Mr. Bernard Tourillon reports

HPQ FILES PATENT APPLICATION FOR NEW CONTINUOUS SIOX MANUFACTURING PROCESS BASED ON ITS PUREVAP QRR TECHNOLOGY

HPQ Silicon Inc. has updated shareholders on a recent patent filing related to its silicon-based anode material initiative.

HPQ filed a new provisional patent application in France related to a continuous silicon oxide (SiOx) manufacturing process based on a modified Purevap QRR (quartz reduction reactor) design. As per French law, HPQ acquired all rights held by the inventors for $90,000. The patent protects a unique QRR technology configuration that allows the production of SiOx on the same equipment.

Patent expands QRR technology, with minimal development risk

The new patented process has a significant advantage over the standard process in that it enables continuous production of SiOx, whereas the latter is produced in batches. The proposed process can be applied to the QRR without major changes in reactor design, reducing the technological development risks. Additionally, it is worth noting that the price of SiOx is approximately two to three times more expensive than silicon of the same purity.

"This new patent application enhances our value proposition for silicon-based anode materials," said Bernard Tourillon, president and chief executive officer of HPQ Silicon. "Our unique Purevap QRR technology, as you know, can convert quartz into a low-carbon 3N+ Si in a single step. A modified Purevap QRR will leverage this 3N+ Si to produce SiOx, which, as you also know, is highly coveted by the battery industry."

Silicon oxide materials for lithium batteries

Silicon suboxides are a promising anode material with high lithium storage capacity. Adding small amounts of silicon oxide to graphite composite electrodes has become a significant trend in the lithium battery industry. This has driven demand for silicon anode materials, which are estimated to reach a potential demand of 300,000 tonnes by 2030. The selling price for silicon-based anode materials ranges from $30 (U.S.) per kilogram to $50 (U.S.) per kilogram.

"The growing importance of SiOx material, which necessitates 3N+ purity silicon feedstock for its production, in the burgeoning multibillion-dollar battery material market, is a fact that cannot be emphasized enough," added Mr. Tourillon.

Other news -- first closing of private placement

HPQ completed a first closing of its non-brokered private placement financing announced on Oct. 16, 2023, for 1,225,000 units at a price of 27.5 cents per unit for a gross proceed of $337,012.50.

Each unit comprises one common share and one common share purchase warrant of the company. Each warrant will entitle the holder thereof to purchase one common share of the capital stock of the company at an exercise price of 30 cents for a period of 24 months from the date of closing of the placement. Each share issued pursuant to the placement will have a mandatory four-month-and-one-day holding period from the date of closing of the placement.

Mr. Tourillon (chairman, president, chief executive officer and director of HPQ) subscribed for 100,000 units in the placement. Following the completion of the private placement, Mr. Tourillon will beneficially own or exercise control or direction over, directly or indirectly, 9,454,850 shares, representing 2.58 per cent of the issued and outstanding common shares of the company.

The participation of Mr. Tourillon in the private placement constitutes a related party transaction within the meaning of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, and TSX Venture Exchange Policy 5.9, Protection of Minority Security Holders in Special Transactions. In connection with this related party transaction, the company is relying on the formal valuation and minority shareholder approval exemptions of subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the portion of the private placement subscribed by Mr. Tourillon does not exceed 25 per cent of the company's market capitalization. The board of directors of the company has approved the private placement, including the participation of Mr. Tourillon therein.

Patrick Levasseur, a director of HPQ, subscribed for 100,000 units in the placement. Following the completion of the private placement, Mr. Levasseur will beneficially own or exercise control or direction over, directly or indirectly, 4,540,875 shares, representing 1.24 per cent of the issued and outstanding common shares of the company.

The participation of Mr. Levasseur in the private placement constitutes a related party transaction within the meaning of MI 61-101, Protection of Minority Security Holders in Special Transactions, and TSX-V Policy 5.9, Protection of Minority Security Holders in Special Transactions. In connection with this related party transaction, the company is relying on the formal valuation and minority shareholder approval exemptions of subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the portion of the private placement subscribed by Mr. Levasseur does not exceed 25 per cent of the company's market capitalization. The board of directors of the company has approved the private placement, including the participation of Mr. Levasseur therein.

Noelle Drapeau, corporate secretary and a director of HPQ, personally and though her company, 6710018 Canada Inc., subscribed for 100,000 units in the placement. Following the completion of the private placement, Ms. Drapeau will beneficially own or exercise control or direction over, directly or indirectly, 1,133,000 shares, representing 0.31 per cent of the issued and outstanding common shares of the company.

The participation of Ms. Drapeau in the private placement constitutes a related party transaction within the meaning of MI 61-101, Protection of Minority Security Holders in Special Transactions, and TSX-V Policy 5.9, Protection of Minority Security Holders in Special Transactions. In connection with this related party transaction, the company is relying on the formal valuation and minority shareholder approval exemptions of subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the portion of the private placement subscribed by Ms. Drapeau does not exceed 25 per cent of the company's market capitalization. The board of directors of the company has approved the private placement, including the participation of Ms. Drapeau therein.

In connection with the offering, Red Cloud Securities Inc. of Toronto, Ont., received a cash commission equal to $3,300 and the company issued to them 12,000 broker warrants. Each broker warrant will entitle the broker to acquire one common share of the company at a price of 30 cents per share for a period of 24 months following the closing date.

Other news

After a careful review of the nanosilicon material market environment, the technology advancement and associated future development costs needed to get the Purevap nanosilicon reactor (NSiR) to a potential commercial stage, HPQ has advised its technology provider that it no longer intends to pursue the development of this technology. Instead, the company would focus its resources on other market-ready and more promising initiatives, such as its fumed silica reactor project and silicon-based anode material initiative.

About HPQ Silicon Inc.

HPQ Silicon is a Quebec-based TSX-V Tier 1 industrial issuer. HPQ is developing, with the support of world-class technology partners PyroGenesis Canada Inc. and Novacium SAS, new green processes crucial to make the critical materials needed to reach net-zero emissions. HPQ's activities are centred around the following four pillars: (1) becoming a green low-cost (capital expenditures and operating expenditures) manufacturer of fumed silica using the fumed silica reactor, a proprietary technology owned by HPQ being developed for HPQ by PyroGenesis; (2) becoming a zero-carbon-dioxide low-cost (capex and opex) producer of high-purity silicon (2N+ to 4N) using the company's Purevap quartz reduction reactor (QRR), a proprietary technology owned by HPQ being developed for HPQ by PyroGenesis; (3) becoming a producer of silicon-based anode materials for battery applications with the assistance of Novacium; (4) HPQ Silicon affiliate Novacium is developing a low-carbon, chemical-base on-demand and high-pressure autonomous hydrogen production system.

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