VANCOUVER, BC, Nov. 28,
2024 /CNW/ - BQE Water Inc. (TSXV: BQE), a
leader in the treatment and management of mine impacted waters, is
pleased to release its interim consolidated financial results for
the three and nine months ending September
30, 2024.
"We continued to deliver strong growth in the third quarter,
building on the increased recurring revenues in the first half of
the year and setting the stage for a solid finish to 2024," said
David Kratochvil, President & CEO of BQE Water. "The
Company's strategic priority to expand operations revenue is
exhibited by the increase of year-to-date recurring revenues, which
is 77% of Proportional Revenues, compared to 56% in the same period
of 2023. Further, as several larger projects initiated during the
quarter, our technical services for Q3 2024 have caught up to Q3
2023 levels, and we expect this momentum in technical services to
be reflected in our Q4 2024 results and, likely, into Q1 2025."
FINANCIAL HIGHLIGHTS
- Recorded Proportional and GAAP revenues of $10.2 million and $6.8
million in Q3 2024 respectively, compared to $8.0 million and $6.2
million in Q3 2023.
- Gross margin of $3.9 million in
Q3 2024 compared to $3.3 million in
Q3 2023, a $587,000 or 18%
increase.
- Net income of $3.7 million in Q3
2024 compared to $2.1 million in Q3
2023, a $1.6 million or 75%
increase.
- Adjusted EBITDA of $4.6 million
in Q3 2024 compared to $2.7 million
in Q3 2023, a $1.8 million or 67%
increase.
- Net cash and cash equivalents of $11.0
million at September 30, 2024,
compared to $7.9 million at
December 31, 2023.
- Working capital of $12.4 million
at September 30, 2024, compared to
$10.5 million at December 31, 2023.
Selected financial results for the three and nine months ended
September 30, 2024 are as
follows:
(in
'000s)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
|
$
|
$
|
|
$
|
$
|
Revenue from Operation
Services
|
3,873
|
3,166
|
|
8,222
|
5,435
|
Revenue from Technical
Services
|
2,944
|
3,080
|
|
4,519
|
7,688
|
Revenue from joint
ventures in China
|
3,375
|
1,718
|
|
6,943
|
4,173
|
Proportional
Revenues
|
10,192
|
7,964
|
|
19,684
|
17,296
|
|
|
|
|
|
|
Net income
|
3,723
|
2,131
|
|
3,796
|
2,404
|
Adjusted
EBITDA
|
4,568
|
2,742
|
|
5,790
|
4,112
|
COMMENTARY AND OUTLOOK
A strong third quarter has
resulted in new historical records for the first 9 months of the
year - Proportional Revenue of $19.7
million, net income of $3.8
million and Adjusted EBITDA of $5.8
million.
Our Q3 2024 results delivered positive performance in all
components of the business:
- All North American and Chinese water treatment plants were
operational.
- Technical services activity increased as several larger
projects were kicked off after some delays.
- Copper production in our JCC joint venture returned to
historical levels.
- There was consistent production of zinc from the Yinshan plant
in our JCC joint venture.
Although technical services revenue was strong, our team was not
fully utilized in projects and operations during Q3 2024. We are
expecting improvements in the coming months based on our presently
known project load. In addition, financial results from our JCC
joint venture were strong, with operational results establishing a
return to the mean in copper production. Finally, we are encouraged
that 77% of our year-to-date Proportional Revenues came from
recurring sources, which underpins and highlights the strength of
our business strategy to grow recurring revenues.
Our outlook for the balance of 2024 is positive as we expect our
revived momentum in technical services to be reflected in our Q4
2024 results and, likely, into Q1 2025. We expect a lower ratio of
recurring operations revenue relative to technical services revenue
over this period due to revenue mix as well as seasonally lower
metals production from JCC joint venture as the site enters
the dry season and the treatment plants undergo their scheduled
annual maintenance.
Looking beyond 2024, our assessment of the drivers for our
growth, as well as the risks, remain unchanged from our last
report. The timing of several projects, including much larger
potential 'company makers' projects, remain unpredictable but the
positive conditions that support the advancement of these projects
remain. While the outcome of the recent US elections introduces
some uncertainty, we do not expect our business to be materially
impacted. More mines for critical minerals are expected to open in
environmentally friendly jurisdictions and any potential roll-back
in regulations in the US will not change the need for minimizing
the risks of long-term environmental liabilities or addressing
social acceptability. In short, we continue to believe our offering
of unique intellectual property and expertise positions BQE
Water for long-term growth and success.
