Dear shareholders, interested parties and friends of Pyrum,

I hope you are all well and have had a lovely and relaxing summer. The summer at Pyrum was again very eventful with many new insights and milestones achieved.

As with the previous newsletters, we are staying true to our format and answering both general and specific questions that we have received recently.

• Why is Pyrum carrying out a capital increase right now? The moment doesn't really seem ideal. What is the money needed for?

Please allow me to answer this question first as Pascal Klein, the largest Pyrum shareholder and one of those affected: the capital increase is definitely taking place at an unfavourable time, which I don't like myself either, but we need it right now for several reasons. All the reasons are understandable and you will understand them in a moment. The fact is and remains that I am not only a member of the Executive Board, but also a shareholder, and would certainly not have approved a capital increase if it were not necessary. The reasons for my approval are as follows:

1. As previously announced, we have finally received the last piece of the puzzle for the Pyrum rollout plan, the long-term purchase agreement for our rCB from Continental. So we really have managed to get an off-take guarantee for the quantity of two plants for a full 10 years and the price per tonne is in a very attractive range of EUR 1,200 to 1,800. These are all gigantic milestones that we are very happy with! Unfortunately, a contract like this rarely comes without something in return. We had to commit to actually building the plants in the short term. Because Continental is committed to acceptance and is gradually converting its production of new tyres to rCB, rCB must also be supplied. This means that Continental undertakes to accept the rCB on the condition that Pyrum builds the plants quickly and brings about a FID (Final Investment Decision) quickly. This means that we have to achieve the FID for the next Pyrum plant in Perl-Besch by 30 June 2025 at the latest, and we need a capital increase now in order to achieve the equity ratio that the banks require for the financing. If we don't want to jeopardise Continental's rCB acceptance guarantee and the timetable for our rollout plan, then we need to act now and grow quickly. For your information, an FID means that a plant is 100% fully financed and has received all approvals. The permits are not a problem until 30 June 2025, but the financing in Perl is only 50% complete. As the plant cannot be financed with more than 70% debt, we need equity to fulfil the banks' criteria. Unfortunately, it has to be real equity; equity-replacing measures are not sufficient. Time is now running against us and we must quickly bring about the FID of at least this further plant so that the rCB approval is irrevocably secured.
   
   
2. We can take a much larger stake in the joint venture plant in the Czech Republic. The previous plan was to invest the EUR 3 million that we were allowed to utilise from the BASF loan and to obtain a minority stake of less than 25% in the plant. Following negotiations with the major Czech group, they are now prepared to give us a stake of up to 49% in the plant, provided we invest EUR 7.6 million. As the financing is to be finalised in the Czech Republic by the end of 2024 and we have to make a binding commitment, now is the time to raise the difference. This really is a unique opportunity to invest just EUR 7.6 million in a Pyrum plant and receive almost half of the shares in return.
   
   
3. We have been working with Schwalbe for years to set up a recycling system for end-of-life tyres. This recycling system is now being gradually expanded and we would like to benefit from it and thus gain massive access to old bicycle end-of-life tyres. In addition, we now have the unique opportunity to participate in the expansion of logistics and will be able to handle this as a service in future. This requires an investment in containers and lorries, which cannot be financed by the BASF loan. Schwalbe is participating as a further strategic investor as part of the current capital increase and will hold 4% of Pyrum once the transaction has been completed.
   
   
4. We are working with Continental in a JDA (joint development agreement) to develop new rCB qualities. These new rCB grades will potentially receive intellectual property rights in which Pyrum would like to participate. This is one of the most important points for our development: to be involved in the development of new rCB qualities and to have co-ownership of them. This is only possible if we put our own money into the JDA, which we have done so far. However, the project financing from banks and BASF does not cover these development costs, so we have to raise equity capital in order to be able to continue to participate in the JDA with an ownership share. Please don't get me wrong, without new equity the JDA would not end, but we would no longer have co-ownership of new rCB qualities under development.

I hope you can understand our motives and realise that there was no time to lose. Of course, the current share price is not perfect due to various sales abroad, but the advantages of a capital increase far outweigh the disadvantages.

• What exactly does the new supply contract with Continental mean for Pyrum? How important is this milestone and is it true that the contract is worth around EUR 150 million?

