Mr. Bernard Tourillon reports

HPQ SILICON PARTNERS WITH OPEN MARKETS TO SCALE ITS BATTERY BUSINESS INTO A STANDALONE COMPANY AND PURSUE A LISTING ON A MAJOR U.S. EXCHANGE

HPQ Silicon Inc. has entered into a strategic consulting agreement with Open Markets LLC-FZ to assist with the proposed establishment and development of a dedicated North American battery business under the working name Project Endura.

The proposed U.S.-based corporation, referred as NewCo, has not yet been incorporated. The agreement establishes the consulting mandate; the contemplated transfer of battery-related rights and commercial agreements and the proposed NewCo financing remain subject to definitive documentation, financing, required consents and applicable approvals.

The initiative's main objective is to scale HPQ's battery business into a stand-alone company (NewCo), with the following objectives, subject to definitive agreements, financing and applicable approvals:

• Securing third party financing for the North American battery business at the NewCo level, with the objective of reducing reliance on additional HPQ common share issuances;
• Structuring a transaction that would provide HPQ with cash consideration, a majority retained equity interest in the new business and a royalty on defined net revenue while maintaining HPQ shareholders' indirect exposure to the future growth of the North American battery business;
• Securing a full management and operations team, including a chief executive officer, chief financial officer, chief research officer and board of directors;
• Evaluating strategic alternatives for NewCo, including a potential future U.S. public listing, subject to financing, market conditions, and applicable regulatory and exchange requirements;
• Focusing operational development and commercialization of HPQ's battery activities in North America through a stand-alone management team and board of directors;
• Collaborating with the Open Markets team, whose partners collectively bring several decades of prior professional experience in investment banking and operational leadership at major financial institutions.

Project Endura is intended to provide a dedicated corporate and operating platform through which HPQ's North American battery activities can be developed, financed and commercialized.

The initiative is designed to bring together specified rights relating to HPQ's North American battery activities with dedicated management, operating capabilities and the objective of securing third party capital. HPQ and Open Markets intend to establish NewCo to finance, develop and operate the business and pursue its commercial objectives, with Open Markets expected to participate as a founding shareholder of NewCo. The scope of the rights and commercial agreements to be contributed and the final ownership structure remain subject to definitive documentation and applicable consents and approvals.

The parties are also evaluating capital markets alternatives for NewCo, including a potential future public listing in the United States, subject to market conditions, financing, applicable regulatory requirements and the execution of definitive agreements.

Capital strategy

To date, the development of HPQ's battery activities has been financed principally at the parent company level. By establishing a dedicated, separately financed vehicle for its North American battery business, HPQ aims to finance commercialization through third party capital raised directly by NewCo, reducing reliance on additional HPQ common share issuances and the associated shareholder dilution.

Under the contemplated structure, HPQ would contribute certain North American battery-related rights and commercial agreements to NewCo in exchange for $4.2-million (U.S.) in cash consideration and an expected 55-per-cent equity interest in NewCo following the initial financing.

The initial NewCo financing, currently targeted at approximately $20-million (U.S.), would finance the cash consideration payable to HPQ, an anticipated investment of at least $8-million (U.S.) in production equipment and manufacturing capabilities, the recruitment of experienced industry executives and technical talent, as well as working capital and transaction-related expenses. These proposed allocations are preliminary and would depend on the financing proceeds available and NewCo's final operating plan. The amount, structure and timing of the financing remain subject to market conditions and HPQ approval. No binding financing commitments have been secured as of the date of this release.

The transaction also contemplates a royalty to HPQ on defined NewCo net revenue.

HPQ would retain its equity interest in Novacium, its North American (Canada, Mexico and the United States) licences relating to Novacium's clean-hydrogen activities and its fumed silica project, all of which would remain outside the contemplated transaction. HPQ shareholders would therefore maintain their exposure to these activities while participating, through HPQ's expected majority ownership of NewCo, in the commercial development of the North American battery business.

Governance and anticipated benefits

Management believes that establishing a separately financed and independently managed battery business could support the commercial development of HPQ's North American battery activities and provide a dedicated platform for financing and operational execution. Under the contemplated governance structure, HPQ's CEO would serve as chairman of NewCo's board, while responsibility for day-to-day operations, business execution and commercial development would rest with NewCo's dedicated management team.

The contemplated transaction remains subject to definitive agreements, financing, required consents and approvals. All financing amounts and proposed transaction terms remain indicative and subject to change. There can be no assurance that NewCo will secure this financing or that HPQ will not require additional financing for its retained activities.

