ABOUT: HPQ Silicon Resources Inc. (TSX-V: HPQ) is a Canadian producer of Innovative Silicon Solutions, based in Montreal, building a portfolio of unique high-value specialty silicon products needed for the coming RER. Working with PyroGenesis Canada Inc. (TSX-V: PYR), a high-tech company that designs, develops, manufactures and commercializes plasma-based processes.
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Bernard Tourillon, the Chairman, President, and CEO for HPQ Silicon Resources. The company trades on the TSX Venture HPQ and over-the-counter URAGF. Thanks for joining us today there Bernard.
Bernard Tourillon: Thank you.
WSA: Please start off by providing us with an intro of the company for some of our listeners that didn’t catch our earlier interview from January of this year.
Bernard Tourillon: Sure. HPQ Silicon is really an innovative silicon solution provider. Silicon is one of those growing ingredient that’s used in a lot of today’s technology, from computer chips to solar cells. And where the interest is really going to be explosive over the next few years is going to be silicon in batteries, as all battery manufacturers or EV manufacturers are looking to replace graphite with silicon to decrease the cost of the mileage per electric car and to increase the capacity of the battery. That’s what we are really focused on, that type of silicon and nano silicon.
WSA: Right, yeah. Bring us up to speed on some of the most recent news and perhaps you could talk about the recent PyroGenesis relationship.
Bernard Tourillon: Sure. What has been going on since January, we’ve been really focused on being able to offer starting end of the year the innovative nano type of silicon material that battery manufacturers and EV manufacturers are looking for. And we basically decided to create a subsidiary that can be 100% focused to that cause – nano which is sort of a partnership between PyroGenesis and HPQ to develop and to market those products. Because we think that the market for nano-sized silicon is going to be tremendous especially when not long ago on Tesla Battery Day, Elon Musk was talking about strategy, basically taking metallurgy grade silicon metal—which is basically the lowest quality of silicon not the electronic grade silicon which is cheaper to do—and then figuring a way of encapsulating it and putting into battery. So that is one of the markets we are looking at developing because we know that battery manufacturers are looking for certain specificity size of silicon which is not that easy to do at the big scale. But PyroGenesis invented plasma optimization that was even before 3D printing came to life. And based on their 20 years of experience, we are going to be revolutionizing the manufactures of nano silicon under high scale, in commercial scales.
WSA: Right. What are the main trends you are seeing right now in this sector and how is HPQ positioned to capitalize it?
Bernard Tourillon: Well, one of the biggest trends we are seeing is that basically EV, electric vehicle material suppliers are going to be in high demand. And as opposed to many of my competitors feel, although we originally came out of the resource sector, we decided to focus ourselves just on the process as opposed to the demand. So what we are seeing, there is going to be a high demand for the type of product we are doing and we have a five-to-six year lead time advantage, and since the beginning our philosophy has always been to look at commercial scalability. There is a lot of R&D made on this where a lot of different types of products are being developed at a large scale, but there is always a big gap with laboratory to commercial scalability. PyroGenesis does not get involved into projects unless they foresee a way to go to commercial scalability from the beginning, and they have a massive track record of doing that in different fields. And the silicon one that we are developing together is an exciting one where demand is going to go through the roof. I think it’s anticipated that probably within the next few years we are going to go from worldwide demands for nano parts of silicon which may be in the few tons per year now to a hundred-thousand tons. It’s a massive market, massive expansion proposition. We have been working at this for five to six years. We are not the new player; we are actually one of the old players into this situation. We are building our expertise, and we are building on Pyro’s 20 years of experience into nano powder, basically into powders, metal powders.
WSA: Powder, you said?
Bernard Tourillon: Yeah, powders. They invented what’s known as plasma optimization, which is basically you take a titanium wire and you pass it into series of plasma and you end up getting spherical powders, which are now the central tools for 3D printing systems that are being used in industrial scales at different areas, in the aerospace industry and car industry. So, basically they invented that technology and they even reinvented it not long ago, making it more efficient. The problem is that that technology has certain limits to scope of size you can do with the material economically, and the battery manufacturers and basically the energy sector certainly were requesting a smaller-sized material. So, we are basically developing a brand new process that is going to be able to furnish a sized material on the nano size all the way up to a micron that the battery and the energy manufacturers are looking for. And that we are going to be, starting in December, we will be in a position to start delivering samples to the battery manufacturers, EV manufacturers, and basically all other participants interested in those products.
WSA: What sort of milestones can the investors expect to see over the next six to twelve months?
Bernard Tourillon: Well, I think we are about to enter the most exciting phase. Right now, starting December, we are going to be in a position where we can produce samples. We have already planned out to scale it up by the middle of next year to go from doing something like 30 kg per month to a capacity of 300 kg per month, which is going to make us one of the biggest suppliers of nano powders in the world. And then we are looking at scaling it up even to bigger commercial scale as we anticipate demand is going to be over the roof. So the next six months are going to be exciting because this- it’s going to go from the design phase to milestone reach, samples produced, samples sent to supplier. We are also going to be working with university here in Canada to start being able also to give out indication of how well our material is going to happen to battery space. Why do I see indication is very simple; every battery manufacturers have their own recipe, their own chemical, ways they use the material to make the batteries, and that’s really proprietary stuff. By us having an access to university that’s going to be able to validate this, we will be able to share with the market how exciting the results are for our material as opposed to getting a battery manufacturer very excited to buy our product, but doesn’t allow us to communicate how well it works in his battery. What we are aiming to be is basically these suppliers of nano silicon from all these battery manufacturers because every one of them has a different recipe, so every one of them is going to demand a very tailor-made product, and that’s exactly how we focus the company, to be able to deliver those tailor-made products.
