VANCOUVER, BC – BioteQ Environmental Technologies, Inc. (TSX : BQE), a leader in industrial wastewater treatment, releases its financial and operating results for the year ended December 31, 2013. Further information on the year end results can be obtained from the Company’s 2013 Annual Report which includes the Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”).
BioteQ will hold a conference call on April 1 at 11:00 AM EDT to discuss results for 2013. Participants can dial in as follows:
North America: 1-416-644-3414 or toll free at 1-800-814-4859
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: 4675375
As noted at the beginning of 2013, due to recent changes in Generally Accepted Accounting Standards (“GAAP”) effective 2013, the results of the Company’s joint ventures will be accounted for as equity investments in BioteQ’s current and future financial statements. In prior years, 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 2013 MD&A.
2013 Financial Results
- Proportional revenues for the year were $7.6 million compared to $9.4 million in 2012, a decline of 19% year over year;
- Revenues as reported under GAAP were $4.1 million compared $5.3 million in 2012, a decline of 23 % year over year;
- Adjusted EBITDA for the year was a loss of $5 million compared to $1.9 million in 2012. Excluding the impact of one-time, non-cash impairment charges, the adjusted EBITDA loss was $2.3 million in 2013;
- Net loss as reported under GAAP was $6.2 million compared to $3.3 million in 2012; and
- Cash and short term investments, including BioteQ’s share held in joint ventures, was $3.2 million compared to $7.5 million at the end of 2012.
Water Treatment Operations
- BioteQ successfully completed its 10th operating season at the Raglan mine site in Quebec. During the year, BioteQ treated and discharged a total of 838,000 cubic meters of water. BioteQ also announced the extension of its service contract with mine site owner, Glencore Canada Corporation (“Glencore”) (formally Xstrata PLC), for an additional three years to the end of the 2016;
- Water treatment operation at the Dexing mine site, a joint venture with mine site owner Jiangxi Copper Company (“JCC”), treated 8,847,000 cubic meters of water and recovered a total of 1,831,000 pounds of copper compared to 2012 when BioteQ treated 8,661,000 cubic meters of water and recovered 1,985,000 pounds of copper; and
- In November 2013, BioteQ indefinitely furloughed water treatment operations at the Bisbee mine site in Arizona. The plant and operations are a joint venture with mine site owner Freeport-McMoRan (“FMI”). BioteQ assessed the future profitability of the operation given expected performance and copper prices and determined that it would be in the best interest of both partners to furlough operations.
New Plant Construction Update
BioteQ is completing construction of three new plants in China with joint venture partner JCC.
- Two new copper recovery plants are in the final stages of construction and commissioning will commence within the next month. The plant at JCC’s Yinshan mine site is expected to begin operations in April 2014. A second copper recovery plant at JCC’s Dexing mine site is expected to begin operations in June 2014. Combined, these new plants are expected to recover approximately 1.8 million pounds of copper on an annual basis; and
- In 2010, BioteQ began construction an ion-exchange plant to recover cobalt and nickel at the Dexing site. Over the course of the project, the plant has experienced problems with construction quality, performance issues with key components, and changes in operating conditions at the site which has delayed completion. Currently, the plant is in a condition that could operate as designed. However, most recently, BioteQ has identified a new operational issue that would lead to longer term performance disruptions if the problem is not addressed. As a result, commissioning has been delayed until this matter can be investigated and resolved.
New Technology Development
Selenium Removal – Selen-IXTM
In 2013, BioteQ secured a contract with Teck Resources Limited (“Teck”) to conduct pilot scale testing of its innovative new Selen-IX™ technology for selenium removal. Work under the contract was completed in late 2013. BioteQ is currently reviewing the results of the pilot campaign with Teck to determine the path forward for continuing development of the technology. Under the terms of the Teck agreement, BioteQ also invested approximately $550,000 to construct a Selen-IX™ pilot plant. BioteQ retains ownership of the pilot plant and all associated intellectual property for future test campaigns. BioteQ is actively exploring new customer sites to deploy the plant to further demonstrate the technology.
Sulphate Removal – Sulf-IXTM
In 2013, BioteQ successfully completed commissioning of a mobile Sulf-IXTM pilot plant that was jointly funded by Newalta Corporation (“Newalta”) and BioteQ. This unit provides on-site field testing for sulphate removal from waste water. Data collected from the pilot plant testing will be used to validate the applicability of the technology to new water streams and to generate the design criteria for full-scale Sulf-IXTM water treatment plants.
