"We are pleased with our annual results which reflect the stage of the Company's growth in the post pandemic world and the reversion to mean of our share of income from the China JV," said
FINANCIAL HIGHLIGHTS
- Achieved record Proportional Revenues of
$18.9 million in 2022, a 21% increase from 2021. - Recorded historic high revenues under GAAP of
$12.2 million in 2022, a 62% increase compared to 2021. - Share of income from joint ventures was
$1.5 million ,$1.3 million lower than in 2021. - Net income for the year was
$1.2 million compared to$2.6 million in 2021. - Adjusted EBITDA was
$3.1 million compared to$4.1 million the year prior. - Increased working capital by 57% year-over-year to
$7.2 million as ofDecember 31, 2022 . - Grew net cash by 58% to
$6.2 million and Proportional Cash by 18% to$9.6 million at the end of 2022.
Selected financial results for the last 5 years are as follows:
Selected financial results for the 3 and 12 months ended
(in '000s) | 3 months ended | 12 months ended | |||
2022 | 2021 | 2022 | 2021 | ||
Revenues under GAAP | 3,465 | 2,570 | 12,158 | 7,511 | |
Proportional Revenues | 4,479 | 4,389 | 18,879 | 15,616 | |
Net income (loss) | (244) | 800 | 1,162 | 2,629 | |
Adjusted EBITDA | (90) | 754 | 3,059 | 4,096 |
OPERATIONAL SERVICES HIGHLIGHTS
Our operational services consist of the operation or technical supervision of water treatment plants, which generate recurring revenues from three main sources: sales of recovered metals, water treatment fees and operations support fees. The Company's active operations for the 12 months ended
Operations | Location | Revenue Source |
JCC-BQE Joint Venture | Sales of recovered metals | |
MWT-BQE Joint Venture | Sales of recovered metals | |
Water treatment fees | ||
Water treatment fees | ||
Zhongkuang Metallurgical Facilities for MWT | Operations support fees | |
Zhaojin Metallurgical Facilities for MWT | Operations support fees | |
Power utility ash pond for WesTech | Water treatment fees | |
Base metal project for a metal producer | Water treatment fees |
JCC-BQE Joint Venture Operations
Our 50/50 joint venture with partner Jiangxi Copper Company ("JCC") operates three water treatment plants at
(in '000s) | 2022 | 2021 |
Water treated (cubic metres) | 17,704 | 21,552 |
Copper recovered (pounds) | 2,829 | 3,337 |
During 2022, all three plants met mechanical availability and process performance set by the Company. Both the volume of water treated and the mass of copper recovered decreased year-over-year, by 18% and 15% respectively. The region experienced an unusually low volume of precipitation in the last half of 2022, with approximately 34% of the total rainfall compared to the same period the year prior. Lower rainfall not only lessened the water flowing into the treatment plants but also affected copper leaching from waste rock, reducing copper concentrations in the plant feed. Changes in water volume and feed grade are largely the result of environmental conditions beyond the control of the joint venture.
MWT-BQE Joint Venture Operations
Our 20% share of MWT-BQE is with our 80% partner
(in '000s pounds) | 2022 | 2021 |
Zinc recovered | 527 | 845 |
Copper recovered | 218 | 237 |
The mass of zinc recovered decreased by 38% while copper recovery decreased by 8%. The smelter periodically operated their production lines with ores from different sources which led to varying concentrations of zinc and copper in the feed composition and a fluctuation in the volume of wastewater treated by the plant. The joint venture has no control in the composition and volume of the feed that flows into the plant.