Commercial execution is the priority

Project Endura will initially focus on four areas:

• Management: recruiting a leadership team with the experience required to move the business from technology development to commercial operations;
• Capital: securing financing to build operating capacity and support growth without relying solely on HPQ parent company financing;
• Customers and partnerships: developing commercial relationships with potential customers, strategic partners and industry participants across the North American battery market;
• Operations: establishing the production, supply chain and operating infrastructure required to support market entry and future scale.

"We have made significant progress in developing our battery technologies. Our priority now is to turn that progress into a commercially operating business. Project Endura is designed to provide the dedicated leadership, manufacturing capabilities and capital needed to make that transition, with HPQ expected to hold a majority equity interest following the contemplated initial financing, subject to final terms," said Bernard Tourillon, chairman, president and CEO of HPQ Silicon. "This approach is intended to finance commercial development at the NewCo level, reducing the need for additional HPQ share issuances. Our immediate focus is execution: establishing production capabilities, developing customer relationships and building a sustainable business."

Role of Open Markets

Under the agreement, Open Markets will assist with transaction structuring, development of the management and operating model, executive recruitment, operational set-up, commercial development, and financing co-ordination with appropriately licensed financial institutions and professional advisers where required.

Open Markets' team brings together experience in investment banking, debt syndication, private equity, technology investing, risk management and operational leadership at major international financial institutions and investment firms.

The agreement provides for an upfront fee of $50,000 (U.S.) payable by HPQ. All additional compensation payable to Open Markets under the agreement will be the responsibility of NewCo. Further terms of the agreement will be disclosed if and when required.

Next steps

Following this announcement, HPQ and Open Markets intend to proceed with the incorporation of NewCo in the United States and the establishment of its corporate and operating framework.

Priority areas include the development of the management team, establishment of operating infrastructure, advancement of commercial opportunities and preparation for the proposed third party financing targeted at approximately $20-million (U.S.). The search for a CEO, CFO and other key executive positions has already commenced, although no appointments are being announced at this stage.

The parties will also continue to assess the appropriate scope of assets, rights and commercial agreements to be included within the dedicated battery business, together with the necessary corporate, regulatory and third party approvals.

Any transfer of assets, rights or commercial agreements will remain subject to definitive documentation, due diligence, applicable consents and approvals. The contemplated transactions will be subject to all applicable regulatory requirements, including TSX Venture Exchange acceptance where required. Depending on the final structure and applicable requirements, the transactions may also require review by an independent committee of the HPQ board, a fairness opinion and approval of disinterested shareholders.

Transaction status

NewCo has not yet been incorporated, and the contemplated transaction remains at a preliminary stage. There can be no assurance that NewCo will be established on the contemplated terms, the proposed asset transfers and financing will be completed, the battery activities will achieve commercial scale, or any future U.S. public listing will occur.

HPQ will provide further disclosure as material developments occur.

About Open Markets LLC-FZ

Open Markets is a Dubai-based research, structuring and management consulting firm focused on corporate transactions, capital structures and cross-border business development. Its partners and advisers collectively bring decades of experience in investment banking, debt syndication, private equity, technology investing, risk management and operational leadership, including roles at Credit Suisse, J.P. Morgan, Bank of America Merrill Lynch, Moelis & Company, MUFG and SoftBank Investment Advisers.

Open Markets team members' prior experience includes senior operational responsibility for a banking unit with approximately $100-billion (U.S.) in assets, leadership of loan syndication desks distributing $5-billion (U.S.) to $10-billion (U.S.) in transactions annually and private-equity leadership associated with approximately $5-billion (U.S.) deployed over two decades. These figures describe separate responsibilities held by individual team members at prior organizations; they are not amounts raised or managed by Open Markets.

For Project Endura, Open Markets will focus on strategic and operational development, transaction structuring, management recruitment, and financing co-ordination. Any activities requiring registration, licensing or other regulatory authorization will be conducted through appropriately authorized third parties. Open Markets is not acting as a broker dealer, investment adviser or placement agent in connection with the agreement.

About HPQ Silicon Inc.

HPQ Silicon is a Quebec-based TSX-V industrial issuer focused on innovation in advanced materials and critical process development. In partnership with its research and development partner Novacium -- of which HPQ is a shareholder -- the company is advancing next-generation silicon-based anode materials (Gen3 and Gen4) for batteries, commercializing its Endura+ lithium-ion cells, and developing breakthrough clean-hydrogen and waste-to-energy technologies, for which HPQ holds exclusive North American rights.

HPQ is also advancing, through HPQ Silica Polvere Inc., the fumed silica reactor technology being developed by PyroGenesis Inc., with the objective of reducing production costs and CO2 (carbon dioxide) emissions. Together, these initiatives position HPQ to capture growth opportunities in the energy storage, clean hydrogen and advanced materials markets essential to achieving global net-zero goals.

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