u/JetsFanYEG

I think commercialization is an important topic of discussion but I think there are very good reasons why it can't be discussed by the company yet as some of the methods of commercializing require external negotiation and revealing too much about plans can be counter-intuitive. For illustration and discussion purposes I will discuss 3 paths to market as possibilities.

1. Direct production by QIMC - selling H2 direct to market or selling energy generated direct to market
2. Indirect production by 3rd party - 3rd party drills and produces H2 and sells H2 or energy direct to market, QIMC receives a % of revenue (royalty) or some derivative such as MOU or JV, etc
3. Sale of proven asset (land leases) - QIMC sells all or part of proven land area and 3rd party assumes all production, revenue, expenses, QIMC is paid up-front and potentially trailing % of revenue (typically smaller % than option 2 above)

Requirements and timeline differences for each (very limited sample of options for discussion)

1. QIMC to drill a production well, measure flow rate over time and sets up an off-take agreement (an agreement where an end-user or middleman agrees to purchase raw gas from the well, or purified pure H2 gas from wellsite after cleaning, or power such as for an AI data center) from this agreement we shareholders can extrapolate future revenue flows and value of the assets under our feet, etc, however this method has drawbacks such as the time and investment it takes to get many wells up and running and determining true costs and true revenue. This is the method most shareholders focus on but may not be the best for the company overall.

2. Setting up a JV with a 3rd party company to drill and produce wells while paying a royalty is an "easier" path to market for QIMC as a 3rd party assumes the costs of drilling and engineering work but it is also more challenging as each side wants to negotiate the best deal for themselves, these could include an AI data center client, an ammonia producer, a power generation company, a direct H2 distributor, etc. This is a challenge on many fronts because QIMC need to "prove" to the 3rd party that there will be enough H2 for their needs (which is what is happening with the shallow well district scale confirmation) because the 3rd party will need to invest time and capital to build out the system, this is also challenging for QIMC shareholders because the revenue (in form of % of H2 sold or used) is not collected until the infrastructure is in place, of course there will be chances to extrapolate future value but it is not as cut and dry as building out the system yourself, in addition QIMC also needs to keep the option of building it out themselves as a bargaining chip against a lowball royalty offer (you better accept a 5% royalty deal because there is no way you can build this yourself, the $17M cash goes a long way to maintain this bargaining chip).

3. Setting up a sale of the production asset (aka the land leases), this one is also difficult for QIMC and the 3rd party because large-scale natural H2 commercial production is a very new industry and neither side would want a bad deal, QIMC "knows" what potential they have, but they also know how long it will take to achieve 1) and 2) above. Securing a sale deal for an area such as Nova Scotia would allow them to pursue other areas (like ON, QC, MN) and have a massive capital influx that allows them to build out a second or third area using 1) or 2) method above. On the flip side you don't want to accept a low deal quicker especially since option 3) can also happen after 1) or 2) are already operating. The problem for shareholders with 3) is there will likely not be any notice or gradual increase it literally could be one day we are trading normally assuming they are building out an area and then a press release drops that XYZ company has made an offer of the entire area play and the market would re-rate very quickly to catch up on the value.

In my opinion they are working on proving out the areas first to get the best deal for option 2) or 3) while still planning for an advanced campaign of option 1) but ensuring they don't negotiate against themselves. Unfortunately for us shareholders we have to be patient and understand that with at least 3 major routes to future value sometimes not having a detailed plan presented to the market can actually benefit us in the long run. Choose the option that you would prefer and try to see how the progress is beneficial for that option (and also for the other options) and in any scenario you should be very pleased with where we are and where we are heading. Remember that as we progress and more companies start analyzing our value (for a possible 2 or 3 scenario) the market will start to catch on because word of mouth spreads, and then while looking at scenarios remember there is always a potential BIDDING WAR!!!!

Momentum keeps building. A roundup of recent press released developments:

Bennett Hill, Nova Scotia (DDH-26-04)

First hole at Bennett Hill returned elevated hydrogen in the upper 100m, including a 9-metre interval with four readings at or above the 4.03% analyzer saturation point. Methane and CO₂ were near or below detection — a clean signature. Because the analyzer maxed out, a higher-range unit was deployed for the deeper interval; those results are pending validation.

District-scale model

This is the first hydrogen response at Bennett Hill, ~15km from the earlier Eatonville Road holes — consistent with the working model of a system that may extend across the Advocate Area rather than a single target.

Quebec — Bill 17

Quebec has adopted Bill 17, establishing a regulatory framework for clean natural hydrogen. QIMC appeared before the National Assembly committee and holds a 5,000m drilling permit in Abitibi-Témiscamingue.

Community partnership

QIMC's work is grounded in its collaboration with the Témiscamingue First Nation (TFN), formalized through an October 2025 MOU. The partnership integrates Aboriginal Traditional Knowledge, environmental stewardship, and equitable economic participation across QIMC's Ontario–Quebec corridor.

