Surge Copper: Advancing One of Canada's Largest Undeveloped Copper Projects

0:18Trevor Hall: Welcome back into Mining Stock Daily and our coverage of the Precious Metal Summit in Zurich. If built, Surge Copper's Burke project in central BC would be a top five copper mine in Canada and the country's largest molybdenum producer. The June pre-feasibility study outlined a 28-year mine life, a$4.5 billion Canadian after-tax net present value, and a 24 % internal rate of return. Happy to welcome in Leif Nelson, CEO of Surge Copper, for an update. Leif, good morning. Good to see you. Likewise. Good to see you, Trevor. How's it been the first couple days here in Zurich? Good. I've been doing some private marketing just in advance of this as well.

0:59So I've been acclimatized to the time zone for a few days.

1:03Trevor Hall: Do you know what time zone you're in anymore? It's been a very busy year for you, really putting Berg back on the map, back on the radar of investors at PFS. Huge numbers. Now, we've had a couple months to digest everything. What has been kind of priority for you over the last few months since that PFS was published? I guess two things. One is communicating the results. So, I mean, that's a key part of my job personally is the marketing side of things. So I've been on the road very extensively since that mid-June publication date. So talking to lots of folks around the world, whether they're investors or other mining companies or potential future customers of a project like this and kind of everything in between.

1:55And then in parallel with that, because of the seasonal nature of, you know, camps for projects at this stage in British Columbia, which is a long way of saying, you know, when the sun is shining and there's no snow on the ground, you know we got to make use of the summer months to maximize site visits and sort of bringing external visitors to site so we had a very busy year of doing that and a lot of that was kind of focused on the knowledge that we were going to be kicking off the environmental assessment process this year as well so it was a lot of bringing you know leadership representatives from the different First Nations that we work alongside, you know leadership from local municipalities and other communities, lots of investor tours, other things like that.

2:42So bringing all manner of folks to site over the summer. And then in September we did announce that we had formally submitted our initial project description and that that was accepted into the environmental assessment process and so we formally commenced that process in September. And just yesterday In fact, we finished the public comment period, the first of several public comment periods, in this case for the early engagement phase of the EA. So it's been a super busy, you know, three, four months.

3:14Trevor Hall: Okay. Well, we should probably address a little bit of the elephant in the room, and that would be BC politics. Yeah. BC did elect a conservative government promising legislative approval timelines and a single review for each project. That happened shortly after the environmental assessment was approved. Has anything changed since then? What are you learning more about working with this new government? Very early days, of course. I would give it 100 days minimum to start to see what their ministerial strategy is going to be and how some of the campaign rhetoric starts to take shape into actual policies.

3:57So I think it's quite hard to know at this stage. What I will say, and I think this is an obvious point, the NDP government, in recent years especially under David Eby, has been very supportive of the resource sector for a variety of reasons. Critical minerals being fundamentally important to our economy in British Columbia and Canada. but I think in addition to that the more recent emphasis around economic sovereignty and just economic growth and the needs that are front and center there. So we obviously had a very strong working relationship with the NDP government and I think that's evidenced by our involvement in the Critical Minerals Office, the Berg project being listed as one of the priority projects in BC under the Look West economic development strategy, so on and so forth.

4:57So you know this is a change in government and we'll see what it portends for any kind of changes to those types of agencies and structures and so forth. The other thing I'd mention is that because we are now officially in the environmental assessment process. We're in a kind of legislated process, legislated space. That's all governed by a law in place, the Environmental Assessment Act. So there's no expected changes to that that are even being telegraphed at this point. So we don't, you know, we're not necessarily expecting anything imminent there. I would say the elephant in the room on this overall topic is the rhetoric around DRIPA.

5:38So there is a law in British Columbia, the Declaration on the Rights of Indigenous People's Act. It's a very, it's a law that's proven to be controversial in BC society in terms of not necessarily what it aspired to do, but it's practical effectiveness in terms of achieving those things. So we're watching that one closely. I think there is some, you know, uncertainty and risk that could come from repealing that law, which is the campaign promise of the provincial government lots of people on different sides of the fence on you know what what what what that will cause to transpire yeah again it's it doesn't it's not going to impact the work that we do as a company or the way that we go about it but there could be you know I think political tension in society as a whole in BC because of that that law being being changed yeah I kind of feel for

6:39Trevor Hall: you because it like because typically you come to these things and you want to talk the technicals of the project you want to talk markets you'll have those investor type of discussions but anymore it feels like you have to do a little bit of a soft you know toe what kind of a government analysis you know like you're kind of commentating a little bit knowing you're in an interesting spot does it feel like you've had to be agile with your communications just based on the election results Of course, yeah. And I mean, mineral project development is a, you know, it's a tough business and it's a serious business.

