(TheNewswire)
VANCOUVER, BC – TheNewswire –August 25, 2022 - BQE Water Inc.(TSXV:BQE) , a leader in the treatment andmanagement of mine impacted waters, is pleased to release itsinterim consolidated financial results for the three and six monthsended June 30, 2022.
“After reporting strong results in 2021, we continued our growthtrajectory in delivering a strong second quarter in 2022. To date thisyear, we have brought online and added two new streams of recurringrevenues to our operations. The first is a facility to remove seleniumfrom ash pond water in Virginia and the second a plant tosimultaneously remove selenium and sulphate from mine water for a basemetal project in Arizona,” stated David Kratochvil,President & CEO of BQE Water.
1 FINANCIAL HIGHLIGHTS
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Added new recurring operational services revenues of $344,000 in Q22022 from two new water treatment plants in the US that commencedoperations in 2022.
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Grew Proportional Revenues by $1.0 million or 24% and revenues by $1.5million or 129% compared to Q2 2021.
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Increased operating margin from $244,000 in Q2 2021 to $949,000 in Q22022.
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Recorded net income of $642,000 and Adjusted EBITDA of $1.3 million inQ2 2022 compared to $809,000 and $1.4 million in Q2 2021.
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Ended Q2 2022 with $4.0 million in working capital, $2.9 million incash and $7.2 million in Proportional cash.
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Subsequent to the end of the reporting period, received a record $2.6million dividend from our China joint venture.
Other selected financial results for the three and six months endedJune 30, 2022 are as follows:
(in ’000s) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | |||
2022 | 2021 | 2022 | 2021 | ||
Revenues under GAAP | 2,722 | 1,188 | 5,189 | 2,168 | |
Proportional Revenues | 5,164 | 4,174 | 8,692 | 5,725 | |
Net income | 642 | 809 | 831 | 287 | |
Adjusted EBITDA | 1,341 | 1,435 | 1,784 | 1,205 |
2 OPERATIONAL SERVICES HIGHLIGHTS
Our operational services consist of the technical supervision andplant operation of water treatment plants, which generate recurringrevenues from three main sources: sales of recovered metals, watertreatment fees and operations support fees. Sales of recovered metalsare based on the mass of metals recovered and market prices of metalssold. Water treatment fees mainly consist of a variable fee based onwater treated and may include a fixed guaranteed minimum feeregardless of volume of water treated. Operations support fees arefixed fees in exchange of onsite plant support services. TheCompany’s operations by 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 |
Zhongkuang Plant for MWT | Shandong province, China | Operations support fees |
Zhaojin Plant for MWT | Shandong province, China | Operations support fees |
Power utility ash pond for WesTech | Virginia, USA | Water treatment fees |
Base metal project for a metal producer | Arizona, USA | Water treatment fees |
JCC-BQE Joint Venture Operations
Our 50/50 joint venture with partner Jiangxi Copper Company operatesthree water treatment plants at Dexing Mine and at Yinshan Mine inJiangxi province of China. The volume of water treated and pounds ofcopper recovered by the plants fluctuate seasonally depending onprecipitation levels in the region. The operating results for thethree and six months ended June 30, 2022 are as follows:
(in ’000s) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | |||
2022 | 2021 | 2022 | 2021 | ||
Water treated (cubic metres) | 5,925 | 7,702 | 8,788 | 10,126 | |
Copper recovered (pounds) | 1,010 | 1,262 | 1,412 | 1,466 |
In Q2 2022, all three plants met mechanical availability and processperformance set by the Company. Both the volume of water treated andthe mass of copper recovered decreased year-over-year by 23% and 20%,respectively. Changes in water volume and feed grade are largely theresult of environmental conditions beyond the control of the jointventure.
MWT-BQE Joint Venture Operations
Our 20% share of MWT-BQE is with our 80% partner Beijing MWT WaterTreatment Project Limited Company and together we operate a watertreatment plant at a smelter in Shandong province of China. MWT-BQEgenerates revenues from the sale of zinc and copper recovered fromsmelter wastewater. Operating results for the three and six monthsended June 30, 2022 are as follows:
(in ’000s) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | |||
2022 | 2021 | 2022 | 2021 | ||
Water treated (cubic metres) | 181 | 175 | 319 | 342 | |
Zinc recovered (pounds) | 45 | 319 | 106 | 589 | |
Copper recovered (pounds) | 52 | 78 | 106 | 154 |
The mass of zinc and copper recovered decreased by 86% and 33%,respectively. 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 Raglan Mine for GlencoreCanada Corporation. During Q2 2022, we mobilized our operations teamto site to commence our 19th operating season at the mine. Operationalactivities were initiated in April and treated water began dischargingin June.
