HPQ Silicon : MANAGEMENT DISCUSSION AND ANALYSIS

HPQ Silicon Inc.

(Formerly HPQ Silicon Resources Inc.)

MANAGEMENT DISCUSSION AND ANALYSIS

For the period ended June 30, 2023

INTRODUCTION

This management discussion and analysis (''MD&A''), prepared as at August 29, 2023, contains information as at June 30, 2023, and should be read in conjunction with the unaudited Consolidated Financial Statements for the periods ended June 30, 2023, of HPQ Silicon Inc (formerly HPQ Silicon Resources Inc.) (''HPQ-Silicon'', the ''Corporation'' or ''HPQ''). The information described in this report includes the activities of the parent company as well as its subsidiaries (see Note 4.2). The consolidated Financial Statements for the quarter were prepared by the management and have not been reviewed by the auditor. All amounts are in Canadian dollars.

The Notes referred to in this MD&A refer back to the Notes in the Consolidated Financial Statements. The Consolidated Unaudited Financial Statements are presented in compliance with the IAS 34 standards ¨Quarterly Financial Information¨ which calls for critical accounting estimates. They also demand of Management the exercise of its judgement in the application of the accounting methods used by HPQ Silicon. Note 5 of the Financial Statements outlines the particularly complex areas where such judgement is required as well as the hypotheses and estimates where such hypotheses and estimates have a major effect on the Consolidated Financial Statements. The consolidated Financial Statements were not adjusted in regard to the accounting value of Assets and Liabilities, Revenues and Expenses and to the classification used in the preparation of the Consolidated Cash Flow Statement under the hypothesis of the Corporation`s ability to continue as a going concern. These adjustments could be significant.

HPQ Silicon Inc. was incorporated on December 20, 1996, under the Canada Business Corporations Act. The Corporation`s shares are part of the Emerging Corporation category and are publicly traded on the TSX-Venture Exchange ("TSX-V") under the symbol:" HPQ". It is a reporting issuer under the securities laws of the provinces of Quebec, Alberta, and British Columbia. Since March 16, 2021, the Company's shares have been traded on the OTCQX Best Market under the symbol "HPQFF" and from July 7, 2023 , the Company's shares are trading on the OTCQB ("The Venture Market") still under the symbol "HPQFF On July 4, 2022, the Company obtained the certificate of modification of its corporate name for HPQ Silicon Inc. as well as its classification of its activity for Industrial, Technological or Life Sciences group 1 on the TSX Venture Exchange as of august 2022. HPQ Silicon`s Head Office is located at 3000, Omer- Lavallée Street, Suite 306, Montréal, Québec, Canada, H2Y 1R8.

The Corporation regularly presents supplementary information on its activities which are filed on SEDAR (www.sedar.com).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements that are based on the Company's expectations, estimates and projections regarding its business, the development of technologies related to the transformation of quartz into silicon materials and its derivatives in which it operates as of the date of the MD&A. These statements are reasonable but involve a number of risks and uncertainties, which are identified in the regular filings done by the Corporation with the Canadian Regulatory Authorities, and there can be no assurance that they will prove to be accurate and the final results as well as future events could vary in a material manner and contradict the results expected under these Statements.

The reader is cautioned not to place undue reliance on forward-looking statements as, actual outcome and results may differ materially from those expressed in or implied by these forward-looking statements.

The Forward-Looking Statements are influenced by a variety of risks, uncertainties and other factors which could significantly alter the results and actual events. When used in this document the words such as

2

"could", "plan", "estimate", "intention", "potential", "should" and similar expressions are Forward Looking Statements.

Even though the Corporation believes that the expectations expressed in these Forward-Looking Statements are reasonable, these statements are subject to risks and uncertainties and there is no assurance given by the Corporation that the expected results will correspond to the Forward-Looking Statements.

Many risks exist which could render these Forward-Looking Statements erroneous such as the inability to obtain patents or other development risks.

The Corporation`s ability to continue its operations is subject to securing additional financings needed to continue the development of its technologies, to start commercial production, and the continued support of its suppliers and creditors. Even though the Corporation was able to secure such financings in the past there is no guarantee it will be able to do so in the future.