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
|
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
|
Minto Mine for
Government of Yukon
|
Yukon,
Canada
|
Water treatment
fees
|
Zhongkuang
Metallurgical Facilities for MWT
|
Shandong province,
China
|
Operations support
fees
|
Zhaojin Metallurgical
Facilities for MWT
|
Shandong province,
China
|
Operations support
fees
|
Power utility ash pond
for WesTech
|
Eastern USA
|
Water treatment
fees
|
Base metal project for
a metal producer
|
Southwestern
USA
|
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 Dexing Mine and at Yinshan Mine in
Jiangxi province of China. The volume of water treated, and metals
recovered by the plants fluctuate seasonally depending on
precipitation levels in the region. The operating results for the
three and nine months ended September 30,
2024 are as follows:
(in
'000s)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
Water treated (cubic
metres)
|
7,031
|
6,631
|
|
19,483
|
17,068
|
Copper recovered
(pounds)
|
1,174
|
741
|
|
2,473
|
1,757
|
Zinc recovered
(pounds)
|
447
|
-
|
|
860
|
-
|
In Q3 2024, all three plants met mechanical availability and
process performance targets set by the Company. The volume of water
treated increased by 6% and the mass of copper recovered increased
by 58% compared to Q3 2023. Such changes in water volume and metal
grade in feed water from period to period are largely the result of
environmental conditions beyond the control of the joint venture.
Starting in 2024, the Yinshan water treatment plant began to
recover zinc as part of their normal operations.
MWT-BQE Joint Venture Operations
Our 20% share in
MWT-BQE is with our 80% partner Beijing MWT Water Treatment Project
Limited Company ("MWT") and together we operate a water treatment
plant at a smelter in Shandong
province of China. MWT-BQE
generates revenues from the sale of zinc and copper recovered from
smelter wastewater. Operating results for the three and nine months
ended September 30, 2024 are as
follows:
(in
'000s)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
Water treated (cubic
metres)
|
79
|
81
|
|
209
|
203
|
Zinc recovered
(pounds)
|
26
|
35
|
|
75
|
114
|
Copper recovered
(pounds)
|
9
|
4
|
|
19
|
45
|
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 number of operating days
contributing to water treatment or support fees for the three and
nine months ended September 30, 2024
are as follows:
(in
days)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
Raglan Mine water
treatment plants
|
92
|
92
|
|
118
|
132
|
Minto Mine water
treatment plant
|
61
|
92
|
|
96
|
273
|
Zhongkuang SART
plant
|
88
|
92
|
|
265
|
272
|
Zhaojin SART
plant
|
88
|
85
|
|
266
|
262
|
Water treatment plant
in Eastern USA
|
70
|
55
|
|
206
|
182
|
Water treatment plants
in Southwest USA
|
92
|
92
|
|
274
|
271
|
The volume of water treated by geographic location for the three
and nine months ended September 30,
2024 are as follows:
(in '000s cubic
metres)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
Raglan Mine water
treatment plants
|
1,511
|
1,320
|
|
1,722
|
1,541
|
Minto Mine water
treatment plant
|
279
|
328
|
|
435
|
830
|
SART plants in
China
|
186
|
147
|
|
472
|
454
|
Water treatment plants
in USA
|
419
|
15
|
|
803
|
25
|
The Company, with our Inuit partner Nuvumiut Development,
operates four water treatment plants at Raglan Mine for Glencore
Canada Corporation ("Glencore"). During Q3 2024, we continued
operating all four treatment plants for our 21st operating season
at the mine.
In 2022, we began to provide water treatment services at Minto
Mine in the Yukon and in 2023, the
Company contracted directly with the Yukon Government to treat and
discharge clean water at the mine in support of environmental
protection.
In Q3 2024, we continued operating the water treatment plant to
treat water and we demobilized our operation team in late August in
order to assist with another project in the Yukon.
In 2021, we began operations of the Zhongkuang SART plant and
the Zhaojin SART plant at metallurgical facilities in China. Both plants have been under our
technical supervision since the start of full production. Both SART
plants operated fully throughout Q3 2024 without disruption.
