"With new streams of recurring revenues that began last year, we grew our 2023 year-to-date revenues from water treatment fees to
- Grew both Proportional and GAAP revenues by 12% and 54% respectively, compared to Q2 2022.
- Doubled our operating margin from
$949,000 in Q2 2022 to$2.0 million in Q2 2023. - Recorded net income of
$615,000 and Adjusted EBITDA of$1.5 million in Q2 2023 compared to$642,000 and$1.3 million in Q2 2022. - Ended Q2 2023 with
$6.8 million in working capital,$4.7 million in cash and$7.5 million in Proportional cash.
Other selected financial results for the three and six months ended
(in '000s) | 3 months ended | 6 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Revenues under GAAP | 4,186 | 2,722 | 6,877 | 5,189 | |
Proportional Revenues | 5,772 | 5,164 | 9,331 | 8,692 | |
Net income | 615 | 642 | 274 | 831 | |
Adjusted EBITDA | 1,451 | 1,341 | 1,372 | 1,784 |
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 |
Our 50/50 joint venture with partner Jiangxi Copper Company operates three water treatment plants at
(in '000s) | 3 months ended | 6 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Water treated (cubic metres) | 7,538 | 5,925 | 10,437 | 8,788 | |
Copper recovered (pounds) | 725 | 1,010 | 1,016 | 1,412 |
In Q2 2023, all three plants met mechanical availability and process performance targets set by the Company. The volume of water treated increased by 27% while the mass of copper recovered decreased by 28% compared to Q2 2022. 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.
Our 20% share in MWT-BQE is with our 80% partner
(in '000s) | 3 months ended | 6 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Water treated (cubic metres) | 13 | 181 | 122 | 319 | |
Zinc recovered (pounds) | 1 | 45 | 79 | 106 | |
Copper recovered (pounds) | - | 52 | 41 | 106 |
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 fluctuations 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. During Q2 2023, the plant was shut down temporarily as the value of zinc and copper in the feed was lower than the recovery cost of the metals.
The number of operating days contributing to water treatment or support fees by plant for the three and six months ended
(in days) | 3 months ended | 6 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
40 | 30 | 40 | 30 | ||
91 | - | 181 | - | ||
Zhongkuang SART plant | 90 | 75 | 180 | 165 | |
Zhaojin SART plant | 87 | 23 | 177 | 23 | |
Water treatment plant in | 63 | 91 | 127 | 181 | |
Water treatment plant in | 91 | 68 | 179 | 68 |
The volume of water treated by geographic location for the three and six months ended
(in '000s cubic metres) | 3 months ended | 6 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
221 | 218 | 221 | 218 | ||
279 | - | 502 | - | ||
SART plants in | 176 | 74 | 307 | 106 | |
Water treatment plants in USA | 4 | - | 9 | 7 |
The Company, with Inuit partner
In
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 2022, we completed the commissioning of a treatment plant utilizing a combination of nanofiltration and our proprietary selenium electro-reduction process for the simultaneous removal of selenium and sulphate from mine water for a base metal project in the American Southwest. In Q1 2023, our team successfully completed the performance test milestone for the treatment plant. As a result, we are now also receiving a variable treatment fee based on the volume of water treated, in addition to the monthly base fee.
- Initiated the wet commissioning phase of a third Selen-IX™ plant at a US mine.
- Completed a lab scale treatability assessment for selenium removal from contact water at an existing gold mine undergoing expansion in the US.
- Initiated a preliminary technical assessment to treat selenium rich wastewater at a power generation site in the US.
- Completed a feasibility study design report for post closure water treatment at an existing copper mine in BC.
- Continued to provide engineering design services for three water treatment plants to support permitting of the KSM gold-copper project in BC.
- Operated a pilot water treatment facility at a rare earth elements project in
Chile . - Completed a treatability assessment and preliminary design for copper concentrate filtrate that will need to comply with stringent limits for molybdenum and sulphate in
Argentina . - Completed a lab scale treatability study utilizing our Sulf-IX™ technology to treat and eliminate brine as part of a broader study to comply with sulphate discharge regulations for a tailings storage facility at an existing iron ore processing facility in the US.
- Completed a laboratory scale program aimed at increasing water recovery and reducing brine waste for a reverse osmosis system being planned for implementation at a gold mine in BC.
- Completed a cyanide removal treatability test and preliminary engineering design for a cyanide removal plant at a project where the discharge limit is expected to be less than 10 ppb in the US.
