Lots of positives coming our way. No fun being a basher. LOL
Business Line Developments: Near Term (0 – 3 months)
Financial
Payments for Outstanding Major Receivables:
Regarding the outstanding receivable under the Company’s existing $25 million+ Drosrite™ contract: and as previously announced, PyroGenesis had agreed to a strategic extension of the payment plan, by the customer and its end-customer, geared to better align the pressures on the end-user’s operating cash flows created by increased business opportunities.
Energy Transition & Emission Reduction
Plasma Torches for Metal Manufacturing:
The Company is in advanced discussions with one of the world’s largest producers of metal products to design and develop a plasma-based solution for use in improving precision in the manufacturing process.
Aluminum Remelting Furnaces:
The Company has been working on aluminum remelting furnace solutions using plasma for use by secondary aluminum producers or any manufacturer of aluminum components that uses recycled or scrap aluminum. With gas-fired furnaces responsible for much of the scope 1 emissions of secondary aluminum production, aluminum companies have been searching for solutions that can help in the decarbonization efforts of aluminum remelting and cast houses.
The Company has two potential solutions: the retro-fitting of plasma torches in existing remelting and cast house furnaces that currently use other forms of heating, such as natural gas; and the manufacturing and sale of a PyroGenesis produced furnace based off the Company’s existing Drosrite metal recovery furnace design, which has been in use commercially for several years.
As mentioned in previous Outlooks, the Company has been working with different companies over the past few years towards these goals. During Q2 2024, the Company announced a signed letter of intent with global aluminum product manufacturer Constellium for large-scale plasma remelting furnaces, and a contract with a global mining supply company, with the agreement related to the client’s intention to examine the use of plasma in decarbonizing its cast houses. Discussions remain underway with other clients for similar contracts.
Aluminum Furnace Tests:
The Company has started, and will continue in the near term, live furnace tests of plasma as a process heat source in melting and holding furnaces with major aluminum companies and is in advanced discussions with other companies for similar live furnace tests of plasma as a process heat source in melting and holding furnaces. Due to the nature of these tests and the increasing number of similar tests, the Company may choose not to announce every test session it engages in.
Plasma Torches for Tunnel Boring:
As noted above, the Company is a party to a framework master agreement with EarthGrid, which included the payment to the Company of a non-refundable downpayment for $667,000.
Negotiations of a first substantial statement of work are ongoing and remain positive, but depend in large part on the client’s ability to secure funding in a timely manner. The client now anticipates proceeding with the purchase of a single plasma torch system in the near to mid term, followed by one or more larger orders in subsequent quarters, dependent upon the client’s financing. While there is no guarantee this statement of work or additional ones will be completed, if successful the Company foresees the potential for a multi-phase, multi-year partnership with the client that may result in materially significant additional plasma torch orders over the next few years.
Iron Ore Pelletization Torch Trials:
CLIENT B
As mentioned in previous Outlooks, the commissioning of the plasma torch systems – for use in the pelletization furnaces of a client previously identified as Client B – was underway, with the Company’s engineers onsite at Client B’s iron ore facility. The commissioning process includes installation, start-up, and site acceptance testing (SAT). The Company previously announced that it had shipped four 1 MW plasma torch systems for use in Client B’s iron ore pelletization furnaces, for trials toward potentially replacing fossil-fuel burners with plasma torches in Client B’s furnaces.
As also mentioned in previous Outlooks, this project continues to move forward after the commissioning suffered a series of unforeseeable delays and infrastructure challenges caused by, among other things, damaging torrential rainstorms that flooded and damaged the facility’s electrical system and furnace components, and intermittent power outages that led to damage of the plasma burners cooling system.
However, Client B remains committed and trials are ongoing, and will remain as such until the customer determines they have sufficient performance data. The latest information provided to the Company suggests a late Q1 2025 timeline for the completion of this performance testing and data gathering phase, though this is an estimate.
