Berg Joint Venture

Highlights

  • Option Agreement allows Surge to acquire 70% interest in Berg
  • Berg contains 610 Mt grading 0.38% CuEq in the Measured & Indicated categories, and 28.1 Mt grading 0.3% CuEq in the Inferred category as outlined below
  • Mineralization at Berg is close to surface, remains open at depth and radially outward, and is notable for having a significant supergene enrichment zone
  • Historic drill results include 176 metres grading 0.63% Cu, 0.020% Mo, 4.8 g/t Ag
  • Between Berg and Ootsa Surge now controls 4 advanced porphyry deposits and 50 kilometres of strike length in a very prospective porphyry belt
  • With Berg acquisition Surge increases M&I tonnes by 372% and creates district development opportunity for very low acquisition cost

Terms of the Option Agreement

Under the terms of the 5 year Option Agreement, Surge issued to Centerra C$4 million in Surge common shares (6,825,939 shares, about 5.5% ownership in Surge) upon TSX approval.  In addition, on each of the five anniversaries after the date of the Option Agreement, a further C$0.2 million in Surge shares will be issued to Centerra bringing the total of all share payments equivalent to C$5 million.

During the five-year option period, Surge must incur C$8 million in project related expenditures, with an initial C$2 million of spending commitment before December 2022. 

After the above commitments are met by Surge, the option will be deemed to have been exercised, and a 70%:30% joint venture will be formed and a formal joint venture agreement established.  Dilution of either party below 10% interest will result in their interest converting to a 1.0% net smelter returns royalty, half of which can be bought back by the other party for C$5 million.   

Berg Project Geology and Mineralization

The Berg property sits immediately northwest of Imperial Metals’ Huckleberry Mine and the Ootsa property sits immediately to the southeast.  The Berg and Ootsa properties are adjoining on the west side and combined they cover the majority of the Seel-Huckleberry-Berg porphyry trend, having a total combined area of 120,155 hectares.  Mineralization at the Berg deposit forms an annular shape around a broadly cylindrical, multi-phase intrusive stock known as the Berg Stock. The historic resources comprise two highly fractured mineralized zones in the northeast and southern portions of the annulus. Hypogene mineralization is characterized by several generations of veining, and a well-developed supergene enrichment blanket is superimposed on the hypogene mineralization.

A total of 53,754 metres over 215 holes have been completed on the deposit by prior operators including Kennecott, Placer Dome, Terrane Metals, and Thompson Creek Metals. Drilling in most areas of the Berg deposit remains wide-spaced and mineralization is open to depth and outward from the Berg Stock. The deposit has been shown to have excellent vertical continuity with significant mineralization intersected greater than 550m below surface.

 

Table listing select historic holes drilled in 2011 by Thompson Creek Metals

Hole

From (m)

To (m)

Interval (m)

Cu %

Mo %

Ag g/t

Cu Eq %*

BRG11-215

54.0

404.2

350.2

0.41

0.031

8.3

0.60

including

54.0

134.4

80.4

0.56

0.036

13.9

0.83

BRG11-219

6.0

69.0

63.0

0.56

0.070

60.5

1.44

BRG11-221

15.0

350.2

332.2

0.46

0.039

5.6

0.65

including

15.0

132.0

114.0

0.58

0.025

5.4

0.72

BRG11-223

27.0

178.3

151.3

0.50

0.017

4.8

0.61

BRG11-228

33.0

294.6

261.6

0.35

0.035

5.3

0.52

BRG-11-229

15.5

325.4

309.9

0.46

0.016

4.6

0.56

including

15.5

191.5

176.0

0.63

0.020

4.8

0.75

*Cu Eq. (copper equivalent) has been used to express the combined value of copper, molybdenum, and silver as a percentage of copper, and is provided for illustrative purposes only.  No allowances have been made for recovery losses that may occur should mining eventually result.  Calculations use metal prices of US $3/lb copper, $22 silver, and $10/lb molybdenum using the formula Cu Eq.% = Cu% + (Mo% x 3.33) + (Ag g/t x 0.0107).