7:17It impacts a lot of people and it's just a fundamentally different stage of an asset than exploration where you are really not interfacing or interacting with society as a whole. It's sort of, you know, a bit of a closed door thing and, you know, investors pay attention to drill results and how assets are getting bigger. but we're sort of well past that, right? The Berg deposit, the Berg project is very well defined at this point as one of the largest mineral endowments in Canada for copper and copper equivalent minerals for this type of mineral system, ore body. And economically, you mentioned some of these numbers at the beginning, like at a pre-feasibility level of definition, this has a very strong economic return profile.

8:03It's one of the potentially biggest future copper producers in Canada. So we've really, I think, delivered and defined those types of things, and now we're into the runway to advance this project through that regulatory process to ultimately get to a final investment decision.

8:22Trevor Hall: Would a repeal of DRIPA make Berg easier to permit, or would it put the relationships you've made with First Nations at risk? Look, I think, again, the intent of DRIPA, I think, was, I mean, it was unanimously supported by the legislature, but I think more broadly, BC society as a whole shared the aspirations of what that piece of law was intended to do. I think the lived experience in the aftermath is that it conflicted with so many other existing pieces of the legal framework of the province of BC. that it became unworkable and created a whole bunch of challenges. So that's sort of where we sit, where there's a recognized need to kind of fix the plumbing and the machinery of this without necessarily throwing the baby out with the bathwater, to use a euphemism.

9:23But, you know, not surprisingly, I think Indigenous people in British Columbia as a whole view this piece of legislation as something that enfranchises their rights. And so they kind of might, certain people, certain segments of society might see the blanket repeal of this law as taking a step backwards or several steps backwards. So that's the risk. and I think major projects, regardless of what sector of the economy they're in, whether you're talking about infrastructure, energy, mining, what have you, these could become things that get caught in the quagmire of just the political relationship between First Nations and British Columbia and the Crown, the province itself.

10:07So it's a monumental task for the government to address this, and I don't think that's saying anything surprising. It's probably one of the key reasons why the election happened the way it did.

10:21Trevor Hall: Yeah, well, the shift of politics has been unreal throughout North America. B.C. going conservative and then Texas going Democrat just a couple weeks later. I just I don't know up from down anymore when it comes to politics. But let's do talk more bird technical development and less politics moving forward. Back earlier last week, you said you completed a drill program at Berg. 31 holes drilled this season. Two were geotechnical, sonic, or acid rock drainage work. Talk about what specific feasibility questions some of this provides you. Yeah, so I think the color on that press release was really to, you know, most folks when they think about a drill program and whether it's big or small, they're going to be thinking about meterage so a 6 000 meter drill program is small in terms of meterage but for for us and the stage that this project is at it was actually a big program in terms of like the spatial coverage the number of individual drill pads things like that so again this was a lot of this drilling was taking place outside of the ore body so a lot of it was characterization of the waste rock envelope around the ore body so stuff that needs to be mined to extract the ore body itself.

11:41Some of it was geotechnical holes into the eventual pit walls, so within the overall you know ore and or waste envelope, and then a lot of it was geotechnical holes within the infrastructure area. So a lot of those geotechnical holes in the infrastructure area are shallow, hence the kind of short meterage of the overall campaign. But that's a good thing, it's just telling you that the till cover, the amount of stuff you got to drill through to get to bedrock is not particularly extensive here. So yeah, lots of really critical information that will go into advancing the feasibility design for the project.

12:19And I guess the messaging here is the 2026 campaign and the 2027 campaign that will be of a comparable size and nature, that will probably be the majority of the data acquisition that we need to advance the project to feasibility levels. So we're not quite at a stage where we want to declare or provide any guidance on timeline to feasibility, but we certainly can say that probably by this time next year, the kind of evergreen technical data underpinning the project will be getting towards that feasibility level.

12:50Trevor Hall: Do you think this work is more of a de-risking type of strategy, or do you foresee doing something that might meaningfully improve the economics of Berg? This particular campaign, mostly de-risking, it's validating assumptions, it is just bolstering the technical data that underpins a lot of that stuff. There was two exploration holes that we did at a kind of a satellite target called Sylvia. You know, assays pending on that, but that was completely unrelated to Berg, just sort of greenfield exploration. We try to make sensible investments in that every year as we go. So, you know, we're out in the field, we're incurring fixed costs to advance Berg, but we have, you know, other targets, other early stage things.

