HPQ Advances Deployment Strategy for its Fumed Silica Reactor Technology as Successful Pilot Program Expands Market Opportunities

Commercial-scale engineering review strengthens confidence in future deployment while growing industry interest expands strategic discussions

MONTREAL, Canada — HPQ Silicon Inc. (“HPQ” or the “Company”) (TSX-V: HPQ) (OTCQB: HPQFF) (FRA: 8PY1), a technology company driving innovation in advanced materials and critical process development, is pleased to provide an update on the commercialization of the proprietary Fumed Silica Reactor (“FSR”) technology developed by its wholly owned subsidiary, HPQ Silica Polvere Inc. (“HSPI”) in connection with PyroGenesis Inc. (“PyroGenesis”).

While HSPI remains a wholly owned subsidiary of HPQ, HPQ and PyroGenesis are in the final stages of completing the previously announced transaction pursuant to which PyroGenesis will acquire a 50% ownership interest in HSPI [1] while remaining the exclusive supplier of equipment for the commercialization of the FSR technology.

Building on the successful pilot-scale production of commercial-grade “150” fumed silica, the independent validation of its commercial performance, the execution of a non-binding Memorandum of Understanding for a proposed 1,000 tonne-per-year commercial plant (“MOU”), and the completion of an extensive engineering review, HPQ believes the successful completion of the pilot program has advanced the FSR program beyond technology validation and toward commercial deployment.

Pilot Program Achieves Its Primary Objectives

The pilot-scale program was designed with two principal objectives:

• demonstrate that the FSR could reliably produce commercial-grade fumed silica directly from quartz; and
• generate the engineering and operating data required to support the design, costing and economic evaluation of future commercial production facilities.

Throughout the pilot program, and following the execution of the MOU, PyroGenesis completed a detailed engineering review of the operating data generated during pilot production. PyroGenesis’ review has strengthened confidence in the projected operating parameters and commercial-scale economics of the FSR technology.

For HPQ, this engineering work represents an important milestone because it substantially reduces technical uncertainty surrounding commercial deployment while providing a significantly stronger engineering basis for evaluating future deployment and business opportunities.

HSPI Commercial Discussions Have Expanded Beyond the Original Scope

As previously disclosed, the parties had anticipated completing negotiations related to the initially announced non-binding MOU by the end of the second quarter of 2026. That timeline reflected the information and commercial opportunities known at the time the MOU was announced.

Since announcing the MOU, the successful completion of the pilot program which validated the production of commercial-grade material, together with the increased confidence resulting from the engineering review, have resulted in the significant expansion of the market opportunities and strategic partnerships being evaluated.

As a result, strategic discussions have expanded beyond the framework originally contemplated. Management believes this broader level of commercial engagement justifies taking additional time to evaluate the business structures most likely to maximize the long-term value of the FSR technology for the Company and its shareholders.

Accordingly, discussions remain active, but additional time is required to complete the commercial, legal and technical work associated with these expanded opportunities.

HSPI Business Strategy Focused on Long-Term Value Creation

The proposed joint venture remains one of several strategic initiatives currently being advanced by the Company.

Consistent with this approach, HSPI’s deployment strategy is focused on maximizing the value of the FSR technology through a combination of:

• joint ventures;
• licensing opportunities;
• royalty-based production partnerships; and
• company-owned production facilities where appropriate.

Management believes the modular design of the FSR technology provides the flexibility to pursue multiple business models, depending on customer requirements, regional economics and strategic partnerships.

Bernard Tourillon, Chairman, President and CEO of HPQ Silicon stated:

“The pilot program has demonstrated that our Fumed Silica Reactor can produce commercial-grade fumed silica directly from quartz and generated the engineering data required to evaluate multiple commercial pathways with significantly greater confidence. The pilot program has transformed the FSR from an engineering development project into a scalable industrial platform supported by independent validation, strengthened engineering confidence, and growing interest from potential industrial participants. Our focus is selecting the optimal deployment strategy while positioning the FSR as a scalable platform capable of serving multiple industrial markets and creating sustainable long-term shareholder value.”

Next Steps

HPQ and HSPI intend to continue advancing strategic discussions with multiple industrial participants while completing the project-specific engineering required to support future industrial deployments.

The Company cautions that all proposed business initiatives remain subject to ongoing negotiations, execution of definitive agreements, regulatory approvals where applicable, customary commercial conditions, and there can be no assurance that any definitive agreements will be executed or that any proposed commercial project will ultimately proceed.

REFERENCE SOURCES
[1] Additional information regarding the previously announced transaction is available in the Company’s news release dated May 30, 2024.