COMMENTARY AND OUTLOOK

Building on our strong growth and record-setting performance in 2024, we achieved new records across nearly every key metric in 2025. Our 2025 financial results highlight our enviable position as a well capitalized clean technology company delivering strong revenue growth and profitability. We ended the year with $21.4 million in working capital (up 70% year-over-year), delivered Proportional Revenue of $39.9 million (up 61%), and grew net income to $8.1 million (up 68%), to achieve a net margin of 23%. We are very proud of what we accomplished.

Key Developments in 2025

One very important development for us in 2025 was the Eagle Mine project in the Yukon. Strategically, Eagle Mine allowed us to showcase BQE Water’s capabilities to industry and regulators in the context of a high-stakes environmental disaster in Canada. We proved our ability to solve tough technical problems and deliver results quickly under difficult conditions and tight schedules. It also showcased our culture with our staff committing themselves to the project, collaborating with others, and developing partnerships with indigenous communities and businesses to ensure project success.

It must be said that we would not have been able to execute at Eagle Mine without our experienced operating crew from Minto Mine. Although our team did not operate at Minto in 2025, we successfully redeployed our team and talent to a project that offered much higher potential for growth and visibility in the industry in the following ways:

• The Eagle project allowed our Yukon operating team to triple in size and our relationship with the First Nation of Na-Cho Nyäk Dun to strengthen. We believe this puts us in a very strong position for water treatment projects across the Yukon in the future.
• By highlighting the importance and benefits of having water treatment and toxicological expertise and testing capability in-house and under one roof, the Eagle project was the main driver behind our investment and expansion into aquatic toxicology. We believe our expansion into aquatic toxicology has created a truly disruptive differentiator for us. We are the only company offering compliance with both water quality and toxicity criteria in the mining market.
• The Eagle project created truly unique opportunities for accelerated talent development. Young engineers who gained experience in the field last year are now integrated into our engineering design projects.

Since the emergency response treatment at Eagle Mine was truly a one-off project, representing nearly half of our technical services revenues in 2025, it may prove difficult to replace with new smaller projects in the near term. Nevertheless, the project was transformational and led to the development of processes, structures, intellectual property, and valuable resources critical for our continued growth in the years to come.

Another key development for us in 2025 was the completion of the Selen-IX™ project at the Wharf Mine. This project enabled the mine to discharge compliant water into the environment within 14 months of the start of detailed engineering, and showed the entire industry that BQE Water and its selenium removal technology offers fast and robust methods of selenium mitigation.

The increase in 2025 revenue over 2024 came from a combination of technical services and growth from existing operations. We achieved: (1) modest but strategically important expansions of our scope of operations services at all of our US sites in the second half of 2025 by reaffirming our role in the success of these long-term operations; (2) a higher than usual volume of water at Raglan Mine leading to a longer than usual treatment season; (3) the completion of the ERDC Valley Tailings plant; and (4) successful demonstration of Selen-IX™ at pilot scale at a mine in the US.

2025 also included an important internal reorganization at the Company. Triggered by growing pains and the realization that our internal structure, last modified during the pandemic, was no longer optimal for the business, we completed a company-wide talent assessment. This assessment established an organizational structure designed to increase productivity, accelerate talent development, and allow the Company to support its goal to double in size in three years. Highlights of the reorganization include:

• Business development capacity doubled.
• New leadership roles for IP capture and development, talent development and performance management, and corporate environmental health & safety.
• Integration of the project delivery team, combining engineering, automation, commissioning, treatability testing, aquatic toxicology testing, operations support, and project management office sub-groups.
• Team members in Latin America are now fully integrated into the rest of the Company in all functions including business development, engineering design, laboratory and pilot testing.

Outlook for 2026

We presently have good visibility and certainty over several larger technical services contracts and expect strong results in the first half of 2026 in this area; specifically:

• Operations services for the emergency treatment system at Eagle Mine will continue until June 2026. Since we do not have an agreement to operate the system for more than 6 months, we will continue to report this project under technical services.
• Engineering design for the long-term treatment system at the Eagle Mine will complete at the end of Q1 2026.
• Technical services-related engineering design/procurement/site installation and commissioning of an ion exchange system at a rhenium recycling facility in Canada. Once completed, the operation of this system is expected to involve BQE personnel in a support capacity.
• Detailed engineering, automation, and field construction support to assist with the implementation of SART at the New Britannia mill in Manitoba. Once completed, the operation of this system is expected to involve BQE personnel in a technical supervisory capacity.
• Technical services including detailed engineering, procurement assistance, and site installation assistance for cyanide destruction and for SART integration into a tailings re-processing demonstration facility in Mexico.
• Feasibility study for SART integration into an existing gold-silver mine in Mexico.
• Advisory services related to water management and treatment for five different projects across Canada.

On the operations services front, we anticipate strong growth in 2026. Projects where we have signed new multiyear agreements include:

• 20-year contract with the BC government to operate the mine water treatment plant at the Britannia Mine.
• Three-year contract with Canadian Royalties to operate the mine water treatment plant at Nunavik Nickel Project through our joint venture between BQE Water and Nuvumiut Development.
• Two-year contract to operate a sulphate removal system at a lead smelter and refinery in Quebec.

In addition to these already signed contracts, we are in active discussions about further potential operations services agreements starting in 2026 at four additional sites across Canada. We also anticipate that our new aquatic toxicology laboratory will become operational and be able to perform a range of specialized investigative tests in Q2 2026. Despite indications that 2026 will be another strong year, we must caution that maintaining the same rate of growth experienced over the last two years may prove difficult.

Positioning and Outlook Beyond 2026

There has been no direct impact on BQE Water from the US trade tariffs to date. That said, the global geopolitical changes that have occurred have already influenced, and will continue to influence, our business in the medium- and long-term.

Focus on the development of critical minerals projects in Canada and gaining security of supply of certain minerals in the Western world in general is providing tailwinds broadly for the mining sector. Unlike previous commodity cycles, the need for establishing a secure supply of minerals may act as a shield to commodity price volatility.

While shortened permitting timelines and financial support by western governments accelerate industrial development, we have not seen any relaxation in the environmental standards and/or lessening of the importance of social acceptability criteria applied to new projects. In fact, over the last 12 months, we have seen a notable increase in the volume of proposals and/or technical services already delivered in connection with early-stage projects. These typically enter permitting within the next two years.

The renewed interest in gold has also driven an increase in demand for our cyanide recycling and cyanide destruction expertise. Presently, our pipeline includes a dozen SART and cyanide destruction projects, some of them already in the execution phase and some in the preliminary assessment stage with clients ranging from top tier producers to junior mining companies.

Our pipeline of opportunities remains well balanced between projects driven by environmental compliance, water reuse maximization, and pure economics of recovery of value. The pipeline is also well diversified in terms of the number of different clients, senior versus junior companies, and geography with North America and Latin America dominating over the rest of the world. This will further reduce the importance of our China business for our overall performance in the future.

With proven technologies, unique expertise, presence in key geographies, and a broad basket of water services spanning all stages of natural resource projects from permitting to closure, we believe BQE Water is uniquely positioned not only to do well in the current stage of the economic cycle but also benefit and take advantage of opportunities that have opened through the changes in the geopolitical landscape. Our strong balance sheet positions us well to navigate any economic uncertainties ahead while pursuing strategic M&A opportunities.

JCC-BQE Joint Venture Operations

Our 50/50 joint venture with partner Jiangxi Copper Company (“JCC”) operates three water treatment plants, two of which at Dexing Mine and one at Yinshan Mine in Jiangxi province of China. The volume of water treated, and metals recovered by the plants fluctuate seasonally depending on precipitation levels in the region. The operating results for the 12 months ended December 31, 2025 and 2024, are as follows:

During 2025, all three plants met mechanical availability and process performance set by the Company. The volume of water treated decreased by 37% year-over-year, the mass of copper recovered decreased by 54%, and the mass of zinc recovered decreased by 12%. Such changes in water volume and metal grade in feed water from period to period are largely the result of environmental conditions beyond the control of the joint venture.

MWT-BQE Joint Venture Operations

Our 20% share of MWT-BQE is with our 80% partner Beijing MWT Water Treatment Project Limited Company (“MWT”) and together we operate a water treatment plant at a smelter in Shandong province of China. Starting January 2025, MWT-BQE amended the contract with the customer from generating revenues from the sale of recovered metals to water treatment fees for the treatment of smelter wastewater. The operating results for the 12 months ended December 31, 2025 and 2024, are as follows:

 BQE Water Operations

The number of operating days contributing to water treatment or support fees for the 12 months ended December 31, 2025 and 2024, are as follows:

The volume of water treated by geographic location for the 12 months ended December 31, 2025 and 2024, are as follows:

The Company, with our Inuit partner Nuvumiut Development, operates four water treatment plants at Raglan Mine for Glencore Canada Corporation (“Glencore”). In 2025, we mobilized our operations team for the 22nd operating season at the mine. The total volume of water treated across all four plants at Raglan Mine in 2025 increased by 26% compared to 2024.