The Corporation commits to update its Forward-Looking Statements and to advise its shareholders if circumstances, estimates or opinions issued by Management changes.

DESCRIPTION OF THE BUSINESS

The Company is a technology company specializing in green engineering processes for silica and silicon material production. HPQ projects are focused on proposing innovative silicon (Si)-based solutions all the while developing a unique portfolio of high value-added silicon (Si) and Silica (SiO2) products sought after by end users (Manufacturers of Li-Ion battery, Electric Vehicle (EV), anodes for Li-Ion batteries, to name just a few).

The company is also working on the development of a stand-alone system for manufacturing hydrogen under pressure by hydrolysis of silicon-containing materials.

The Corporation`s activities are focussed on the three (3) following niches:

3

3. OTHER NICHES

HPQ TECHNOLOGIES

SILICON (Si) NICHE

Silicon (Si), also known as silicon metal, is a semi-conductor material and the second most abundant element in earth's crust. Like all other energy metals (lithium, graphite, cobalt, nickel, etc.), it does not exist in its pure state and is expensive to extract.

Silicon is also one of today's key strategic materials needed for the decarbonization of the economy and the Renewable Energy Revolution ("RER").

The EU, the United States and Australia declared Silicon a critical raw material as a wide range of modern technologies depends on it to make various numbers of industrial and consumer products.

The Silicon market is ripe for the development of disruptive technologies, because:

THE PUREVAPTM QUARTZ REDUCTION REACTOR (QRR)

The PUREVAP™ "Quartz Reduction Reactor" (QRR) is by design a Closed Electric Arc Furnace (CEAF) with the ability to operate under controlled atmospheric conditions. This innovative furnace enables the semi- continuous feeding of Silica (SiO2) and a carbon reductant, facilitating the production of 3N+ silicon in a single step. Notably, the QRR's design eliminates air infiltrations within the reactor, ensuring that the CO gas ("Co(g)") generated during the carbothermic reaction remains unoxidized. Consequently, the QRR produces a gas composition enriched with CO(g), which can be readily captured for further utilization. There by enabling CO2-free production of silicon.

Another advantage of the QRR is the fact that it uses 25% less feedstock to make the same amount of silicon as traditional production processes (4.5 Metric Tonnes (MT) to make 1MT of silicon as opposed to 6MT) - granting up to a 20% cash cost advantage, all the while producing a higher purity silicon (4N versus 2N).

PUREVAPTM QRR PROGRESS MILESTONES

The PUREVAP™ (Gen3) Pilot Plant, a scale up version of the Gen 2 PUREVAP™ QRR by a factor of approximately 2,500 times, is being deployed to validate and replicate key findings previously identified during Gen 1 and 2 testing.

4

Started in June 2022, a vigorous testing program is ongoing and will take run for a period of approximatively 12 months, ending around the end of June 2023. The PUREVAP™ QRR R&D programme is progressing.

This research and development phase takes place before the launch of the pre-commercial phases, which makes it possible to test the system in conditions that are as close as possible to a commercial operation. This phase also allows HPQ, its technology provider and subcontractor to validate and quantify the QRR's disruptive advantages as previously identified during Gen 1 and 2 testing.

The key trend emanating from the Gen3 QRR testing to date and the silicon purity results are:

For the period ended June 30, 2023, the Company incurred $1,386,000 in expenses related to the advancement of the Gen3 Pilot plant test program.

PUREVAPTM QRR FUTURE PROGRESS MILESTONES

During the coming months, the company's PUREVAPTM QRR project activities will be focused on the following development milestones:

Costs related to the work required to achieve milestones #2 to #5 will be negotiated by mutual agreement between HPQ and its technology provider during the third quarter of 2023.

The cost of reaching milestone #6 is preliminarily estimated at $350,000. This cost covers the preparation of a concept study expected to be completed in eight (8) months or less. The objective of this study is to stimulate the advancement of pre-commercialization for the PUREVAPTM QRR technology.

5

Attachments

Disclaimer

HPQ-Silicon Resources Inc. published this content on 28 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 August 2023 00:48:58 UTC.