1. All references herein to copper equivalent (CuEq) are on the basis of recovered or payable metals, as indicated, with such recovered or payable metals converted into copper equivalent based on their respective price ratios using the long -term metal
1. All references herein to copper equivalent (CuEq) are on the basis of recovered or payable metals, as indicated, with such
recovered or payable metals converted into copper equivalent based on their respective price ratios using the long -term metal
prices used in the PEA of US$4.00/lb copper, US$15.00/lb molybdenum, US$23.00/oz silver, and US$1,800/oz gold and with
the formula CuEq (lbs) = Cu (lbs) + 3.75 * Mo (lbs) + 5.75 * Ag (oz) + 450 * Au (oz).
PO Box 10351 888-700 West Georgia Street, Vancouver, BC, Canada, V7Y 1G5
www.surgecopper.com
TSX-V: SURG
OTCQX: SRGXF
Frankfurt: G6D2
Telephone: +1 (604) 718-5454
Email: [email protected]
June 13, 2023
NEWS RELEASE
Surge Copper Announces Maiden Berg PEA: C$2.1 billion NPV8% and 20% IRR
Large-scale, long-life, stand-alone greenfield development project
with simple design and high outputs of critical minerals located in a
safe jurisdiction with world-class infrastructure
• Base case after-tax NPV8% of C$2.1 billion and IRR of 20% based on long-term commodity price assumptions of
US$4.00/lb copper, US$15.00/lb molybdenum, US$23/oz silver, and US$1,800/oz gold plus foreign exchange of
0.77 USDCAD
• 30-year mine life with total payable production of 5.8 billion pounds (2.6 million tonnes) of copper equivalent
(CuEq)1, including 3.7 billion pounds (1.7 million tonnes) of copper
• Updated mineral resource estimate includes combined Measured & Indicated resource of 1.0 billion tonnes
grading 0.23% copper, 0.03% molybdenum, 4.6 g /t silver, and 0.02 g/t gold, containing 5.1 billion pounds of
copper, 633 million pounds of molybdenum, 150 million ounces of silver, and 744 thousand ounces of gold,
plus an additional 0.5 billion tonnes of material in the Inferred category
• Mineable inventory contains 978 million tonnes grading 0.22% copper, 0.02% molybdenum, 4.5 g/t silver, and
0.02 g/t gold, and consists of 80% Measured and Indicated resources , with the first 5 years of steady-state
production containing 162 million tonnes with an average grade of 0.30% copper, 0.03% molybdenum, 5.7 g/t
silver, and 0.03 g/t gold
• First 10 years of steady-state production: annual payable production of 220 million pounds (100 kilotonnes) of
copper equivalent including 151 million pounds (69 kilotonnes) of copper
• Life of mine annual payable production of 191 million pounds (87 kilotonnes) of copper equivalent including
121 million pounds (55 kilotonnes) of copper
• Life of mine C1 co-product cash costs of US$1.75/lb Payable CuEq and by-product cash costs of US$0.46/lb
Payable Cu
• Low life of mine strip ratio of 1.1 inclusive of pre-stripping requirements of 43 million tonnes
• Pre-production capex of C$2.0 billion, implying capital intensity metrics including NPV / Capex of 1.1x, Capex /
Annual Production of US$16. 82/t Recoverable CuEq, Capex / Total Recoverable Production of US$0.5 5/t
Recoverable CuEq, and Average FCF Yield on Capex of 18%
• Low estimated costs of approximately C$6-8 million and rapid 18-month timeline to advance project to PFS
stage
• Simple project design includes a single open pit, overland conveyor system, concentrator process plant and
tailings and waste management facility, and ties into existing infrastructure including roads and hydroelectric
gridpower
Surge Copper Corp. 2
June 13, 2023, Vancouver, British Columbia – Surge Copper Corp. (TSXV: SURG) (OTCQX:
SRGXF) (Frankfurt: G6D2) (“Surge” or the “Company”) is pleased to announce the results of
its Preliminary Economic Assessment (the “PEA”), prepared in accordance with National
Instrument 43 -101 – Standards of Disclosure for Mineral Projects (“NI 43 -101”), for the Berg
Project located in central British Columbia within the traditional territories of the Cheslatta Carrier
Nation, Wet’suwet’en First Nation, and Wet’suwet’en – including communities of Skin Tyee, Nee
Tahi Buhn, and Witset. The PEA was completed by Ausenco Engineering Canada Inc. (“Ausenco”)
and is based on an updated mineral resource estimate completed by Moose Mountain Technical
Services Inc. (“MMTS”). The PEA is the first economic study prepared in accordance with NI 43-
101 on the Berg Project and represents a significant milestone in the advancement of the Berg
Project and the Company’s overall strategy in the combined Berg-Ootsa district. The Company is
currently earning a 70% interest in the Berg Project from Centerra Gold.