13:36And so we're always trying to, again, leverage that presence in the field to make those kinds of earlier stage, higher risk, higher reward type investments. So we drilled two holes into the Sylvia target. I think for just Berg-related fundamental upside, some of that maybe will come around the edges, I would say, literally and figuratively, with encountering high -grade silver veins in the resource. These types of ore bodies are known to host those sorts of things. So you occasionally hit those as you're doing infill drilling, and that can add a little bit of value here and there. and then next year we'll be getting into the feasibility level metallurgy for the project and probably one of the focus areas there will be looking to optimize silver recoveries a bit more.

14:27So that's the third most important credit in the deposit. Prior metallurgical work was really focused on nailing copper and molly which we've done so probably a bit of room to add some knowledge and recovery points so to speak on the silver down the road.

14:44Trevor Hall: Okay. I know you're probably getting this same question you've got in the last day and a half, but Berg does need$4.5 billion Canadian of initial capital. You have$21 million in the treasury as of September. African rainbow mineral zones, 20%. With metal prices high, really what is the realistic paths to fund and build Berg? Yeah, I mean, I try to frame people or frame this for people in that, you know, if a project like this was permitted, shovel ready, I think most people would arrive at a very simple answer, which is like, is something like that of interest in the global mining sector? Of course it is.

15:26It's a scarcity thing. There's not many of these types of projects that are of this size, that have this sort of economic return profile, and are in a tier one jurisdiction like British Columbia, like Canada. So there's just a short list of these things. We know they're in demand. We've got more work to do to de-risk it. So I think looking at that capital cost, you need to compare it against other similar projects around the world, whether they are already on the books of majors or whether they're owned by juniors. And there's a lot of very significant data points available in the market today for stuff that's being sanctioned for major investments.

16:03So in like the last few weeks, we've seen Hudbay sanction their investment on Copper World. We saw just last week Freeport sanction a major expansion investment, so Brownfields, on their Baghdad mine in Arizona. I think last year, Harmony sanctioned an investment on the Eva Copper Project. So there's a handful of these examples where you can look at what the going rate is on a capital intensity basis for shovel-ready copper projects today. and our capital cost estimate is very much in line with where those sort of numbers are shaking out. So the capital cost is not high relative to other copper projects, but you are correct.

16:44There is a fundamental question of how does a junior access the capital to advance a project like this through its various stages? We're focused for right now on accessing the correct types of capital to advance the project to FID. And after FID, after we get to a sort of permitted construction ready position, there's a lot of different types of project finance, sophisticated types of capital that come into the picture there. So project finance debt from export credit agency providers is one simple example. Precious metal streaming is another. Offtake related financing, JV formation with those types of partners, et cetera.

17:27Those are all like the basic ingredients. And of course, M &A is a generic overlay that is taking place during all those different steps.

17:37Trevor Hall: You know, out of some of the news you just discussed from the majors, do you think that's really a testament of the producers kind of banking on higher for longer copper prices? Do you think we would have seen some of that at$3.54 copper? I do think it's testament to that. I think we are experiencing incentive prices in the market today. I think there might be some hiccups along the way. I've been listening to a lot of analysis coming out of LME week and of course it's Shanghai week this week. And I think the tariff regime in the United States is a really interesting feature of the current outlook on copper prices for the next 12 months.

18:27The United States has built up like a 2 million ton inventory or stockpile of refined copper. That's coincided entirely with the first two years of the Trump administration. Big change in the complexion of government in the United States right now. Who knows what that will portend with regards to the tariff strategy as it relates to copper specifically, you could see a lot of that material flow in different directions and inevitably that'll have an impact on near-term prices. But I think the sanctioning decisions that you're seeing today from majors is telling you that, I mean, A, they can hedge stuff right now to cover their costs of capital or to cover their payback and B, they're very comfortable with the long-term outlook on copper.

19:16Trevor Hall: Okay. We'll probably talk at least one more time before the end of the year get into the holiday season but it's going to be a big 2027 for search copper and we'll be following the story in the months to come search copper does trade on the venture exchange with surg and on the otc qb with srgxf leif good to see you thanks so much thanks for the next few the information presented should not be considered investment advice mining stock daily and affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.