13:52:38 EDT Sat 10 Jun 2023
Enter Symbol
or Name

BQE Water Inc (2)
Symbol BQE
Shares Issued 1,248,128
Close 2022-04-19 C$ 25.50
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BQE Water earns $2.62-million in fiscal 2021

2022-04-22 09:33 ET - News Release

Mr. David Kratochvil reports


BQE Water Inc. has released its unaudited consolidated financial results for the year ended Dec. 31, 2021. Following the completion of the audit process, BQE Water will issue further disclosure for the audited results and the material differences (if any) compared with the unaudited annual results contained herein. While management has reviewed the unaudited figures below, until the audited results are released and approved by the board, shareholders and interested investors of BQE Water are advised to exercise caution with the following unaudited financial results.

"Our fiscal year 2021 was exceptional in many ways. Not only did we deliver our strongest financial performance with record adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $4.1-million despite the challenges of a global pandemic, we also realized several key technical milestones. During the year, we brought on-line two SART plants for metallurgical facilities in China, completed commissioning of the first selenium removal plant in the power industry, advanced several selenium removal treatment plants to late stages and acquired IP [intellectual property] in cyanide destruction to provide a complete suite of cyanide management for our clients," stated David Kratochvil, president and chief executive officer of BQE Water.

Financial highlights:

  • Increased adjusted EBITDA by 53 per cent, from $2.7-million in 2020 to $4.1-million in 2021;
  • Grew proportional revenues by 16 per cent, from $13.5-million in 2020 to $15.6-million in 2021;
  • Recorded new historic high net income of $2.6-million in 2021, a 125-per-cent increase from $1.2-million in 2020;
  • Grew diluted earnings per share by 122 per cent, from 95 cents in 2020 to $2.11 in 2021;
  • Increased working capital by 29 per cent year-over-year, from $3.5-million to $4.5-million as of Dec. 31, 2021;
  • Increased net cash by 22 per cent over the 12-month period, from $3.2-million to $3.9-million at the end of 2021.

Operational services highlights

Our operational services consist of the operation or technical supervision of water treatment plants, which generates 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 Dec. 31, 2021 and 2020, are in the associated table.

JCC-BQE joint-venture operations

The company's 50/50 joint venture with partner Jiangxi Copper Company operates three water treatment plants at the Dexing mine and the Yinshan mine in the Jiangxi province of China. The volume of water treated and pounds of copper recovered by the plants fluctuates seasonally depending on precipitation levels in the region. The operating results for the 12 months ended Dec. 31, 2021, are in the associated table.

During 2021, 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 increased year-over-year by 2 per cent and 1 per cent, respectively. Changes in water volume and feed grade are largely the result of environmental conditions beyond the control of the joint venture. The minimal variances between 2020 and 2021 indicate very stable operations.

MWT-BQE joint-venture operations

The company's 20-per-cent share of MWT-BQE is with the company's 80-per-cent partner, Beijing MWT Water Treatment Project Ltd. Company; together, the companies operate a water treatment plant at a smelter in the Shandong province of China. MWT-BQE generates revenues from the sale of zinc and copper recovered from smelter waste water. The operating results for the 12 months ended Dec. 31, 2021 are in the associated table.

The mass of zinc recovered decreased by 33 per cent while copper recovery increased by 5 per cent. The smelter periodically operated its 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 waste water 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 operates four treatment plants at the Raglan mine for Glencore Canada Corp. In April, 2021, the company mobilized the company's operations team to site to commence the company's 18th operating season and began discharging water in June, 2021. During 2021, the total water treated across all four plants at the Raglan mine increased by 50 per cent.

In 2020, the company completed the commissioning of the first industrial-scale plant utilizing the company's patented and award-winning Selen-IX process for selenium management at the Kemess property owned by Centerra Gold. In 2021, the Kemess property was not operating as it was declared to be in an extended state of care and maintenance, with water treatment not required under this status.

The Zhongkuang SART plant began operations in January, 2021, and the Zhaojin SART plant in April, 2021. Both SART plants have been under BQE Water's technical supervision since beginning full production. During 2021, the Zhongkuang SART plant was put into care and maintenance temporarily from March to October due to the metallurgical circuit shutdown at the Zhongkuang leaching plant.

The volume of water treated for the 12 months ended Dec. 31, 2021 is in the associated table.

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 2021 are summarized below.

Commercial deployment of Selen-IX and direct selenium electro-reduction (ERC) technology:

  • Initiated precommissioning activities for a second large-scale Selen-IX plant to be installed at a mine in the United States;
  • Continued to provide engineering services for the first commercial-scale direct selenium ERC plant at a mine in the U.S.;
  • Completed the commissioning of the first Selen-IX plant outside of the mining industry at an ash pond in the U.S.