All figures presented herein are on an unlevered, 100% basis, all currency numbers are either
United States dollars (US$) or Canadian dollars (C$) as specified , all tonnes refer to metric
tonnes, and all ounces refer to Troy ounces. The PEA is preliminary in nature and includes Inferred
Mineral Resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as Mineral Reserves,
and there is no certainty the PEA will be realized.
Leif Nilsson, Chief Executive Officer, commented: “The Berg Project now represents one of the
largest primary copper development projects in Canada, and this PEA confirms some of the
unique features and key selling points of the project, including: 1) the potential for a simple, stand-
alone, large-scale open pit mine and traditional concentrator flow -sheet which can produce high
outputs of metals critical for the global energy transit ion (including copper and molybdenum),
located in a safe jurisdiction with world -class infrastructure and a strengthening fiscal and
permitting environment, 2) the ability to tie -in to existing hydroelectric grid infrastructure and
electrify energy-intensive components of the operation such as material transport via overland
conveyors, resulting in a low carbon footprint per unit of metal output, and 3) a robust economic
return profile under a variety of long-term metal pricing assumptions. We believe these are among
the most important characteristics for large-scale copper development projects, and that the Berg
Project compares very favourably against similar -scale development opportunities globally.
Additionally, the climate within Canada toward the development of strategically significant projects
such as this is clearly improving, as evidenced by provincial and federal efforts to streamline
permitting processes, and various incentives aimed at critical minerals projects, including the
recently announced 30% refundable tax credit on capital costs for critical minerals processing
equipment, which was not included in the PEA but would be expected to positively impact the
base case economics. Given the significant multi-decade production volumes of both copper and
molybdenum, and the fact that most primary copper development projects globally are copper -
gold or copper -cobalt, we believe Berg is well positioned as one of the most robust copper -
molybdenum development projects globally. Surge plans to advance the Berg Project toward pre-
feasibility while continuing to explore the surrounding district, which we believe has significant
untapped exploration potential and the ability to grow from what is already one of the largest
copper districts in Canada.”
Surge Copper Corp. 3
Berg PEA Summary
The PEA was initiated in late 2022 after the completion of a broad set of trade -off studies led by
Ausenco which focused on infrastructure opportunities and alternatives present in the Berg -
Huckleberry-Ootsa district, spanning material mo vement technologies and logistics, electricity
supply options, and tailings and waste management facility siting options. The study is also
underpinned by significant metallurgical testwork completed on material from the Berg deposit by
G&T Metallurgical S ervices Ltd. (now ALS Metallurgy), which demonstrated that conventional
flotation processes can be used to produce marketable copper and molybdenum concentrates.
The PEA outlines a large, open -pit mining operation which , over the course of 31 years , would
extract a mineable inventory to provide a mill feed of approximately 978 million tonnes with an
average grade of 0.22% copper, 0.02% molybdenum, 4.5 g/t silver, and 0.02 g/t gold. The mine
is developed in multiple phases, focusing on early extraction of the higher -grade portions of the
deposit in the supergene enrichment zone. Mining is performed by way of conventional truck and
shovel operations, with run -of-mine mill feed and certain volumes of waste rock crushed and
transported via a 3.4-kilometre electrically powered overland conveyor system from the mine to
the process plant located at 400 metres lower elevation to the west of the mine site. The mill and
concentrator process plant will operate at a 90,000 tonnes per day nominal capacity and will
produce separate copper and molybdenum concentrates via a conventional sulphide flotation and
molybdenum separation flowsheet. Process tailings and potentially acid generating (“PAG”) waste
rock will use co-storage of tailings and waste rock together for permanent storage in a tailings &
waste rock management facility (“TWMF”) located southwest of and adjacent to the process plant.