To answer this question, I need to expand a little and explain the background to such a development. The bottom line is that we at Pyrum have not only developed a new technology, but also brought completely new products to a previously non-existent market. When you develop a better car or a very efficient solar system, you are entering an existing market and competing with suppliers of existing products. But that was never the case with Pyrum. When we had our technology in stable operation and were able to produce large quantities, there was no market for our end products. Although there was a will in the market to become "greener" and "more sustainable", neither our oil nor our rCB was needed to manufacture the products. In addition, we were operating in long-established segments that had existed unchanged for almost 100 years and worked according to the credo: "Never change a running system". This was the case in 2017 and 2018, when we were already able to produce but did not yet have any customers.

The big turning point came with the new sustainability rules, the Fridays for Future movement and the public's desire for sustainable products. When BASF approached us and wanted to "test" our oil, we knew we had to open this door. So we supplied BASF with everything we could, as quickly as we could. BASF was positively astonished and quickly agreed to test larger quantities of our oil in increasingly wide-ranging applications. And lo and behold, it worked. To be honest, BASF was initially very sceptical as to whether it would all work, whether the machines would be able to handle our oil and whether the quality of BASF's end products would remain the same. But once again, someone had to have the courage to give it a try. When BASF signed the first framework agreements with us and invested in us, suddenly everyone wanted our oil. Pyrolysis oil has now become a real star in the market and every chemical and oil company wants to buy huge quantities of pyrolysis oil. The market now has to grow quickly as there is much more demand than supply. To be honest, there are not enough tyres in the world to meet the demand for pyrolysis oil.

Unfortunately, oil cannot be compared with carbon black because the market is much more complicated and works differently from the ground up. This means that our oil is a raw material that is also treated as such at BASF. Simply put, our oil is similar to crude oil and goes into BASF's normal oil system, where our oil is broken down into its molecules and processed into chemical products in BASF's individual plants. To put it in a nutshell: In BASF's products, no one will ultimately recognise whether our oil or crude oil has been used. This means that Pyrum has little to do with the quality assurance of BASF's end products. We do have to comply with certain characteristic values in the oil, but this is relatively easy to realise with our technology.

Unfortunately, rCB is a completely different story, as our rCB is not further processed by the manufacturers. As it is, our rCB goes into new tyres and massively changes their properties if we had quality fluctuations in production. In addition, we first had to learn what is important with carbon black. What does a tyre manufacturer need? How must the carbon black be processed? How fine does it have to be? Does the grinding process have an influence on the quality? And much more. In the end, we supply BASF with a oil and Continental with a high-tech carbon black that first had to be developed in co-operation with Continental. So we had to learn a lot and also put our company on a completely different footing! A certified automotive supplier that delivers safety-relevant components no longer has anything to do with a start-up. Over the last two years, we have had to adapt our structures and develop rCB in several quality classes and testing mechanisms to ensure quality in production. Then there was a laboratory, several conversions in the production facilities to avoid contamination and hundreds of training sessions with the employees. But we did it! Today, we are able to produce an rCB from 100% waste that can be used 1:1 in new tyres.

Now the time had finally come to get down to business. We had the product and Continental, Schwalbe and many other manufacturers had expressed a need for it. And after all these technological achievements came the sobering reality of purchasing from large corporations in the automotive industry. We were informed that supply contracts are concluded for a maximum of one to two years, that Pyrum has to provide a lot of insurance and guarantees and that they have already considered a price for the rCB, which of course has to be cheaper than traditional carbon black because rCB is new and first has to establish itself on the market. After a conversation like this, you first have to sit down, take a deep breath and then say "No" very calmly and firmly. This is absolutely unusual in the automotive industry; usually the customer sets the conditions and the supplier accepts them and either delivers or not. However, we knew that our material was something special and formulated our conditions very clearly: a 10-year acceptance guarantee from the commissioning of a plant, a guaranteed base price for the entire term of the contract and a guarantee that we would also receive end-of-life tyres in order to be able to produce rCB. Of course, our demands were not taken seriously at first and were labelled as "absolutely unusual for the market". But we stuck to our guns, there was no other way. Nobody will finance our plants if there is no purchase guarantee for the end products at a fixed minimum price until the plant has amortised. Of course, the existing purchase agreement with BASF for the oil helped us in the negotiations, but it was regularly pointed out that 10-year contracts are quite common in the chemical industry, but not in the automotive industry. So it quickly became clear that we were asking the automotive industry for something that was virtually impossible and had never been done before. To cut a long story short, after months of intensive negotiations, we finally managed it and now have a 10-year purchase guarantee for the quantities from two Pyrum industrial plants! We also have the option to supply the volumes from two further plants from 2028. And the fixed base price, which cannot be undercut for 10 years, has also been implemented. This is one of the biggest milestones in our company's history, and we must all be aware of that. Let's be honest, we are talking about the volumes of two plants for 10 years for a market average price that is somewhere in the region of EUR 1,500 per tonne. This brings us to a contract volume of over EUR 150 million, which was even reinforced with a down payment on the contract. I can only thank Continental for taking this innovative and new path with us and for their strong commitment. This is the only way we can improve the world and drive innovation forward. And just like back then with BASF: as soon as the ink was dry on the framework purchase agreement, other market players came along and wanted rCB too. It is not without reason that Schwalbe has already announced that it will switch 70% of its entire production to Pyrum-rCB and further talks with tyre manufacturers are already underway.