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. In 2021 and to date in 2022, the Kemess property wasnot operating as it had been placed in an extended state of care andmaintenance. Water treatment is not required under this state and theSelen-IX™ plant was not operational.
In 2021, we began operations of the Zhongkuang SART plant and theZhaojin SART plant for metallurgical facilities in China. Both plantshave been under our technical supervision since beginning fullproduction. During Q2 2022, the Zhongkuang SART plant operated for thefull quarter and the Zhaojin SART plant resumed operations in earlyJune as the upstream circuit gradually returned to normal operations.
At the end of 2021, we completed the commissioning of our firstproject in the power generation industry, a treatment plant utilizingour Selen-IX™ process to remove selenium from ash pond water forWesTech Engineering. We also began providing ongoing plant operationalservices in return for water treatment fees with fixed and variablecomponents. During Q2 2022, due to issues with the upstream feedpumping system, water treatment with the Selen-IX™ circuit was notrequired and water was stored for treatment later in the year.Although the lack of feed had some effect on the recurring revenuesfrom this operation, we continued to collect a base fee whichrepresents the guaranteed minimum regardless of volume of watertreated.
In April 2022, we completed the commissioning of a treatment plantutilizing a combination of nanofiltration and our proprietary seleniumelectro-reduction process to simultaneously remove selenium andsulphate from mine water for a base metal project in the AmericanSouthwest. Upon completion of commissioning, we began providingon-going plant operational services in return for water treatment feescomprised of a fixed guaranteed minimum and a variable fee linked tothe volume of water treated. But due to a limited supply of feed waterinto our treatment circuits, we received only the fixed guaranteedminimum fee for the months during which the plant was ready tooperate.
The number of operating days contributing to water treatment orsupport fees for the three and six months ended June 30, 2022 are asfollows:
(in days) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | |||
2022 | 2021 | 2022 | 2021 | ||
Raglan Mine water treatment plants | 30 | 23 | 30 | 23 | |
Zhongkuang SART plant | 75 | - | 165 | 64 | |
Zhaojin SART plant | 23 | 64 | 23 | 154 | |
Water treatment plant in Virginia | 91 | - | 181 | - | |
Water treatment plant in Arizona | 68 | - | 68 | - |
The volume of water treated for the three and six months ended June30, 2022 are as follows:
(in ’000s cubic metres) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | |||
2022 | 2021 | 2022 | 2021 | ||
Raglan Mine water treatment plants | 218 | 145 | 218 | 145 | |
SART plants in China | 74 | 108 | 106 | 156 | |
Water treatment plants in USA | - | - | 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 duringQ2 2022 are summarized below.
Commercial Deployment of Selen-IX™ and DirectSelenium Electro-Reduction (ERC) Technology
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Continued to provide engineering services for a third large scaleSelex-IX™ plant currently in the construction stage for a mine inthe US.
Cyanide Recovery, Destruction, and ThiocyanateManagement
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Performed a site assessment to integrate SART into an existing goldmetallurgical plant in Canada.
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Completed cyanide recycle and cyanide destruction tests in alaboratory as the basis for design and cost estimates for projects inCanada and Mexico.
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Completed a prefeasibility study for a thiocyanate removal plant withconcurrent cyanide recovery for re-use at an active mine in Mexico.
Water Consulting Services – Management, Treatability,Permitting Assistance, Toxicity Mitigation
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Continued to provide engineering design services for three watertreatment plants for mine permitting in BC.
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Completed lab scale treatability testing for sulphate and metalsremoval to support permitting for the re-start of a base metal mine inOntario.
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Continued to provide optimization services to an existing ammoniaremoval plant in Ontario.
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Completed engineering design for an ammonia removal facility for alarge existing mining operation in Ontario.
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Completed lab scale testing for water treatment integration at a rareearth elements project to provide the basis for pilot plant design andpermitting in South America.
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Completed an onsite sulphate removal pilot operation for Codelco atthe El Teniente operation and initiated planning to move the pilotplant to the Andina operation in Chile.
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Provided management and operations supervision services for a watertreatment pilot to remove boron in Peru.
4 COMMENTARY AND OUTLOOK
We recorded another solid quarter of financial resultsand reached several important new milestones in Q2 2022.
One milestone was the successful completion ofcommissioning and the start of ongoing operations of a second watertreatment plant in the US. These two plants commenced operationswithin the last six months and contributed new recurring revenues of$439,000 on a year-to-date basis in 2022. Due to factors beyond ourcontrol, both plants received only a small fraction of the designedwater volume to treat. As such, revenues from these operations reflectonly our guaranteed minimum base fees which are fixed regardless ofthe volume of water treated. Looking ahead, we expect an increase inrevenues from both sites as the volume of water requiring treatmentincreases.
A second milestone was the successful pilotdemonstration of our Sulf-IX™ technology for sulphate removal at theEl Teniente copper operation in Chile owned by Codelco as part of an18-month multi-site and multi-technology project. Upon completion ofthe pilot, the mobile pilot plant will be moved to a second locationwhere it will be combined with a copper recovery module to demonstrateour BioSulphide ® processalongside sulphate removal.
A third milestone was the achievement of a record cashposition at the end of a second quarter, which historically is thelowest due to the seasonality of our operations. This accomplishmentwas made possible due to a combination of factors including:
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New recurring revenues from our US operations thatreduced the effect of seasonality on our overall revenues.
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A strong pipeline of active projects where we providetechnical engineering services. Project highlights in Canada includethe design of several new water treatment plants in BC and Ontario formine permitting. In Chile, in addition to our continuing work forCodelco, our team has been providing lab testing and designengineering services for a rare earth elements project currentlyentering the permitting phase.
Lastly, our growth has been recognized publicly byCorporate Knights as one of the 25 fastest-growing green publiccompanies in Canada ( https://www.corporateknights.com/rankings/future-50/2022-future-50-ranking/ ). This recognition is a sign that our success is beingnoticed by the broader business community in Canada.
Looking ahead to the remainder of the year, we expect our strongfinancial performance to continue. We have a strong backlog oftechnical services projects and new recurring revenues from plantsthat commenced operations earlier in the year. As always, we wouldlike to caution investors with respect to the uncertainties that couldaffect this positive outlook. Specifically, geopolitical risks, highinflation and monetary tightening could all have negative impacts onthe world economy, including our sector. That said, we believe theenvironmental compliance and sustainability requirements of naturalresource companies coupled with our healthy balance sheet andrecurring revenues positions us well to sustain any temporaryexogenous shocks and will allow us to continue to grow as wecapitalize on long-term opportunities in mining and environmental,social and governance trends.
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) | 3 mos ended Jun. 30 | 6 mos ended Jun. 30 | ||
2022 | 2021 | 2022 | 2021 | |
$ | $ | $ | $ | |
Revenues | 2,722 | 1,188 | 5,189 | 2,168 |
Operating expenses (excl depreciation) | (1,773) | (944) | (3,304) | (1,451) |
Operating margin | 949 | 244 | 1,885 | 717 |
Share of income from joint ventures | 1,129 | 1,580 | 1,462 | 1,604 |
General and administration | (579) | (459) | (1,183) | (860) |
Sales and development | (436) | (378) | (791) | (831) |
Share-based payments | (267) | (184) | (289) | (272) |
Depreciation and amortization | (59) | (37) | (114) | (74) |
Income from operations & joint ventures | 737 | 766 | 970 | 284 |
Other expenses, net | (77) | (39) | (119) | (79) |
Bad debt recovery | - | 95 | - | 95 |
Income tax expense | (18) | (13) | (20) | (13) |
Net income for the period | 642 | 809 | 831 | 287 |
Net earnings per share (basic) | 0.51 | 0.66 | 0.67 | 0.23 |
Net earnings per share (diluted) | 0.50 | 0.65 | 0.65 | 0.23 |
Proportional Revenues1 | 5,164 | 4,174 | 8,692 | 5,725 |
Adjusted EBITDA1 | 1,341 | 1,435 | 1,784 | 1,205 |
Comprehensive income | 503 | 837 | 584 | 244 |
at Jun. 30, | at Dec. 31, | |||
2022 | 2021 | |||
$ | $ | |||
Cash | 2,899 | 3,944 | ||
Proportional cash1 | 7,225 | 8,089 | ||
Working capital | 4,017 | 4,557 | ||
Total assets | 14,623 | 13,803 | ||
Total non-current liabilities | 751 | 778 | ||
Shareholders’ equity | 12,010 | 11,313 |
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 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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