PyroGenesis Canada Inc. (TSX:PYR, OTCQX:PYRGF) is to exercise its option to convert a 10% gross sales royalty into a 50% ownership stake in HPQ Silica Polvere, a wholly-owned subsidiary of HPQ Silicon Inc (TSX-V:HPQ, OTCQX:HPQFF).
The HPQ Silica Polvere business is focused on developing the Fumed Silica Reactor (FSR) project, which utilizes PyroGenesis' proprietary technology to convert quartz into fumed silica, used as a universal thickening and anticaking agent, in a single, eco-friendly step.
Previously, an agreement between HPQ Silica Polvere and PyroGenesis, established in July 2021, allowed for the conversion of the annual royalty into an ownership stake at any time.
Now, the companies will negotiate and draft a shareholders' agreement.
“PyroGenesis’ decision to exercise its option early, as we commence the next phase of commercial validation, highlights their strong commitment to our project,” said HPQ chief executive Bernard Tourillon.
“This move also mitigates future financing risks and eliminates a prospective obstacle in our ongoing discussions with potential partners in the development of the fumed silica business.”
PyroGenesis chief executive Peter Pascali, meanwhile, said: “With PyroGenesis’ conversion of the HPQ Polvere annual royalty option to an ownership stake, the potential benefit to the company from HPQ Polvere’s future success is enhanced, and we are very excited about what the future holds for the FSR project – an initiative we believe is a truly innovative approach to producing fumed silica, one of the most in-demand materials.”
The fumed silica market, valued at $1.9 billion in 2023, is expected to grow at a compound annualised rate (CAGR) of more than 5.5% over the next seven years, to reach $3.1 billion by 2032.
In terms of physical volume, the company highlighted that the market is anticipated to increase by 80,000 tonnes annually from 2024 to 2029.