Teams on the ground, drilling and sampling ongoing as we keep on testing the extent of the system.

Full press releases: qimaterials.com

Forward-looking statements apply.

From QIMC IR:
"While André Turmel and John K were testifying live before the Québec National Assembly's parliamentary commission on Projet de loi 17— helping shape the very regulatory framework that will govern natural clean hydrogen exploration in this province — our team was simultaneously delivering a video presentation at the Hydrogène Québec–Enbridge Québec conference.

Two rooms. Two audiences. One message: natural clean hydrogen is real, it's here, and QIMC is leading it.

That kind of presence — at the legislative AND industry level on the same day — doesn't happen by accident. It's the result of years of scientific work, exploration discipline, and building credibility as Québec's first mover in natural clean hydrogen.

Bill 17 is a clear, responsible regulatory framework is what unlocks institutional confidence, investment, and long-term development in this province. André and John K were there to ensure the committee heard a technical, science-based perspective — the kind that only comes from a team that has actually been in the field, drilling, sampling, and analyzing gas composition data across Québec and Nova Scotia.

We were invited because of our credibility. That's meaningful.

Hydrogène Québec – Enbridge Québec Conference

At the same time, our video presentation was reaching the industry's key players, developers, utilities, and investors who are building Québec's hydrogen economy. Being on that stage (even virtually!) alongside major players like Enbridge reinforces QIMC's position at the center of this conversation.

What Sets Us Apart: Clean Gas Composition

In both settings, our message is simple: not all natural hydrogen is equal. Our R2G2™ framework targets systems with high H₂, low CH₄,low CO₂ that's what we mean by clean natural hydrogen.

We are proud of the entire QIMC team. Drill turning, expanded field work, presentations to Quebec National Assembly and industry leaders. Days like last Wednesday remind us why we do this."

https://api.newsfilecorp.com/redirect/Q2MwmT7bjM

English Translation

Jonatan Julien (Vice-President): Welcome to the representatives of Québec Innovative Materials Corp. Let me remind you that you have 10 minutes for your presentation, after which we will proceed to a question-and-answer period with the members of the committee. I invite you to introduce yourselves and begin your presentation. Welcome.

John Karagiannidis (QIMC): Thank you. Thank you, Mr. President, Mr. Minister, ladies and gentlemen of the committee. I am John Karagiannidis, founder, president, and chairman of QIMC. Next to me is André Turmel, Maître Turmel. I am also Maître Karagiannidis, but he is Maître Turmel as well. Executive Chairman of the Board of QIMC.

Thank you for receiving us today as part of the study of Bill 17. We are here to share QIMC's perspective on this bill and, more specifically, on the emergence of clean natural hydrogen in Quebec, which can also be referred to as geological hydrogen.

Our message is simple: it is to Quebec's advantage to equip itself right now with a clear framework to govern the development of this emerging clean energy sector. In this regard, Bill 17 constitutes, in our opinion, a very important step forward.

Regarding QIMC, let me first briefly introduce who we are. QIMC is a Quebec-based company developing natural or geological hydrogen exploration and development projects here in Quebec and elsewhere in North America, notably in Nova Scotia, where we are currently drilling, and also in Ontario. Additionally, we are active in the State of Minnesota, where we are the only company that has obtained permits from the State of Minnesota itself to develop natural hydrogen. So that is another aspect.

An important element, particularly for us, is that a significant part of our expertise was developed here in Quebec. Our objective is truly to continue developing a clean, local energy source that complements other energy sources.

In a context where energy demand is rising rapidly and the availability of new electricity blocks is increasingly restricted — a trend we have noticed in the areas where we developed our projects, particularly in Nova Scotia and also in Minnesota —, we believe it will be essential for Quebec to develop new sources of clean energy, notably for uses that are more difficult to electrify, such as the industrial and transportation sectors.

Furthermore, as you may have noted in our brief, one of the advantages of clean natural hydrogen is that it has very little impact on the land and the environment. Our field approach is based on solid scientific foundations that we developed here in Quebec with our scientific partners at the INRS. We also have a partner in Ontario called Lambton College.

Developed here in Quebec, this is a form of development that respects local territories, carried out in collaboration with local, Indigenous, and regional communities. We are the only company that has a partnership agreement with the Timiskaming First Nation for development in the Timiskaming region. Furthermore, the Timiskaming First Nation is also helping us in Nova Scotia with the Mi'kmaq, given the relations we share with them. So it is very important for us to build from the community up. That is how we have built our company from the beginning, and those relationships are very, very important to us.

What is natural hydrogen? Natural hydrogen, as its name indicates, forms naturally in very, very deep geological formations. It involves a rather specific structure, specifically very unique rock formations. What we are primarily targeting are fault formations that are rich in magnetite.

