PyroGenesis provides technology solutions to heavy industry that leverage off of the Company’s expertise in ultra-high temperature processes. The Company has evolved from its early beginnings of being a specialty-engineering firm to being a provider of a robust technology eco-system for heavy industry that helps address key strategic goals.

The Company believes its strategy to be quite timely, as multiple heavy industries are committing to major carbon and waste reduction programs at the same time as many governments are increasingly funding environmental technologies and infrastructure projects – all the while both are making it a strategy to ensure the availability of critical minerals during the coming decades of increased output demand.

While there can be no guarantees, the Company believes the evolution of its strategy beyond greenhouse gas emission reduction, to an expanded focus that encapsulates the key verticals listed in the section “Q3 Production Highlights”, both (i) improves the Company’s chances for success while (ii) also providing a clearer picture of how the Company’s wide array of offerings work in tandem to support heavy industry goals.

PyroGenesis’ market opportunity is significant, as major industries such as aluminum, steelmaking, manufacturing, defense, aeronautics, and government require factory-ready, technology-based solutions to help steer through the paradoxical landscape of increasing demand and tightening regulations and material availability.

As more of the Company’s offerings reach full commercialization, PyroGenesis will remain focused on attracting influential customers in broad markets while at the same time ensuring that operating expenses are controlled to achieve profitable growth.

For the remainder of 2023, we will continue to sharpen our focus on our strategy that structures our solution ecosystem under the three verticals noted previously: (i) energy transition & emission reduction, (ii) commodity security & optimization, and (iii) waste remediation.

Cost Controls and Efficiencies

PyroGenesis is competing hard while closely scrutinizing both potential and existing projects to ensure that the utilization of our labour and financial resources are optimized. As we have shown in the past, we will only engage in projects if the potential benefits to PyroGenesis is significant and well-understood. We continue to intensify our focus on project and budgetary clarity during this persistent period of elevated global inflationary pressures, by sourcing alternative suppliers and constantly adjusting project resources. We have also refined our early-stage project assessment process to allow for faster “go / no-go” decisions on project viability.

Enhanced Sales and Marketing

Against the backdrop of this 3-tiered strategy, the Company has been increasing sales, marketing, and R&D efforts in-line with – and in some cases ahead of – the growth curve for industrial change related to greenhouse gas reduction efforts.

In September, the Company was featured as a cover story in Powder Metallurgy Review, a premier business magazine serving the additive manufacturing and metals industries. The multi-page article detailed PyroGenesis Additive’s journey to becoming a player in the titanium metal powder production market with its new NexGen production technology.

During the quarter, the Company proudly participated in both the “5th Symposium on Iron Ore Pelletizing” in Quebec City, and also in the Côte-Nord tour organized by AluQuébec - Grappe industrielle de l'aluminium du Québec. The latter of the two events was an invitation-only event which gathered over 25 partners and equipment manufacturers from various industry sectors.

Business Line Developments

The upcoming milestones which are expected to confirm the validity of our strategies are outlined below (please note that these timelines are estimates based on information provided to use by the Clients/Potential Clients, and while we do our best to be accurate, timelines can and will shift, due to protracted negotiations, client technical and resource challenges, or other unexpected situations beyond our or the Clients’ control):

Business Line Developments: Near Term (0 – 3 months)

1. Energy Transition & Emission Reduction

New Industry Contract for Plasma Torches: The Company is currently negotiating a large first-phase contract in excess of $10 million that would signal PyroGenesis’ resumption of work in an industry that previously showed promise. This industry, which shall remain confidential at present, has previously heralded the potential use of plasma torches in conducting its primary objective, due to the increased speed and other advanced criteria at which the projects could be completed by using plasma torches vs traditional approaches. While there is no guarantee this contract will be signed, if successful the Company foresees the potential for a multi-phase, multi-year partnership with the client that may result in many additional plasma torch orders over the next few years.

Iron Ore Pelletization Torch Trials: as mentioned in the Q1 outlook on May 15, in April 2023, the commissioning of the plasma torch systems, for use in Client B’s pelletization furnaces, was underway, with the Company’s engineers onsite at the Client’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 the Client’s furnaces.

As mentioned in Q2 Outlook, this project continues to move forward, however the commissioning suffered a series of delays, due to damaging regional torrential rainstorms and flooding that damaged the facility’s electrical system and furnace components. Repairs have been ongoing. The Company’s plasma torches have been installed and activated, and the final commissioning and site acceptance testing has resumed, with expectation for final SAT completion within the next few weeks.

The Client has informed us that they continued to experience technical challenges of their own at different stages during Q3, and the site acceptance testing (SAT) was not completed as expected during the quarter. While this is understandably frustrating, the project is not in any jeopardy, and the Client remains committed to the trials.

As of this date, November 9, the Client B has indicated that they were continuing to move forward in resolving their own technical and supply chain issues. Client B is confident that the issues are minor comparatively, and that the acceptance testing, and full trials will be back on track once certain components on backorder are received. Although the timeframe is uncertain, it is expected to be achieved before the end of the year.

Client A, a large international mining company who has also purchased a full plasma torch system for use in trials in their pelletization furnaces, has recently informed the Company that they continue their plasma torch initiative at their own pace.

2.  Commodity Security & Optimization

Product Qualification Process for Global Aerospace Firm: Based on information flow between the Company and the aerospace client previously announced, the Company believes that the 2-year long qualification process to approve the Company’s titanium metal powers for use by a global aerospace firm and their suppliers, will conclude in the near term.

Of note, the Company can confirm that the qualification process also now includes PyroGenesis’ “coarse cut” titanium metal powder, in addition to the “fine cut” titanium metal powder that has been previously discussed as part of the qualification process.

3. Waste Remediation

Post-Quarter End: In October, the Company announced a contract for $360,000 (Press Release dated October 24, 2023) for a lab-scale size version of the Company’s plasma arc chemical warfare agent destruction system (known as “PACWADS”) from a European engineering services firm undertaking the discovery and safe destruction of chemical warfare agents within the European Union.

The first phase lab-scale order, part of a potential three-phase project, is in relation to a multi-partner project aimed at identifying, extracting, and disposing of chemical munitions and chemical warfare agents residing in active marine passageways and corridors. The second phase will consist of testing the PACWADs system to validate its efficiency, performance and capacity. The eventual goal is to develop a full-scale system once results from the lab-scale system are reviewed.

Potential PAWDS Order: The Company is in initial negotiations with a company that conducts cleanup and destruction of waste from seawater. They have also indicated interest in doing the same on land in remote locations. Negotiations for a PyroGenesis Plasma Arc Waste Destruction System (PAWDS), similar to the type the Company designed and built for some of the U.S. Navy aircraft carriers, are in early stage. While there is no guarantee this contract is completed, if successful the Company may be contracted for multiple PAWDS systems over time.