"With the addition of the two US-based treatment plants we commissioned in 2022 to our plant operations services, we were able to grow our Q1 2023 GAAP revenues to
FINANCIAL HIGHLIGHTS
- Grew total revenues by 9% primarily driven by a fourfold, or
$646,000 , increase in recurring plant operation revenues compared to Q1 2022. - Recorded net loss of
$342,000 and Adjusted EBITDA loss of$80,000 , compared to net income of$190,000 and Adjusted EBITDA of$446,000 in Q1 2022. - Working capital of
$6.7 million atMarch 31, 2023 , compared to$7.2 million atDecember 31, 2022 , a decrease of$481,000 or 7% over the three months. - Net cash of
$5.8 million atMarch 31, 2023 , compared to$6.2 million atDecember 31, 2022 , a 7% decrease.
Selected financial results are as follows:
(in '000s) | 3 months ended | |
2023 | 2022 | |
$ | $ | |
Revenues under GAAP | 2,691 | 2,467 |
Proportional Revenues | 3,560 | 3,529 |
Net income (loss) | (342) | 190 |
Adjusted EBITDA | (80) | 446 |
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 operations by source of revenue are as follows:
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) | 3 months ended | |
2023 | 2022 | |
Water treated (cubic metres) | 2,899 | 2,864 |
Copper recovered (pounds) | 291 | 402 |
In the first quarter of 2023, all three plants met mechanical availability and process performance targets set by the Company. The volume of water treated is comparable to the year prior while the mass of copper recovered decreased by 28%. Changes in water volume and feed grade from period to period are largely the result of environmental conditions beyond the control of the joint venture.
MWT-BQE Joint Venture Operations
Our 20% share in MWT-BQE is with our 80% partner
(in '000s) | 3 months ended | |
2023 | 2022 | |
Zinc recovered (pounds) | 78 | 61 |
Copper recovered (pounds) | 41 | 54 |
The smelter periodically operated its production lines with ores from different sources which led to varying concentrations of zinc and copper in the feed and a fluctuation in the volume of wastewater treated by the plant. The joint venture has no control over the composition and volume of feed that flows into the plant.
BQE Water Operations
The Company, with Inuit partner
In 2022, we entered into a new operational services agreement with Minto Metals to operate a water treatment plant at
In 2021, we began operations of the Zhongkuang SART plant and the Zhaojin SART plant at metallurgical facilities in
In 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 three months ended
(in days) | 3 months ended | |
2023 | 2022 | |
- | - | |
90 | - | |
Zhongkuang SART plant | 90 | 90 |
Zhaojin SART plant | 90 | - |
Water treatment plant for ash pond in | 90 | 90 |
Water treatment plant in | 90 | - |
The volume of water treated for the three months ended
(in '000s cubic metres) | 3 months ended | |
2023 | 2022 | |
- | - | |
214 | - | |
Eastern China SART plants | 131 | 32 |
Water treatment plants in USA | 3 | 7 |
TECHNICAL SERVICES HIGHLIGHTS
Selenium Removal Projects
- Successfully completed the performance test including bioassays for acute and chronic toxicity at a treatment plant removing selenium and sulphate simultaneously at a US mine.
- Continued to provide engineering services for the construction of a third Selen-IX™ plant at a US mine.
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 the installation and initiated commissioning of a water treatment pilot plant for a rare earth elements project under permitting in
Chile . - Initiated a treatability assessment for copper concentrate filtrate that will need to comply with stringent limits for molybdenum and sulphate in
Argentina . - Performed a toxicity investigation evaluation to demonstrate treatment for toxicity mitigation at an existing mine prior to the spring freshet in
Québec . - Partially completed – due to the project being put on hold – the design of an ammonia removal system for a mine in
Ontario . - Assisted with the water treatment expansion requirements at
Minto Mine in theYukon . - Initiated laboratory scale testing aimed at increasing water recovery and reducing brine waste for a reverse osmosis system in BC.
Cyanide Management Projects (Cyanide Destruction, Recycle)
- Completed lab scale testing and preliminary engineering for a cyanide destruction system to comply with a weak acid dissociable (WAD) cyanide limit below 50 ppb at a US mine.
- Completed a second round of on-site cyanide destruction testing to identify options to reduce operating costs and establish the engineering design basis for the design of a new system at the
Pogo Mine inAlaska . - Completed a trade-off study to upgrade an existing cyanide destruction plant using a sulphur burner and an oxygen generator for a mine in
Mexico . - Continued optimization for a cyanide destruction and effluent discharge system using reverse osmosis at a large gold heap leach operation in
Peru . - Continued with the engineering design for a third SART plant for Shandong Gold in
China .
COMMENTARY AND OUTLOOK
Historically, the first quarter has been our weakest financially, primarily due to the impact of seasonality on recurring revenues from existing operations. Specifically, our operations in
In comparison to Q1 2022, the financial results for Q1 2023 reflect higher labour costs associated with the onboarding of new staff; a reorganization aimed at establishing operations support infrastructure required for long-term growth; and lower technical services revenues due to some project delays and suspensions.
Looking ahead to the remainder of 2023, we plan to continue to execute on our existing project backlog and expect recurring revenues from operations to improve in Q2 and Q3. With travel restrictions easing globally, travel related to business development activities is increasing and is expected to contribute to growth in our opportunity pipeline going into 2024 and beyond. At the same time, the management team plans to focus on opportunities to reduce expenditures moving forward in anticipation of a slowing economy.
The trends of increased environmental protection, stricter regulations, and the outsourcing of water know-how continue to be supportive of the Company's long-term growth. However, we continue to caution investors with respect to uncertainties that could affect the shorter-term outlook; specifically, the risk of a global recession, which could affect the development of new mining projects, and geopolitical risks. That said, we have meaningfully strengthened our balance sheet over the past three years and have grown our recurring revenue base. Additionally, we secured a second interest free loan through a new government program to support the development of our professional team. All this positions us well to sustain any temporary exogenous shocks and also supports our growth plans as we capitalize on long-term opportunities in mining and ESG.
SELECTED FINANCIAL INFORMATION
For a complete set of Interim Financial Statements and MD&A, please go to www.bqewater.com.
(in $'000 except for per share amounts) | 3 months ended | |
Q1 2023 | Q1 2022 | |
$ | $ | |
Revenues | 2,691 | 2,467 |
Operating expenses (excluding depreciation) | (1,694) | (1,531) |
Operating margin | 997 | 936 |
Share of income from joint ventures | 81 | 333 |
General and administration | (672) | (604) |
Sales and development | (613) | (354) |
Share-based payments | (190) | (23) |
Depreciation and amortization | (82) | (55) |
(Loss) income from operations and joint ventures | (479) | 233 |
Other income (expenses), net | 137 | (43) |
Net (loss) income for the period | (342) | 190 |
(Loss) earnings per share (basic) | (0.27) | 0.15 |
(Loss) earnings per share (diluted) | (0.27) | 0.15 |
Proportional Revenues1 | 3,560 | 3,529 |
Adjusted EBITDA1 | (80) | 446 |
Comprehensive (loss) income | (332) | 81 |
at | at | |
2023 | 2022 | |
$ | $ | |
Cash | 5,777 | 6,234 |
Proportional cash1 | 8,576 | 9,582 |
Working capital | 6,684 | 7,165 |
Total assets | 15,493 | 15,988 |
Total non-current liabilities | 506 | 555 |
Shareholders' equity | 12,307 | 12,638 |
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
SOURCE
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