BQE Water Operations
The Company, with our Inuit partner
In
In 2021, we began operations of the Zhongkuang SART plant and the Zhaojin SART plant at metallurgical facilities in
At the end of 2021, we completed the commissioning of our first project in the power generation industry, a treatment plant utilizing our Selen-IX™ process to remove selenium from ash pond water for
In
The number of operating days contributing to water treatment or support fees for the 12 months ended
(in days) | 2022 | 2021 |
157 | 129 | |
127 | - | |
Zhongkuang SART plant | 349 | 126 |
Zhaojin SART plant | 159 | 161 |
Water treatment plant for ash pond in | 328 | - |
Water treatment plant in | 248 | - |
The volume of water treated for the 12 months ended
(in '000s cubic metres) | 2022 | 2021 |
1,870 | 2,327 | |
378 | - | |
SART plants in | 411 | 336 |
Water treatment plants in the | 18 | - |
TECHNICAL SERVICES HIGHLIGHTS
Selenium Removal Projects
- Successfully completed the commissioning of a water treatment plant for simultaneous selenium and sulphate removal at a mine in the US.
- Continued to provide engineering services for the construction of a third Selen-IX™ plant at a US mine.
- Successfully completed lab testing and preliminary engineering for a selenium removal system to treat Flue Gas Desulphurization (FGD) scrubber blow-down at a US power utility provider.
- Successfully completed lab testing and preliminary engineering for a selenium removal system to support permitting of a new uranium project in
Canada .
Water Consulting Projects (Water Management, Treatability, Permitting Assistance, Toxicity Mitigation)
- Continued to provide engineering design services for three water treatment plants to support permitting of the KSM project in BC.
- Completed water treatment consulting services resulting in the issue of a permit for the Blackwater project in BC.
- Completed a water treatment conceptual design study to support the permitting of a new lithium project in
Ontario . - Completed engineering design for a water treatment pilot plant to support permitting of a rare earth elements project in
Chile . - Completed pilot demonstrations of the company's sulphate removal Sulf-IX™ technology and selective copper recovery BioSulphide® process at multiple sites across Codelco operations including the El Teniente and Andina mines in
Chile . - Completed process engineering design for the construction of a water treatment plant to recycle water at a mine in
Mexico . - Initiated engineering for an expansion project of the water treatment plant at
Minto Mine in theYukon .
Cyanide Management Projects (Cyanide Destruction, Recycle)
- Completed site testing to investigate possible improvements in cyanide destruction at a gold mine in
Nevada . - Completed technical assessment for a cyanide destruction plant at the
Pogo Mine inAlaska to identify operating cost reductions through process optimization. - Completed a study to optimize cyanide destruction and effluent discharge using reverse osmosis at a large gold heap leach operation in
Peru . - Initiated engineering design of a SART plant for Shandong Gold in
China . - Performed a trade-off study for the expansion of the existing SART plant in
Mexico to include a zinc recovery circuit.
COMMENTARY AND OUTLOOK
When comparing our 2022 results against the previous year, it is important to first consider the exceptional net income from our
In fact, 2022 was an exciting year for the Company, dominated by growth in both the team's technical capabilities and overall capacity to execute a larger number of projects, ensure the successful operation of a growing portfolio of plants under long-term contracts, and support sales and development activities that included new products and services.
When asked what we consider as the main challenge for
Another challenge exclusive to
Lastly, another challenge unique to us has been the increase in plant operations services and the associated shift in the balance of services from the laboratory and engineering office out into the field. This shift produced the need for adjustments in skillsets and internal restructuring to manage such a transition.
Despite some natural growing pains, the Company continued to demonstrate a positive long-term trajectory which is reflected in our 2022 financial results as follows:
- Added new recurring operational revenues of
$2.0 million from projects outside ofChina , effectively doubling our operations business. - Achieved record technical services revenues of
$8.0 million , which is a leading indicator of future operations services. - Reduced our reliance on metal sales in
China for the recurring revenue portion of the total net income to de-risk our exposure to commodity price fluctuations and geopolitical uncertainties. - Continued to increase the Company's treasury by growing working capital to
$7.2 million , which represents the highest year-end balance since the new commercial strategy and business model was implemented in 2014.
