Surge Exploration Enters into MOU for an Option to Acquire the Atacama Cobalto Project in the Atacama Region of Chile
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Vancouver, BC V6C 1H2
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NEWS RELEASE
Surge Exploration Enters into MOU for an Option to Acquire the
Atacama Cobalto Project in the Atacama Region of Chile
Vancouver, BC – July 24, 2018 – Surge Exploration Inc. (the "Company" or “Surge”) (TSX‐V: SUR,
OTCQB:SURJF) is pleased to announce that it has entered into a non‐binding Memorandum of
Understanding (the “MOU”) with Compañía Minera del Pacífico S.A. (“CAP Minería”) for an option to
acquire up to 100% of the Atacama Cobalto Project in the prolific Atacama Region in Northern Chile.
Tim Fernback, Director of Surge, said: “Surge Exploration is excited to pursue exploration in this historically
IOCG and cobalt rich area. We look forward developing the Atacama Cobalto Project through timely
execution of exploration programs 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 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
Minería reported profits in excess of US$200 million and employs over 2,000 people in its operations.
Transaction Terms:
Subject to completion of a comprehensive due diligence process by Surge, the Company and CAP Minería
intend to enter into a Definitive Option Agreement (the “Agreement”), subject to TSX Venture Exchange
(“TSX‐V”) approval. The Agreement will contain three distinct (3) phases (“Phase 1”, “Phase 2”, and ”Phase
3”).
As part of the First Phase, the Company may choose to acquire 51% of the mining concessions with
consideration in the amount of US$3,000,000 and 1,000,000 common 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 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”).
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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 100% of the mining concessions by contributing in excess of its 70% obligation to the
Newco, thereby diluting CAP Minería’s interest in Newco. 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. In either case, upon CAP Minería’s conversion to NSR,
Surge shall achieve 100% ownership of the Newco, and therefore, 100% ownership in the Atacama
Cobalto Project.
This Transaction is subject to applicable finder’s fees and is subject to TSX Venture Exchange approval. As
per the terms of the non‐binding MOU, a binding Definitive Option Agreement will be negotiated within
the next 90 days by both parties, and is subject to the terms contained within the MOU.
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.
Cobalt Ontario Properties
The Company has an option to earn an undivided 60% interest in the Glencore Bucke 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.
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On Behalf of the Board of
Directors
“Gordon Jung”
Gordon Jung
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.