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BQE: New Water Treatment Plant Contract

What you need to know:
• BQE announced that it has been contracted for a new water treatment plant for the closure of the legacy Valley Tailings Facility in the Yukon. This continues the rapid growth that BQE has posted in its recurring operations segment which grew 79% YoY and 43% QoQ in Q2.
• The plant is expected to be completed in Q2/25 and operate for six years.
• The new contract leverages BQE’s experience in the Yukon, as it currently works with the Yukon Government and the Keno Hill mine.

Yesterday after market close, BQE Water (BQE:TSXV, BTQNF:OTC) announced that it has been contracted to design, supply, install, and commission a new water treatment plant for the closure of the legacy Valley Tailings Facility near Mayo, Yukon. This comes on the back of its Q2 financials which were released on Tuesday, please refer to our note here. We view both announcements as solid positives for the stock given that they support the growth of the recurring operations services segment. We are maintaining our BUY rating and $77.00/share target price on BQE Water.

New Water Treatment Contract
BQE announced that Elsa Reclamation & Development Company Ltd. (ERDC) has contracted it to design, supply, install, and commission a new Water Treatment Plant (WTP) for the closure of the legacy Valley Tailings Facility near Mayo, Yukon, on the traditional territory of the First Nation Na-Cho Nyak Dun. The plant will treat water generated during tailings excavation and consolidation, and discharge treated water into the environment. The treatment process primarily targets heavy metals. BQE will be responsible for engineering design, equipment procurement, site installation, commissioning, and start-up of the WTP; the plant is expected to be completed in Q2/25. The plant is anticipated to be used for six years.

This relationship leverages BQE’s experience in the Yukon, having signed a contract with the Yukon’s Department of Energy, Mines and Resources for the closed Minto Mine in August 2023 as well as serving Hecla’s Keno Hill mine. Management also highlighted that the contract gives BQE the opportunity to showcase a rapid and cost-effective deployment of a fit-for-purpose treatment that eliminates the need for a long-term liability at a remote site. We view the announcement as a positive development as management continues to execute on the operations services side of the business. Our model remains unchanged given that projects like this are baked into our assumed growth of the operations services segment.