PyroGenesis Canada : 2022-05-16 PyroGenesis Announces Q1 2022 Results-

PyroGenesis Announces Q1 2022 Results:

Revenues $4.2MM; Gross Margin 25%;

Current Backlog of Signed and/or Awarded Contracts $41.2MM

MONTREAL, QUEBEC (GlobeNewswire - May 16th, 2022) - PyroGenesis Canada Inc. (http://pyrogenesis.com) (TSX: PYR) (NASDAQ: PYR) (FRA: 8PY), a high-techcompany (hereinafter referred to as the "Company" or "PyroGenesis"), that designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions which are geared to reduce greenhouse gases (GHG), is pleased to announce today its financial and operational results for the first quarter ended March 31st, 2022.

"We are happy to be announcing our Q1 2022 financial results. We have posted quarterly revenues of $4.2MM," said Mr. P. Peter Pascali, CEO and Chair of PyroGenesis. "Our backlog remains very large, above $41MM, and despite gross reported revenue being impacted this quarter slightly by accounting procedures related to international logistical and shipping challenges, our factories continue to produce at a rapid rate, both against the backlog and in anticipation for new business throughout the year.

Perhaps even more exciting, our new business development efforts have grown dramatically, with a pipeline of pitched projects within the aluminum business line alone now over several hundred million dollars.

2022 continues to build on the foundation set by the previous two years. With the successful execution and delivery of the backlog of signed contracts, the benefit of the biogas upgrading projects from Pyro Green-Gas, and exploding interest across seemingly every aspect of the aluminum industry, 2022 is scaling up to be another great year for the company.

The board and I see continued production and sales success in the months ahead; as our iron ore pelletization torches enter into on-site client install and testing, 3D powder qualification with the global aerospace company moves to the finish line, and some of our potential aluminum projects in negotiations reach a signing point, we expect the backlog to race past the $50MM mark and beyond," concluded Mr. Pascali.

Q1 2022 results reflect the following highlights:

• Revenues of $4,206,762,
• Gross margin profit of $1,051,723 or 25% of revenue,
• Cash, cash equivalents and publicly traded shares at March 31, 2022 of $18.5MM
• Backlog of signed and/or awarded contracts of $41.2MM
• Milestone new market entry sales, including for the destruction of polyfluoroalkyl substances

OUTLOOK

With 2021 having achieved many important accomplishments and milestones, 2022 has begun by maintaining the accelerated business momentum of the previous two years.

Despite the continuing challenges of the global marketplace due to Covid, plus new challenges resulting from conflict in Ukraine, as well as energy supply shortages in Europe and China impacting both the cost and output of aluminum and steel, opportunities for PyroGenesis continue to expand across the board. Led by unprecedented awareness of the Company's capabilities across the aluminum industry after the successful commissioning of its DROSRITETM metal recovery systems at a leading Middle Eastern primary aluminum producer; along with the discovery, pursuit, and active engagement of new market prospects both upstream and downstream from the Company's DROSRITETM systems; and major new developments within primary, secondary (recycled) and tertiary (manufacturers' in- house casting facilities) aluminum producers who are engaging the Company in a variety of discussions and negotiations regarding metal recovery, furnace retro-fitting, and comprehensive fuel- switching initiatives. These factors, bolstered by the quickening global push towards fossil fuel reduction at both industry and government levels that further showcases the PyroGenesis advantage, allows management to expect that tailwinds into an already strong pipeline will continue throughout 2022 and beyond.

Overall Strategy

Continuing to build on its strategy to offer technology solutions that provide benefits from greenhouse gas ("GHG") emissions reduction,

While we had previously considered our strategy to be timely, as many governments are stimulating their respective economies by promoting and funding both environmental technologies and infrastructure projects; and after 2021 proved an even greater affirmation of this approach as major industries and organizations targeted by the Company not only recommitted to their targets, but in some cases raised them significantly, 2022 has brought about more circumstances that highlight how technology solutions like those from PyroGenesis will be in even greater demand.

In particular, the conflict in Ukraine has showed once again how geopolitical influences will continue to impact the supply of metals that are already under extraordinary market demand. As the war in the Ukraine drove supply chain issues and additional sanctions on Russia, aluminum spot-prices spiked as high as 60% year over year in March 2022 - up to $3,487 a tonne, a 30-year high - on worries about supply reductions from aluminum powerhouse Rusal.

The conflict also more fully exposed the vulnerability of aluminum producers to power availability and energy price uncertainty, as current energy supply challenges being experienced by European and Asian metal producers were exacerbated during the war.

All of these factors show that with global metal demand only growing (anticipated to grow by 80% by 2050), and industry carbon-reduction targets not yet on track to meet their goals, producers must find ways to improve their efficiency, and increase their yield of high-quality metal from current production - all while lowering their carbon footprint. PyroGenesis' range of technology solutions provide just such an opportunity, with the Company's DROSRITETM systems providing industry- leading dross recovery rates of high-quality aluminum, inline and on-site, with a lower operating expenses and lower carbon footprint than all competing technologies; meanwhile, the Company's mainstay plasma torch offering provides another technology-driven solution for metal producers looking to reduce their reliance on a volatile natural gas supply chain (or any fossil fuel, for that matter) within any aspect of their operations that require metal melting or heating.

These same or similar pressures are affecting the global steelmaking industry, into which the Company has already sold initial torches for final pre-order trials; the Company expects similar positive outcomes as a result of these additional pressures.

For clarity, as stated many times, most of PyroGenesis' product lines do not depend on environmental incentives (tax credits GHG certificates, environmental subsidies, etc.) to be economically viable; with the increased commitments by industry to carbon reduction, it is anticipated that the Company's growth drivers will expand, and shareholders will see increased value.

The Company is not immune to the negative impact that COVID-19 and other external factors brought on businesses, specifically related to the work force and, more importantly, the supply chain. However, Management believes that the Company is better situated than most, and through various mitigation measures these challenges continue to be dealt with in an effective manner. The Company expects even greater improvements as the impact of COVID-19 and other external factors continues to recede after Q2 2022.

Organic Growth

Organic growth will be spurred on by (i) the natural growth of our existing offerings, which continue to be accelerated given our strong balance sheet (ii) leveraging off our insider "Golden Ticket" advantage that because of, for example, the fact that the inline, hot dross-enabled DROSRITETM system in installed inside a customer's facility (vs. the legacy cold-dross Rotary Salt Furnace approach that is installed off-site), this allows us to see first-hand some of the additional and peripheral needs of our customers, and (iii) exploring new ways scientifically (and corresponding markets laterally) to provide unique solutions and value that helps industries deal with some of the most pressing environmental, engineering, and energy problems.

A "Golden Ticket" provides the opportunity to either, (i) cross sell other products or, ideally, (ii) identify new areas of concern that can be addressed uniquely by PyroGenesis.

Over the past several years, PyroGenesis has successfully positioned each of its business lines for

rapid growth by strategically partnering with multi-billion-dollar entities. These entities have identified PyroGenesis' offerings to be unique, in demand, and of such a commercial nature as to warrant such unique relationships. We expect that these relationships are now positioned to transition into significant revenue streams.

Aluminum Industry Process Improvement

As mentioned in previous reports, momentum with PyroGenesis' Aluminum Industry strategy and offering continues to not just bear fruit, but to explode in opportunity in several different directions.

In 2021, the Company concluded a joint venture and a license agreement with an existing and proven technology provider. The technology is geared to uniquely handle the residues resulting from the processing of dross in the aluminum industry. We had previously announced our intention to secure this technology and would not only make our traditional DROSRITE™ offering more appealing but could also be offered as a stand-alone product. We believe that valorizing the residues and producing high end products will further define us as the go-to company for all dross related processing. This is a prime example of our "Coffee & Donuts" strategy in play. The joint venture will only relate to the new technology and, as such, PyroGenesis will not have to vet in any assets or IP (specifically not the DROSRITE™ technology).

Overall, the Company is now one of the largest and certainly the fastest growing dross recovery solutions in the world, with 11 large DROSRITE™ systems in use or slated for delivery to markets around the world, and three more LOI's. The Company also continues to increase the price and the efficiency of its systems, and is pitching several more contracts as of the writing of this document.

During the quarter, the Company announced on February 2, receipt of a $4M purchase order for the first of three 10-ton DROSRITETM systems from an existing client, which followed the receipt of a letter of intent (LOI) from the existing client on June 07, 2021.

Steel Industry Process Improvement

With steelmaking being one of the most carbon-emission intensive industries in the world, estimated to be responsible for between 7 to 12 per cent of all global fossil fuel and greenhouse gas emissions, that industry continues to be under intense pressure, including huge financial penalties, to find emission reductions.

This pressure on the steel-making industry allows PyroGenesis to expect demand for its upstream, iron ore pelletization solution to increase significantly, as steelmakers look to all aspects of the production lifecycle for carbon reduction opportunities.

Serious consideration is being given to replacing large numbers of the fossil fuel burners in iron ore pelletization with PyroGenesis' proprietary and patented plasma torches. To date, everything is

proceeding as expected. Initial discussions with potential customers have evolved into confirmation stages, computer simulations, business case development, and initial torch orders for in-factory testing with two of the largest steelmaking and mining companies in the world. As these torches are tested in live settings over the coming months, the company expects a resulting roll-out program to replace many, if not all, fossil fuel burners with PyroGenesis' plasma torches in the customers' iron ore pelletization furnaces - a technology process for which PyroGenesis, as the patent holder, commands a significant competitive advantage.

During the quarter, the company announced on January 27 the scheduling of a factory acceptance test (FAT) for plasma torches for its "client A", a multi-billion dollar international producer of iron ore. Subsequently, on February 8, the Company announced the completion of said FAT, and further announced that the torch system would be shipped to the Client's facility, with scheduled arrival on or about the end of Q2 2022.

On February 1, the Company provided a cost estimate for 36 plasma torches to that same Client A. The estimate was accordingly provided, at an estimated value of $95-115 million. The range is an estimate due to certain uncertainties which will be more clearly defined in due course.

PyroGenesis expects that the previously mentioned government initiatives, geared to stimulating their respective economies by promoting and funding environmental technologies and infrastructure projects, will only serve to increase interest in PyroGenesis' plasma torch offerings to other companies in this space. While potential clients seeking government support for large initiatives may draw out the onset of large contracts, the sheer number of potential customers, and the fact that the Company will engage with many of them in different stages at different times, will help to ensure a long, overlapping pipeline of potential projects.

In addition, PyroGenesis is proactively targeting other industries which are experiencing significant pressure to reduce GHGs, and which utilize fossil fuel burners as well, such as the cement, aluminum, and automotive industries.

Plasma Torches for Emerging / Niche Markets

Separately, the Company also offers plasma torches to emerging / niche markets where there is a high probability of on-going sales from successful implementation.

One such example is when, during the quarter, on February 7, the Company announced that it had signed a $273,000 contract with a European research centre, to manufacture and deliver a 50Kw methane plasma torch, which will be used by the client to develop a process to convert hydrocarbons, including methane (a greenhouse gas), into useful chemicals such as olefins (e.g. ethylene, propylene, etc.), thereby significantly reducing GHGs.