"Our Q1 2026 results were unable to match our exceptionally strong Q1 2025, which was unpinned by BQE's response to an emergency environmental disaster in the Yukon. The first quarter for the Company is historically slow due to seasonal revenue patterns and limited metal recovery activity in China. Our Q1 2026 bottom line was also affected by one-time budgeted expenses associated with taking over the Britannia Mine treatment facility operation under a 20-year contract, and higher expenses to support the Company's growth plan, mainly from increasing of head office staff and completing our new aquatic toxicology laboratory," said David Kratochvil, President & CEO of BQE Water. "Our outlook for 2026 as a whole is positive, as we anticipate continuing our long-term operations at the nine sites across Canada, US, and China, new short-term operations in Western Canada, and steady increase in our technical advisory and engineering design services through 2026."
FINANCIAL HIGHLIGHTS
Revenues under GAAP of $4.8 million and Proportional Revenues of $5.3 million in Q1 2026, compared to $7.4 million and $7.9 million in Q1 2025.
Gross margin of $1.2 million in Q1 2026 compared to $3.2 million in Q1 2025, a $2.0 million decrease.
Net loss of $1.3 million in Q1 2026 compared to net income of $1.7 million in Q1 2025.
Loss per share of $0.98 in Q1 2026 compared to earnings per share of $1.34 in Q1 2025.
Adjusted EBITDA loss of $1.1 million in Q1 2026 compared to income of $1.9 million in Q1 2025.
Working capital of $20.0 million at March 31, 2026, compared to $21.4 million at December 31, 2025, a 7% decrease.
Selected financial results are as follows:
(in '000s)
3 months ended Mar. 31
2026
2025
Revenue from operational services
1,981
1,962
Revenue from technical services, short-term operations
920
3,442
Revenue from technical services, advisory and design
1,899
2,042
Total revenues under GAAP
4,800
7,446
Share of revenue from joint ventures in China
504
502
Proportional Revenues
5,304
7,948
COMMENTARY AND OUTLOOK
Our Q1 2026 financial results were unable to match our exceptionally strong Q1 2025 as explained below. Q1 has historically been our seasonally weakest quarter as several of the Company's long-term operations generate little or no revenue during the northern hemisphere winter months and our metal recovery operations in China are modest at best due to the dry season. Over the last seven years, the Company recorded positive net income only twice, in Q1 2022 and Q1 2025.
Looking specifically at Q1 2026 when compared to Q1 2025, there were three primary factors at play:
1)
Our record financial results in Q1 2025 were achieved primarily through the Eagle Mine emergency response project in the Yukon, where we provided engineering, commissioning, and short-term operations services throughout the period by mobilizing a large portion of the Company's resources. Our successful efforts allowed Eagle Mine to cease treating water in Q4 2025 with no need to re-start the water treatment system until March 2026. As a result, there was only one month of short-term operations services at Eagle Mine in Q1 2026. The decrease in this project's revenue between Q1 2026 and Q1 2025 explains most of the total decrease in revenue between the two periods.
2)
Two factors contributed to a lower gross margin in Q1 2026 when compared to the same period last year: i) lower productivity of new team members, and ii) a one-time increase in operating costs associated with the transition of the Britannia Mine water treatment plant from the previous operator. Although the Britannia operation started to generate new long-term recurring revenue in mid-January, transition-related costs resulted in a net loss of $100,000 for the project in Q1 2026. These one-time expenses primarily included temporary and additional operations personnel, travel costs, and rental equipment charges. The plant is now fully transitioned and staffed with permanent personnel, and we anticipate gross margins to improve going forward.
3)
Finally, Q1 2026 also marked the first full quarter following the Company's re-organization, which was implemented to support our strategic growth plan developed last year to double in size within three years. As part of this plan, we increased labour resources, primarily at our headquarters. Sales and development costs also rose in Q1 2026 due to one-time expenses integral to our growth strategy, including training and development of new staff and completing the set-up of our new aquatic toxicology laboratory facility.
Our outlook for 2026 as a whole is positive, particularly in the following areas:
Operational Services. Field operations are ramping up with two new contracts, ERDC in the Yukon and Canadian Royalties Inc. in Quebec, and operations at Britannia Mine are expected to stabilize and contribute positively to our financial results over the remainder of the year.
Short-term Operations. We expect our short-term operations revenue to increase further as we are in advanced stages of contracting for operations with three other sites in Western Canada in 2026.
Advisory and Design. Based on active engineering design projects, the value of our technical services is expected to increase steadily as we move through 2026.
In summary, while ongoing staff training and development will weigh on our margins over the next few quarters, these investments are considered essential to the Company's growth goals. Notably, we continue to observe a marked increase in business activity in the mining industry, with permitting, pre-feasibility, and feasibility studies for major projects being initiated across all key jurisdictions. We believe this activity is indicative of the early stages of an upswing in capital spending in the industry, which we expect will provide a strong tailwind to our business over the next few years. At the same time, we are always mindful of current geopolitical and market uncertainties and are prepared to pivot as required to prioritize profitability while continuing to pursue disciplined growth.
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
Jiangxi province, China
Sales of recovered metals
MWT-BQE Joint Venture
Shandong province, China
Water treatment fees
Raglan Mine for Glencore
Northern Québec, Canada
Water treatment fees
Britannia Mine water treatment plant
British Columbia, Canada
Water treatment fees
Water treatment plant for lead smelter
Quebec, Canada
Operations support fees
Zhongkuang Metallurgical Facilities for MWT
Shandong province, China
Operations support fees
Zhaojin Metallurgical Facilities for MWT
Shandong province, China
Operations support fees
Shandong Gold SART plant
Shandong province, China
Operations support fees
Power utility ash pond for WesTech
Eastern USA
Water treatment fees
Wharf Mine water treatment plant
