HPQ's partner begins FSR pilot plant precommissioning
2024-06-05 11:14 ET - News Release
Also News Release (C-PYR) PyroGenesis Canada Inc
Mr. Bernard Tourillon reports
PRE-COMMISSIONING OF FUMED SILICA REACTOR PILOT PLANT UNDERWAY
HPQ Silicon Inc.'s subsidiary, HPQ Silicon Polvere, has achieved another milestone in the commercialization pathway of its fumed silica reactor (FSR) technology. The company would like to update shareholders on these developments.
The company's technology provider, PyroGenesis Canada Inc., has informed HPQ that HPQ Silica Polvere's 50-tonne-per-year (tpy) FSR pilot plant has begun precommissioning work, and all is progressing as expected for a Q3 FSR start.
Commercial validation of the fumed silica reactor process
Initially, the system will operate using a batch protocol to produce fumed silica material with targeted specific surface areas ranging from 150 to 200 square metres per gram (g), similar to what the company has achieved at the lab scale. The system will then transition to semi-continuous operations to produce five square m (200 kilograms (kg) of commercial-grade fumed silica.
In the next phase, the pilot plant operations will be optimized to focus on producing food/pharma-grade fumed silica material with specific surface areas exceeding 300 square m per g.
"The materials produced will be sent to several potential clients under nondisclosure agreements (NDA) for qualification," said Bernard Tourillon, president and chief executive officer of HPQ Silicon and HPQ Silica Polvere. "These potential clients, who have expressed keen interest in our material, could become strategic partners in our journey. We aim to negotiate offtake agreements for our low-carbon fumed silica material with them, potentially covering both the material produced by HPQ Polvere's inaugural 1,000 tpy commercial-scale plant and the material produced by the pilot system."
This strategic approach ensures an early supply of our product, with the pilot system running at full capacity, operating multiple production cycles throughout the day. Assuming 20 hours of operation per day, the system could produce approximately 161 kg/day, equivalent to about 50,000 kg/year (50 TPY).
Updating HPQ Polvere technical and economic study
The process improvements mentioned in HPQ's April 11, 2024, news release, and the conversion of the royalty discussed in its May 30, 2024, news release, are positively impacting the economic potential of the project, in an industry were EBITDA (earnings before interest, taxes, depreciation and amortization) margins for traditional fumed silica manufacturers average only around 20 per cent.
"Considering this new data, we believe it important to update investors on the changes to the project potential of the FSR since our Jan. 10, 2024, release," added Mr. Tourillon.
To update the internal economic study, HPQ Polvere management and PyroGenesis revised the rough order of magnitude study regarding the cost of building and operating a commercial FSR plant (1,000 tpy) capable of producing fumed silica with specific surface areas ranging from 150 square metres per gram to 300 square m per g, using selling prices for the material from information derived from third party sources and publicly available data.
The salient points of the revised rough order of magnitude study indicate that the HPQ Polvere fumed silica reactor will have:
- Capex (capital expenditures) around the $10 (U.S.) per kg of annual capacity versus the $146 (U.S.) per kg of annual capacity for traditional producer, reducing the capital cost to enter the fumed silica market by about 93 per cent;
- Energy consumption between 10 kilowatt-hours and 15 kWh per kg of fumed silica produced versus 100 kWh to 120 kWh per kg of fumed silica produced by traditional producer, reducing the energy consumption by about 90 per cent;
- Revised EBITDA margins associated with making material with a surface area of 150 square m per g now at between 72 per cent and 80 per cent:
- Between 3.6 to four times higher than traditional producer margins;
- Payback period per 1,000 tpy FSR making 150 square m per g material between 2.7 and 2.5 years.
- Revised EBITDA margins associated with making material with a surface area of 200 square m per g now at between 83 per cent and 88 per cent:
- Between 4.2 to 4.4 times higher than traditional producer margins;
- Payback period per 1,000 tpy FSR making 200 square m per g material between 1.5 and 1.4 years.
- Revised EBITDA margins associated with making material with a surface area of 300 square m per g now at between 85 per cent and 90 per cent:
- Between 4.25 to 4.5 times higher than traditional producer margins;
- Payback period per 1,000 tpy FSR making 300 square m per g material between 1.16 and 1.11 years.
- Greenhouse gas emissions associated with making fumed silica with the FSR estimated at between one kig and 2.5 kg of CO2 (carbon dioxide) per kg of fumed silica versus eight kg to 17 kg of CO2 per kg of fumed silica for traditional producer:
- Greenhouse gas reduction between 84 per cent to 88 per cent versus traditional producer;
- Potential European carbon advantage between 630 euros to 1,350 euros per tonne sold.
"The fumed silica reactor technology has the potential to change fumed silica manufacturing for the better, and HPQ Silica is uniquely positioned to be the sole provider capable of supplying the materials required to meet the increasing demand for low-carbon fumed silica products," added Mr. Tourillon. "This demand is anticipated to necessitate the deployment of numerous 1,000 tpy fumed silica reactors in the future."
HPQ Polvere management plans to update and further validate these projections when more data is collected from a future pilot plant testing phase later in the year. This will be achieved with the completion of an engineering cost and feasibility study that will be conducted by an independent party at the appropriate time.
Other news, asset acquisition
The company announces that it has acquired rights lost in the Pact of Partners signed when the French company Novacium SAS was formed. The loss occurred following the company's failure to fulfill its commitment to increase its shareholding in Novacium as stipulated and provided for in the Pact of Partners, agreed and signed with its three co-shareholders, within the granted deadlines.
The company buys the rights in accordance with an agreement signed with its three co-partners, which provides that the company will pay an amount of one million euros ($1,483,100) which will be distributed between them. Such payment will be made by means of the issuance by the company of units of its capital stock, issued at the price of 21.5 cents and consisting of one common share and one-half of a warrant, with each full warrant entitling the holder thereof to purchase one common share of the capital stock of the company at a price of the 30 cents, for a period of four years following the closing date of the transaction. All shares issued in connection with this transaction will be subject to a hold period of four months and one day from the closing date of the transaction. In doing so, the company regains all of its rights in the Pact of partners and in Novacium and by avoiding costly and perilous legal proceedings.
This agreement is subject to the approval of the TSX Venture Exchange and the regulatory authorities having jurisdiction.