"In the third quarter, we set record highs in revenue, net income and Adjusted EBITDA. Our growth was largely driven by new streams of recurring revenue through the operations established in the
FINANCIAL HIGHLIGHTS
- Recorded Proportional and GAAP revenues of
$8.0 million and$6.2 million in Q3 2023 respectively, 40% and 78% increases compared to Q3 2022 and both historic highs during a quarter largely due to new recurring revenues from operations and growth in technical services in 2023. - Operating margin of
$3.3 million in Q3 2023 compared to$1.7 million in Q3 2022, an 88% increase. - Record high net income of
$2.1 million in Q3 2023 compared to$573,000 in Q3 2022, a 272% increase. - Adjusted EBITDA of
$2.7 million in Q3 2023 compared to$1.4 million in Q3 2022, a 101% increase. - Working capital of
$10.0 million as atSeptember 30, 2023 , an increase of$2.9 million or 40% fromDecember 31, 2022 .
Other selected financial results for the three and nine months ended
(in '000s) | 3 months ended | 9 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Revenue from Operation Services | 3,166 | 1,959 | 5,435 | 2,807 | |
Revenue from Technical Services | 3,080 | 1,544 | 7,688 | 5,885 | |
Revenue from joint ventures in | 1,718 | 2,204 | 4,173 | 5,707 | |
Proportional Revenues | 7,964 | 5,707 | 17,296 | 14,399 | |
Net income | 2,131 | 573 | 2,404 | 1,404 | |
Adjusted EBITDA | 2,742 | 1,361 | 4,112 | 3,147 |
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 | 9 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Water treated (cubic metres) | 6,631 | 6,395 | 17,068 | 15,183 | |
Copper recovered (pounds) | 741 | 1,097 | 1,757 | 2,509 |
In Q3 2023, all three plants met mechanical availability and process performance targets set by the Company. The volume of water treated increased by 4% while the mass of copper recovered decreased by 32% compared to Q3 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.
MWT-BQE Joint Venture Operations
Our 20% share in MWT-BQE is with our 80% partner
(in '000s) | 3 months ended | 9 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
Water treated (cubic metres) | 81 | 185 | 203 | 504 | |
Zinc recovered (pounds) | 35 | 199 | 114 | 305 | |
Copper recovered (pounds) | 4 | 7 | 45 | 113 |
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 Q3 2023, the plant was shut down intermittently as the value of zinc and copper in the feed was lower than the recovery cost of the metals.
BQE Water Operations
The number of operating days contributing to water treatment or support fees by plant for the three and nine months ended
(in days) | 3 months ended | 9 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
92 | 92 | 132 | 122 | ||
92 | 35 | 273 | 35 | ||
Zhongkuang SART plant | 92 | 92 | 272 | 257 | |
Zhaojin SART plant | 85 | 64 | 262 | 87 | |
Water treatment plant in | 55 | 92 | 182 | 273 | |
Water treatment plants in | 92 | 92 | 271 | 160 |
The volume of water treated by geographic location for the three and nine months ended
(in '000s cubic metres) | 3 months ended | 9 months ended | |||
2023 | 2022 | 2023 | 2022 | ||
1,320 | 1,316 | 1,541 | 1,534 | ||
328 | 128 | 830 | 128 | ||
SART plants in | 147 | 160 | 454 | 266 | |
Water treatment plants in USA | 15 | 8 | 25 | 15 |
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. During Q3 2023, our team completed the performance test milestone for a 2nd newly constructed selenium removal water treatment plant which entered the operation phase in
TECHNICAL SERVICES HIGHLIGHTS
Selenium Removal Projects
- Continued the wet commissioning phase of the third BQE designed Selen-IX™ plant at a US mine.
- Deployed on-site pilot testing of Selen-IX™ demonstration as a key component for permitting of a gold mine expansion in the US.
- Completed a preliminary technical assessment to treat selenium rich wastewater at a power generation site in the US.
