Surge Exploration Enters into Formal Definitive Option Agreement to Acquire the Atacama Cobalto Project in the Atacama Region of Chile
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NEWS RELEASE
Surge Exploration Enters into Formal Definitive Option
Agreement to Acquire the Atacama Cobalto Project in the
Atacama Region of Chile
Vancouver, BC – December 12, 2018 – Surge Exploration Inc. (the "Company" or “Surge”) (TSXV: SUR,
OTCQB:SURJF, FRA: DJ5C ) is pleased to announce that further to its news releases dated November 6,
2018 and J uly 24, 2018, the Company has entered into a formal binding Definitive Agreement (the
“Definitive Agreement”) with Compañía Minera del Pacífico S.A. (“CAP Minería”) dated December 7, 2018,
for an option to acquire up to 70 % of the Atacama Cobalto Project in the prolific Atacama Region in
Northern Chile.
Tim Fernback, Surge President & CEO , said: “Surge Exploration is excited to finalize this Definitive
Agreement with CAP Minería and to begin our proposed exploration work plan within this historic IOCG
and cobalt rich area of Chile. This advanced exploration property has had over 20,250 meters of diamond
drilling and assaying completed in the recent past, so our first step will be to review the past work and
propose a detailed drilling program for the upcoming season. We look forward developing th e Atacama
Cobalto Project for the benefit of our shareholders.”
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 19 46. CAP S.A. is publicly traded on the Santiago Stock Exchange (SSE: CAP) with a market
capitalization in excess of US$1. 3 billion. CAP S.A.'s principal operations include steel making and steel
processing plants, iron ore mines, marine ports, desalination plants, an d 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
Minería reported profits in excess of US$200 million and employs over 2,000 people in its operations.
Transaction Terms:
The Company and CAP Minería entered into a Definitive Option Agreement (the “Agreement”), subject to
TSX Venture Exchange (“Exchange”) approval. The Agreement contains three distinct (3) phases (“Phase
1”, “Phase 2” and ”Phase 3”). The transaction is arm’s length pursuant to Exchange policies.
The total purchase price for the Company to acquire 51% of the Mining Rights will be US$3,000,000 and
1,000,000 common shares of Surge Exploration Inc., in addition to certain work commitmen ts on the
property. This will complete the First Phase of the project. The payments of which are as follows:
Cash Payments - $25,000 to be paid upon signing the Agreement; $75,000 to be paid upon Exchange
approval; $100,000 to be paid 12 months from Exchange approval; $200,000 to be paid 24 months from
Exchange approval; $500,000 to be paid 36 months from Exchange approval; and $2,100,000 to be paid
48 months from Exchange approval.
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Share Payments – 400,000 shares to be issued 36 months from Exchange approval and 600,000 shares to
be issued 48 months from Exchange approval.
Once Surge fulfills Phase 1, a mining legal partnership will be created between Surge and CAP Minería (the
“Newco”), in which the parties will participate with 51% equity in the case of Surge, and 49% equity in the
case of CAP Minería.
Within two (2) years of completing 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 completing 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 70% ownership based on achieving certain milestones and an ability to acquire the
remaining 30% if CAP Minería decides not to contribute in future cash calls . Once Phase 2 is successfully
completed by Surge, each party shall contribute on a pro -rata basis or be diluted. In the event that CAP
Minería’s interest is diluted below 10%, CAP Minería share will automatically convert to a 2% Net Smelter
Return (“NSR”). Throughout the term of the agreement, CAP Minería shall maintain the right to convert
its ownership percentage in exchange for a 2% NSR at any time . Upon CAP Minería’s conversion to NSR,
Surge shall achieve 100% ownership of the Newco, and therefore, 100% ownership in the Atacama
Cobalto Project.
Finder’s fees will be paid in connection with the transaction. The transaction and finder’s fees are subject
Exchange approval.
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. To date, CAP Minería has drilled over 20,250 m on the Atacama Coblato
Project.
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 British Columbia and elsewhere in Canada. The Company has an exploration office in Santiago,
Chile to review mineral exploration opportunities in Chile and elsewhere in South America.
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Ontario Cobalt Properties (Cobalt):
The Company has an option to earn an undivided 60% interest in the Glencore Bucke Property and the
Teledyne Property, located in Cobalt, Ontario Canada.
Incahuasi Lithium Project (Lithium Brine):
The 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 consists of
10 mineral exploration concessions totalling 2,300 hectares. Bordering this property, in Argentina, is a
9,843 hectare lithium exploration property held by Advantage Lithium (TSXV: AAL OTCQB: AVLIF). The
option on this project is subject to TSX-V approval.
Mineral Mountain Property (Copper Gold) British Columbia
As announced on November 28, 2018, Surge has acquired a 100% interest in 9 claim blocks comprising
19,665 hectares (197 sq km) in the Omineca region of north-central British Columbia, approximately 150
km north of Fort St. James. The claims are not subject to any royalty terms, back -in rights, payments or
any other agreements and encumbrances. The region is host to numerous operating mines, good
infrastructure including experienced exploration and supporting services.
B.C. Minfile assessment report data indicates that most of the area covered by the Omineca Group claim
blocks were at one time or another covered by staking during surges of explorat ion in B.C. dating from
the 1940’s to present day. Prominent among early discoveries in the Omineca region were the nearby
Lustdust/Stardust property (Sun Metals Corp. TSX -V: SUNM) covering a large, coherent integrated
porphyry-skarn, epithermal system; the Kwanika property (Serengeti Resources Inc./POSCO Daewoo TSX-
V: SIR) a promising advanced stage copper-gold project; the Lorraine property (Lorraine Copper Corp. TSX-
V: LLC) host to a large copper/gold NI 43 -101 compliant resource. The tenures are locat ed between the
Kemess North project being developed by Centerra Gold’s subsidiary Aurico Metals and Centerra Gold’s
operation Mt Milligan mine.
Hedge Hog Property, (Copper Gold) 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 Ven ture 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 th at 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.