BQE Water Reports Q3 2024 Financial Results
Press Release
November 28, 2024
VANCOUVER, BC – BQE Water Inc. (TSX-V: 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.
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