In this context, we do not aim to develop or explore in, for example, camps where there were hydrocarbons or where there are fossils. Because in those cases, you will find hydrogen, but that hydrogen will be bacterially created, meaning you will have $CH_4$ and $CO_2$ in it. This is somewhat contrary to the company's mission, which is truly focused on clean hydrogen, free of $CH_4$ and $CO_2$. And our results in Quebec, whether in Quebec, Ontario, or Nova Scotia, confirm this. Therefore, the gas composition is very, very important to us and is truly key to the project.

Unlike other forms of hydrogen, it does not need to be produced by an energy-intensive industrial process. That is to say, we are talking about hydrogen in its primary form, rather than hydrogen created electrically or anthropogenically. This is very important. Therefore, we do not consume electricity as is the case with green hydrogen production. So that is very, very important here.

To put it somewhat simplistically, hydrogen is generated when water comes into contact with certain minerals, in this case, iron minerals that are rich in magnetite. This water then migrates through fractures and accumulates in natural reservoirs. So it is... and regarding the extraction, which we will discuss a bit later, I noted it down further on. To extract it, we do not need heavy infrastructure here; it is a very, very simple extraction. We also do not require much energy. We are therefore able to minimize the environmental and territorial footprint in terms of the extraction itself.

Regarding the projects we discussed earlier, our projects conducted in Canada and North America have allowed us to identify very significant potential. In Nova Scotia, for example, we control an area of land in terms of claims measuring roughly 130 kilometers by 40 kilometers. So we control the entire district known as the Cobequid, which is one of the large districts.

What is ironic — and here I am going to veer off the script I had —, what is ironic is that our competitors, Rio Tinto, who are to the south in Nova Scotia, came in to claim afterward. And our other competitors, an American company called Koloma, which was funded by the Department of Defense, Bill Gates, and Bezos to the tune of 450 million, are to our east. So we are truly sandwiched between these two major competitors.

In Nova Scotia, we were able to make significant progress and validate the scientific model that was initially developed here in Quebec. Our latest drillings this winter and spring have indeed confirmed the presence of natural hydrogen by percentage, unlike other global projects, across several zones at a concentration high enough to rule out it being a simple local anomaly. So we are talking about very large systems here, not a small anomaly.

Therefore, we will continue our work this year in Nova Scotia with... we are planning seven wells in Nova Scotia with depths ranging from 900 to 1,000 meters. We have already drilled down to 900 meters in Nova Scotia, and now we are planning four additional wells there. These are important developments because they show that the model works very well in the field and that it can be applied on a larger scale. As I mentioned, we are talking about systems of extraction and exploitation here.

But what concerns us more directly in Quebec is the Quebec-Ontario corridor found in... what we call the Timiskaming Graben, next to Lake Timiskaming. Now, at several wel...

Jonatan Julien: Two minutes.

John Karagiannidis: Yes, yes, I will go quickly. Saint-Bruno-de-Guigues, in Timiskaming — excuse me — Saint-Bruno-de-Guigues, in Timiskaming, which constitutes our flagship project in Quebec. We have documented significant hydrogen concentrations at shallow depths. This is therefore very encouraging. The next steps aim to better understand and document the migration of the hydrogen system, which begins at a very great depth and migrates upward.

Next, we also have a project in Ontario within the graben itself, which continues and is a direct continuation of the work carried out in Quebec. In total, within this Quebec-Ontario corridor, we have collected more than 2,000 samples that have been analyzed, which confirmed the presence of natural hydrogen and highlighted a potential that exists on the scale of the geological system itself.

Now, André, Maître Turmel, had some comments on the bill itself.

André Turmel (QIMC): Well, quickly, hello. Simply to make use of the remaining seconds so we can discuss it. Globally, we are in favor of this bill. It closely resembles Bill 143 adopted in Nova Scotia. I know that Quebec officials are speaking with Nova Scotia, and vice versa. We have comments that we can discuss that are... could certainly be substantial, notably regarding the definition of natural hydrogen itself.

But overall, we are very pleased that there is a framework. The licensing regime suits us, especially the fact that the substrate becomes the property of the state domain; we have no problem with that, of course.

Jonatan Julien: Perfect. There were 20 seconds left, but...

André Turmel: OK, we will continue. OK. But as John mentioned, it is quite impressive. Three weeks ago, we were in Texas at the conference called Drilling for Hydrogen. And the people from Stanford University had done a global survey of where natural hydrogen was being drilled. They told us there were 25 drillings currently underway, 25, and out of those 25, 5 were conducted by QIMC. So we are truly, in what is certainly a nascent industry, nevertheless among the leaders.

Jonatan Julien: Thank you, Maître Turmel. We will have the opportunity to discuss this. I am certain the Minister will want to continue on this excellent path. So, thank you for your very interesting presentation. Mr. Minister, I now give the floor to you. You have 16 minutes and 30 seconds.

Daniel Bernard (Minister Delegate): Thank you, Mr. President. Hello Mr. Karagiannidis, and Mr. Turmel. Good to see you again. A quick anecdote: at one point, he mentions a geological term, a graben, and I previously shared an anecdote in my past life where I said: "Quebec had already tried to separate from the rest of Canada, and it fell through... because that was the graben of the Ottawa River." So, I shared that when your father was there, it was funny.