 

Table 1. Mineral Resource Estimate for the Berg Deposit with Effective Date of March 9, 2021.

 

Grade

 

Contained Metal

Material Type

Resource Category

Cut-Off (CuEq %)

Tonnes
(Mt)

Cu
(%)

Mo
(%)

Ag
(g/t)

CuEq
(%)

 

Cu
(Mlbs)

Mo
(Mlbs)

Ag
(Moz)

CuEq
(Mlbs)

             

Supergene

Measured

0.2

86.9

0.41

0.03

2.46

0.50

 

789

52

6.9

960

 

Indicated

0.2

88.5

0.29

0.02

2.67

0.37

 

572

43

7.6

724

 

Measured & Indicated

0.2

175.4

0.35

0.02

2.57

0.44

 

1,362

95

14.5

1,685

 

Inferred

0.2

7.2

0.23

0.01

4.26

0.29

 

37

2

1.0

47

             

Hypogene

Measured

0.2

120.3

0.28

0.04

3.42

0.41

 

752

97

13.2

1,098

 

Indicated

0.2

314.1

0.22

0.03

3.10

0.34

 

1,537

226

31.3

2,343

 

Measured & Indicated

0.2

434.3

0.24

0.03

3.19

0.36

 

2,289

323

44.6

3,441

 

Inferred

0.2

20.8

0.22

0.02

3.57

0.30

 

101

8

2.4

138

             

Leachate

Measured

0.2

0.0

0.04

0.09

5.62

0.21

 

0

0

0.0

0

 

Indicated

0.2

0.2

0.14

0.12

2.37

0.25

 

1

1

0.0

1

 

Measured & Indicated

0.2

0.2

0.13

0.12

2.41

0.25

 

1

1

0.0

1

 

Inferred

0.2

0.1

0.11

0.09

6.13

0.21

 

0

0

0.0

0

             

Total

Measured

0.2

207.2

0.34

0.03

3.0

0.45

 

1,541

149

20.1

2,058

 

Indicated

0.2

402.8

0.24

0.03

3.0

0.35

 

2,110

270

39.0

3,069

 

Measured & Indicated

0.2

610.0

0.27

0.03

3.0

0.38

 

3,651

419

59.1

5,126

 

Inferred

0.2

28.1

0.22

0.02

3.8

0.30

 

138

11

3.4

185

Notes:

1) Copper Equivalent (CuEq) calculated using metal prices of $3.10/lbs Cu, $10.00/lb Mo, and $20/oz Ag. Recoveries were applied to correspond with estimated individual metal recoveries based on limited metallurgical testwork for production of a copper and molybdenum concentrate: supergene zone (Cu = 73%, Mo = 61%, and Ag = 52%), hypogene zone (Cu = 81%, Mo = 71%, and Ag = 67%), leachate zone (Cu = 0%, Mo = 61%, and Ag = 52%). Smelter loss was not applied.
2) A cut-off value of 0.2% CuEq was used as the base case for reporting mineral resources that are subject to open pit potential. The resource block model has been constrained by a conceptual open pit shell, however, economic viability can only be assessed through the completion of engineering studies defining reserves including PFS and FS. The CIM Definition Standards (May 10, 2014) were followed for classification of Mineral Resources. It cannot be assumed that all or any part of Inferred Mineral Resources will be upgraded to Indicated or Measured as a result of continued exploration.
3) Dry bulk density has been estimated based on 2,996 in situ specific gravity measurements collected between 2007 and 2011. Values were applied by geology model domain (n = 18) representing the weathering profiles and major lithological units; values ranged from 2.38 t/m3 to 2.74 t/m3.
4) There are no known legal, political, unnatural environmental, or other risks that could materially affect the potential development of the mineral resources.
5) All numbers are rounded. Overall numbers may not be exact due to rounding.

 

Top, horizonal section through the Berg Deposit at 1475 meters above see level showing copper equivalent grade. Bottom, vertical section A-A’ looking north, through the Berg deposit showing copper equivalent grades.  

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