Upon completion of commissioning, BioteQ conducted two separate pilot campaigns with a US based industrial company. The pilot campaigns were aimed at testing sulphate removal from waste water generated from flue gas treatment. The campaigns were successful in demonstrating the technology’s application to the customer’s treatment needs and further enhancing the development of the technology. BioteQ is currently discussing the results of these pilot campaigns with the customer to determine next steps towards a possible commercial agreement.
- In December 2013, BioteQ began a financing under a Share Rights Offering to raise gross proceeds of approximately $1.2 million. The proceeds from the offering will be used to fund operating expenses and other general working capital needs. The financing closed in January 2014.
- 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.
2013 Commentary and 2014 Outlook
While the Company has been pleased with the development of new technologies, specifically Sulf-IXTM and Selen-IXTM, and continued growth in China with joint venture partner JCC, BioteQ’s commercial progress and financial performance fell well short of expectations set at the beginning of the year. General business conditions in the mining sector were challenging during the year which led to a decrease in commodity prices and project delays and cancellations. Despite these challenges, BioteQ believes that attractive opportunities exist for its technologies in the mining sector particularly due to the adoption and enforcement of new stringent effluent discharge regulations in many jurisdictions around the world.
The management and board changes announced in February 2014 are part of a plan that will include a renewed emphasis on the development and provision of innovative technical solutions for the mining sector. The emphasis for BioteQ going forward will be to pursue opportunities that will lead to the generation of recurring revenues to the Company and that will allow BioteQ to play a role of a technical expert and a technology partner to customers seeking to manage technical risks associated with achieving 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. BioteQ’s strategy and short term goals will include the following:
- Build on past successes and lessons learned;
- Continued focus on the completion of the new plants in China to begin generating cashflow as soon as possible;
- Accelerate the development of the Selen-IXTM process and improve the Sulf-IXTM process in order to present technically robust and financially attractive alternatives to conventional technologies; and
- Rebuild a pipeline of sales projects that will focus on opportunities that utilize BioteQ’s proven commercial technologies and new strategic areas of the market (selenium and sulphate) that can generate long term recurring revenue based on the volume of water treated and/or the mass load of contaminants removed or recovered.
BioteQ is in the early stages of this transition and progress on this renewed strategy will take time to develop.
In terms of BioteQ’s current financial outlook for the year, although its recurring revenue is expected to increase, it may prove to be challenging to break even on an operating cash flow basis due to:
- the volume of one time sales that can be recognized in the short term;
- uncertainty on the cost, outcome and settlement of litigations related to prior projects; and
- the recent decline in copper prices which will impact the results of our operations in China.
BioteQ will provide more specific updates on its financial projections for the year in subsequent quarters as near term opportunities are fully evaluated.
2013 Financial Highlights Summary
For a complete set of Financial Statements and Management Discussion and Analysis, please go to www.bqewater.com
|(in $’000 except for per share amounts)||2013||2012||2011*|
|less: Plant and other operating costs (excluding depreciation)||2,371||3,464||4,654|
|General and administration||3,473||4,333||4,990|
|Sales and development||1,856||1,555||955|
|Share of results of equity accounted joint ventures||1,057||(242)||–|
|Impairment of investment in joint venture||1,463||–||–|
|Depreciation and amortization||746||511||695|
|Loss before other income (expenses)||(7,099)||(4,488)||(3,982)|
|Other income (expenses) – net||111||84||(81)|
|Reversal of capital asset impairment||400||1,227||–|
|Gain (loss) on disposal of capital assets||239||–||(555)|
|Net loss for the year||(6,427)||(3,366)||(5,090)|
|Translation gain (loss) on foreign operations||640||(22)||408|
|Comprehensive (loss) for the year||(5,787)||(3,388)||(4,682)|
|Net loss per share (basic and diluted)||0.09||0.05||0.07|
|Proportional Revenues (see non-GAAP Measures)||7,610||9,424||7,414|
|Adjusted EBITDA (see non-GAAP Measures)||(2,304)||(1,890)||(3,742)|
* Results for the year ended Dec. 31, 2011 have been presented under the proportional consolidation method of accounting.