Surge Exploration Inc. is pleased to announce that its Board of Directors has approved the final terms of the Definitive Option Agreement (the “Agreement”) alongside the Board of Directors for Compañía Minera del Pacífico S.A. to acquire up to 100% of the Atacama Cobalto Exploration Property near Copiapó Chile.
The formal Agreement signing, to be executed by both CAP Mineria and Surge’s wholly owned Chilean subsidiary, Surge Exploration Chile SpA, is planned by both parties later in the month when Surge management travels to meets with CAP Mineria management in Santiago, Chile.
Compañía Minera del Pacífico S.A. owns and operates several iron ore mines such as Los Colorados and Cerro Negro Norte and is a controlled subsidiary of CAP S.A. (http://www.cap.cl) a Chilean company founded in 1946. CAP S.A. is publicly traded on the Santiago Stock Exchange (SSE: CAP) with a market capitalization in excess of US$1.65 billion. CAP S.A.’s principal operations include steel making and steel processing plants, iron ore mines, marine ports, desalination plants, and power transmission lines. In 2017, CAP S.A. reported revenues in excess of US$1.9 billion and employed over 4,000 people, and CAP Mineria reported profits in excess of US$200 million and employs over 2,000 people in its operations.
The original non-binding Memorandum of Understanding (the “MOU”) between CAP Mineria and Surge to acquire an option of up to 100% of the Atacama Cobalto Project (“Atacama Cobalto Project”) was first announced on July 24, 2018.
Tim Fernback, President & CEO of Surge, said: “Surge Exploration is excited to get board approval on this Agreement and to begin the process of exploring in this historically IOCG and cobalt rich area. We look forward to working with CAP Mineria to develop the Atacama Cobalto Project with a well-conceived exploration program for the benefit of our shareholders. The property is 1,059 hectares large and has had 43 diamond drill holes completed on it to date by CAP S.A. This is an advanced exploration property, with over 20,250 m (66,437 ft.) of drill core and past assays that Surge can benefit from. Our exploration plan will include the completion of a NI 43-101 Geological Report, an initial 3-D underground model based on past exploration programs and additional drilling and metallurgical tests on the property.”
Mr. Fernback continues “The property was originally explored with the idea that it could be an iron-ore mine prospect by CAP S.A., and ended up showing good cobalt potential with positive assay results. We are extremely excited about the cobalt potential of this property.”
Subject to completion of a comprehensive due diligence process by Surge, the Company and CAP Mineria intend to enter into a Definitive Option Agreement (the “Agreement”), subject to TSX Venture Exchange (“TSX-V”) approval. The Agreement will address three (3) phases (“Phase 1”, “Phase 2”, ”Phase 3”).
As part of the Phase 1 the Company may choose to acquire 51% of the mining concessions for a consideration in the amount of US$3,000,000 and 1,000,000 shares of Surge Exploration Inc., in addition to certain work commitments on the property.
Once Surge fulfills Phase 1, a mining legal partnership will be created between Surge and CAP Mineria (the “Newco”), in which the parties will participate with 51% of equity in the case of Surge, and with a 49% in the case of CAP Mineria.
Within two (2) years of fulfillment of Phase 1, the Company may elect to pursue Phase 2, whereby Surge can to acquire an additional 9%, for a total of 60%, of the Newco upon completion of a positive Preliminary Economic Assessment (the “PEA”).
Within two (2) years of fulfillment of Phase 2, the Company may elect to pursue Phase 3, whereby Surge can acquire an additional 10%, for a total of 70%, of the Newco upon completion of a positive Pre-Feasibility Study (the “PFS”). Surge can earn up to 100% of the mining concessions by contributing in excess of its 70% obligation to the Newco, thereby diluting CAP Mineral’s interest in Newco. In the event that CAP Mineria’s interest is diluted below 10%, its share will automatically convert to a 2% Net Smelter Return (“NSR”), and CAP Mineria shall maintain the right to convert its ownership percentage in exchange for a 2% NSR at any time. In either case, upon CAP Mineria’s conversion to NSR, Surge shall achieve 100% ownership of the Newco, and therefore, in the Atacama Cobalto Project.
This Transaction is subject to the formal signing of the agreement by both parties, applicable finder’s fees and is subject to TSX Venture Exchange approval.
Qualified Person: The technical content of this news release has been reviewed and approved by Thomas Eggers. Mr. Eggers is a non-independent Qualified Person within the meaning of National Instrument 43-101 Standards, as a Registered Member of the Chilean Mining Commission.
About the Atacama Cobalto Project:
The Atacama Cobalto Project is located in the Atacama Province in northern Chile, 15 km northwest of the town of Copiapó, where mining is the largest economic activity, and the mining industry is one of the region’s major employers. The Atacama Cobalto Project consists of 1,059 hectares and is located only 3 km East of the Cerro Iman Mine.
The area of interest hosts several other mining companies and is situated near the mylonitic corridor that is part of the Atacama Fault System that hosts many of the IOCG deposits in northern Chile. The Atacama Cobalto Project corresponds to a “cobalt anomalous IOCG” associated with the geographic area.
The Atacama Cobalto Project benefits from access to excellent infrastructure, including port access, energy supply, and access through the Pan American Highway.
About Surge Exploration Inc. https://surgeexploration.com/
The Company is a Canadian-based mineral exploration company which has been active in the resource sector in both British Columbia and Ontario, Canada. The Company operates a wholly-owned Chilean subsidiary, Surge Exploration Chile SpA, and maintains an exploration office in Santiago, Chile to review mineral exploration opportunities in Chile and elsewhere in South America.
Atacama Cobalto Project, Copiapó, Chile:
The Atacama Cobalto Project is located in the Atacama Province in northern Chile, 15 km northwest of the town of Copiapó, where mining is the largest economic activity, and the mining industry is one of the region’s major employers. The Atacama Cobalto Project consists of 1,059 hectares and is located only 3 km East of the Cerro Iman Mine. To date, CAP Minería has drilled over 20,250 m on the Atacama Coblato Project. The option on this project is subject to TSXV approval.
Incahuasi Lithium Project, Salar de Incahuasi, Chile:
The Incahuasi Lithium property is located on the northernmost section of the Incahuasi salar, 75 km southeast from both the town of Tilomonte, Chile and the Salar de Atacama, where mining is the largest economic activity, and the mining industry is one of the region’s major employers. The Incahuasi salar is located on the national border between Chile and Argentina at an elevation of 3,260 m. The Incahuasi Lithium Project Project consists of 10 mineral exploration concessions totalling 2,300 hectares with the adjoining 9,843 hectare property located directly over the national border in Argentina is held by Advantage Lithium. Announced on October 31, 2018, the non-binding MOU on this project is subject to additional due diligence by the Company, a formal Definitive Option Agreement by both the vendor and Surge and TSXV approval.
Cobalt Ontario Properties
The Company has an option to earn an undivided 60% interest in the Glencore Buck Property and the Teledyne Property, located in Cobalt Ontario.
Hedge Hog Property, British Columbia
The Company has an option to earn an undivided 60% interest seven mineral tenure covering 2,418 hectares (5,972 acres) located approximately 80 km northeast of the town of Quesnel, BC and 20 km north of the historic gold mining towns of Wells and Barkerville.