In 2022, we began operations of a treatment plant utilizing our
Selen-IX™ process to remove selenium from ash pond water for
WesTech Engineering ("WesTech"). In Q3 2024, our team continued at
site providing water treatment services with the Selen-IX™ circuit
to manage the presence of selenium in the feed.
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 August
2023, our team completed the performance test milestone for
a second newly constructed selenium removal water treatment plant
which entered the operation phase. In Q3 2024, we continued to
provide water treatment operation services for both Selen-IX™ water
treatment plants in the American Southwest.
TECHNICAL SERVICES HIGHLIGHTS
BQE Water's technical
expertise and IP are applicable globally across broad areas of
water management. The highlights of technical services provided to
clients and technical innovation projects during Q3 2024 are
summarized below.
Trusted Advisory Services (Water Management and Water
Studies)
- Initiated the design of water treatment facility to support the
clean-up of legacy tailings site in the Yukon.
- Initiated advisory services to an environmental emergency at
the Eagle Gold Mine in the Yukon.
- Initiated plant operations support and engineering services to
an actively producing mine requiring improvements to their existing
treatment in Western Canada.
- Completed a field pilot campaign for thiosalts removal at a
mine in Eastern Canada.
- Completed a treatability assessment and preliminary engineering
for selenium removal at a mine in Peru.
- Continued engineering services for the design, procurement, and
construction of a fourth selenium removal plant using Selen-IX™ to
meet end-of-pipe limit of less than 2 parts per billion at a gold
mine in Central US.
- Continued to provide plant upgrade design and automation
services to include sulphate removal to a discharge limit less than
1,500 mg/L at an integrated lead smelter-recycling facility in
Eastern Canada.
- Assisted with regulatory review of water treatment to be
implemented at the Blackwater mine in BC.
- Continued plant automation services for a new water treatment
plant for water recycle at a gold mine in Mexico.
- Completed a preliminary design of water treatment for a Rare
Earth project in development in Brazil.
- Continued selenium stability test program simulating conditions
in semi-passive treatment systems to support holistic risk
assessment of selenium treatment options for a client based in
BC.
Cyanide Management (Destruction and Recycle)
- Provided on-site engineering and laboratory services to
investigate options for cyanide removal from impacted water at the
Eagle Gold Mine in the Yukon and
select the method that best integrates into the emergency temporary
water treatment at site that targets less than 25 ppb residual
cyanide at the end-of-pipe.
- Completed the engineering design for a cyanide removal facility
requiring the end-of-pipe cyanide concentration below 8 ppb in the
US.
- Continued to provide engineering services for Shandong Gold to
support the construction of the third SART plant in China.
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)
|
3 months ended Sept.
30
|
9 months ended Sept.
30
|
|
2024
|
2023
|
2024
|
2023
|
|
$
|
$
|
$
|
$
|
Revenues
|
6,817
|
6,246
|
12,741
|
13,123
|
Operating expenses
(excluding depreciation)
|
(2,943)
|
(2,959)
|
(6,156)
|
(6,815)
|
Operating
margin
|
3,874
|
3,287
|
6,585
|
6,308
|
|
|
|
|
|
Share of income from
joint ventures
|
1,577
|
382
|
3,039
|
870
|
General and
administration
|
(771)
|
(610)
|
(2,363)
|
(2,032)
|
Sales and
development
|
(576)
|
(555)
|
(2,428)
|
(1,726)
|
Share-based
payments
|
(199)
|
(109)
|
(815)
|
(328)
|
Depreciation and
amortization
|
(106)
|
(111)
|
(310)
|
(304)
|
Income from operations
and joint ventures
|
3,799
|
2,284
|
3,708
|
2,788
|
|
|
|
|
|
Other income
(expenses), net
|
2
|
(13)
|
189
|
48
|
Bad debt
expenses
|
-
|
-
|
-
|
(259)
|
Income tax
expenses
|
(78)
|
(140)
|
(101)
|
(173)
|
Net income for the
period
|
3,723
|
2,131
|
3,796
|
2,404
|
|
|
|
|
|
Net earnings per share
(basic)
|
2.91
|
1.71
|
3.00
|
1.92
|
Net earnings per share
(diluted)
|
2.87
|
1.67
|
2.96
|
1.88
|
|
|
|
|
|
Proportional
Revenues (Non-GAAP measures)
|
10,192
|
7,964
|
19,684
|
17,296
|
Adjusted
EBITDA (Non-GAAP measures)
|
4,568
|
2,742
|
5,790
|
4,112
|
Comprehensive
income
|
3,846
|
2,202
|
3,976
|
2,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Sept.