That being said, thank you truly for your presence. We have already spoken about Timiskaming and these files. And now you have... what I would like us to receive for the officials here who are handling the bill — since you haven't tabled the brief yet —, if you have recommendations or other points on certain aspects, it would be really interesting if you shared them with us here in the government, even sending them later. I think that will be important because we have seen people doing carbon capture, but you are one of the only ones truly active on the geological or natural hydrogen side. Furthermore, you operate in a specific context, which is where I want to begin.

You started under the Mining Act, and eventually, a transition will be required toward a license to continue. So, from your perspective, you should keep the Mining Act for your silica if you wish to exploit it, but eventually, for the hydrogen portion, you would need to transition to the license. And eventually, the bill provides for both types of licenses to overlap. So, for the first part, how do you envision this transition to secure both?

And for the other part, you have made investments currently, so technically, there are credits you have applied to the claims. Would these credits remain on the claims, or would you like to see a transition toward your future license?

André Turmel: Just to be certain, Mr. Minister, I am told that a brief has been tabled.

Daniel Bernard: Yes? Oh, OK, sorry, I didn't receive it.

André Turmel: Yes, yes, it is a short brief with a brief presentation, but it includes five or six suggestions. But to answer your question, Mr. Minister, QIMC has filed numerous mineral exploration rights under the Mining Act, where we were looking for specific geological precursor conditions. Because since we couldn't... since hydrogen was not regulated, what we were looking for in our mineral exploration rights was iron, magnetites, and so on.

What we hope for, of course, like our predecessors before us, is that all the work we have done and invested into these mineral exploration rights is not lost and is instead transferred. There is already a provision in the bill that allows someone holding mining rights in a given territory, when someone else comes in wanting to develop hydrogen, there is an obligation to reach an agreement. Well, in our case, let's just say we will agree with ourselves. A provision must be found to enable that transition.

As you said, we have invested a lot. We recently raised investment capital. We have money to work with, and we have zero debt. We have the funds to work for the next four years. And the question you are asking regarding the transition is the same one being asked in Nova Scotia. In Nova Scotia, the law has been adopted, it looks very similar to Quebec, and we are waiting on the regulations, which are imminent. Mr. Karagiannidis...

John Karagiannidis: Yes, we met with Premier Houston last week to specifically discuss hydrogen. Because currently in Nova Scotia, 54% of the claims on the land, the territory available in Nova Scotia, have been claimed for hydrogen. So hydrogen has become a very important economic driver for Nova Scotia at present, natural hydrogen in particular, due to the presence of these two majors, Rio Tinto and Koloma. Rio Tinto is to our south, and Koloma is to our east.

So, between us, Rio Tinto, and Koloma, we hold, I would say, roughly 48% of the claimable land in Nova Scotia at the moment. And it has become a very major economic driver. We recently raised nearly 20 million dollars. The institutional funds that participated in this fundraising included all the major American institutional funds, and Brookfield also participated in our last financing round. So, we are in a very good position in terms of exploration and, as they say in English, we are well-funded.

André Turmel: And no government funds have been requested to date. I am not saying we won't ask for any, but we don't have... we operate entirely on our own equity, our own funds, and what we have successfully raised.

Daniel Bernard: Yes. If I may follow up on the work you have done. You mentioned you were conducting work for iron and other minerals, but at the same time, you performed many studies and analyses for natural hydrogen, correct? And you encountered... so that was one of the issues raised. That being said, currently you still have, and here I am making a link to some extent with the Act respecting the preservation of agricultural land — we know we spoke about this —, you have casings in place. We are talking about hydrogen. Normally, if the gas is present, there must be hydrogen leaking, escaping from the wells currently in place, because it is a gas.

During the exploration phase, and coming back to you, when you develop, we would need to ensure there is a system, a mechanism, notably for farmers or lands, providing protection, a way to seal the holes during that period. How do you see that? Because developing a reservoir will require several drillings and other steps. So, how do you suggest managing that environmental aspect?

John Karagiannidis: That is an excellent point, because if we look at all the work that has been done in Quebec, it was carried out under agreements already established with private landowners. So, whatever work was done, we already have agreements with those private owners.

If I look at the parallel with Nova Scotia, it is essentially the same regime as in Nova Scotia, where our work is also conducted on private land. So we have compensation agreements, whether in Nova Scotia or in Quebec, with the private owners we work with.

Now, we must draw a distinction between the extraction of hydrogen itself and the discovery or identification of the structure and the system itself. If we are talking about identifying the system itself, we are talking about a system covering, for example as I told you regarding Nova Scotia, 130 kilometers by 40 kilometers. So if I apply that to Quebec, we are talking about a system spanning, say, 80 kilometers by 40 kilometers, for the graben itself. So we are talking about a geological system that is very, very wide laterally, OK?