Final copper concentrate products containing precious metal by -products will be transported b y
truck to one of several nearby deep seaports along the Pacific coast for sale to end customers,
and molybdenum concentrates will be transported by truck to a rail load out location for toll
roasting within continental North America before final sale of molybdenum oxide to end customers
globally. The study outlines a two -year construction period with pre -production capital
expenditures of just under C$2.0 billion, sustaining capital expenditures over the life of mine of
$1.5 billion, reclamation and closure costs at the end of the mine life of C$200 million, and total
taxes paid over the life of mine, on an undiscounted basis, of C$4.9 billion.
Mark Wheeler, P .Eng., Vice President of Projects, commented: “This maiden PEA represents a
fantastic starting point for the further development of the Berg Project and we look forward to
sharing the details with local communities, specifically the Wet’suwet’en First Nation, Clans of the
Wet’suwet’en, and Cheslatta Carrier Nation in order to ensure participation in all aspects of the
project going forward. The PEA shows a long-life development project with the opportunity to have
significant benefits for the local communities across the region.”
Surge Copper Corp. 4
Figure 1. Regional Map
Figure 2. Payable Production and Co-Product C1 Cash Cost Profile
160
279
281
263
267
176
201
180
191
199
163
229
264
192
199
204
177
179
191
186
184
173
165
159
157
157
157
163
200
101
27
-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
-
50
100
150
200
250
300
350
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Co-Product Cash Costs (US$/lb CuEq)
Payable Copper Eq. (Mlbs CuEq)
Copper Moly as CuEq Silver as CuEq Gold as CuEq C1 Cash Costs (co-product)
Surge Copper Corp. 5
Table 1. Key Financial and Economic Analysis Metrics
Base Case After-Tax Economic Metrics
NPV7% C$mm $2,473
NPV8% C$mm $2,084
IRR % 20%
Payback Period years 3.9
Pre-Production Capex C$mm $1,968
NPV / Capex x 1.1x
Capex / Total Production US$/t CuEq $0.55
Capex / Annual Production US$/t CuEq $16.82
FCF Yield on Capex % 18%
Aggregate Undiscounted Financial Metrics Avg. Annual1 LOM Total
Revenue C$mm $994 $30,262
Operating Costs C$mm $426 $12,976
Royalties C$mm $9 $277
Pre-Production Capex C$mm $984 $1,968
Sustaining Capex C$mm $50 $1,733
Cash Taxes C$mm $161 $4,858
Free Cash Flow C$mm $348 $8,450
Pricing Assumptions
Copper US$/lb $4.00
Molybdenum US$/lb $15.00
Silver US$/oz $23.00
Gold US$/oz $1,800
Foreign Exchange USDCAD 0.77
LOM Gross Revenue Contribution
Copper % 64%
Molybdenum % 26%
Silver % 8%
Gold % 3%
1. Average annual financial metrics are weighted by total mill throughput in each year, except pre -production capex which is a simple
average.
Surge Copper Corp. 6
Table 2. Key Operating Metrics
Aggregate Operating Metrics Avg. Annual1 LOM Total
Mine Life years - 30
Milled Mineralized Material Mt 32 978
Strip Ratio waste:ore 1.06 1.13
Grades
Copper % Cu 0.22% 0.22%
Molybdenum % Mo 0.02% 0.02%
Silver g/t Ag 4.5 4.5
Gold g/t Au 0.02 0.02
Payable Production
Copper Mlbs Cu 121 3,702
Molybdenum Mlbs Mo 13 399
Silver Moz Ag 3 82
Gold koz Au 12 354
Copper Equivalent Mlbs CuEq 191 5,825
Copper Equivalent kt CuEq 87 2,642
LOM Blended Process Recovery and Payability Recovery2 Payability
Copper % 81% 97%
Molybdenum % 76% 99%
Silver % 65% 90%
Gold % 55% 90%
Cash Costs3
C1 Cash Costs (co-product) US$/lb CuEq $1.75
C3 Cash Costs (co-product) US$/lb CuEq $1.98
C1 Cash Costs (by-product) US$/lb Cu $0.46
C3 Cash Costs (by-product) US$/lb Cu $0.82
1. Average annual operating metrics are weighted by total mill throughput in each year, except strip ratio which is a simple ave rage.
2. Recovery numbers represent blended average across zones and are calculated based on total LOM recovered metal divided by
contained metal.
3. C1 and C3 cash costs are based on common industry definitions. C1 cash costs include all on -site and off-site costs required to
generate revenue, plus royalties, and are presented in aggregate versus payable copper equivalent (co -product) and net of by-
product revenue versus payable copper (by-product). C3 cash costs are C1 cash costs plus sustaining capex.
Surge Copper Corp. 7
Table 3. After-Tax NPV8% & IRR Sensitivity Tables
Figure 3. Cash Flow Components
After-Tax NPV8% & IRR Sensitivity to Copper and Molybdenum Prices
Copper Price Copper Price
$2.80 $3.20 $3.60 $4.00 $4.40 $4.80 $5.20 $2.80 $3.20 $3.60 $4.00 $4.40 $4.80 $5.20
$2,084 (30%) (20%) (10%) - 10% 20% 30% $0 (30%) (20%) (10%) - 10% 20% 30%
$10.50 (30%) $229 $698 $1,160 $1,618 $2,073 $2,526 $2,979 $10.50 (30%) 9% 12% 15% 18% 20% 23% 25%
$12.00 (20%) $390 $855 $1,317 $1,773 $2,227 $2,680 $3,133 $12.00 (20%) 10% 13% 16% 18% 21% 23% 26%
$13.50 (10%) $549 $1,012 $1,473 $1,929 $2,382 $2,835 $3,288 $13.50 (10%) 11% 14% 17% 19% 22% 24% 26%
$15.00 - $707 $1,170 $1,629 $2,084 $2,537 $2,990 $3,443 $15.00 - 12% 15% 17% 20% 22% 25% 27%
$16.50 10% $864 $1,327 $1,784 $2,238 $2,692 $3,144 $3,597 $16.50 10% 13% 16% 18% 21% 23% 25% 28%
$18.00 20% $1,022 $1,483 $1,939 $2,393 $2,846 $3,299 $3,752 $18.00 20% 14% 16% 19% 21% 24% 26% 28%
$19.50 30% $1,179 $1,639 $2,095 $2,548 $3,001 $3,454 $3,906 $19.50 30% 15% 17% 20% 22% 24% 27% 29%
After-Tax NPV8% & IRR Sensitivity to Copper and Molybdenum Process Recoveries
Copper Recovery Copper Recovery
69% 73% 77% 81% 85% 89% 93% 69% 73% 77% 81% 85% 89% 93%
$2,084 (15%) (10%) (5%) - 5% 10% 15% $0 (15%) (10%) (5%) - 5% 10% 15%
65% (15%) $1,253 $1,460 $1,667 $1,872 $2,078 $2,283 $2,488 65% (15%) 15% 17% 18% 19% 20% 21% 22%
68% (10%) $1,324 $1,531 $1,737 $1,943 $2,148 $2,353 $2,558 68% (10%) 16% 17% 18% 19% 20% 21% 23%
72% (5%) $1,395 $1,602 $1,807 $2,013 $2,218 $2,423 $2,628 72% (5%) 16% 17% 18% 20% 21% 22% 23%
76% - $1,466 $1,672 $1,878 $2,084 $2,289 $2,494 $2,698 76% - 17% 18% 19% 20% 21% 22% 23%
80% 5% $1,536 $1,743 $1,949 $2,154 $2,359 $2,564 $2,769 80% 5% 17% 18% 19% 20% 21% 22% 24%
83% 10% $1,607 $1,813 $2,019 $2,224 $2,429 $2,634 $2,839 83% 10% 17% 18% 20% 21% 22% 23% 24%
87% 15% $1,678 $1,884 $2,089 $2,295 $2,499 $2,704 $2,909 87% 15% 18% 19% 20% 21% 22% 23% 24%
After-Tax NPV8% & IRR Sensitivity to Total Opex and Total Capex
Total Opex Total Opex
$2,084 (30%) (20%) (10%) - 10% 20% 30% $0 (30%) (20%) (10%) - 10% 20% 30%
(30%) $3,664 $3,371 $3,078 $2,785 $2,493 $2,200 $1,908 (30%) 36% 34% 32% 30% 28% 26% 24%
(20%) $3,431 $3,138 $2,845 $2,552 $2,259 $1,967 $1,674 (20%) 31% 29% 28% 26% 24% 22% 20%
(10%) $3,198 $2,904 $2,611 $2,318 $2,025 $1,732 $1,438 (10%) 27% 26% 24% 23% 21% 19% 18%
- $2,964 $2,670 $2,377 $2,084 $1,790 $1,495 $1,199 - 24% 23% 21% 20% 18% 17% 15%