- Performed a site visit and completed a preliminary technical assessment to integrate a SART process and recover cyanide from thiocyanate at a gold mining operation in
Ontario . - Continued with the engineering design for a third SART plant for Shandong Gold in
China . - Completed humidity cell testing to support permitting for the co-disposal of tailings containing traces of residual cyanide and residue from the electro-reduction of selenium for a project in the US.
Overall, we are very pleased with our second quarter results. We delivered significant growth in GAAP revenues, which more than offset a decline in our share of revenues from
First, recurring revenues from water treatment fees are foundational to our business model. During Q2 2023 water treatment fees increased by
Second, our technical services revenues also increased
Another development in Q2 2023 that deserves mention is the operational status of
On the project side, we are pleased with the successful completion of pilot campaigns for Codelco utilizing our Sulf-IX™ and BioSulphide® processes. These campaigns met all project objectives set out by Codelco, and Codelco has now initiated internal planning of next steps, including the engineering of an industrial scale demonstration facility to support scale-up to the full flow of mine water.
We received important industry recognition for our Selen-IX™ process for selenium removal when we were awarded the 2023 MetSoc Innovation Award winner. MetSoc is a constituent society of the
Looking at our year-to-date results, while our operating margin increased in 2023 compared to 2022, our team and costs have grown, resulting in a lower net income. There are two components in the overall cost increases: general inflation and corporate growth. We anticipate that the peak of cost increases is now behind us. Pricing for our technical services has been adjusted for inflation and all future contracts include an inflation adjustment provision. Costs to establish operations support infrastructure and to grow our capacity to execute projects – both required for long-term growth – are already reflected in our costs. We do not anticipate our overall costs to decrease moving forward, but we do expect them to stabilize as our internal processes for onboarding and professional development improve, and our capacity to execute projects starts to benefit from training already completed.
Looking ahead to the remainder of 2023, we plan to continue executing on existing projects and expect to add a new stream of water treatment fees in Q3 2023 from the latest selenium removal plant in the US. While we expect strong revenues from technical services in 2023, we are seeing delays in investment decisions related to new projects, which may affect our revenues in 2024. Our technical services are a mix of activities related not only to capital spending for new mines but also expansions of existing mines, with operational improvements, optimizations, and permitting activities all preceding major capital spending. We expect this to mitigate impacts from a slow-down in major capital investments in the short-term. In the medium and long-term, we see no change in the heightened focus on environmental protection, stricter regulations, need for social acceptability of natural resource extraction projects, and the outsourcing of water know-how; all factors that support our long-term growth.
We expect our balance sheet to remain strong as we enter 2024. We are pleased to announce that we received our 2022 annual dividend of
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 | 6 months ended | ||
2023 | 2022 | 2023 | 2022 | |
$ | $ | $ | $ | |
Revenues | 4,186 | 2,722 | 6,877 | 5,189 |
Operating expenses (excluding depreciation) | (2,162) | (1,773) | (3,855) | (3,304) |
Operating margin | 2,024 | 949 | 3,022 | 1,885 |
Share of income from joint ventures | 407 | 1,129 | 488 | 1,462 |
General and administration | (750) | (579) | (1,422) | (1,183) |
Sales and development | (557) | (436) | (1,170) | (791) |
Share-based payments | (29) | (267) | (219) | (289) |
Depreciation and amortization | (111) | (59) | (193) | (114) |
Income from operations and joint ventures | 984 | 737 | 506 | 970 |
Other expenses | (83) | (77) | 60 | (119) |
Bad debt expenses | (259) | - | (259) | - |
Income tax expenses | (27) | (18) | (33) | (20) |
Net income for the period |
615 |
642 |
274 |
831 |
Net earnings per share (basic) | 0.49 | 0.51 | 0.22 | 0.67 |
Net earnings per share (diluted) | 0.48 | 0.50 | 0.21 | 0.65 |
Proportional Revenues (Non-GAAP measures) | 5,772 | 5,164 | 9,331 | 8,692 |
Adjusted EBITDA (Non-GAAP measures) | 1,451 | 1,341 | 1,372 | 1,784 |
Comprehensive income (loss) | 144 | 503 | (187) | 584 |
at | at | |||
2023 | 2022 | |||
$ | $ | |||
Cash | 4,732 | 6,234 | ||
Proportional cash (Non-GAAP measures) | 7,539 | 9,582 | ||
Working capital | 6,841 | 7,165 | ||
Total assets | 16,057 | 15,988 | ||
Total non-current liabilities | 1,675 | 555 | ||
Shareholders' equity | 12,384 | 12,638 |
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.sedarplus.ca (including without limitation the factors described in the section entitled "Risks and Uncertainties" in the Company's MD&A for the year ended
SOURCE
© Canada Newswire, source