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PyroGenesis 3: Transforming Metals and Minerals Manufacturing

Jeff Nielson Jeff Nielson, Stockhouse
2 Comments| February 11, 2019

Click to enlargePyroGenesis Canada Inc. (TSX: V.PYR, OTCQB: PYRNF, Forum) is a familiar name to Stockhouse tech investors, featured in several articles in recent years. As a hi-tech Company with three dynamic divisions, each of which has recently achieved important milestones, we saw a great opportunity to re-introduce PyroGenesis to the Stockhouse audience.

In this Stockhouse multi-part series, we’ve been shining the spotlight on these three divisions, one at a time.  Part 1 focused on the Company’s Additive Manufacturing division (3-D printing). PyroGenesis’s patented “plasma-atomized” titanium powders are revolutionizing the 3-D printing industry, with these valuable powders retailing for up to US$500 per kilogram.

Total demand for these metal powders is projected to reach 8,625,000 kg’s by 2020, meaning billions in revenues are up for grabs. A recent partnership with prestigious European multi-national, Aubert & Duval positions PyroGenesis well to capitalize on this opportunity.

Part 2  was devoted to the Military/Environmental division of PyroGenesis. For readers who missed the earlier installments, this requires a little more explanation. PyroGenesis uses the Power of Plasma (the fourth state of matter) as a key technological input to service numerous, important industrial and commercial niches – cleaner and more efficient processes than (lower tech) competing technologies.

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Plasma is generated at extreme temperatures, and then becomes an ideal hi-tech input for a potentially infinite number of heat-based applications. Not surprisingly, one of the first avenues that PyroGenesis explored with its R&D when the Company was founded in the 1990’s was hi-tech (and ultra-clean) waste processing.

This is more than mere waste disposal. Using PyroGenesis’s proprietary Plasma Torches, this is a waste-to-energy solution that is not only ideal for a variety of waste disposal applications. It’s technology that can be (and has been) adapted for additional multi-billion dollar markets.

One of the industries that has a strong need for the clean/efficient processing of toxic waste is the military industry. As the world’s largest military (by far), this made the United States Department of Defense a natural partner for PyroGenesis.

This 20-year relationship has evolved to the level that PyroGenesis’s multi-million dollar PAWDS (toxic) waste disposal system is now standard equipment on the U.S. Navy’s latest generation of “super carriers”. Imminent: a $12.5 million contract for two new PAWDS installations – PyroGenesis’s single largest contract to date.

An example of a new application for these Plasma Torches is the Company’s recent breakthrough into the multi-billion dollar market for “iron ore pelletization”. Here PyroGenesis’s patented Plasma Torch technology provides a zero-emissions solution for a highly pollutive process that currently generates 40 million tonnes of CO2 emissions per year.

The Company’s third division is its Mining & Metallurgy division. Is this division any less-important as a component of operations? We went right to the source. We asked the President, CEO and Founder of PyroGenesis, P. Peter Pascali if he could rank these divisions for investors in order of importance.

The CEO’s quip (without missing a beat) was, “This is like asking me to rank my own children.”

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So, three equally important divisions. All are derived from the Power of Plasma. And all are supported by a total of more 70 issued or pending patents in the Company’s IP bank.

Mining & Metallurgy

How is the Power of Plasma going to transform metals and minerals manufacturing? The basic answer is similar to the Company’s other divisions: introducing innovative plasma-based solutions that can replace existing (lower-tech) processes with a cleaner, more efficient option.  More specifically, this is a more compact and easily added component to the smelting process that is required in the production of many of the world’s most important metals.

The principal technology that PyroGenesis has introduced to significantly improve upon smelting is known as DROSRITE™. The gist of the innovation is found in the name of the technology: dross.

Dross is a waste byproduct from the smelting process that is used for the production of aluminum, zinc, and many other common base metals. It’s the outer ‘skin’ that forms on the surface of these metals as this hot metal interacts with oxygen. This “dross” is an important issue as it represents wasted metal, reducing efficiency and increasing costs for end users. Up to 10% of smelter production can be wasted because of this.

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To mitigate this loss, metals manufacturers already attempt to recycle this dross and extract as much usable metal as possible. DROSRITE™ technology performs this same process much cleaner and recovers more than 20% more metal than lower-tech processing currently in the marketplace. It pays for itself.