Water Consulting Projects (Water Management, Treatability, Permitting Assistance, Toxicity Mitigation)
- Completed a technical assessment of water treatment requirements and options for closure and post-closure at a mine in the
Yukon overseen by the provincial government. - Continued to provide engineering design services for three water treatment plants to support permitting of the KSM gold-copper project in
British Columbia . - Continued to provide engineering services for design for the construction of a new water treatment plant for water recycle at a gold mine in
Mexico . - Completed the water treatment pilot test campaign integrated into a rare earth elements metallurgical extraction project in
Chile . - Initiated work on an investigation of root causes of effluent toxicity at a mine in
Eastern Canada . - Initiated pilot scale tests to demonstrate a new innovative method of managing thiosalts in mine effluents at an existing mine in
Canada . - Initiated an engineering review of an existing reverse osmosis plant, with a focus on increasing plant capacity through optimization to avoid major capital expense, for a customer in
Chile . - 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.
Cyanide Management Projects (Cyanide Destruction, Recycle)
- Completed a lab scale program to confirm the design basis for a cyanide removal plant with the discharge limit of less than 10 ppb for a project in the US.
- Initiated proof of concept lab scale testing of removal of cobalt and associated cyanide from an existing gold mine in
Canada . - Continued with the engineering design for a third SART plant for Shandong Gold in
China .
COMMENTARY AND OUTLOOK
We are remarkably pleased with our Q3 2023 and year-to-date financial results, which demonstrate that our strategic focus of rebalancing our revenue sources from the sales of recovered metals to fees from recurring water treatment operations is bearing fruit. On a year-to date basis, our water treatment fees from operations, for the first time, exceeded the sale of recovered metals by
In the first nine months of 2023, we extended our water treatment operation services to four different sites in
Revenue from technical services, which is generated from our specialized professional services in water management, has always been a forerunner to future operation services. Our year-to-date revenues from technical services grew to
Looking ahead to the remainder of 2023, we plan to continue executing our existing projects. In the fourth quarter, our operating season at our Canadian operations will pause and be winterized due the cold climate, while our US operations will continue year-round. While we do expect the revenue from either operation services or technical to be at a similar level when compared to the year ago period, we do anticipate weaker results from our
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 | 9 months ended | ||
2023 | 2022 | 2023 | 2022 | |
$ | $ | $ | $ | |
Revenues | 6,246 | 3,503 | 13,123 | 8,692 |
Operating expenses (excluding depreciation) | (2,959) | (1,759) | (6,815) | (5,063) |
Operating margin | 3,287 | 1,744 | 6,308 | 3,629 |
Share of income from joint ventures | 382 | 281 | 870 | 1,743 |
General and administration | (610) | (591) | (2,032) | (1,774) |
Sales and development | (555) | (414) | (1,726) | (1,205) |
Share-based payments | (109) | (172) | (328) | (462) |
Depreciation and amortization | (111) | (70) | (304) | (183) |
Income from operations and joint ventures | 2,284 | 778 | 2,788 | 1,748 |
Other income (expenses) | (13) | 84 | 48 | (35) |
Bad debt expenses | - | - | (259) | - |
Income tax expenses | (140) | (289) | (173) | (309) |
Net income for the period | 2,131 | 573 | 2,404 | 1,404 |
Net earnings per share (basic) | 1.71 | 0.46 | 1.92 | 1.13 |
Net earnings per share (diluted) | 1.67 | 0.45 | 1.88 | 1.11 |
Proportional Revenues (Non-GAAP measures) | 7,964 | 5,707 | 17,296 | 14,399 |
Adjusted EBITDA (Non-GAAP measures) | 2,742 | 1,361 | 4,112 | 3,147 |
Comprehensive income | 2,202 | 573 | 2,014 | 1,158 |
at | at | |||
2023 | 2022 | |||
$ | $ | |||
Cash | 6,526 | 6,234 | ||
Proportional cash (Non-GAAP measures) | 8,344 | 9,582 | ||
Working capital | 10,021 | 7,165 | ||
Total assets | 18,882 | 15,988 | ||
Total non-current liabilities | 1,690 | 555 | ||
Shareholders' equity | 14,530 | 12,638 |
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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
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