10% $2,730 $2,436 $2,142 $1,848 $1,553 $1,257 $959 10% 22% 20% 19% 18% 16% 15% 13%
20% $2,495 $2,201 $1,906 $1,611 $1,314 $1,017 $720 20% 20% 18% 17% 16% 14% 13% 12%
30% $2,259 $1,965 $1,669 $1,372 $1,075 $777 $479 30% 18% 17% 15% 14% 13% 12% 10%
Total Capex
Total Capex
Molybdenum Price
Molybdenum Price
Molybdenum
Recovery
Molybdenum
Recovery
($1,500)
($1,000)
($500)
-
$500
$1,000
-2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Cash Flow (C$mm)
Operating Cash Flow Capex Cash Taxes Changes in Working Capital
Surge Copper Corp. 8
Mineral Resource Estimate
In conjunction with the PEA, a new mineral resource estimate (“MRE”) has been completed on
the Berg deposit with block model estimation performed by Sue Bird, P.Eng., of MMTS , an
independent Qualified Person as defined by NI 43-101. The MRE benefits from 2,855 metres of
new drilling completed by Surge in 2021, 7,261 new gold assays collected by Surge from historical
core and pulp samples during 2022 and 20 23, improved geostatistical modelling of silver in the
deposit, and improved metallurgical recovery assumptions based on an extensive review of
historical metallurgical testwork by Ausenco and Surge. The MRE has an effective date of June
7, 2023.
Data fro m 210 core holes totalling 54,384m of drilling was used for the resource estimate.
Domains of mineralized material were created for the oxide, supergene , and hypogene zones,
with the hypogene material further defined by lithology. The domains were trimme d to the
overburden surface and by un-mineralized assays. Copper, molybdenum, silver, and gold grades
were estimated using capped assays composited to 5m intervals. The estimation block size is
15x15x15 metres with grades estimated by ordinary kriging and requiring the composites and the
model domain to match. Outlier restriction of the composite is also used during interpolation to
ensure that the modelled tonnage and grade are not bias ed compared to the de -clustered
composite data. The bulk density has be en assigned by domain based on the mean of 3,111
samples.
Classification is based on the variography to define the necessary drillhole spacing. Only drillholes
since 2007 have been used to define the drillhole spacing. Classification criteria are summarized
in Table 4 below.
Table 4. Classification Criteria
Class Criteria Distance (m)
Average to Furthest DH
Measured Closest 2 Drillholes <=30 <=50
Closet 3 Drillholes <=40 <=57
Indicated Closest 2 Drillholes <35 <35
Closet 3 Drillholes 50 49
Inferred All other blocks within the domains
and interpolated with Cu Range of the Cu Variogram
The MRE is summarized in Table 5 below. The resource is constrained by an open pit with a
“reasonable prospect of eventual economic extraction” using a cutoff of CDN$8.50/t and the
parameters as defined in the notes to Table 5. Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability.