VANCOUVER, BC – BioteQ Environmental Technologies, Inc. (TSX : BQE), a leader in industrial wastewater treatment, releases its financial and operating results for the three months ended March 31, 2014. Further information on the quarterly results can be obtained from the Company’s Q1 2014 Quarterly Report which includes the Condensed Consolidated Interim Financial Statements and Management’s Discussion and Analysis (“MD&A”).
BioteQ will hold a conference call on May 15 at 11:00 AM EDT to discuss results for the first quarter. Participants can dial in as follows:
North America: 1-416-644-3415 or toll free at 1-877-974-0445
United Kingdom: 44-20-7190-1595 or toll free at 0800-358-5256
Switzerland: 41-22-592-7311 or toll free at 0800-560-749
Participant pass code: 4682671
As noted at the beginning of 2013, due to changes in Generally Accepted Accounting Standards (“GAAP”), the results of the Company’s joint ventures are accounted for as equity investments in BioteQ’s current and future financial statements. In prior years before 2013, the results of the Company’s joint ventures were accounted for through proportionate consolidation.
To ensure clarity and comparability with historic results, certain statements in this news release and in the MD&A are characterized as BioteQ’s “proportional” share, which means the effective portion of results that BioteQ would have reported if each of its joint ventures had been reported in accordance with past accounting standards. For further details, please see “Non-GAAP Financial Measures” in the Company’s Q1 2014 MD&A.
Q1 2014 Financial Results
- Revenues for the quarter as reported under GAAP were $154,000 compared $796,000 in 2013, a decline of 80% compared to the prior year;
- Proportional revenues, which include the Company’s joint venture activities, were $553,000 compared to $2 million in 2013, a decline of 76% compared to the prior year;
- Adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) was a loss of $2 million compared to a loss of $755,000 in Q1 2013;
- Net loss for the quarter as reported under GAAP was $2.1 million compared to $1 million in 2013; and
- Cash and cash equivalents and short-term investments, including its share held in joint ventures, was $2.7 million compared to $3.2 million at the end of 2013.
In February 2014, BioteQ announced changes to its executive management team and roles on its Board of Directors as follows:
- Jonathan Wilkinson stepped down from his positions as Chief Executive Officer and Board member;
- David Kratochvil, previously BioteQ’s President and Chief Technology Officer, rejoined the Company in the capacity of Interim Chief Executive Officer;
- George Poling stepped down from his capacity as Board Chair for personal reasons, although he will remain on the BioteQ Board; and
- Peter Gleeson, previously a non-executive member of the Board, assumed an executive management role as Executive Chairman.
The management and board changes are part of a plan that will include a renewed emphasis on the development and provision of innovative technical solutions for the mining sector.
Water Treatment Operations
Water treatment operation at the Dexing mine site, a joint venture with mine site owner Jiangxi Copper Company (“JCC”), treated 1.3 million cubic metres of water and recovered a total of 212,000 pounds of copper compared to Q1 2013 when BioteQ treated 2.2 million cubic metres of water and recovered 511,000 pounds of copper. The decline in water volume and copper production were anticipated and meet budgeted projections. The decrease in volume of water treated and pounds of copper recovered is due to lower than expected rainfall in the region and lower concentrations of copper in the feed water. In recent weeks, both the volume of water at the site and copper concentration levels have increased back to historical levels and we now anticipate that the plant is expected to recover approximately 1.6 million pounds of copper for the year.
New Plant Construction Update
BioteQ is completing construction of two new plants in China with joint venture partner JCC. The copper recovery plants are in the final stages of construction and commissioning and will commence operations in the second quarter.
- The plant at JCC’s Yinshan mine site is currently being commissioned. The plant has started to receive wastewater into the plant to allow final process and mechanical adjustments to be completed. Once fully operational, the plant is expected to recover approximately 900,000 pounds of copper on an annual basis.
- A second copper recovery plant at JCC’s Dexing mine site is in the final construction phase and expected to begin commissioning and operations later in Q2. Once in operation, the plant is also expected to recover approximately 900,000 pounds of copper on an annual basis.
Sales and New Technology Development
The management changes announced during the quarter were implemented to refocus the company to pursue opportunities that will lead to the generation of recurring revenues and that will allow BioteQ to play the role of a technical expert and a technology partner to customers seeking to manage technical risks associated with achieving cost effective compliance with new, challenging, environmental regulations. These partnerships will better align the interests of BioteQ and its customers in the success of projects over the long-term while utilizing the Company’s core strengths and expertise. Since the personnel changes, management has been actively engaging existing and potential new customers with this objective as a primary focus. In addition, BioteQ continued to work closely with existing business partners in advancing joint business opportunities and identified and started working with several new partners who will broaden BioteQ’s outreach and capacity to execute projects using the new business model. Finally, management engaged well established and highly reputable service providers to the mining industry who could open up potential new channels in the future. While the initial response has largely been very positive, it will take time for relationships to develop, suitable sites to be identified, and projects to be awarded.
The following is an update on key opportunities in progress:
Selenium Removal – Selen-IXTM
BioteQ is currently in the process of working with its existing partners and potential new customers on deploying its Selen-IX™ pilot plant, constructed and successfully operated as part of the work performed under contract with Teck in 2013, on streams where nitrate removal is not required. The objective is to select those opportunities that combine the right technical fit with the customers’ needs that are often customer and site specific.
EcoMetales Limited – BioSulphide® Plant Design
Subsequent to the end of the quarter, BioteQ started to provide paid technical services to BioteQ’s Chilean partner EcoMetales Limited (“ECL”) focused on advancing the design of a treatment plant using BioteQ’s BioSulphide® process to improve the removal of arsenic from wastewater originating at one of the smelter operations in Chile. The objective of the project is to reduce the hazardous wastes, in terms of mass and volume, and to enhance water reuse. The support from BioteQ is part of a broader effort to complete environmental assessment and economic evaluation of the treatment process.
Consulting Contracts – Latin America
BioteQ has also entered into several small contracts for the supply of technical services to a number of customers and sites across Latin America. The scope of these contracts range from technical feasibility studies, to operational reviews including on site operations assistance and laboratory testing. While the financial amounts to be received from these contracts are limited, BioteQ has performed rigorous screening of the sites and customer’s requirements to ensure a long-term strategic fit with the new business strategy, and as a result BioteQ is optimistic that these service contracts will prove to be a catalyst for larger contracts in the future.
- In December 2013, BioteQ began a financing under a Share Rights Offering to raise gross proceeds of approximately $1.2 million ($960,000 net of expenses). The proceeds from the offering will be used to fund operating expenses and other general working capital needs. The financing closed in January 2014.
- BioteQ continues to be engaged in its ongoing litigation with Aditya Birla Minerals in Australia. The courts have set a mediation date for both parties in late June 2014. BioteQ’s legal position has not changed since the inception of the litigation: BioteQ does not believe Birla’s allegations have merit and are vigorously defending its position. BioteQ will also continue to pursue legal action against Birla for breach of contract related to water treatment operations at the Mount Gordon site.
- During the quarter, BioteQ amended the payment terms of its legal settlement with NWM Mining. The final $700,000 payment originally due April 30, 2014 is now due as follows: $50,000 due March 31, 2014, $50,000 due April 15, 2014, and the final $600,000 balance will be due no later than June 30, 2014. All other terms and conditions remain unchanged. The March and April payments totaling $100,000 have been received.
BioteQ entered 2014 with a limited backlog in new project bookings. Projects that were expected to be closed and executed by this time of the year have not materialized or have been delayed. As previously noted, the new sales model being implemented by management will take time to begin bringing cash flow into the Company. This shortfall in near term sales has brought working capital resources to lower than expected levels. Although the Company believes it can manage its working capital through this period, non-operational sources of capital may be required in the short-term.
The company is reviewing and actively pursuing all options to avoid a short-term working capital deficiency including the repatriation of funds available in its joint venture ahead of schedule and pursing amounts owed. However, the results of these initiatives are uncertain at this time.
BioteQ Corporate Profile
BioteQ is an innovative clean technology leader in global industrial water treatment, serving the mining and energy markets. The company has technology expertise and proven operational capabilities in sulphide precipitation, ion exchange, alkali/lime precipitation, leaching, sulphate removal and SART technology. Over the past decade, BioteQ has designed and commissioned wastewater treatment plants at mine sites for leading organizations including Glencore Xstrata, Freeport McMoran, Jiangxi Copper and the US EPA. These plants recover dissolved metals and/or remove substances such as sulphate and selenium, producing clean water and minimizing or eliminating residual waste. BioteQ is headquartered in Vancouver, Canada and trades on the TSX under the symbol BQE. Please visit our website at www.bqewater.com for additional information.
The Toronto Stock 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.sedar.com (including without limitation the factors described in the section entitled “Risks and Uncertainties” in the Company’s Annual Report for the year ended December 31, 2013 and the section entitled “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2013). 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.