(TheNewswire)
VANCOUVER, BC – TheNewswire - May 25, 2022 - BQE Water Inc. (TSXV:BQE) , a leader in thetreatment and management of mine impacted waters, is pleased torelease its interim consolidated financial results for the threemonths ended March 31, 2022.
“After reporting strong full-year 2021 results, we delivered a solidfirst quarter in 2022, recording our first positive net income for afirst quarter due to robust revenues from technical services and newrecurring revenues from plants entering operations. Building on thegrowth trajectory that started last year, including our strong balancesheet, healthy project pipeline and growing recurring revenue streams,we are going into 2022 with a positive outlook. So far this year, wehave brought online our first project to remove selenium from ash pondwater in the US,” stated David Kratochvil, President& CEO of BQE Water.
1 FINANCIAL HIGHLIGHTS
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Grew Proportional Revenues by $2.0 million or 128% compared to Q12021.
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Recorded an historic high net income for Q1 of $190,000. This is ourfirst Q1, typically the weakest quarter, with positive net income.
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Increased Adjusted EBITDA by $677,000 compared to Q1 2021.
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Increased working capital by $1.3 million or 45% over a 12-monthperiod, from $3.1 million at March 31, 2021 to $4.4 million at March31, 2022.
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Increased net cash by $578,000 over a 12-month period, from $3.2million at March 31, 2021 to $3.8 million at March 31, 2022.
Selected financial results are as follows:
(in ’000s) | 3 months ended Mar. 31 | |
2022 | 2021 | |
$ | $ | |
Revenues under GAAP | 2,467 | 980 |
Proportional Revenues | 3,529 | 1,551 |
Net income (loss) | 190 | (523) |
Adjusted EBITDA | 446 |
2 OPERATIONAL SERVICES HIGHLIGHTS
Our operational services consist of the operation or technicalsupervision of water treatment plants, which generate recurringrevenues from three main sources: sales of recovered metals, watertreatment fees and operations support fees. The Company’s operationsby source of revenue are as follows:
Operations | Location | Revenue Source |
JCC-BQE Joint Venture | Jiangxi province, China | Sales of recovered metals |
MWT-BQE Joint Venture | Shandong province, China | Sales of recovered metals |
Raglan Mine for Glencore | Northern Québec, Canada | Water treatment fees |
Kemess Property for Centerra | Northern BC, Canada | Water treatment fees |
Smelter for MWT | Shandong province, China | Operations support fees |
Ash pond for WesTech | Virginia, USA | Water treatment fees |
JCC-BQE Joint VentureOperations
Our 50/50 joint venture with partner Jiangxi Copper Company(“JCC”) operates three water treatment plants at Dexing Mine andat Yinshan Mine in Jiangxi province of China. The volume of watertreated and pounds of copper recovered by the plants fluctuateseasonally depending on precipitation levels in the region. Theoperating results for Q1 2022 are as follows:
(in ’000s) | 3 months ended Mar. 31 | |
2022 | 2021 | |
Water treated (cubic metres) | 2,864 | 2,424 |
Copper recovered (pounds) | 402 | 204 |
In the first quarter of 2022, all three plants met mechanicalavailability and process performance set by the Company. Both thevolume of water treated and the mass of copper recovered increasedyear-over-year by 18% and 97% respectively. Changes in water volumeand feed grade are largely the result of environmental conditionsbeyond the control of the joint venture.
MWT-BQE Joint VentureOperations
Our 20% share of MWT-BQE is with our 80% partner Beijing MWT WaterTreatment Project Limited Company (“MWT”) and together we operatea water treatment plant at a smelter in Shandong province of China.MWT-BQE generates revenues from the sale of zinc and copper recoveredfrom smelter wastewater. Operating results for Q1 2022 are as follows:
(in ’000s) | 3 months ended Mar. 31 | |
2022 | 2021 | |
Zinc recovered (pounds) | 61 | 270 |
Copper recovered (pounds) | 54 | 76 |
The mass of zinc recovered decreased by 77% while copper recoverydecreased by 29%. The smelter periodically operated its productionlines with ores from different sources which led to varyingconcentrations of zinc and copper in the feed and a fluctuation in thevolume of wastewater treated by the plant. The joint venture has nocontrol over the composition and volume of feed that flows into theplant.
BQE Water Operations
The Company operates four treatment plants at Raglan Mine for GlencoreCanada Corporation (“Glencore”). During the first quarter, theplants at Raglan Mine are shut down as water stored in the outdoorreservoirs is frozen. Consequently, no water is treated and no revenueis generated in Q1 from the Raglan Mine plants.
In 2020, we completed the commissioning of the first industrial scaletreatment plant utilizing our patented and award-winning Selen-IX™process for selenium management at the Kemess property owned byCenterra Gold (“Centerra”). In 2021 and to date in 2022, theKemess property was not operating as it was placed in an extendedstate of care and maintenance, and water treatment is not required andthe Selen-IX™ plant was not operational.
At the beginning of 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 Q1 2022, the Zhongkuang SART plantoperated for the full quarter while the Zhaojin SART plant remained incare and maintenance due to the lack of feed from the metallurgicalfacility caused by various disruptions beyond our control. Both theupstream circuit and Zhaojin SART plant are expected to graduallyreturn to normal operations in Q2 2022.