Cyanide recovery, destruction, and thiocyanate management:

  • Completed field assessments of several cyanide destruction plants in Canada;
  • Completed laboratory testing of cyanide destruction for projects in Canada and Mexico;
  • Completed feasibility studies for SART implementation at metallurgical facilities in China;
  • Completed a study to review the potential relocation and reuse of existing SART plant equipment in Latin America;
  • Completed lab-scale testing and scoping-level engineering for cyanide recovery from thiocyanate at an active mine in North America.

Water consulting services -- management, treatability, permitting assistance and toxicity mitigation:

  • Completed engineering design of water treatment system for permitting of a new mine in British Columbia;
  • Completed comprehensive review of water treatment requirements and independent review of engineering design of a water treatment plant for an existing mining operation in Peru;
  • Completed feasibility level engineering for water treatment to support permitting and development of a new mine in Central America;
  • Provided troubleshooting and optimization services for an existing ammonia removal plant in Ontario;
  • Completed prefeasibility level engineering for a new ammonia removal plant in Ontario;
  • Completed laboratory treatability studies to support permitting of new mining operations in Canada and Chile;
  • Initiated a two-year pilot demonstration program for sulphate removal and copper recovery for Codelco in Chile.

Commentary and outlook

Overall, 2021 was a year dominated by strong profitable growth and the achievement of several important technical and commercial milestones. These include:

  • New records for net income, adjusted EBITDA and proportional revenues, growing these by 125 per cent, 53 per cent and 16 per cent, respectively, year-over-year, and improving working capital year-over-year by 29 per cent;
  • Completed commissioning and began operations of the first treatment plant in the power industry, using the company's patented and award-winning Selen-IX process to remove selenium from ash pond water in the Eastern U.S.;
  • Advanced two selenium removal projects in mining, with one entering plant precommissioning and the other having completed the procurement of long lead equipment. The company signed long-term operating agreements with both projects;
  • Growing acceptance by industry and regulators of the company's Selen-IX process for selenium removal with the company's inclusion as a treatment option in the most recent draft of the Canadian Coal Mining Effluent Regulations;
  • Acquired IP in cyanide destruction and began integrating the world-leading knowledge and experience of one of the co-inventors of the cyanide destruction process into the company. This arrangement gives U.S. the ability to offer a complete suite of cyanide management services and has already generated new projects and clients in 2021 and expanded the sales pipeline for 2022;
  • Signed a two-year contract with Codelco, the world's largest copper producer, to provide pilot demonstrations of the company's sulphate removal and copper recovery technologies at multiple locations in Chile;
  • Initiated work on four new projects in Eastern Canada, expanding geographically into new mineral rich areas;
  • Expanded the in-house technical team and capabilities at all of the company's locations: Canada, U.S., Chile and China.

Looking ahead, the company anticipates the momentum of the previous few years will continue into 2022, supported by:

  • Sales pipeline growth from:
    • World-leading cyanide destruction expertise complementing the company's expertise with cyanide recycling in SART;
    • Large number of permitting and feasibility studies expected to advance to the next project phase;
    • The KSM project in B.C. advancing to substantial start where the company is the lead for water treatment;
    • Increasing industry recognition and credibility as the trusted subject matter expert;
  • Additional recurring revenues generated from the operation of treatment plants in the U.S.;
  • Active continuing projects in Latin America: pilots with Codelco, Trafigura and water management at El Mirador.

The company is also excited for the company's growth prospects beyond 2022 as the demand for the company's technical expertise and commercial business model aligns with key long-term trends:

  • Global decarbonization that demands critical metals and base metals for a green economy;
  • Need for mining projects to be environmentally responsible and socially acceptable, with water being one of the key elements determining both;
  • Tightening government regulations and enforcement for water quality;
  • Obligation for positive engagement and active involvement with indigenous communities, where the company's focus on clean water production provides opportunities for bringing local communities on board with mining projects;
  • Outsourcing of innovation by mining companies to service providers, combined with the company's record of bringing technology innovation to market;
  • Cleanup and closure of ash ponds is one of the largest environmental liabilities faced by power utilities.

Despite these trends and the company's optimistic outlook for 2022, readers need to be cautioned about the risks that may create sudden and potentially significant headwinds for the company and the company's business. First, although the COVID-19 pandemic appears to be entering the endemic phase, the success of the company's continued growth relies on travel and free movement of key personnel between countries. Second, geopolitical tensions between China and the West may complicate the company's continuing Chinese operations and any future business. Lastly, a global recession may lead to a drop in commodity prices that could put resource projects on hold. For these reasons, the company remains focused on fiscal prudence and maintaining the company's working capital at a level that would shield the company from these exogenous impacts. The company's financial results for 2021 and the current outlook for 2022 underpin the company's view that the company is on track for profitable growth and has sufficient cash reserves to mitigate these risks.

About BQE Water Inc.

BQE Water is a service provider specializing in water treatment and management for metals mining, smelting and refining. The company is 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 U.S. Environmental Protection Agency (EPA). BQE Water is headquartered in Vancouver, Canada, and trades on the TSX Venture Exchange under the symbol BQE.

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