Mr. Peter Pascali reports

PYROGENESIS ANNOUNCES IMPROVED ECONOMICS FOR FUMED SILICA REACTOR PROJECT

Further to the press release of HPQ Silicon Inc. dated Jan. 10, 2024, PyroGenesis Canada Inc. is talking about the recent completion of an internal economic and technical study which produced more favourable results than were previously indicated by HPQ for its fumed silica reactor (FSR) technology project. This latest study was carried out at the request of a third party corporation, which will not be named pursuant to the terms of a non-disclosure agreement (NDA). According to HPQ, this latest study confirms the viability of, and advantages from, scaling up the FSR from the current 50 tonnes per year (tpy) pilot plant configuration to a 1,000 tpy commercial configuration.

According to HPQ's release: "The study unveiled its robust economic potential, emphasizing potential EBITDA [earnings before interest, taxes, depreciation and amortization] margins three times higher than the industry average of 20 per cent and a capital investment 93 per cent less than that required for building a conventional fumed silica plant."

As stated in PyroGenesis's news release dated Nov. 9, 2023, the production of the fumed silica reactor pilot plant is already under way, with a planned completion by Q2 2024. The company confirms this timeline to be on target.

The FSR, another plasma-based process developed by PyroGenesis, converts quartz into commercial-grade fumed silica (or pyrogenic silica) in a single, eco-friendly step. By eliminating the use of harmful chemicals generated by conventional methods, the groundbreaking FSR approach, if successfully applied on a commercial scale, will contribute to the repatriation of silica production to North America.

With respect to the results of this latest study, the company, in conjunction with management of HPQ Polvere (the HPQ subsidiary which owns the FSR technology), used a rough order-of-magnitude study regarding the cost of building the first 1,000 tpy fumed silica reactor. HPQ's management then used selling prices for the fumed silica, and potential operating costs from information derived from third party sources and publicly available data.

The salient points of the internal economic study indicate that the FSR will have:

• Capex (capital expenditure) between $9 (U.S.) and $10 (U.S.) cost per kilogram (kg) of annual capacity;
• Energy consumptions between 10 kilowatt-hours and 15 KWh per kg of fumed silica;
• EBITDA margins between 60 per cent and 65 per cent;
• Payback period per 1,000 tpy reactor of around 1.7 years.

"If these salient points of the internal economic study are proven out, then HPQ will be able to build facilities with significantly lower capex and energy consumption, while generating significant margins," said P. Peter Pascali, president and chief executive officer of PyroGenesis. "The payback of approximately 1.7 years will enable them to roll out significantly faster and with less capital. Not only does this speak for significant financial gains, but given this revolutionary plasma-based technology eliminates all harmful chemicals, it is environmentally friendly. It also underscores PyroGenesis's commitment to sustainable development. This, once again, reflects the potential of HPQ Polvere's fumed silica reactor which we developed, and aligns perfectly with our commitment to environmental responsibility. Conventional fumed silica processes, which rely on silicon metal (Si) as raw material, not only have a significant carbon footprint of around 9.5 tonnes of CO2 [carbon dioxide] equivalent per tonne of fumed silica, but also present complex process challenges which include, but are not limited to, using hazardous materials. These latest economic and technical indicators provide more evidence that the technology developed by PyroGenesis for HPQ Polvere will offer significant economic and environmental advantages over conventional manufacturers -- improving profitability, but also reducing the environmental footprint associated with fumed silica production."

PyroGenesis is an exclusive service provider for HPQ Polvere in respect of the FSR project. As part of the terms on their commercial engagement, PyroGenesis will receive royalty payments representing 10 per cent of HPQ Polvere's eventual sales, with set minimums. In addition, PyroGenesis may, at any time, convert its right to this royalty stream into a 50-per-cent ownership stake in HPQ Polvere's remaining equity in HPQ Polvere.

PyroGenesis's involvement in developing fumed silica from quartz is part of PyroGenesis's three-tiered solution ecosystem that aligns with economic drivers that are key to global heavy industry. High-purity silicon is part of PyroGenesis's commodity security and optimization tier, where the recovery of viable metals and the optimization of production to increase output helps to maximize raw materials and improve the availability of critical minerals. Silicon has been identified as a critical mineral by many governments worldwide.

About PyroGenesis Canada Inc.

PyroGenesis Canada, a high-technology company, is a leader in the design, development, manufacture and commercialization of advanced plasma processes and sustainable solutions that reduce greenhouse gases (GHGs) and are economically attractive alternatives to conventional dirty processes. PyroGenesis has created proprietary, patented and advanced plasma technologies that are being vetted and adopted by multiple multibillion-dollar industry leaders in three massive markets: iron ore pelletization, aluminum, waste management and additive manufacturing. With a team of experienced engineers, scientists and technicians working out of its Montreal office and its 3,800-square-metre and 2,940-square-metre manufacturing facilities, PyroGenesis maintains its competitive advantage by remaining at the forefront of technology development and commercialization. The operations are ISO 9001:2015 and AS9100D certified, having been ISO (International Organization for Standardization) certified since 1997.

About HPQ Silicon Inc.

HPQ Silicon is a Quebec-based TSX Venture Exchange Tier 1 industrial issuer.

HPQ is developing, with the support of world-class technology partners PyroGenesis Canada and Novacium SAS, new green processes crucial to make the critical materials needed to reach net-zero emissions.

HPQ 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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