Mr. Pascali, 

As we patiently wait for news on the Drosrite partnership, Brandon Bandiera, developbc and I were tossing around numbers and came up with an analysis of sorts. As a result I have a couple questions. 

First question, based on the guidance you’ve provided thus far and statements you’ve made are we in the ball park? (Analysis below) 

Second question, a second Drosrite unit was constructed for North American demo. Can you provide an update on this unit and with the change in strategy will it still be used as a demo unit? 

As always thank you for your time and hopefully you can provide some guidance on the first question. All the info is public but I understand if you choose not to comment for competitive reasons. 

Sincerely, 

Brent 

Drosrite Analysis

Aluminum per ton of dross - 50 per cent

Recovery Rate - 98 per cent

 Drosrite System Processing - 5,000 tpy 

Cost of Aluminum Dross -  $270 CAD/ton

Aluminum sale price (LME) - $2,400 CAD/ton

Aluminum Dross Recovery:

(5,000*0.50*0.98*2,400)-(5,000*270)= $ 4.53 million CAD = $3.4 million USD

Operation Cost of Drosrite per year 

(As per October 2000 article and adjusted for inflation)

It was not clear if these figures were USD or CAD so both scenarios are provided. 

Operation cost - $489,000 USD

Waste disposal cost - $438,000 USD

489k+438k = $927,000 USD = $1.23 million CAD or 927k CAD

4.53 CAD - 1.23 CAD = $ 3.3 million  CAD 

4.53 CAD - 927k CAD = $3.6 million CAD 

You provided guidance that one Drosrite would generate $3.7 million in revenue per year. It is not know as to whether this $3.7 million is USD or CAD. We looked at three potential scenarios. 

$3.7 million USD = $4.9 million CAD

Brandon noted that in the October 31, 2018 presentation to Richmond Club the Drosrite slide quoted $100 USD/tonne for Opex. This would bring the cost to operate to 500k USD as oppose to the 927k USD posted above.

$500k USD = $660 CAD 

$4.9 million CAD - 660k CAD =  $4.2 million CAD

$3.7 million CAD - $660K CAD = $3 million CAD

$3.6 million CAD - $660k CAD = $2.9 million CAD

Clearly two of these are quite close and likely on the right track but since we don't know for sure the $4.2 million is included. In the end it doesn't matter and this is why. 

In the Richmond Club presentation you stated that one Drosrite used in a tolling service would generate $1 million a year. It is not known if this is USD or CAD. We assumed its CAD since you also stated that a unit sells for about $1 million and it appears the last two systems have been sold for close to $1 million CAD each.

In the end it doesn't matter because whether its $4.2 mil, $3 mil or $2.9 mil, you told us $1 mil, year after year. The only variable is whether you’re aiming for 33% or 25%. I suspect it closer to the 33% side based on two of our numbers being very close. 

All of these numbers were before tax, and in Quebec corporate tax of  26.7%. 

We believe a reasonable assumption would be one Drosrite unit will produce roughly $700k-800k net earnings for Pyro. Our initial analysis was $550k but this had the October 2000 OPEX numbers and we revised it as per the presentation slide. 

I apologize in advance if the forms of this analysis is difficult to read. I’m posting this over lunch from my phone.