BioteQ Environmental Technologies Inc.

TSX : BQE


BioteQ Environmental Technologies Inc.

November 12, 2012 17:00 ET

BioteQ Reports Q3 2012 Operating and Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 12, 2012) - BioteQ Environmental Technologies Inc. (TSX:BQE), a leader in the treatment of industrial wastewater, reports its financial and operating results for the three and nine month periods ended September 30, 2012. All figures are in Canadian dollars and are in accordance with International Reporting Standards (IFRS), unless otherwise noted.

BioteQ's revenues include revenues from engineering fees and plant sales, revenues from plant operations generated by the sale of recovered metals, and revenues from plant operations that generate water treatment fees.

Financial results and highlights for Q3 2012:

  • BioteQ's financial performance in the third quarter and the first nine months of 2012 was strong. Year to date revenues are similar to revenues achieved by the Company for the full year in 2011. Cash usage and net income levels improved considerably compared to 2011.
  • Total revenues for the quarter were $2.8 million, similar to Q3 2011 revenues of $2.9 million. Total revenues for the first nine months of 2012 were $7.3 million compared to $5.7 million in the first nine months of 2011, an increase of 29%.
  • The year to date revenue increase over the prior year was due to a doubling of engineering fees and plant sales from $1.1 million to $2.3 million, a 35% increase in treatment fees from $1.1 million to $1.5 million, and a slight increase in metal recovery revenues from $3.4 million to $3.5 million. The increase in metal recovery revenues was due to a 20% increase in production, which was offset by lower global prices for copper in 2012 compared to 2011.
  • Operating margin for the quarter was $1.2 million, compared to $1.6 million in Q3 2011. Year to date, operating margin was $2.7 million compared to $2.4 million for the same period in 2011. Operating margin improved on an absolute basis for the 9 month period, even accounting for the impact of lower copper prices. Had copper prices in 2012 been at 2011 levels for the first 9 months of the year, operating margin would have been $700,000 higher.
  • Cash used by operating activities, after changes in working capital, was $200,000 compared to cash use of $412,000 in the same quarter last year. Year to date, cash used in operations including working capital was $774,000, an improvement of $632,000 or 45% compared to cash use of $1.4 million in 2011.
  • BioteQ has achieved a significant improvement in net cash used in operating activities while also making strategic investments to drive growth. Earlier in the year, the Company invested in enhanced sales and marketing resources to secure new contracts and enter new markets, as well as engineering and technical resources to support project execution. Cash use has also been impacted by a number of non-recurring costs that affect 2012 results and that will, to a lesser extent, impact 2013 including: legal fees; care and maintenance costs for the Mount Gordon plant; payments and consulting fees owing to BioteQ's former CEO; and severance pay resulting from an internal efficiency review conducted early in the year.
  • Net loss for the quarter was $1.3 million ($0.02 per share), compared to a loss of $1.1 million ($0.02 per share) in 2011. Year to date, the net loss was $2.2 million ($0.03 per share) compared to $3.2 million ($0.05 per share) in 2011, a 32% reduction compared to 2011.
  • The Comprehensive loss for the third quarter was $1.5 million compared to a loss of $560,000 in Q3 2011. Year to date, the Comprehensive loss was $2.3 million compared to $2.7 million in 2011.
  • Working capital at the end of Q3 2012 was $8.1 million which included $8.2 million in cash and short-term investments. BioteQ has future capital commitments of approximately $1.7 million for the completion of new water treatment systems at the Dexing mine.
  • BioteQ ended the quarter with total assets of $17.4 million compared to $19.3 million as of December 31, 2011.