WSA: Right. And so, as far as investors and the financial community as you mentioned, speaking to the market, what do you want them to better understand about HPQ?
Bernard Tourillon: Well, I think they should understand, if they are looking for a way to start to participate in the EV sector, more specifically the silicon for EV sector, HPQ is a unique vehicle to be able to do that. We are very well financed. We have a few million dollars in the bank account, something like over 16 million warrants of cash, if you count all our warrants money. And what really makes us different from other is that all those warrants are held by only five group of investors, one of them is our biggest shareholder PyroGenesis and second one is the Quebec government, which has been supporting us in the development of this technology. You have a company that has the money to do what it has set out to do and that’s planning on starting to reach the operational milestones from the end of this year.
WSA: Right. Well, you just completed a 2.7 million private placement last week…
Bernard Tourillon: Yes, PyroGenesis was the biggest subscriber of that, and that was a very specific private placement because we ended up buying into the intellectual properties related to the new reactor that we are developing. So, that’s what’s going on with that process. But other than that, we are very well financed. Our first project of technology is fully financed and the other ones are also fully financed.
WSA: And can you talk a little bit about the management team? What makes you guys well suited to be able to deliver on some of those milestones?
Bernard Tourillon: Well, what HPQ has done very successfully is that—along with my partner, Patrick Levasseur—we have a lot of experience running basically entrepreneurial companies and developing entrepreneurial process. What we have done that differentiates us from everybody else is we are not trying to build a massive team in-house, which ends up being very expensive. What we have done is we partnered up with world leader in expertise. We have Apollon Solar in France which is a company if you combine, they probably have like a hundred years of experience just working on silicon for high-value application products. And we have partnered up with PyroGenesis one of our largest shareholders which has probably the largest in-house plasma expertise under one roof. So instead of us having to build our own big R&D team and learn from everything else, what we have tried to do is basically do the BVM,the conduit, of all these groups working together and making it work through HPQ. So HPQ shareholder benefit without having to finance that. We basically have a very low overhead, very low budget. We prefer to spend our money on R&D than everything else. But that’s going to be changing in coming months as we get closer to delivering some of our first samples to interested parties.
WSA: Right, so trying to stay lean and mean?
Bernard Tourillon: Yeah, exactly.
WSA: While still trying to maximize that shareholder value?
Bernard Tourillon: Yes. Yes, it is.
WSA: What are some of steps that you are taking as far as maximizing shareholder value, getting your story out to investors and the financial community?
Bernard Tourillon: Well, we actually waited to be very active in telling our story until we got closer to samples. If you have a great story to tell, but you have “seen this before” it might lose the potency of what’s going on. And one of the things we are also doing is that we are not just focusing on the battery sector. We are also looking at other markets where our unique nano silicon material can generate abnormally high returns. Basically, what we are looking at is using a nano silicon powder to generate hydrogen through hydrolysis. And with our partner in France, we have an operational system already. So this is a secondary market for our material that we are looking. We are not just fully dependent on, when battery manufacturers are going to be able to scale up to bigger capacity, we will have other markets as opposed to other application, high-value application. And since we are not going to have a big footprint at the beginning, for us, we can generate significant profit from what would be considered marginal markets for other large firms involving silicon. So that really differentiates us from everybody else. We haven’t put all of our eggs [in one basket] betting on the battery market, the battery market can be massive, but we have other venues where our product will have significant impact and probably even bigger impact. It’s going to be very exciting in 12 months as this becomes more and more visible.
WSA: Yeah, exactly. You are trying to create those other verticals.
Bernard Tourillon: Yes.
WSA: Certainly, so once again, we are speaking with Bernard Tourillon, Chairman, President, and CEO for HPQ Silicon Resources. The company trades on the TSX Venture HPQ and over-the-counter URAGF. Currently trading at 0.43 cents a share US and market cap is about 110 million US. Before we conclude, to get a recap of some of the key points. Why do you believe investors should consider the company as a good investment opportunity today?
Bernard Tourillon: Well, basically we are probably — if people believe in — and it’s a brilliant question, if people believe that the future is electric vehicle and electrification in renewable energy storage, HPQ Silicon is one of those rare vehicle—a true player in this area—specifically with regard to one material that is starting to get more and more attention which is called silicon. We are uniquely positioned where as the market is demanding our product, we are coming on line with it. That’s really what makes it very exciting.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress. And we would like to thank you for taking the time to join us today, Bernard, and update on investor audience. It was great to have you on again.
Bernard Tourillon: Thank you.