CHARBONE's Phase 1B Takes a Major Step Forward as Electrolyzer Arrives at Sorel-Tracy

CHARBONE has announced the delivery of its electrolyzer to the Company's flagship Sorel-Tracy site, marking one of the most significant physical milestones to date in the development of Phase 1B. The electrolyzer is the technological core of the next phase of hydrogen production at Sorel-Tracy. With the equipment now on site, CHARBONE, its construction contractors and technical partners can proceed with positioning, installation and integration into the existing site infrastructure, followed by component assembly, mechanical and electrical connections, testing and commissioning.

In our view, the significance of this announcement lies less in the arrival of a single piece of equipment and more in what it demonstrates about the progression of Phase 1B. Civil construction began earlier this summer, and the arrival of the principal production equipment moves the project into another tangible stage of execution. Management has reiterated that its previously communicated fall launch remains on track.

This is particularly relevant when viewed alongside CHARBONE's recent commercial progress. Earlier this month, the Company reported preliminary Q2 gas income of approximately $0.5 million, up 155% from approximately $0.2 million in Q1. That gas income is expected to include clean UHP hydrogen sourced from CHARBONE's own Sorel-Tracy Phase 1A plant, together with UHP helium and oxygen sourced through partners. In our view, this creates an important distinction. The additional hydrogen capacity being developed through Phase 1B is increasingly being built alongside an operating industrial gas platform that is already beginning to generate revenues across multiple products, rather than representing production capacity developed entirely ahead of commercial activity.

The numbers remain modest and the Q2 figures are still preliminary. But the sequence of developments is becoming increasingly relevant to the investment case: hydrogen production from Phase 1A, growing industrial gas sales, continued helium activity across multiple markets, expansion of distribution capabilities, and now further progress toward increased hydrogen production capacity at Sorel-Tracy. The arrival of the electrolyzer connects the operational and commercial sides of that strategy.

CHARBONE's longer-term model is not limited to hydrogen production alone. The Company is working to develop an integrated platform combining clean UHP hydrogen production with the storage, distribution and supply of other strategic industrial gases including helium and oxygen. Its stated modular approach is designed to allow production capacity to be added progressively in line with demand. Phase 1B fits directly into that model.

There are still important execution steps ahead. Delivery does not mean the additional production capacity is operational. The electrolyzer must now be positioned, installed and integrated, with mechanical and electrical connections completed before testing, commissioning and ramp-up can take place. That distinction matters. At the same time, the delivery removes one material equipment-related step from the development path and shifts attention toward site integration and commissioning. Management has maintained its target for a fall launch, making execution over the coming months the key point to watch. In our view, the electrolyzer delivery therefore represents another meaningful step in de-risking the physical development of Phase 1B — but not the completion of it. What the market may still be underappreciating is the broader sequence now taking shape. CHARBONE is simultaneously developing production capacity and the supply, customer and logistics infrastructure.