Surge Copper Corp: Is Something Brewing?

May 24, 2019 1:14 AM ET2 Comments
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Summary

  • Exploration targets are next to permitted Huckleberry Mine.
  • Strong mix of experienced Board of Directors.
  • Completed PEA showing NPV of 186 million.

It is quiet, awfully quiet! While many explorations companies are announcing their 2019 drill programs SURG has remained quiet. On the surface this may be concerning but if you know the facts it is actually quite exciting!

The quick facts of SURG.V from 2019 presentation.

Quick Facts

"Issued and Outstanding Shares 57,279,373

Warrants1 15,199,600

Options2 4,113,442

Fully-diluted 76,592,415 

• Located in west central British Columbia

• 100% owned by Surge Copper Corp. with strong First Nation support.

• Porphyry copper mineralization with three main deposits: Ox, East Seel, & West Seel.

• Excellent access and infrastructure, lots of exploration upside.

• Adjacent to Huckleberry open pit mine and mill complex (6 km northwest).

• PEA explores the concept to use the existing mine infrastructure to develop the Ootsa deposits. OOTSA PROJECT SUMMARY 

• Pit constrained M&I resources total 224 Mt containing: − 1.1 billion lbs Cu − 1 million ounces Au

PEA Asessment (2016)

Mill feed1 65 Mt @ 0.37% Cu Eq

Strip ratio 1.46

Mine life 12 years

Total Production – Copper 324 M lbs

                        – Gold 185 K oz

                        – Molybdenum 15.8 M lbs

                        – Silver 3.0 M oz

Initial capital cost

C$64 million

Direct cash cost US$1.33 / lb

All-in sustaining cash cost US$2.09 / lb

After-tax NPV @ 5%3 C$186 million

After tax IRR3 81%

Payback period 1 year

Notes:

• Assumes contract mining and toll milling.

• Mill feed is 94% Measured, 6% Indicated.

• Mill feed is moved to Huckleberry by conveyor.

• Preliminary testwork indicates general amenability of Ootsa feed to processing at Huckleberry

• On September 17, Imperial Metals announced their intent to sell assets and has set up a Special Committee to review offers.

• Imperials VP of Operations, Randall Thompson is on Surge Coppers Board of Directors

• Surge Copper will continue to pursue opportunities with the Huckleberry Mine"

What makes this all very interesting is that we know they want to do a deal with Imperial Metals (III). Whether they get bought out, (SURG.V) buys Huckleberry from Imperial (III) or they do a deal in some other form. 

Imperial has a liability with Huckleberry sitting idle and either need to sell it or find more economical feed for it, which is right next door at Surge Copper.

SURG.V has high inside ownership and high"family and friends " ownership which results in low trading volume because everyone is waiting. 

Current share price is .05. Using the NPV of $186 million gives us a share price of $3.20 or $2.44 fully diluted.

We highly recommend holding (SURG.V) as its upside potential is excellent. As stated above, the silence of a 2019 drill program leads us to believe they are working on some sort of deal as we speak! Check out their 2019 Presentation for more information.

Disclosure: I am/we are long surg.v.

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