Once this system has been identified, to move to the extraction stage, given that the majority of the hydrogen is already dissolved in the water itself, it will be an extraction system that is very similar to a geothermal system, in the sense that the water will rise, the water is depressurized, and the hydrogen, which is clean — because that is the major advantage we have here, whether in Quebec or Nova Scotia, the hydrogen itself within the overall gas composition is clean, meaning no $CH_4$ and no $CO_2$.

So when the water rises and we depressurize the system, the hydrogen released will already be clean hydrogen. We separate that hydrogen, and the water then returns to the system. So, we will capture dissolved hydrogen in certain situations, or accumulated hydrogen in others. You see? Therefore, the extraction itself is different from the structural and lithological identification of the geology itself.

André Turmel: Perhaps to complete that information. When we explore, at the beginning, we walk the ground. There is an observation made by the geologists. Then, an installation of 80 centimeters into the ground, we insert a pipe to see if anything is there. And that is what we did in Timiskaming a year and a half ago. In Nova Scotia, we have moved a step further; there are diamond drill rigs which, as you know from your familiarity with Abitibi-Timiskaming, drill down to 1,000 meters. And there, it is a different matter; it is still exploration, but much more in-depth, requiring personnel to perform the work. That is the phase... So, within exploration, there are two phases. We discover the terrain, then we explore by drilling.

Next will be extraction. But before extraction, we still need to analyze the volumes and the flow rates to see if we can reach a commercial level.

John Karagiannidis: However, just to return to that point as well, the drilling in Nova Scotia allowed us to identify the lithology that is favorable to the production of clean hydrogen. And that is why the bill is so important. Because if we apply what we discovered in Nova Scotia in terms of deep geological structures through drilling, if we apply that to Quebec, we see the potential for natural hydrogen in Quebec, you see?

In Quebec, if we hadn't drilled in Nova Scotia, we wouldn't have been able to discover the links between rocks that are rich in magnetite, for example, and natural hydrogen. You see? So, by doing what we did in Nova Scotia, it allowed us afterward to return to Quebec and say: "OK, now we understand the importance of the Timiskaming graben system, and also the Lac-Saint-Jean system as well."

Daniel Bernard: Yes. You are touching on a point that truly interests me. We are talking about placing funds in trust for reclamation. So, would you be favorable to a requirement that as soon as a company begins exploration work, it sets up reclamation funds right from the start of the work?

John Karagiannidis: Yes, that is very important, yes. No, no, it is very important, and it was one of the points raised when we held community meetings in Nova Scotia and when we held our community meeting in Saint-Bruno-de-Guigues. As we emphasized at the beginning, QIMC is truly built with the contribution of the community. It is very important to us, and for us, as I mentioned earlier, the relationship we have with the Timiskaming First Nations is the kind of relationship we establish at the community level as well.

André Turmel: Along with the lessons we learned in Nova Scotia as well. In the bill, there is a provision regarding a pilot project. And for our part, if the law can be adopted sooner rather than later, meaning this session, we are ready to submit a pilot project for Timiskaming, because we have learned a great deal over the last three months. And so, a question may arise: is this urgent or not? For us, it is quite urgent that a framework be established, a legislative and regulatory framework. The pilot project will allow us to move forward, to carry out the work while respecting the communities, by creating citizen committees, etc.

Daniel Bernard: One of the points, how much time do we have left, Mr. President?

Jonatan Julien: There are 4 minutes and 25 seconds left.

Daniel Bernard: OK, thank you. One of the points, as I understand your operation, eventually you will require storage sites? Because when you begin pumping, you will likely connect your drillings to bring that to a storage station later on. Because in the bill, several parties were asking for legislation regarding what was planned for $CO_2$, the pipelines among other things. In your case, do you have suggestions, perhaps for the regulations, to manage these pipelines that will be laid to bring it to a storage site? Because currently, we don't have much of an equivalent for that.

John Karagiannidis: What we see in terms of the end-user for natural hydrogen is that the natural hydrogen must... the end-user must be located within a 200-kilometer radius, OK? So, on our side, what we discussed, for example, using the Nova Scotia example once again, is an industrial use that will be located on the site itself, integrated into the system itself. So here we are talking either about a use for safe fuel, which is... SAF, for example, a use for SAF, a use for aviation, or a use for an ammonia plant...

André Turmel: Ammonia, but especially a distilled water plant. When we produce hydrogen, we can burn it, there is combustion, it produces electricity, but it is only 30% efficient. We can also produce electricity through a fuel cell, which is much more efficient. And one of the byproducts of that is water, distilled water for hospitals, which is a byproduct that could also be utilized.

Our goal is to be as close as possible to the extraction sites, because the further you move from the well, the lower the economic value drops. The dollar per kilo for geological hydrogen compares very favorably with green hydrogen, which is at 4, 7 dollars, 8 dollars, 9 dollars depending on where it comes from. So, closer to the hole will be better. But we are not industrial developers either; we are trying to focus on exploration and extraction.

