonstrated by:

• Signing a new multi-year plant operating servicesagreement with Minto Mine in the Yukon.

• Bringing into operation two US plants within the lastnine months that are a source of steady recurring revenues.

• Nearly doubling our technical services revenue on ayear-to-date basis compared to 2021, providing a good indication ofthe strength of our project pipeline as well as expected future growthin recurring revenues since technical services often precede plantoperations services.

• Reaching record levels of working capital and cashderived from operations.

• Completing a successful demonstration of our Sulf-IX™technology for sulphate removal at the first of multiple sites ownedby the world’s largest copper producer Codelco in Chile.

Challenges consist of a mix of those we are activelymanaging and those that are outside of our control:

• An increase in the number of employees and theassociated costs of hiring, onboarding and training for new watertreatment plant operations and technical roles in engineering,projects, lab and piloting has slightly reduced our operating margin.However, investing in building our team for the long term is essentialto our growth and success.

• Inflation and a tight labour market are drivingyear-over-year increases in expenses through compensation adjustments,corporate insurance, employee health benefits and other professionalservice fees.

• A drought in China during a period that is normally the“wet season” reduces the income earned from our China jointventure.

Looking ahead to the remainder of the year, we expectcontinued strong revenues from operations and technical services asthese are directly underpinned by our solid project pipeline. However,we are anticipating a shortfall in copper sales from our China jointventure to further increase in Q4 2022 as the Dexing region enters thedry season earlier than usual. While this shortfall in copper saleswill reduce the share of income received from the joint venture, we anticipate it will be partially offset bythe increase in revenues from operations and technical services.

We expect results for the remainder of the year toproduce another consecutive year-over-year increase in working capitaldriven by normal operations. We also anticipate our project pipelinewill remain robust as we enter 2023. As always, we need to cautioninvestors about the possible negative impacts of a downturn in theglobal economy and particularly the resource sector on ourperformance. However, our proven and unique expertise in supportingclients with their environmental compliance and sustainable watertreatment needs is highly supportive of our long-term outlook forstrong corporate growth.

5 SELECTED FINANCIAL INFORMATION

For a complete set of Financial Statements andMD&A, please go to www.bqewater.com.

Notes:

1. Non-GAAP measures

About BQE Water

BQE Water is a service provider specializing in watertreatment and management for metals mining, smelting and refining.We are helping to transform the way the industry thinks about waterin the context of natural resource projects by offering services andexpertise which enables more sustainable water management practicesand improved overall project performance at reduced risks. BQE Waterinvests in innovation and has developed unique intellectual propertythrough the commercialization of several new technologies at minesites around the world for organizations including Glencore, JiangxiCopper, Freeport-McMoRan and the US EPA. BQE Water is headquartered inVancouver, Canada and trades on the TSX Venture Exchange under thesymbol BQE. Visit www.bqewater.com for more information.

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The Toronto Venture Exchange has notreviewed and does not accept responsibility for the adequacy or theaccuracy of this release.

CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING INFORMATION

Certain information contained herein maynot be based on historical fact and therefore constitutes"forward-looking information" under applicable Canadiansecurities legislation. This includes without limitation statementscontaining the words "plan", "expect","project", "estimate", "intend","believe", "anticipate", "may","will" and other similar words or expressions.Forward-looking statements are based on the opinions and estimates ofmanagement at the date the statements are made, and are subject to avariety of risks, uncertainties and other factors that may causeactual events or results to differ materially from those expressed orimplied by such forward-looking statements. Factors that could causeor contribute to such differences include, but are not limited to, theCompany’s dependence on key personnel and contracts, uncertaintywith respect to the profitability of the Company’s technologies,competition, technology risk, the Company’s ability to protect itsintellectual property and proprietary information, fluctuations incommodity prices, currency risk, environmental regulation and theCompany’s ability to manage growth and other factors described inthe Company’s filings with the Canadian securities regulators at www.sedar.com (including without limitation the factors described in the sectionentitled "Risks and Uncertainties" in the Company's MD&Afor the year ended December 31, 2021). Given these risks anduncertainties, the reader is cautioned not to place undue reliance onforward-looking statements. All forward-looking information containedherein is based on management’s current expectations and the Companyundertakes no obligation to revise or update such forward-lookinginformation to reflect subsequent events or circumstances, except asrequired by law.

For further information pleasecontact:

BQE Water Inc.

Suite 250 – 900 Howe Street VancouverBC Canada V6Z 2M4

David Kratochvil, President & CEO

dkratochvil@bqewater.com

Heman Wong, CFO

hwong@bqewater.com

604-685-1243 or1-800-537-3073

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