Canadian billionaire Eric Sprott is investing $10 million (US$7.18 million) to increase his stake in Max Power Mining (CSE: MAXX; OTC: MAXXF) and advance its Lawson natural hydrogen project in Saskatchewan.
The funding through a private placement increases his ownership to 19.5% from around 18% and follows a $25-million investment in May.
Max will issue 4 million units valued at $2.50 a piece to Sprott. The deal is expected to close around Aug. 17. Each unit consists of a common share and a share purchase warrant active at $3.25 for 24 months following the closing date.
Max says it intends to use the additional money to advance its ongoing drill program at Lawson and for general corporate purposes. The news follows the company’s recent acquisition of permits allowing the project in the province’s south to expand.
Shares in Max Power gained 5% to $2.50 apiece in Toronto on Monday when then investment was disclosed, and were there at mid-Tuesday, valuing the company at about $437 million.
Natural hydrogen
Located about 80 km north of Moose Jaw, Lawson has a multi-well drill program in search of the “world’s first large-scale commercial discovery of natural hydrogen,” according to the company.
Sprott’s backing is unusual for an investor best known for decades of investing in precious metal explorers. Natural hydrogen has attracted interest as a potential low-carbon fuel because, unlike manufactured hydrogen, it could be produced without the large amounts of electricity needed to split water or the emissions associated with making hydrogen from natural gas.
But the industry remains highly speculative, with questions over whether underground accumulations can be found in sufficient concentrations, produced economically and replenished at useful rates.
The increased stake requires Sprott to file an early warning report to regulators regarding the potential for a take-over bid.
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