John Karagiannidis: So our business model is truly a vertically integrated model, but with an end-user located on the site itself.

Daniel Bernard: Have you seen other competitors begin to emerge, looking for essentially the same thing as you? In Quebec?

John Karagiannidis: In Quebec? Well, in Quebec, several companies have filed claims, I would tell you, but they are small juniors who claimed in southern Quebec. A couple have also filed claims in the Timiskaming area, but they are truly small juniors. Our major competitors, regardless... but the largest competitor is truly Koloma.

Koloma is the company that was funded by the US Department of Defense and the Department of Energy. They are our major competitor in Minnesota, our major competitor in Nova Scotia, and they are also our major competitor in Ontario.

Daniel Bernard: 1 minute left, Mr. President?

Jonatan Julien: 1 minute 8 seconds.

Daniel Bernard: OK. Last question, quick and to the point. Eventually, we will transition to a licensing system, and the government will open up territories, both for $CO_2$ and likely for hydrogen. How do you view this opening up of territories and the allocation of licenses within a territory that becomes open?

André Turmel: Look, I think that... as long as there is transparency and the conditions are met, we don't believe we will always be the only company producing natural hydrogen. The more companies there are, the better it will be, just like in mining activities. We structured the mining framework a few years ago, and it was for the better. And we think the framework regarding natural hydrogen should also be equally well-structured with the communities, but I believe there is space for everyone.

John Karagiannidis: Perfect, thank you Mr. President.

Jonatan Julien: Thank you. Thank you. Thank you, Mr. Minister. Now, I give the floor to the member for Jacques-Cartier. You have 13 minutes and 52 seconds.

Gregory Kelley (Jacques-Cartier): Thank you very much, Mr. President. Thank you very much, counselors, for your presentation. Just for now, if I understand correctly, your activities are in the Minister's riding, primarily in the Minister's region. And next question: if the bill is not adopted next week, what is the urgency for you? I know the preference is next week, but if it is next year, are you able to continue drilling? Is it a major hindrance, or given that you are in what is, at least on the white hydrogen side, a quite new industry, what is... what is your reading of the situation here in Quebec?

André Turmel: Well, I think we will lose the competitive advantage we had developed in Quebec, starting in Timiskaming last year, which we put on pause because we had obtained an exploration permit, but we put it on pause because we feared... because it is well known, everyone asks questions, and we didn't want to arrive in the communities without people understanding exactly what we were doing. So, now Nova Scotia has just moved, and they are moving quickly. Soon it will be other American states. There is a great deal of pressure from players right now, and for us, waiting a year — though I understand the electoral context —, is not good news for Quebec, quite simply.

Gregory Kelley: OK, thank you very much. Another question, a more technical one, but is the method used, not just for exploration, but for extracting white hydrogen, very similar to fracking for shale gas? And it is not a process where water is injected to...

John Karagiannidis: No, because shale gas is gas trapped within the rock itself. Natural hydrogen comes from a natural generator that produces hydrogen at a depth of 4 kilometers. This hydrogen is produced naturally, like a sponge. Water enters, reacts with iron rocks that are rich in magnetite. These iron rocks at that depth, combined with a geothermal gradient that is quite high — which is why we chose the Timiskaming region and not another region.

The regions we chose are regions where there is no presence of natural gas, no presence of hydrocarbons or fossils, so to speak. This gas, created at a depth of 4 kilometers, releases itself. No stimulation or fracking is required whatsoever for natural hydrogen; it is the opposite. Because hydrogen is a very light element, it immediately seeks to escape.

André Turmel: It is a natural electrolysis. In reality, when green hydrogen is produced by humans, anthropogenically, it involves an electrolysis process, right? Well, we capture that electrolysis 4 kilometers beneath the earth, where it occurs naturally, quite simply, without any energy input. So, to answer your question, Mr. Member, there is no injection of chemicals, water, or anything else. On the contrary, it is a cycle. The hydrogen rises within the water, we extract the hydrogen and the geothermal heat, and we return the water to where it came from in the ground. So, it is a cycle that is, I won't say perfect, but quite complete geologically.

Gregory Kelley: Ah, thank you. So, is it intensive, since as I understand, it is not a system of injecting water, but it requires water... or is the water already there, already present? Sorry, it is just to fully understand that it requires a chemical reaction; hydrogen is a reaction that occurs between water and the deposits containing iron, so it requires water to create a reaction.

John Karagiannidis: Yes, at 4 to 5 kilometers of depth.

Gregory Kelley: Yes, well yes, otherwise how can you separate the $H_2$ from the water? The water is already there, already present.

John Karagiannidis: Exactly, it is a reaction created at a depth of 4 to 5 kilometers.

Gregory Kelley: OK. So, will this create some competition for water resources with Quebec farmers in certain regions, or?