30,
|
at Dec. 31,
|
|
|
|
2024
|
2023
|
|
|
|
$
|
$
|
Cash
|
|
|
10,987
|
7,928
|
Proportional
cash (Non-GAAP measures)
|
|
|
14,925
|
9,790
|
Working
capital
|
|
|
12,420
|
10,529
|
Total assets
|
|
|
24,902
|
18,856
|
Total non-current
liabilities
|
|
|
1,904
|
1,900
|
Shareholders'
equity
|
|
|
19,266
|
14,776
|
NON-GAAP MEASURES
Throughout this News Release,
certain financial measures are used that do not have standard
meanings under IFRS and are considered specified financial
measures, which includes non-GAAP financial measures. These
measures may not be comparable with similar measures presented by
other companies. "Proportional Revenue" and "Adjusted EBITDA" are
non-GAAP financial measures, and should only be used to evaluate
our operational results in conjunction with the corresponding GAAP
measures.
Proportional Revenue
This non-GAAP financial measure
of Proportional Revenue adds BQE Water's share of revenues from its
China joint ventures to the
Company's revenues reported under GAAP. Proportional Revenues for
the three and nine-month periods ended September 30, 2024 and 2023 are reconciled as
follows:
(in
$'000s)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
|
$
|
$
|
|
$
|
$
|
Reported revenues under
GAAP
|
6,817
|
6,246
|
|
12,741
|
13,123
|
Share of revenues from
joint ventures in China
|
3,375
|
1,718
|
|
6,943
|
4,173
|
Proportional Revenue
for the period
|
10,192
|
7,964
|
|
19,684
|
17,296
|
Adjusted EBITDA
Adjusted EBITDA ("earnings before
interest, taxes, depreciation and amortization") is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other companies. It should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Consequently, the
presentation of Adjusted EBITDA enables shareholders to better
understand the underlying financial performance of our business
through the eyes of management. Adjusted EBITDA includes
adjustments of the Company's Proportional share of joint venture
results. The following table reconciles this non-GAAP measure to
the most directly comparable IFRS measure of net income:
(in
$'000s)
|
3 months ended Sept.
30
|
|
9 months ended Sept.
30
|
|
2024
|
2023
|
|
2024
|
2023
|
|
$
|
$
|
|
$
|
$
|
GAAP: Net
income
|
3,723
|
2,131
|
|
3,796
|
2,404
|
deduct:
interest income
|
(44)
|
(1)
|
|
(161)
|
(33)
|
add:
income tax expenses
|
428
|
267
|
|
711
|
504
|
add:
depreciation and amortization
|
224
|
229
|
|
665
|
671
|
EBITDA
|
4,331
|
2,626
|
|
5,011
|
3,546
|
add:
share-based payment expenses
|
199
|
109
|
|
815
|
328
|
deduct:
other income
|
-
|
-
|
|
(3)
|
(47)
|
add: bad
debt expense
|
-
|
-
|
|
-
|
259
|
add/deduct: net foreign exchange
|
38
|
7
|
|
(33)
|
26
|
Adjusted
EBITDA
|
4,568
|
2,742
|
|
5,790
|
4,112
|
About BQE Water
BQE Water is a service provider
specializing in water treatment and management for metals mining,
smelting and refining. We are helping to transform the way the
industry thinks about water in the context of natural resource
projects by offering services and expertise which enables more
sustainable water management practices and improved overall project
performance at reduced risks. BQE Water invests in innovation and
has developed unique intellectual property through the
commercialization of several new technologies at mine sites around
the world for organizations including Glencore, Jiangxi Copper,
Freeport-McMoRan and the US EPA. BQE Water is headquartered in
Vancouver, Canada and trades on
the TSX Venture Exchange under the symbol BQE. Visit
www.bqewater.com for more information.
The Toronto Venture Exchange has not reviewed and does not
accept responsibility for the adequacy or the accuracy of this
release.
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 December 31, 2023). Given these
risks and uncertainties, the reader is cautioned not to place undue
reliance on forward-looking statements. All forward-looking
information contained herein is based on management's current
expectations and the Company undertakes no obligation to revise or
update such forward-looking information to reflect subsequent
events or circumstances, except as required by law.
SOURCE BQE Water Inc.