Mr. Bob Emmott reports

MAXIM POWER CORP. RECEIVES NOTICE FROM VALORY RESOURCES INC. TO EXERCISE THE OPTION TO PURCHASE SUMMIT COAL

Pursuant to the option to purchase agreement entered into in February, 2022, and subsequently amended and restated in March, 2023, Maxim Power Corp. has received notice from Valory Resources Inc. that Valory is exercising its right to purchase the corporation's wholly owned subsidiaries Summit Coal LP and Summit Coal Inc. Following receipt of the notice, Maxim and Valory have until Feb. 18, 2025, to enter into a purchase and sale agreement (the PSA). Closing of the PSA will be subject to each party satisfying customary closing conditions and is expected to occur in the first half of 2025.

Purchase and sale agreement

Under the terms of the PSA, Valory will pay a total purchase price of $14.2-million, consisting of $10.2-million cash and $4.0-million of equity securities in the form of either (i) common shares of Valory, or (ii) an interest-bearing note convertible into Valory common shares, at Maxim's election, prior to closing. Summit will be sold with $2.2-million of restricted cash, resulting in net cash proceeds to Maxim of $8.0-million.

Summit sale proceeds will be used by Maxim for general corporate purposes.

Following signing, a copy of the PSA will be available under the corporation's SEDAR+ profile.

Royalty agreement

Prior to closing, Maxim and Summit will enter into an agreement such that Maxim will receive a 3-per-cent royalty on any raw coal volume produced from the coal leases currently owned by Summit, including any volumes from Summit's Mine 14 project. The royalty will be calculated using a Premium Low Vol Hard Coking Coal benchmark and will be paid in United States dollars. The amount and timing of any royalty payments is contingent on the commencement of production and there is no certainty as to if, or when, production may begin.

Ground lease

Maxim, through its wholly owned subsidiary, Milner Power Inc., has agreed, commensurate with closing, to enter into a ground lease at the H.R. Milner site, with a nominee of Valory, to allow for construction and operation of a coal processing facility, the form and terms of which are appended to the PSA.

About Summit

Summit owns metallurgical coal leases for Mine 14 and Mine 16S located north of Grande Cache, Alta. Current estimates for Mine 14 are 18.9 million tonnes of low-mid volatile metallurgical coal reserves based on the National Instrument 43-101 technical report filed on Maxim's SEDAR+ profile on March 21, 2013. Mine 16S is located 30 kilometres northwest of Mine 14 and represents 1,792 hectares or 29 per cent of Summit's total area of coal leases. An NI 43-101 technical report has not been prepared for Mine 16S.

About Valory Resources Inc.

Valory Resources is a private Canadian resources company focused on the development of underground steelmaking coal projects to serve the global steel industry. Valory owns 100 per cent of the Blackstone underground hard coking coal exploration project in Alberta, comprising an area of approximately 14,000 hectares.

About Maxim Power Corp.

Based in Calgary, Alta., Maxim is one of Canada's largest truly independent power producers. Maxim is now focused entirely on power projects in Alberta. Its core asset -- the 300-megawatt H.R. Milner Plant, M2, in Grande Cache, Alta. -- is a state-of-the-art combined cycle gas-fired power plant that commissioned in Q4, 2023. Maxim continues to explore additional development options in Alberta including its currently permitted gas-fired generation project and the permitting of its wind power generation project. Maxim trades on the Toronto Stock Exchange under the symbol MXG.

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