John Karagiannidis: No, because it has nothing to do with the water table. Between the water table and a depth of 4 to 5 kilometers, you have rocks that are non-porous and impermeable. So you have no interaction between those zones. And since, in the case of natural hydrogen, there is no injection of any kind, and furthermore, we are dealing with clean natural hydrogen, when the extraction takes place, you have no mixing with $CH_4$ or $CO_2$ or any contaminants.

But I understand your question because it was also raised at the community level in Nova Scotia, and that was one of the issues in Nova Scotia before we began our drilling; the fracking issue was very, very important to the communities. So, when we explained the process, when the communities came to see the site, and they were able to see the actual footprint of the site, that is when they truly understood the beauty and the simplicity of the system itself.

Gregory Kelley: Exactly. And when I had a meeting with Maître Turmel a couple of weeks ago, after that I went on YouTube to watch a few videos. No, not in a negative sense, but more to see how it works. And there was the New York Times article recently that was translated into French for La Presse. Super interesting. But regarding the water question, I said to myself, it seems like an important element. So, thank you for the details and the clarifications as well because there are not a lot of experts in Quebec in this field either, and you are the leaders, so these were just questions I had. And here, I think you have...

John Karagiannidis: Yes, but just to clarify regarding that article you mention, in that case, they were stimulating the hydrogen, you see? So, that was in southern Quebec, in a camp where they had already identified... that was essentially the shale gas area. So it is a case involving hydrocarbons, a camp where the hydrogen you extract will be contaminated hydrogen. You see? So it is hydrogen where you will have... you have to separate the $CH_4$ from the $CO_2$. That is a completely different ball game.

Gregory Kelley: OK, we will take that into consideration as well during our detailed study for the distinction. And that brings us back to a question: in your presentation, in your view, what is the definition of white hydrogen or hydrogen in general? I believe that was one of the first points you made, that it is important for us as elected officials to define natural hydrogen in the law. So, what is your suggestion for us?

André Turmel: I invite you to read the definition adopted by the legislature of Nova Scotia, which provides a very technical and, I would say, molecular definition. Of course, I am not a chemist and all that, but it simply allows for a precise determination of where that hydrogen comes from, the geological sources, and so on. So, we find that more precise, but I think we can still survive without a definition. However, if we are going to be precise, let's be precise if we can, and that will not delay your adoption of the bill.

Gregory Kelley: Perfect. Thank you very much. Super interesting. Thank you for the exchange; I will pass the floor to my colleague for the next steps. Thank you to you both.

Désirée McGraw (Notre-Dame-de-Grâce): And thank you to my colleague, and I confirm that he did indeed go on YouTube because he shared... he shared the video with me. I know he is a legislator and member, but I think in another life, he would have gone into geology or something similar; I know he finds it fascinating. Listen, thank you very much for the presentation and for your presence as well. It raises many questions. One of the questions, you mentioned you went to Texas, and there were 25... if I understand correctly, 25 sites in the world, 5 of which were QIMC?

John Karagiannidis: That have drilled, yes.

Désirée McGraw: Where are they in the world? Obviously in Canada, and are you also active...

John Karagiannidis: And Minnesota.

Désirée McGraw: In Canada and in Minnesota.

John Karagiannidis: Well, what happens is that in the United States, for example, in what is called the Midcontinent Rift, if we move south of Minnesota into the area of Kansas. So there are drillings that have been conducted there in the Kansas area. There have been exploratory drillings conducted in Lorraine, France. Drillings have been done there as well. There are also drillings in Saskatchewan that were carried out, and also drillings conducted in Mali. Certainly Mali, which was the flagship discovery for natural hydrogen as such. And the company managing — which is interesting here regarding Mali —, the company managing the Mali project is based in Montreal, and it is called Hydroma. If you want, for your colleague if he wishes to do a bit more research on Mali, that is it.

So it is truly a... what has really driven things recently is all the American institutional money that has entered the field. Because there is such a demand for off-grid energy right now in the United States in particular, it has really pushed a lot of capital into natural hydrogen studies. So that is where we see... I will give you another example, the US Air Force has currently mandated that every Air Force base be independent of all external energy for two weeks. So, by proceeding in that manner, they are immediately turning to the development of natural hydrogen for that purpose. You see? So there is a very strategic component on the military side as well in relation to this.

Désirée McGraw: Thank you. With my colleague, you mentioned that it is like a vertuous cycle, not perfect but virtuous, and not vicious. But are there still environmental impacts that are problematic? Regarding water or other impacts that should be highlighted?

André Turmel: I would tell you that when we held a public consultation session in Advocate Harbour, Nova Scotia, the question asked was: what's next? It's all well and good for you to extract it, but after that, what kind of local plant are you going to install? Who is the offtaker? Are you going to install a large data center plant? And at that point, people were a bit more... they were a bit more suspicious, which is normal.

