VANCOUVER, Nov. 6, 2018 /CNW/ - Surge Exploration Inc. (the
"Company" or "Surge") (TSX‐V: SUR), (OTCQB: SURJF) 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. ("CAP
Mineria") to acquire up to 100% of the Atacama Cobalto Exploration
Property (the "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."
Transaction Terms:
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 (TSX-V:
AAL OTCQB:AVLIF). 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.
On Behalf of the Board of Directors
"Tim
Fernback"
Tim Fernback
President & CEO
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release may contain forward‐looking statements
which include, but are not limited to, comments that involve future
events and conditions, which are subject to various risks and
uncertainties. Except for statements of historical facts, comments
that address resource potential, upcoming work programs,
geological interpretations, receipt and security of mineral
property titles, availability of funds, and others are
forward‐looking. Forward‐looking statements are not guarantees of
future performance and actual results may vary materially from
those statements. General business conditions are factors that
could cause actual results to vary materially from forward‐looking
statements.
SOURCE Surge Exploration Inc.