At the end of 2021, we completed the commissioning of our firstproject in the power industry, a treatment plant utilizing ourSelen-IX™ process to remove selenium from ash pond water for WesTechEngineering (“WesTech”). We also began providing on-going plantoperational services in return for water treatment fees with fixed andvariable components.
The volume of water treated for the three months ended March 31, 2022are as follows:
(in ’000s cubic metres) | 3 months ended Mar. 31 | |
2022 | 2021 | |
Raglan Mine water treatment plants | - | - |
MWT-BQE joint venture water treatment plant | 138 | 167 |
Kemess water treatment plant | - | - |
Eastern China SART plants | 32 | 48 |
Virginia ash pond water treatment plant | 7 | - |
3 TECHNICAL SERVICES HIGHLIGHTS
BQE Water’s technical expertise and IP are applicable globallyacross broad areas of water management. The highlights of technicalservices provided to clients and technical innovation projects duringQ1 2022 are summarized below.
CommercialDeployment of Selen-IX™ and Direct Selenium Electro-Reduction (ERC)Technology
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Began commissioning of a treatment plant designed to simultaneouslyremove sulphate and selenate using nanofiltration and direct seleniumERC at a mine in the US.
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Continued to provide engineering services for a third large scaleSelex-IX™ plant currently in the procurement stage for a mine in theUS.
Cyanide Recovery,Destruction, and Thiocyanate Management
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Completed field assessments and troubleshooting for several cyanidedestruction plants in Canada and Mexico.
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Completed cyanide destruction laboratory testing for projects inCanada and Mexico.
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Initiated an engineering prefeasibility study for a thiocyanateremoval plant with concurrent recovery of cyanide for recycle at anactive mine in Mexico.
Water ConsultingServices – Management, Treatability, Permitting Assistance, ToxicityMitigation
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Provided troubleshooting and optimization services for an existingammonia removal plant in Ontario.
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Provided oversight of pilot equipment fabrication and completedcommissioning plans and operating procedures for a pilot plantdesigned for boron removal in Peru.
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Initiated a 2-year pilot demonstration program for sulphate removaland copper recovery for Codelco in Chile.
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Initiated the design stage of three water treatment plants forpermitting in BC.
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Completed lab scale treatability testing for the permitting of newmines in Canada and the US.
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Completed lab scale testing of arsenic and ammonia removal for anexisting mine in Canada.
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Completed feasibility level engineering for water treatment to supportthe permitting and development of a mine in Central America.
4 COMMENTARY AND OUTLOOK
We are very pleased with our Q1 2022 results which showed sustainedstrength in the project pipeline that underlies our long-termfinancial performance. Historically, the first quarter has been ourweakest financially, primarily due to the impact of seasonality onrecurring revenues from existing operations. Specifically, ouroperations in Northern Québec are shut down over the winter monthswhile our joint venture operations in China treat lower water volumesduring their dry season. Despite the same conditions and challengesfaced in previous years, we recorded our first positive net income fora first quarter in 2022 due to robust revenues from technicalservices.
Looking ahead to the balance of the year, we expect continued strongfinancial performance due to a strong backlog of technical servicesprojects, the re-start of our seasonal operations, and new recurringrevenues from plants entering operations for the first time in 2022.As always, the Company would like to caution investors with respect tothe uncertainties that could affect this positive outlook.Specifically, geopolitical risks, high inflation, monetary tighteningand the continued impact of COVID-19 could all have negative impactson the world economy, including our sector. That said, we believe thatthe environmental compliance and sustainability requirements ofnatural resource companies coupled with our healthy balance sheet andrecurring revenues position us well to sustain any temporary exogenousshocks and will allow us to continue to grow as we capitalize onlong-term opportunities in mining and ESG.
5 SELECTED FINANCIAL INFORMATION
For a complete set of Financial Statements and MD&A, please go towww.bqewater.com.
(in except for per share amounts) | ||
$ | $ | |
Revenues | 2,467 | 980 |
Operating expenses (excluding depreciation) | (1,531) | (507) |
Operating margin | 936 | 473 |
Share of income from joint ventures | 333 | 23 |
General and administration | (604) | (401) |
Sales and development | (354) | (453) |
Share-based payments | (23) | (88) |
Depreciation and amortization | (55) | (37) |
Income (loss) from operations & joint ventures | 233 | (483) |
Other expenses, net | (43) | (40) |
Net income (loss) for the period | 190 | (523) |
Earnings per share (basic) | 0.15 | (0.43) |
Earnings per share (diluted) | 0.15 | (0.42) |
Proportional Revenues 1 | 3,529 | 1,551 |
Adjusted EBITDA 1 | 446 | (231) |
Comprehensive income (loss) | 81 | (592) |
$ | $ | |
Cash | 3,756 | 3,944 |
Working capital | 4,434 | 4,557 |
Total assets | 14,212 | 13,803 |
Total non-current liabilities | 766 | 778 |
Shareholders’ equity | 11,433 | 11,313 |
Proportional cash 1 | 7,852 | 8,089 |
Notes:
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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 VentureExchange has not reviewed and does not accept responsibility for theadequacy or the accuracy 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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