So, the first question we are asked is, what are we going to install there? With the energy, we can... we can also deploy it, if we are not too far from the grid, and sell it to the municipality; we can involve the municipalities in participating in projects. But to return to your question regarding the environment, look, there are no GHG emissions, and the footprint when we drill is literally... it's the footprint around it, like the square in front of the small skating rink we have before us. It's just that; we have to cut down trees, yes, and after that, we put up a fence, and that's how it is. The rig, how do we call that?

John Karagiannidis: The rig, the drill.

André Turmel: The drill rig comes, it drills, but once we are set up, it's not... it's not large like a rig in Alberta. It is even smaller.

Désirée McGraw: Perhaps a final question, I don't know if I have time, but quickly, quickly. We are currently, pardon?

Jonatan Julien: You still have 3 minutes.

Désirée McGraw: Ah, perfect! We have more time, OK, because my colleague didn't use all the time. Thank you, there we go. Ah, super, that is always good news. Listen, you said, my colleague had said indeed we are in the process with this bill of establishing a legislative framework and a new regime indeed. Does the bill contain sufficient transitional measures so that the work already carried out in Quebec before the coming into force of the new regime...

André Turmel: That is a highly specific question. We conducted research work under the scope of mining rights, under the Mining Act, but because of what we were looking for, rocks and minerals, which we knew might lead to hydrogen, we couldn't use the word hydrogen in the application because... hydrogen is not a mineral substance.

But for all the work we have done or that others have done in the territory, there needs to be a smooth transition. Someone holding mineral exploration rights in a territory, if it is the same company, should be allocated an exploration license under the same conditions for three years of research and reporting. That seems fairly straightforward to provide for.

John Karagiannidis: For one thing, ah, yes, go ahead.

André Turmel: Yes, yes, go ahead. OK, perfect.

Désirée McGraw: I... so I think this will be the last question, we will see. The bill, does it sufficiently prohibit any possibility of bypassing the prohibition on oil and gas exploration or exploitation under the guise of natural hydrogen research?

André Turmel: I think they wrote it three or four times in different ways. As far as I'm concerned, it's clear. Honestly, we can clearly see the intention, which is not to reopen that issue.

Désirée McGraw: It wouldn't be a step backward in that regard for Quebec?

André Turmel: No, because we are using this legislative vehicle to add two or three new things: carbon capture, hydrogen, and storage. But it is the vehicle we have.

John Karagiannidis: But it is also to return to your definition of hydrogen. In Nova Scotia, for example, the framework provided for hydrogen is entirely separate from the Nova Scotia Petroleum Act. You see? So in Nova Scotia, they have already separated and established this distinction between the Petroleum Act and natural hydrogen. And that is what we are seeing currently as well, and it is very important to make that distinction, which brings us back to your point once again regarding gas purity.

The gas extracted must be pure at the end of the day, with no $CH_4$ and no $CO_2$. If you have $CH_4$ and $CO_2$, you defeat the very principle of clean white hydrogen, you see? So that is very, very important. And that is why we choose... you mentioned earlier where we find this in the world. Hydrogen can be found in Alberta. But the hydrogen found in Alberta will be bacterially created hydrogen; it is contaminated hydrogen that is not clean.

André Turmel: Meaning we will have to clean out the methane and all that. It can still be useful, but it is more costly.

John Karagiannidis: Exactly, that's it.

Jonatan Julien: Thank you. Thank you very much. I thank you for your contribution to the work of the committee, very interesting. I am suspending the proceedings for a few moments to allow the next group to take their places. Thank you.

Message from QIMC IR

"Two big moments kick off next week

Expanded Drill & Soil Sample Campaign— Teams are scaling up across West Advocate and Bennett Hill. More boots on the ground, more samples, more momentum behind the clean natural hydrogen system

Premier's State of the Province — Our CEO John K will be there next week representing QIMC at the Premier's State of the Province address, then John K is heading straight out to site. Proud to fly our colours at a moment that matters this much for the province."

https://x.com/QIMCSilica/status/2057872262657626380

The rock behind the 10.77% H₂ hit

What you're seeing:

• Vuggy → those open holes in the rock = secondary porosity (room for gas)

• Magnetic→ magnetite + pyrrhotite = the reduced, iron-rich chemistry our R2G2™ model targets

• "Poker-chip" fractured → those disc-shaped breaks perpendicular to the core = structural pathways

All five percent-level H₂ readings sit inside this conglomerate package in a 69-metre interval: ``` 5.10% @ 779 m

5.10% @ 806 m

8.87% @ 815 m

7.29% @ 818 m

10.77% @ 848 m ← highest mud-gas H₂ reading on the property to date

Independently verified by Prof. Marc Richer-Laflèche, P.Geo. (INRS).

Full details in the press release

https://qimaterials.com/qimc-reports-10-77-hydrogen-mud-gas-reading-at-west-advocate-five-stacked-level-readings-in-a-69-metre-methane-free-hydrogen-rich-interval-in-hole-ddh-26-03-west-advocate-nova-scotia/