In terms of technical development, there were several milestone achievements in 2022:
- Successful commissioning of the first treatment plant that combines selenium and sulphate removal.
- Successful pilot demonstrations of our BioSulphide® process for selective copper recovery and Sulf-IX™ process for sulphate removal at three different sites for Codelco.
- Completion of half a dozen cyanide destruction projects which cemented the integration of newly acquired IP in this area into the Company's IP portfolio.
The figure below shows the evolution of our staffing from 2017 to 2022, including our projections for 2023. The graph provides good insight into the changes that occurred during this period of growth and the challenges therein. Between 2017 and 2020, the turnaround in business performance was supported by resources and infrastructure already in place when the new business strategy was fully implemented in 2015. Since that time, the Company has experienced a strain on existing resources and has roughly doubled our team size.
In summary, while 2022 is the first year since 2017 where Adjusted EBITDA and net income did not increase year-over-year, the management team of
Looking ahead, we have good visibility for projects in 2023. Our recurring revenue and gross margin from operational services are expected to continue to increase: there will be a full year of operation at
In the long-term, the drivers for continued company growth remains firmly in place including:
- Global decarbonization driving demand for metals production.
- Tightening government regulations and increased enforcement around water quality.
- Environmental responsibility and social acceptability guiding water management and treatment decisions.
- Increased role of Indigenous communities in clean water production and environmental monitoring.
- Outsourcing of innovation in the mine water space combined with our track record of bringing innovation to market.
- Clean-up and closure of ash ponds as one of the largest environmental liabilities faced by power utilities.
Despite these trends and our optimistic outlook for 2023, readers need to be cautioned about the risks that may create sudden and potentially significant headwinds for us and our business. First, geopolitical tensions between
SELECTED FINANCIAL INFORMATION
For a complete set of Financial Statements and MD&A, please go to www.bqewater.com.
(in $'000 except for per share amounts) | 2022 | 2021 |
$ | $ | |
Revenues | 12,158 | 7,511 |
Operating expenses | (7,107) | (3,949) |
Operating margin | 5,051 | 3,562 |
Share of income from joint ventures | 1,487 | 2,803 |
General and administration | (2,464) | (1,823) |
Sales and development | (1,768) | (1,374) |
Share-based payments | (671) | (303) |
Depreciation and amortization | (264) | (168) |
Income from operations and joint ventures | 1,371 | 2,697 |
Other income (expenses) | 108 | (33) |
Bad debt (expense) recovery | (8) | 95 |
Income tax expenses | (309) | (130) |
Net income for the year | 1,162 | 2,629 |
Earnings per share (basic) | 0.93 | 2.13 |
Earnings per share (diluted) | 0.92 | 2.11 |
Proportional Revenues1 | 18,879 | 15,616 |
Adjusted EBITDA1 | 3,059 | 4,096 |
Comprehensive income | 994 | 2,934 |
at | at | |
2022 | 2021 | |
$ | $ | |
Cash | 6,234 | 3,944 |
Proportional cash1 | 9,582 | 8,089 |
Working capital | 7,165 | 4,557 |
Total assets | 15,988 | 13,803 |
Total non-current liabilities | 555 | 778 |
Shareholders' equity | 12,638 | 11,313 |
Notes: |
1. Non-GAAP measures |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain information contained herein may not be based on historical fact and therefore constitutes "forward-looking information" under applicable Canadian securities legislation. This includes without limitation statements containing 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 of management at the date the statements are made, and are subject to a variety of risks, uncertainties and other factors that may cause actual events or results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company's dependence on key personnel and contracts, uncertainty with respect to the profitability of the Company's technologies, competition, technology risk, the Company's ability to protect its intellectual property and proprietary information, fluctuations in commodity prices, currency risk, environmental regulation and the Company's ability to manage growth and other factors described in the Company's filings with the Canadian securities regulators at www.sedar.com (including without limitation the factors described in the section entitled "Risks and Uncertainties" in the Company's MD&A for the year ended
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