HPQ completes first phase 2 test of FSR pilot project

Executive Summary

• HPQ Silicon Inc. completed Test No. 6 of its Phase 2 Fumed Silica Reactor (FSR) pilot project, achieving significant operational improvements including a 50% reduction in start-up time and a fivefold increase in total material output.
• The company entered into a $150,000 related-party loan to exercise one million warrants of Quebec Innovative Materials Corp. at 15 cents per share before their August 30, 2025 expiry.
• The loan allows the lender to convert the principal into HPQ units (one common share and one warrant) at the share price on the redemption date, subject to TSX Venture Exchange approval.

Key Details

• FSR Pilot Test No. 6 Results:
  • Start-up Time: Reduced by 50% compared to previous tests, improving overall process efficiency.
  • Throughput: Semi-continuous batches doubled relative to Test No. 5; total material output increased fivefold.
  • Scalability: Performance reinforces confidence in the scalability of the proprietary FSR process for future commercial-scale operations.
  • Material Analysis: Produced material has been delivered to two third-party laboratories: a global fumed silica manufacturer (under an active Letter of Intent announced July 9, 2024) and a university laboratory.
• Quebec Innovative Materials Corp. Warrant Exercise Financing:
  • Loan Amount: $150,000.
  • Lender: A related party.
  • Purpose: To exercise one million warrants of Quebec Innovative Materials Corp. at an exercise price of $0.15 per share.
  • Warrant Expiry: August 30, 2025.
  • Loan Terms: 90-day term, unsecured, bears no interest, no link to company assets.
  • Conversion Option: On the redemption date, the lender may elect to convert the loan amount into HPQ units.
  • Unit Structure: Each unit consists of one common share and one warrant.
  • Unit Issue Price: Equal to HPQ's share price on the redemption date.
  • Warrant Terms: Exercisable at 130% of the unit issue price for a period of two years from issuance.
  • Hold Period: Any securities issued pursuant to conversion are subject to a statutory hold period of four months and one day.
  • Regulatory Status: Subject to approval of the TSX Venture Exchange and other applicable regulatory authorities.
• Corporate Structure Note: HPQ Silvere Polvere Inc. (HSPI) is a wholly owned subsidiary of HPQ Silicon. PyroGenesis announced its intention in May 2024 to exercise an option to acquire a 50% stake in HSPI.

Notable Quotes

• "These operational improvements represent a meaningful advancement in the development of our fumed silica reactor technology... Reducing start-up time, increasing batch production and significantly expanding output are critical milestones as we progress toward commercial deployment." — Bernard Tourillon, President and CEO, HPQ Silicon and HPQ Silica Polvere.