Operating results and highlights for Q3 2012:

  • BioteQ had active operations in Canada, the US, and China during Q3 2012 that together treated 3.6 million cubic meters of contaminated water and recovered 850,000 pounds of metal contaminants from the environment, bringing total production for the first nine months of 2012 to over 2 million pounds of metal and 8.3 million cubic meters of water. The Company's operations are performing well and are on track to meet expectations for performance in 2012.
  • During the quarter, BioteQ made additional progress in executing its strategic plan. The sales and marketing team continues to qualify and to actively pursue new project opportunities in mining markets, resulting in improved pipeline quality, and a growing portfolio of validation contracts that are expected to lead to commercial sales over the next 12 to 18 months.
  • BioteQ, together with joint venture partner Jiangxi Copper Company, announced plans in September to build an additional copper recovery plant at the Dexing site. The companies committed $3.2 million, sharing equally in the capital costs of the plant and in the profits generated from operations. The operation is expected to provide incremental recurring revenue of between $2.5 to $3 million, of which half will accrue to BioteQ. Design work on the plant has commenced. Construction is expected to be complete by the end of Q3 2013.
  • In August, BioteQ completed its contract for engineering review and technical services for Kinross Gold's Maricunga site in Chile. Subsequent to quarter end, BioteQ secured a second fee-based contract with Kinross for continuing technical services in Chile.
  • BioteQ completed fee-based engineering design work for an arsenic removal facility for EcoMetales, a wholly-owned subsidiary of Codelco. The project has moved to the next stage of review, which will include environmental and regulatory approval.
  • BioteQ carried out fee-based validation test work for two SART projects during the quarter. Testing was completed on one project, which provided the design criteria to inform the commercial proposal for a full scale plant; the customer is expected to make a decision regarding this proposal within the next six to twelve months. Test work for the second validation contract is in progress and is expected to lead to the provision of a commercial proposal during the fourth quarter.
  • BioteQ and Newalta completed construction of a mobile Sulf-IX™ unit that will provide a pilot scale plant for the partners to demonstrate the technology's sulphate reduction capabilities for new customers and new market verticals. The plant is being commissioned at a Newalta site.
  • BioteQ continues to advance its Sulf-IX™ technologies toward commercial applications in the mining and energy sectors. The Company is providing ongoing technical services to optimize a demonstration scale Sulf-IX™ plant built by an international mining customer at a mine site in the southern US.
  • Subsequent to the end of the quarter, BioteQ successfully concluded its eighth operating season at the Raglan site. For the 2012 operating season, the total volume of water treated was approximately 860,000 m3.

Guidance

BioteQ is on track to meet the financial guidance provided in March, 2012. The company expects revenues in 2012 to increase by at least 30% over the prior year, to approximately $10 million, with cash used in operations (including changes in working capital) to be reduced by at least 40% to less than $1.5 million.

Jonathan Wilkinson, BioteQ's Chief Executive Officer, stated, "We are pleased with BioteQ's continued progress towards its 2012 goals. We have qualified and expanded our sales pipeline, and important project opportunities continue to advance toward contract decisions. Revenues and cash figures have improved significantly compared to 2011. Based on the results for the first nine months of the year, we anticipate that the Company will meet its operational and financial milestones for the year. We believe that by demonstrating consistent progress, we will ultimately provide strong returns to our shareholders."

BioteQ's financial statements and the Company's MD&A have been filed on SEDAR, www.sedar.com, and will be available on the BioteQ website at www.bioteq.ca.

A conference call to discuss the financial results is scheduled for Tuesday November 13th at 11:00 am Eastern. Participants can access the call by dialing 416-340-2217 or 1-866-696-5910, reference number 9447043. For assistance during the call, dial *0. A playback of the call will be available until December 1st by dialing 905-694-9451 or 1-800-408-3053, reference number 3591824. A recording of the call will be available on the BioteQ website within two days of the call.

BioteQ Corporate Profile

BioteQ is an innovative clean technology leader in global industrial water treatment, serving the mining and energy markets. The company's proven technologies have been applied at sites around the world to recover dissolved metals and remove sulphate, producing clean water and eliminating residual waste. BioteQ is headquartered in Vancouver, Canada and trades on the TSX under the symbol BQE. Please visit our website at www.bioteq.ca for additional information.

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, 2011 and the section entitled "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2011). 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.

BioteQ Environmental Technologies Inc.
Consolidated Statement of Financial Position
As at September 30, 2012 and 2011
Unaudited
Sep 30 2012 Dec 31 2011
$ $
Assets
Current assets
Cash 7,619,161 4,774,970
Short-term investments 545,452 4,486,097
Trade receivables 2,388,050 1,664,326
Receivable from joint venture partners 130,936 182,286
Net insurance proceeds receivable (note 6) - 637,099
Taxes recoverable 1,182 153,889
Inventory (note 7) 77,793 48,174
Work in progress 388,949 432,261
Other receivable and prepaid expenses 408,701 222,709
11,560,224 12,601,811
Non-current assets
Property, plant and equipment (note 5, 8 and 19) 5,744,379 6,615,837
Intangible asset 46,453 69,682
Total assets 17,351,056 19,287,330
Liabilities
Current liabilities
Accounts payable and accrued liabilities 2,743,417 2,659,249
Deferred revenue 474,940 340,185
Taxes payable 180,523 63,105
Deferred lease inducement 13,176 18,945
3,412,056 3,081,484
Non-current liabilities
Deferred income tax liability 88,713 88,713
Long-term liabilities (note 9) 94,181 111,146
Total liabilities 3,594,950 3,281,343
Shareholders' Equity
Capital stock and warrants (note 10) 55,269,416 55,269,416
Contributed surplus 8,215,665 8,117,400
Accumulated other comprehensive loss (1,253,423 ) (1,075,369 )
Deficit (48,475,552 ) (46,305,460 )
Total shareholders' equity 13,756,106 16,005,987
Total liabilities and shareholders' equity 17,351,056 19,287,330
Commitments (note 17)
Approved by the Board of Directors
signed "Jonathan Wilkinson" signed "G.W. Poling"
Jonathan Wilkinson, Director G.W. Poling, Director

For a complete set of consolidated financial statements including accompanying notes, go to www.bioteq.ca

BioteQ Environmental Technologies Inc.
Consolidated Statement of Operations and Comprehensive Loss
For the three and nine months ended September 30, 2012 and 2011
Unaudited
3 months ended Sep 30, 9 months ended Sep 30,
2012 2011 2012 2011
$ $ $ $
Revenue 2,772,740 2,948,473 7,334,515 5,678,444
Plant and other operating costs (other than depreciation) 1,571,823 1,350,809 4,632,595 3,293,908
1,200,917 1,597,664 2,701,920 2,384,536
General and administration 1,304,597 1,783,942 3,580,402 3,771,534
Sales, marketing and development 427,851 305,042 1,100,234 645,767
Stock-based compensation 39,157 10,133 98,265 80,536
Depreciation of property, plant and equipment (note 8) 232,575 151,994 693,548 452,484
Amortization of intangible asset 7,743 7,743 23,229 23,229
Loss before the under-noted (811,006 ) (661,190 ) (2,793,758 ) (2,589,014 )
Interest income 10,653 27,058 39,556 77,836
Other income (loss) - (3,750 ) 16,500 (3,750 )
Foreign exchange gain (loss) (41,972 ) (145,393 ) 14,945 (145,990 )
Reversal of impairment of Lluvia de Oro operations (note 11) - - 1,226,873 -
Impairment of construction materials (note 5) (347,749 ) - (347,749 ) -
Loss before income taxes (1,190,074 ) (783,275 ) (1,843,633 ) (2,660,918 )
Income taxes (note 13) 66,602 337,231 326,459 512,242
Net loss for the period (1,256,676 ) (1,120,506 ) (2,170,092 ) (3,173,160 )
Other comprehensive income (loss)
Cumulative translation adjustment (196,826 ) 560,864 (178,054 ) 440,562
Comprehensive loss for the period (1,453,502 ) (559,642 ) (2,348,146 ) (2,732,598 )
Net loss per share
Basic and diluted (0.02 ) (0.02 ) (0.03 ) (0.05 )
Weighted average number of shares outstanding
Basic and diluted 69,966,672 69,966,672 69,966,672 69,943,204

For a complete set of consolidated financial statements including accompanying notes, go to www.bioteq.ca

BioteQ Environmental Technologies Inc.
Consolidated Statement of Changes in Equity
For the three and nine months ended September 30, 2012 and 2011
Unaudited
Accumulated
other
comprehensive
income
(loss)
Number
of
shares
Contributed
surplus
Capital
stock
Warrants Deficit Total
$ $ $ $ $ $
Balance - January 1, 2011 69,865,006 53,668,812 1,513,417 8,045,826 (1,482,945) (41,215,005) 20,530,105
Stock-based compensation - - - 80,536 - - 80,536
Exercise of options 101,666 87,187 - (30,304) - - 56,883
Net loss for the period - - - - - (3,173,160) (3,173,160)
Other comprehensive loss for the period - - - - 440,562 - 440,562
Balance - September 30, 2011 69,966,672 53,755,999 1,513,417 8,096,058 (1,042,383) (44,388,165) 17,934,926
Balance - January 1, 2012 69,966,672 53,755,999 1,513,417 8,117,400 (1,075,369) (46,305,460) 16,005,987
Stock-based compensation - - - 98,265 - - 98,265
Net loss for the period - - - - - (2,170,092) (2,170,092)
Other comprehensive income for the period - - - - (178,054) - (178,054)
Balance - September 30, 2012 69,966,672 53,755,999 1,513,417 8,215,665 (1,253,423) (48,475,552) 13,756,106

For a complete set of consolidated financial statements including accompanying notes, go to www.bioteq.ca

BioteQ Environmental Technologies Inc.
Consolidated Statement of Cash Flow
For the three and nine months ended September 30, 2012 and 2011
Unaudited
3 months ended Sep 30, 9 months ended Sep 30,
2012 2011 2012 2011
$ $ $ $
(note 20 ) (note 20 )
Cash flow used in
Operating activities
Net loss for the period (1,256,676 ) (1,120,506 ) (2,170,092 ) (3,173,160 )
Items not affecting cash:
Depreciation of property, plant and equipment 232,575 151,994 693,548 452,484
Amortization of intangible asset 7,743 7,743 23,229 23,229
Amortization of deferred lease inducement (4,955 ) (7,104 ) (19,164 ) (21,313 )
Impairment of construction materials (note 5) 347,749 - 347,749 -
Loss on disposal of equipment - 3,750 - 3,750
Unrealized foreign exchange loss 39,957 413,546 23,504 297,392
Interest income (3,867 ) (3,090 ) (16,010 ) (39,721 )
Stock-based compensation charge (note 10) 39,157 10,133 98,265 80,536
(598,317 ) (543,534 ) (1,018,971 ) (2,376,803 )
Change in non-cash working capital items (note 14) 398,055 131,892 244,964 970,776
Net cash used in operating activities (200,262 ) (411,642 ) (774,007 ) (1,406,027 )
Investing activities
Purchase of property, plant and equipment (178,438 ) (152,224 ) (493,135 ) (886,314 )
Proceeds on disposal of equipment - 12,604 - 12,604
Receipt of government grant - - 277,550 -
Purchase of short-term investments (89,571 ) (4,332,301 ) (2,520,556 ) (10,405,181 )
Proceeds from sale of short-term investments 2,427,211 3,244,000 6,477,211 13,624,000
Net cash provided by (used in) investing activities 2,159,202 (1,227,921 ) 3,741,070 2,345,109
Financing activities
Proceeds from exercise of options - - - 56,883
Increase in deferred lease inducement 13,395 - 13,395 -
Increase (decrease) in long-term liabilities 14,348 (61,386 ) (16,965 ) 783
Net cash provided by (used in) financing activities 27,743 (61,386 ) (3,570 ) 57,666
1,986,683 (1,700,949 ) 2,963,493 996,748
Effect of exchange rate changes on cash (128,072 ) (103,457 ) (119,302 ) (120,937 )
Increase (decrease) in cash 1,858,611 (1,804,406 ) 2,844,191 875,811
Cash
Beginning of period 5,760,550 7,333,682 4,774,970 4,653,465
End of period 7,619,161 5,529,276 7,619,161 5,529,276

For a complete set of consolidated financial statements including accompanying notes, go to www.bioteq.ca

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

Contact Information

  • BioteQ Environmental Technologies Inc.
    Tanja McQueen
    VP Corporate Development
    604-685-1243 or 1-800-537-3073
    604-685-7778 (FAX)
    investor@bioteq.ca
    www.bioteq.ca