In conclusion, we can say that we have finally done it! We have not only developed the technology, but also created the market and generated a demand for our products that did not exist 3-4 years ago. And there's no going back! The sustainability targets have been set and now that it has been technically proven that it works, the industry can no longer go back to fossil oil or fossil industrial soot because the emissions here are many times higher. I would like to take this opportunity to remind you that we save 965 kg/CO2 equivalent per tonne of end-of-life tyres and make ourselves independent of oil imports from the Middle East and carbon black supplies from Russia. So we are no longer just talking about ecological goals, but also about independence from raw materials. With the framework agreements for oil and rCB, all of our end products are now securely sold on a long-term basis and we can do what we like to do best: Building plants and driving the triumphal march forwards.

• What is the status of TAD 2 and 3 in Dillingen? When will the plants be running at 100% and when will rCB also be produced here?

We are now running both new lines alternately in industrial test mode, each in non-stop production for three weeks, followed by an automatic cleaning cycle. Both lines have also been operated simultaneously, but only for a few days to see that everything runs stably together. Over the past few months, we have successfully resolved all teething problems and have now reached the point where we have started the first 100% full-load operation. I am pleased to inform you that the first full-load test with TAD 3 has been successfully completed and that we will soon be starting the first full-load operation with TAD 2. There was already a press release on this with further details. The plan is to start parallel operation with both lines at 100% in 2024.

As far as rCB production in Dillingen is concerned, I can announce that we are continuing to produce stable, high-quality rCB with TAD 1 (Pyrum Line 1) and have already processed and sold a few tonnes from TAD 2 and 3 in the "old" grinding and pelleting plant. The final Continental audit is planned for October so that carbon black from TAD 2 and 3 can also be officially used in Continental tyres. This is only possible once stable series operation over several weeks has been demonstrated. Our new rCB will initially be produced with TCU (unground rCB, raw from the reactor) from TAD 2 and 3 in grinding and pelletising plant 1. Unfortunately, this plant is too small to be able to process all the quantities from TAD 1, 2 and 3, but we assume that we will still be able to produce more rCB than is currently the case with the TCU from TAD 1 alone.

As far as the new and six times larger grinding and pelletising plant is concerned, the situation is as follows:

• The grinding plant has already been delivered and is safely packed in large crates at Pyrum in Dillingen.
  
  
• The foundations for the new grinding and pelletising plant were laid in October so that we can start building the grinding plant in November at the latest. The parts for the pelletising plant are to be delivered from November so that we can continue seamlessly with the construction of the pelletising plant. The aim is to start rough assembly, also in November, and to complete the assembly work in the first quarter of 2025 in order to start commissioning in the second quarter.
  
  
• The rCB storage silos and the entire loading technology for the finished rCB have already been installed.

Just to give you a feel for the grinding and pelletising plant 2: We are talking about a plant that is larger than three to four detached houses and is being built in a huge hall in which several trades have to work simultaneously. However, we are very confident that we will be able to produce the first rCB samples in Q2/2025.

• What is the status of the new Pyrum plant in Perl/Besch? When will construction start there?

There is not too much news in Perl/Besch, except that all planning and approval documents were largely finalised over the summer. Some new findings from the operation of TAD 2 and 3 as well as the experience of the grinding and pelletising technology have also been incorporated here. Although this has taken us two to three months, it has prevented us from having to submit a licence amendment application in the future, which would have cost us a lot more time and money afterwards. From today's perspective, the documents will be submitted in November once the final expert reports have been finalised. After that, it usually takes four to eight weeks to obtain the authorisation for an early start to construction in accordance with Section 8a of the Federal Immission Control Act (BImSchG) and to start construction. The site has already been cleared and the new trees are being planted in cooperation with our partner Siemens in the municipality of Perl. Siemens is supporting us very strongly with the planting of the new trees and has become an important partner for Pyrum and the construction of our facilities.

• What is the situation with the Pyrum joint venture plants? Is progress being made here? Which projects are developing the fastest?

This question is interesting, but not so easy to answer, as a different plant is slightly ahead every week. The most advanced joint venture projects are currently:

• Sokolov, Czech Republic: This Pyrum plant, which is to be built on the site of a power plant, is at a very advanced stage. Partial licences and funding approvals have already been granted and the detailed engineering will be completed in the next few weeks. This project is likely to be the first joint venture to start construction. Over the summer, a delegation from the licensing authority in the Czech Republic visited Dillingen and inspected our main plant. The authority was very positively surprised and assured us of rapid processing and the best possible support. The authorising authority really didn't expect our plant to be so clean, quiet, efficient and environmentally friendly.
  
  
• Athens, Greece: This plant is a joint venture between a Greek tyre disposal company, a fund and Pyrum. The licences have already been granted and the building site is also available. As this is a project of national importance - after all, this Pyrum plant will dispose of almost 50% of the entire end-of-life tyre market in Greece - special political bodies are involved and there are potentially very high funding amounts. Although this process has already taken several months, we are confident that we will be able to finalise the funding process before the end of 2024. If we were to place orders before the funding was confirmed in writing, the funding would unfortunately be irretrievably lost and we are talking about a funding rate of up to 48% of the total construction costs of the plant. So we have to be patient and wait for the funding bodies to give their approval.

There are many other projects, such as with SUEZ in England, with Greentech in Sweden, with Remondis in Bremen or with Unitank in Emleben. All of these projects are progressing slowly but surely. The two projects mentioned above and our own construction project in Perl/Besch are currently the furthest along and are making great progress every week. We may also face a luxury problem: If all the projects get the green light at the same time, then we are in for a very busy time.

• What are you currently most afraid of or respectful of, Mr Klein?

Not so long ago, my fears were more of a technical nature. By that I mean that any technical problems with our systems caused me sleepless nights. Fortunately, that time is over and we have really managed to create a very reliable technology that is also reproducible and can be mass-produced. After that, my main fear was: "Will we ever get the rCB to the point where it can really be used in tyres, and will we be able to sell it at a reasonable price so that our factories are profitable?". This fear haunted me for a very long time, but in the first half of this year we finally solved that too! We produce stable rCB that can be used in tyres, and the large purchase agreements with Continental and Schwalbe show that there is a real demand for our rCB and at prices that can finance factories. The recently concluded 10-year supply contract for rCB with Continental is therefore a huge milestone that has apparently not yet been recognised by the capital market.

Curiously enough, my fears or concerns are completely different today than they were a few months ago. I have no critical concerns about Pyrum, our technology, our end products or their marketing! The issues that have bothered me for years have been resolved, and today I am more concerned with everyday problems in normal business operations and external problems. The current political instability in Germany, on the other hand, really worries me and some of our international investors are telling us the same thing. They believe in Pyrum, they believe in the business model and the market, they also believe in us as a management team, but they no longer believe in Germany and are afraid that Pyrum will suffer as a result. The high interest rates, the reluctance of investors, funds and banks and the resulting lack of funding in the market are also being felt everywhere. Just today I received another interesting piece of information that really shocked me. Did you know that in Q2 2024, according to PricewaterhouseCoopers, just EUR 14 million flowed into capital increases of small and mid caps (small and medium-sized companies) in the whole of Germany? EUR 14 million in a country like Germany and that in an entire quarter! How are the companies supposed to develop further? As Pyrum, we are still fortunate to have many strategic partners such as BASF, Continental and Schwalbe, who also support us financially, but without strategic partners it is currently almost impossible to develop.

To finish the question: Pyrum itself no longer worries me, but the capital market environment and political developments do. We are also noticing that some investors are selling Pyrum shares at the drop of a hat because they urgently need money or are reallocating their investments! This has nothing to do with Pyrum itself, but we have to deal with it.

We hope that this newsletter has given you some important insights into what is currently happening at Pyrum and we can only encourage you to send us feedback and further questions for the next newsletter.

Yours, Pascal Klein