HPQ Silicon Agrees to Acquire Intellectual Property Rights to PUREVAP Process from PyroGenesis

HPQ Silicon Resources Inc is pleased to announce the completion of a major Agreement with PyroGenesis Canada Inc. on July 29, 2016 as follows:

1. HPQ Silicon will acquire the intellectual property rights to the PUREVAP™ process as it relates exclusively to the production of silicon metal from quartz. PyroGenesis will retain a royalty-free, exclusive, irrevocable worldwide license to use the process for purposes other than the production of silicon metal from quartz.
2. HPQ Silicon will purchase a 200 metric ton/year PUREVAP™ Quartz Vaporization Reactor ("PUREVAP™ QVR") pilot system to produce solar grade silicon metal from HPQ Silicon quartz.
3. The total Purchase Price to be paid by HPQ Silicon over the next 30 months for the PUREVAP™ QVR Pilot Plant and related Intellectual Property is CDN$8,260,000. HPQ Silicon has already paid over CDN$1,000,000, or approximately 12% of the value of the agreement. An additional CDN$300,000 will be paid through the immediate issuance of 1,363,636 Common shares of HPQ Silicon to PyroGenesis (subject to standard regulatory approval) and an additional CDN$190,000 was paid through a one million Units subscription made by HPQ Silicon in PyroGenesis latest private placement.

UNIFICATION OF TECHNOLOGY AND RESOURCES DRIVEN BY INDUSTRY FEEDBACK

On June 29, 2016, Lab scale testing demonstrated the ability of the PUREVAP™ process to produce high purity silicon metal greater than 99.9% (>3N) in just one step, using quartz from HPQ Silicon properties.

Upon achieving this milestone, it became clear to HPQ Silicon from discussions with industry professionals and government officials that unification of the PUREVAP™ Intellectual Property with the feedstock quartz under one corporate umbrella was necessary for future commercial and financing purposes.

Bernard J. Tourillon, Chairman and CEO of HPQ Silicon stated "Today marks a major milestone for HPQ Silicon and its shareholders. By unifying this fantastic technology under our brand and successfully scaling it up, we can accelerate our plan of becoming the cleanest, greenest and lowest cost vertically integrated producer of Solar Grade Silicon Metal in the world. Thanks to our great working relationship with PyroGenesis, combined with our ownership of the PUREVAP™ QVR intellectual property, HPQ Silicon is uniquely positioned to become an agent of change in the Solar Industry and beyond".

With unification now having been completed, validating the scalability of the process becomes the next and most important priority of both HPQ Silicon and PyroGenesis. To this end, Pierre Carabin, Director of Engineering of PyroGenesis stated:

"We are very happy to be moving to the pilot scale with this process. Throughout PyroGenesis' history, we have successfully taken new concepts from the lab to commercialization. As we have done with the US Navy, developing the PAWDS technology from lab scale to finally being specified in the design of the new US Aircraft Carriers, and more recently, with our Drosrite technology. We plan to systematically and successfully ramp up the PUREVAP™ process to full commercial scale. Once successful, we believe the PUREVAP™ process portends to be a game changing, and enabling, technology."

FURTHER DETAILS PERTAINING TO PILOT PLANT

This agreement is for the design, fabrication, assembly, commissioning and testing of a 200 metric ton/year PUREVAP™ QVR pilot plant. The design, fabrication and assembly period for the pilot plant is expected to take 12 to 16 months, after which the pilot plant will undergo a commissioning phase expected to last an additional 2 months, with a final testing period expected to last 10 months. The pilot plant will initially be installed at PyroGenesis' facility in Montreal, Canada, and upon completion of the testing period, the pilot plant will be relocated to a permanent production site, chosen by HPQ Silicon.

"The pilot system represents a significant milestone in our relationship with HPQ Silicon and demonstrates our commitment to the advancement of the PUREVAP™ project," said P. Peter Pascali, President and CEO of PyroGenesis. "At PyroGenesis we believe in a conservative approach to development, and we only engage projects we feel have merit as well as a high probability of success."

FURTHER DETAILS PERTAINING TO ACQUISITION OF INTELLECTUAL PROPERTY

PyroGenesis will retain a royalty-free, exclusive, irrevocable worldwide license to use the process for purposes other than the production of silicon metal from quartz. Should PyroGenesis develop any other such application, HPQ Silicon shall have a right of first refusal in the event of any sale or otherwise disposal. PyroGenesis will retain all royalty payments owed by HPQ Silicon under the previously disclosed development and exclusivity agreement for the development of the PUREVAP™ process, payments of which represent 10% of HPQ Silicon metal sales, with set minimums, but with royalty payments being waived for 2017.

A MANAGEABLE FINANCIAL COMMITMENT OVER THE NEXT 30 MONTHS

Total Purchase Price CDN$8,260,000 is divided as follow:

• CDN$1,000,000 for the purchase of the related Intellectual Property;
• CDN$4,430,000 for the design, fabrication, assembly, cold commissioning and testing;
• CDN$520,000 for the hot commissioning of the pilot system; and
• CDN$2,310,000 for testing and operating the pilot system during 10 months.

In addition to having sufficient liquidity, thanks to ongoing warrant exercise, as well as having made a $CDN1 Million payment to PyroGenesis, HPQ Silicon management deems the cash calls associated with the agreement a manageable risk for the following reasons:

• The signature of the agreement and the stage of work with Pyrogenesis now render the project eligible for government funding programs (Provincial and Federal) that could cover up to 80% of the cost associated with the Pilot Plant.
• Over CDN$5,000,000 worth of warrants are in the money, a majority of which controlled by Insiders and key investors,
  • With regards to this, investors are advised that Insiders may decide to exercise warrants over the next 30 months to meet cash call needs related to this project.
• Availability of previously announced convertible debt financing of CDN$1,750,000;
• The acquisition of PUREVAP™ Intellectual property opens up additional options for financing as many investors have demonstrated a reluctance to invest in the Company while it did not have direct control over the key intellectual property supporting its business plan.