CLIENT A
Sustained weakness in global steel demand due to the combination of a supply glut plus significantly reduced steel production particularly in China, has reduced demand and spot prices for steel and iron ore – both of which have seen declines as high as 25% in 2024, with iron ore exhibiting a three-year price low. With some suggestions that the steel and ore industries are in the midst of an adjustment period, ore producers are exhibiting caution, especially around the production of lower quality ore used in coal-consuming blast furnaces. Eventually, as steelmakers and ore producers begin to retool for more low-carbon iron and steel making, and the overall steel demand rebound that is expected to occur in 2025 takes hold, the outlook for both the higher-grade ore suitable for use in low-carbon steel and the lower grade ore for traditional blast furnaces improves.
Industry-wide, with this current unstable demand environment for ore, ore producers are taking an added measure of caution around large infrastructure decision-making. Most notably, the client previously identified as Client A, a large international mining company which has also previously purchased a full plasma torch system for use in trials in its pelletization furnaces, has paused its trials for the foreseeable future. Whether Client A resumes plasma investigation in their pelletization furnaces in the future is largely dependent on internal confidence around ore price future, resumption of ore demand, strategic priorities of specific pelletization locations, and other various aspects unknown to the Company. The Company continues to present new ideas to Client A for use of plasma in additional applications and locations.
CLIENT C
Client C, a third global market-leading client who the Company previously identified as one "who is not only a significant player in the iron ore pelletization industry but is also a major player in the steel industry", has been working with PyroGenesis over the past few years on various potential initiatives related to using plasma for decarbonization. Recently, PyroGenesis was awarded official supplier status to Client C, as part of an impending initiative. The Company will have more information on this in the upcoming weeks.
With live pelletization furnace plasma trials (with Client B) continuing, as the latest development with Client C renews their commitment to investigating plasma, and as new interest from other entities appears, the Company believes its position relative to both the steelmaking and iron ore industries remains very strong. The early publicity and research results surrounding plasma's potential for use in iron ore pelletization opened the doors to these and multiple other industries for furnaces and high heat applications that the Company believes will ultimately far surpass the specific pelletization application.
Aluminum Cast House Decarbonization:
The Company is part of a tendered bid process for the testing of plasma within an aluminum cast house of a leading global aluminum company. This is unrelated to the project announcement made in conjunction with Constellium. During the quarter, the Company was advanced past the preliminary tender phase to the full tender proposal phase.
The Company submitted its full proposal in August 2024, with the final client decision expected in the near- to mid-term.
Commodity Security & Optimization
Drosrite Factory Trials:
The Company is conducting on-site trials of the Company’s Drosrite furnace system for the processing of aluminum dross, with multiple aluminum manufacturers, as a first step towards potential purchase of Drosrite systems. These particular potential clients are located across Europe and the United States. The first trial, for a manufacturer in France, was recently completed, and data is now being examined.
Titanium Metal Powder:
In June, the Company announced [press release dated June 5, 2024] that it had cleared the final requirement to becoming an approved supplier of its titanium metal powder to a global aerospace original equipment manufacturer.
The formal process for adding the Company to the approved supplier list has begun and is expected to be complete in the near term.
Waste Remediation
SPARC Refrigerant Waste Destruction System:
The Company is in negotiations with a Middle Eastern customer for the construction of the Company’s SPARC (Steam Plasma Refrigerant Cracking) system, for the safe destruction of hazardous end-of-life refrigerants, such as CFCs, HCFCs, and HFCs. The customer has access to a very large existing stockpile of these hazardous materials. This project is under discussion as a co-venture, whereby PyroGenesis would receive revenue on a profit-sharing basis.
Plasma-Based Glass Valorization:
The Company is in final negotiations with an entity in Canada, for a plasma-based furnace for use in the melting and valorization of recycled glass, with an estimated contract value of $2 million.
Plasma Resource Recovery System (PRRS):
The Company is in discussions with a European company for the Company’s Plasma Resource Recovery System, for use in the pyrolysis of plastics.
Business Line Developments: Mid Term (3-6 months)
Energy Transition & Emission Reduction
Mining Industry Parts Manufacturer Decarbonization:
As noted above, in April 2024 the Company announced the signing of a contract with a client to assess the applicability and examine the use of plasma as a heat source in the client’s cast furnaces. The client, a billion-dollar entity with facilities on five continents, is one of the world’s largest manufacturers of products that serve the mining and defense industries, amongst others. The tests noted as targeted for completion by the end of the Q2 were conducted and have concluded, successfully.
Negotiations are now underway for the sale of initial plasma torch system(s) as well as the accompanying manipulation/handling components, as a per unit price of between US$500,000-$1,000,000 in revenues to PyroGenesis per torch.
Commodity Security & Optimization
“FSR” Project:
In September, the Company’s client, HPQ Silicon Inc., announced [news release dated September 27th] the successful completion of commissioning of the Fumed Silica Reactor (FSR) pilot plant that PyroGenesis has been designing, engineering, and constructing to convert quartz into fumed silica in a single and eco-friendly step. The pilot plant has commenced pre-commercial production tests of fumed silica, with commercial samples scheduled to be sent to key parties such as Evonik and others under NDA in the near to mid-term.
Drosrite Systems:
The Company is in various stages of discussions with aluminum manufacturers to purchase Drosrite aluminum dross processing systems, including with two Middle Eastern aluminum companies for the purchase of multiple 5,000+ tonnes per year Drosrite furnaces. In addition, multiple European and American aluminum manufacturers are considering systems of various capacities.
Critical Mineral Production:
The Company is in discussion with a producer of critical minerals used in electronics, renewable energy, and EV manufacturing, to use plasma during the production process of these minerals.
Titanium Metal Powder:
The Company is in discussions several companies in both North America and Europe regarding the potential sale of multiple tonnes of titanium metal powder, across both “coarse” and “fine” powder cuts.
Waste Remediation
SPARC Refrigerant Waste Destruction System:
The Company is in negotiations with a large US-based distributor of refrigerants and specialty gases for the construction of the Company’s SPARC (Steam Plasma Refrigerant Cracking) system, for the safe destruction of hazardous end-of-life refrigerants, such as CFCs, HCFCs, and HFCs, for a contract amount of approximately $2-3 million.
e-Waste Recycling and Valorization:
The Company is in negotiations with a potential customer to develop a scalable system for recycling decommissioned equipment used in the energy industry, for the purpose of recovering valuable materials like silicon, silver, and other metals from e-waste.
Business Line Developments: Long Term (> 6 months)
Energy Transition & Emission Reduction
Plasma-Based Glass Recycling:
The Company is in advanced negotiations with a global leader in glass recycling, to investigate plasma as part of the customer’s energy transition initiatives.
Furnace Electrification Co-Venture:
The Company is in negotiations with a large global manufacturer of energy equipment to co-venture with PyroGenesis on the electrification of third-party furnaces.
Commodity Security & Optimization
Silicon, Nano-Silicon, and Silica Production:
The Company is in discussions at quotation stage with several different potential customers who have expressed interest in PyroGenesis’ advances methods for producing silicon, nano-silicon, and silica. The customers include a major global automaker (whose interest lies primarily in nano-silicon for EV batteries), a US battery manufacturer, and a raw material supplier to the construction materials industry.
Waste Remediation
Plasma Waste-to-Energy System / Resource Recovery System (PRRS):
In July [press release dated July 29, 2024], the Company announced the signing of a 2-stage contract for a land-based plasma waste-to-energy system with a European consortium. The first stage consists of a conceptual and preliminary design phase for approximately $2 million, which commenced in Q3 and is scheduled to last no more than one year. The design of the Plasma Waste-to-Energy System is based on the Company’s Plasma Resource Recovery System (PRRS), a waste-to-energy technology that eliminates toxic compounds while transforming waste into reusable products such as syngas and chemicals such as methanol.
The design phase, which is scheduled to end by Q3 2025, will determine the order of magnitude cost estimate of the system construction, expected to range between $120-160 million depending on the system’s capacity and other details. The customer may then engage with PyroGenesis for the design and development of a large waste-to-energy system.
Plasma Torches:
The Company has been in discussions over several years with a European entity, to act as a potential supplier of plasma torches for the entity’s waste-to-energy initiative; the entity has at times, listed PyroGenesis as their torch supplier in various publications online. This entity has recently announced having entered into an agreement with a German multi-Billion-dollar leading technology company to accelerate green energy transition through waste-to-energy technology. The entity announced that it aims to establish 300 plants producing 1 million tons of hydrogen over the next several years.