For players within the metals industry, a key aspect of DROSRITE™ is that it is salt-free technology. This reduces or eliminates other production issues associated with the smelting process.

The Company has already successfully deployed this technology to recycle aluminum dross. The chronology below illustrates the evolution of DROSRITE™ as part of the Mining & Metallurgy division.

More recently, PyroGenesis has made an important breakthrough in advancing this division. On November 6, 2018; the Company announced a strategic alliance with “one of the largest Japanese trading houses”. This alliance is a joint venture to advance DROSRITE™ commercialization, through global tolling services.

Recycling dross may not seem like a very sexy industrial application for a hi-tech company that is a Master of Plasma. But a look at the numbers may cause readers to revise their thinking.

Among several major markets to be targeted with this pending partnership is the global aluminum market. Total revenues in the aluminum market are projected to reach US$249.29 billion by 2025, rising from US$143.87 (2016) at a CAGR of 6.4%. With 2 – 10% of aluminum smelter production lost to dross, the dross “market” itself is a multi-billion dollar opportunity – for this one metal alone.

On December 3, 2018; PyroGenesis conducted a successful paid-for demonstration of DROSRITE™ for the zinc industry. Here the client is one of India’s largest smelter operators.

The global zinc industry represents a $34.4 billion market in 2018, with a forecast CAGR of 4.4% over the next five years. The most recent production statistics (for 2017) show global zinc production of 13,597,000 metric tonnes. With 2-10% of this production lost to dross, just the recycling of zinc dross is effectively a billion dollar industry.

Then there is the second technology platform for the Mining & Metallurgy division: PUREVAP™. PUREVAP™ is described as a “one-step direct transformation process” to produce (high purity) solar-grade silicon, suitable for use in the silicon panels that power the world’s solar power industry. Currently, producing high-purity silicon is a complex, multi-staged process – significantly adding to the cost of these panels.

Yet even with existing technology, “renewable” energy sources are projected to be cost-competitive with fossil fuel-powered electricity by 2020. PUREVAP™ technology would dramatically ratchet down the cost of these silicon panels – potentially revolutionizing the solar power industry by reducing the cost of the silicon in these panels by as much as 90%.

With PyroGenesis’s other divisions already revenue-generating and with DROSRITE™ at the commercialization stage, why is the Company still persevering with this R&D instead of focusing its energies on these other, more-advanced initiatives?

CEO Pascali has strong convictions here.

This is not pure R&D. This is R&D where we are paid handsomely to essentially develop a potentially game-changing technology which, if successful, will generate significant recurring revenues for PyroGenesis in the form of a 10% royalty on future revenues.  This strategy with respect to R&D has effectively been one of the hallmarks of PyroGenesis’s continued success. [emphasis mine]

Revenue-generating research – with a potential pot of gold at the end of the rainbow.

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Risk mitigation

Having these three, equally prospective hi-tech divisions means more due diligence for investors. The pay-off for this extra homework is a low-risk proposition for tech investors, and investors can take comfort from the fact that PyroGenesis’s multi-billion dollars partners have done some serious due diligence before moving forward with PyroGenesis. An extremely comforting thought for investors.

While all three divisions are derived from the Power of Plasma, each division is essentially a stand-alone entity, targeting entirely separate applications for this patented plasma technology. This mitigates risk. If one division (unexpectedly) stalls, investors have two, other strong divisions to add value to their holdings.

The Company not only provides exposure to several multi-billion dollar markets, it boasts premier partners in each of its three divisions. With its ultra-clean technology, PyroGenesis is also a strong play on Climate Change.

Attractive valuation. Low risk. Exciting technology with enormous potential. A Canadian hi-tech success story. Investors can find many reasons to add PyroGenesis Canada to their own portfolio.

Appendix: DROSRITE™ in action

FULL DISCLOSURE: This is a paid article of Stockhouse Publishing.

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Great 3 part disclosures of PYR present business lines. Am certain more lines of business will open up for PYR thanks to their terrific R&D group & the ever increasing patent portfolio. Looking forward to more news on the PYR front. Thanks, Sincerely, Topseeker
February 17, 2019

That's all wonderful and terrific. When will the PYR stock price follow?
February 11, 2019

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