The various military conflicts in the Middle East and Eastern Europe continue to create some level of global economic uncertainty, as well as supply chain disruptions that can change at any time. However, it’s important to note that the Company does not have any operations, customers or supplier relationships in Russia, Belarus or Ukraine, and as such are not directly impacted at a customer level in these countries. The Company does have customer relationships and projects in Poland and will continue to monitor the situation in the region regarding challenges to the completion of current projects, which at this time are not inhibited.

As always, the Company monitors the potential impact macroeconomic events and conditions could have on the business, operations, and financial health of the Company.

Generally, the Company believes that broad-based threats to global supply chains increase awareness and interest in the many solutions the Company offers. This is particularly true within the minerals and metals industries, as manufacturers seek alternatives to off-shore suppliers as well as technologies that could optimize output or recycle critical material from byproducts or waste – solutions that the Company currently offers.

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 us 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)

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