Mr. Peter Pascali reports

PYROGENESIS ANNOUNCES ACCELERATED CONSTRUCTION OF FUMED SILICA REACTOR PROJECT WITH ARRIVAL OF ALL MAJOR EQUIPMENT

PyroGenesis Canada Inc., further to HPQ Silicon Inc.'s press release dated today, and the company's own news releases dated Jan. 11, 2024, and Feb. 6, 2024, has reached the next milestone for the pilot plant development.

The fumed silica reactor (FSR) technology project is being conducted in conjunction with HPQ Silica Polvere Inc., a wholly owned subsidiary of HPQ. With all major equipment now on site, the construction phase of the 50-tonne-per-year (tpy) FSR pilot plant is accelerating.

Fumed silica is a moisture-absorbing white microstructure powder with high surface area and low bulk density. Used most often as a thickening agent, anti-caking agent and stabilizer to improve the texture and consistency of products, the commercial applications of fumed silica can be found in many industries across thousands of product lines, including, but not limited to, personal care, powdered food, pharmaceuticals, agriculture (food and feed), adhesives, paints, sealants, construction, batteries and automotive.

The FSR converts quartz into fumed silica (also known as pyrogenic silica) in a single and eco-friendly step, while eliminating the use of harmful chemicals generated by conventional methods. The FSR, if successful, could provide a groundbreaking contribution to the repatriation of silica production to North America.

The FSR pilot plant is being constructed within a dedicated space inside PyroGenesis's facilities, with a custom-designed infrastructure that meets the pilot plant's unique ventilation, safety and access requirements. A 4,000-square-foot facility with a 30-foot height allowance has been allocated to house the pilot plant, which itself has an approximate layout footprint of 50 feet by 30 feet. The FSR pilot plant is being developed by PyroGenesis with a 50 tpy output capacity.

In addition, recent results (refer to the company's news release dated Jan. 11, 2024) from an internal economic and technical study, which was carried out at the request of a third party which requested confidentiality, confirmed the viability of, and advantages from, the eventual scale up to a 1,000 tpy commercial configuration. These advantages included potential EBIDTA (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.

"We are rapidly moving forward with the fumed silica reactor pilot plant construction, as we recognize that numerous industries will benefit from what we believe is a truly innovative approach to producing one of the most in-demand materials," said P. Peter Pascali, chief executive officer and president of PyroGenesis. "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. The technology developed by PyroGenesis for HPQ Polvere is designed to offer significant economic and environmental advantages over conventional manufacturers -- improving profitability, but also reducing the environmental footprint and reducing the harmful chemicals associated with traditional fumed silica production."

The fumed silica market, valued at $1.3-billion (U.S.) in 2022, is expected to grow at a compound annual growth rate (CAGR) of 5 per cent to reach $2.1-billion (U.S.) by 2032. Fumed silica sales accounted for almost 23 per cent of the global specialty silica market at the end of 2021.

In the FSR project, PyroGenesis is the exclusive supplier of a technology capable of using quartz (SiO2 (silicon dioxide)) as a raw material to produce commercial-grade fumed silica in a single step. As part of the terms on the FSR project with HPQ, once sales reach certain thresholds, PyroGenesis will receive an annual royalty payment representing 10 per cent of HPQ Polvere's gross sales, with set minimums. This royalty stream can, at any time, be converted by PyroGenesis into a 50-per-cent ownership in HPQ's remaining equity stake 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.

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