Surge Copper (SURG.V) has signed an agreement with a subsidiary of Centerra Gold (CG.TO, CGAU) whereby the latter will receive 21.2 million shares of Surge Copper in return for the latter establishing 100% ownership of the project. This new agreement replaces the 2020 agreement whereby Surge was only able to earn up to a 70% interest in the now 125,000 hectare land package (of which just under 35,000 hectares is subject to the deal with Centerra Gold). Subsequent to the closing of the transaction, Centerra Gold, through its fully owned Thompson Creek Metals subsidiary, will own approximately 15% of Surge Copper’s share count.
The PEA released in 2023 outlined an after-tax NPV8% of C$2.1B and an IRR of 20% at $4 copper. Using $3.60 copper, the after-tax NPV8% is C$1.63B while the IRR decreases to 17% while keeping the molybdenum price unchanged at $15 per pound. Based on the 2023 PEA mine plan, a total of 3.7 billion pounds of copper would be produced and sold as well as almost 400 million pounds of molybdenum and 82 million ounces of silver over a 30 year mine life. The initial capex was estimated at just under C$1B on a pre-production basis with the total initial capex approaching C$2B with an additional C$1.7B in sustaining capex. The C3 cash costs are estimated at just $0.82 per pound of copper at a production rate of 121 million pounds per year.
Disclosure: The author has no position in Surge Copper nor Centerra Gold. Please read the disclaimer.