In 2021, we began operations of the Zhongkuang SART (sulphidication-acidification-recycling-thickening) plant and the Zhaojin SART plant at metallurgical facilities in China. Both plants have been under our technical supervision since the start of full production. Both SART plants operated fully throughout 2025 without disruption. In September 2025, we commissioned the third SART plant at Shandong Gold, and starting October 2025, our team has been providing ongoing technical supervision.

In 2022, we began operations of a treatment plant utilizing our Selen-IX™ process in Eastern USA to remove selenium from ash pond water for WesTech Engineering (“WesTech”). In 2025, our operations team continued providing water treatment services with the Selen-IX™ circuit to manage the presence of selenium in the feed.

In 2022, we completed the commissioning of a treatment plant utilizing a combination of nanofiltration and our proprietary selenium electro-reduction process for the simultaneous removal of selenium and sulphate from mine water for a base metal project in the American Southwest. In August 2023, our team completed the performance test milestone for a second newly constructed selenium removal water treatment plant which entered the operation phase. Starting April 2025, we have reduced our scope from full operations of the treatment plant to operations support by providing technical onsite supervision at the treatment plants.

In October 2025, we completed the commissioning of a Selen-IX™ treatment plant located at the Coeur Wharf Mine in South Dakota. Our team passed the performance test and began providing routine operation support since November 2025.

TECHNICAL SERVICES HIGHLIGHTS

BQE Water’s technical expertise and IP are applicable globally across broad areas of water management. Highlights of some of our technical services and technical innovation projects during Q4 2025 are summarized below. 

Trusted Advisory Services (Water Management and Water Studies)

• Continued to provide water treatment operations services for the temporary emergency treatment system at the Eagle Gold Mine in the Yukon.
• Initiated preliminary engineering design of a long-term water treatment system for the Eagle Mine to transition from the temporary emergency response to a new system fit for purpose and allowing compliance over a wide range of project scenarios, including a mine re-start.
• Completed the commissioning and initiated continuous operations of new sulphate removal treatment stage to achieve compliance with a sulphate limit of less than 1,500 mg/L at an integrated lead smelter-recycling facility in Eastern Canada.
• Completed the design and automation of an ion exchange system for lithium brine purification and initiated assistance with installation for a customer in Canada.
• Continued to provide field operations and engineering design services for a water treatment system integrated into a rare earth extraction project in Brazil.
• Continued to perform lab testing of nickel and cobalt recovery from acid mine water at an existing operation at one of the major metal producers in Africa.
• Continued to perform laboratory scale testing of rhenium recovery from wastewater produced by gas scrubber blowdown in Chile.
• Continued to perform a preliminary assessment of water treatment to enable water reuse for mineral flotation in Mexico.
• Initiated a preliminary technical assessment of applying the company’s BioSulphide process as part of mine closure for an existing copper mine approaching the end-of-life in Mexico.
• Completed preliminary assessment and lab treatability testing for dewatering of an open pit at an existing gold-silver mine in Mexico.

Cyanide Management (Destruction and Recycle)

• Continued to provide plant engineering design services requiring the end-of-pipe cyanide level below 8 ppb to a project in the US.
• Performed METSIM modelling, laboratory testing, and basic engineering for SART integration into the New Britannia mill in Manitoba, Canada.
• Continued with the engineering design for construction of a SART plant at a new mine under development in Mexico.

Aquatic Toxicology Services

• Initiated testing involving investigation of water quality on early life stages of trout for a client in BC.
• Initiated development of nitrate guideline for a client in Alberta.

SELECTED FINANCIAL INFORMATION

For a complete set of Financial Statements and MD&A, please go to www.bqewater.com.

NON-GAAP MEASURES

The Company uses non-GAAP financial measures to supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (IFRS), or GAAP, to enhance overall understanding of the Company’s current financial performance with investors and observers. Proportional Revenues and Adjusted EBITDA are reconciled as follows:

Proportional Revenues

This non-GAAP financial measure of Proportional Revenue adds BQE Water’s share of revenues from its China joint ventures to the Company’s revenues reported under GAAP. Proportional Revenues for the year ended December 31, 2025 and 2024, are as follows:

Adjusted EBITDA

Adjusted EBITDA (“earnings before interest, taxes, depreciation and amortization”) is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Consequently, the presentation of Adjusted EBITDA enables shareholders to better understand the underlying financial performance of our business through the eyes of management. Adjusted EBITDA includes adjustments of the Company’s Proportional share of joint venture results. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure of net income: