MAX Power Mining (CSE: MAXX) says it is accelerating the commercial validation of what would be Canada’s first natural hydrogen system after securing a C$25 million ($18 million) investment from mining billionaire Eric Sprott.
In a press release on Friday, the energy exploration junior said it has defined the first series of high-priority targets for follow-up drilling at the Lawson natural hydrogen system in Saskatchewan. The drilling, part of an expanded multi-well program, aims to confirm what the company considers to be the world’s first large-scale commercial discovery of this emerging new primary energy source.
In addition to hydrogen, the Lawson complex — located in the heart of the Genesis Trend adjoining the Regina-Moose Jaw Industrial Corridor — is also showing strong potential for helium deposits, the company said.
A survey was conducted this week at six proposed initial well locations at Lawson, after which the MAX Power team finalized its first three drill targets through analyzing 3D seismic data to define structurally optimal locations where the potential for gas flow, volume and concentrations of natural hydrogen and helium could support commercial validation.
Using information collected through the drilling campaign, the exploration and production models will be optimized and refined in real time, with the help of geoscientists, geophysicists, engineers and technicians, to fast-track the timeline for potential commercial discoveries, MAX Power said.
In addition, the MAX Power team has also planned a 2D seismic data acquisition program across the 475-km-long Genesis Trend to further assess dozens of preliminary and more advanced natural hydrogen prospects while also identifying potential new target areas.
Sprott backing
These plans will be funded by the C$25 million announced a day before. Under a private placement, a Sprott-owned entity would acquire 12.5 million units of the company at C$2 per unit. Each unit carries one common share and one warrant to buy shares at C$2.75 each.
Sprott currently holds more than 10% of MAX Power’s outstanding stock, and has agreed to not exceed its shareholder above 19.9%.
“MAX Power is entering the most important execution phase in its history, and Eric Sprott’s fresh investment of $25 million expands and accelerates this execution phase. Lawson confirmed Canada’s first subsurface natural hydrogen system,” MAX Power CEO Ran Narayanasamy said in a press release on Friday.
Shares of MAX Power initially surged on the Sprott investment, but fell during Friday’s trading, down about 5% to C$2.36 by 1 p.m. ET. The Vancouver-headquartered company has a market capitalization of about C$357 million ($259 million).
