With PFS in Hand, Surge Battery Metals Seeks Partners for Nevada North

0:15This podcast features options available on our website at www.icell.com. Early this month, Surge Battery Metals released a pre-feasibility study for its Nevada North lithium project in Elko County, Nevada, highlights for an after-tax NTV of$9.8 billion at an 8 % discount rate and an after-tax IRR of 23.6 % using a long-term lithium carbonate price of$24 ,000 U.S. It's built on a proven and probable reserve of 218.3 million tons at 3 ,928 part per million lithium, enough for a 42-year mine life. Phase one capital is estimated at$2.77 billion. The company is planning for a final investment decision in 2028.

0:57The project is held in a joint venture with Evolution Mining and Surge, holding about two-thirds. Stephan Ball, he is VP of Commercial Development and here to take us through it. Stephan, welcome to Mining Stock Daily. Thanks. Great to be here, Michael. Let's step back, Stephan. Tell us about the project, the location, the rock type, the infrastructure. Yeah, so this project is in northeast Nevada, north of Elko, a few hours. kind of in the middle of middle more or less middle of nowhere um it's a a clay hosted lithium deposit um there's a you know quite a few in nevada most of the deposits in nevada are kind of lower grade maybe around a thousand parts per million then there's a handful that start to get to get higher uh ours is one of those can you talk about uh infrastructure around the project Yeah, so there's a highway, North and West Highway, and some electrical lines.

2:00We're about 10 miles off of that Highway 93. So there's some old rail that's not active now, but that could be revived. So there's decent infrastructure there. It's just there is about 10 miles to kind of access that. You did mention it's a claystone. And just for listeners, the other type of processing is spodgamine as well as brine. Talk about your claystone and what that means for processing. Yeah, so it's quite different than spodgamine. You know, the spodgamine is in kind of really hard granitic rocks. And R is in clays, which are quite soft. Our grade is a little bit lower than spodgamine.

2:46but I'd say that clay deposits in general are lower than spodumine, but ours is actually kind of getting to the bottom end of where you do see spodumine. And it's a little bit hard to compare clay and spodumine kind of apples to apples just by how they're measured. We measure ours, the convention is in part per billion lithium, our grade, our feed grade is close to 4 ,000 ppm. and then spodumine measures in li2o and that kind of makes theirs look a little bit better but if we were to measure ours in li2o would be i think close to about 0.8 or 0.9 percent li2o and that gets you kind of in the bottom range of spodumine in terms of processing um ours is actually quite a bit easier i think to process spodumine mineral really does not like to be broken apart it's pretty stable and uh you need to you need to roast it at like a thousand degrees celsius to kind of make a phase change and then you can get at that lithium uh the clay is a little bit easier you don't have to roast you can roast if you want some flow sheets do but you can also just do an acid bleach on it and uh and kind of go from there Talk about water needs.

4:05The PFS says for phase one, you need about 3 ,280 acre feet per year. You filed applications through the state government to roughly cover that. You are in the western U.S. and the western U.S. are certainly challenged by water scarcity. Thacker Pass, which is near you, had its own water challenges. How confident are you in terms of being able to secure water for the project? It's looking pretty good. We've got a pretty good line of sight right now to phase one. We've had that agreement with the Salmon River Cattlemen's Association, and that is helping us get there for that phase one water needs.

4:47It hasn't been finalized yet, but it looks pretty good. We've got more work to do on phase two. That being said, we see the path forward there. There is water available in the basin. This can be done. We've just got to continue to execute on that and secure it. July 8th, you said in the news release, Respect was working towards cesium and rubidium being in the upcoming PFS. The PFS that you did release this month doesn't mention those metals. Why are those metals significant and why did they make it into the PFS? Yeah, so cesium and rubidium is, you know, they're two critical minerals. They both have really niche applications.

5:36They both have really opaque markets. And we continue to kind of explore this and develop this. As we've been going through our feasibility work, we continue to see how is the cesium and rubidium acting in our process, looking for opportunities where we might be able to pull it out. The grades, you know, are a couple hundred ppm. so it's not worth going after by itself but there if there's a place in the flow sheet where they where they concentrate or where they fall out there really could be an opportunity to capitalize on that um in terms of of the resource we we we we're working on a resource for that um but we could not upgrade them to reserves uh yet we don't really have the um the processing knowledge to be able to qualify them into reserves.

6:29You were talking earlier about processing, and I believe it's the types of materials that you're going to be needing. Talk a little bit more about the types of processing that you're looking for the claystone and how you're actually going to be sourcing materials for that. Yeah, so a couple steps. So, you know, of course, you start off with your mining. The mining is pretty easy. It's kind of free dig. We don't really have to do any blasting. So we just bring that to the plant and then we do a little beneficiation. So we have some coarse calcite that is in our process or in the ore. And it's significantly coarser than the rest of the material.

7:09And so we can separate that out fairly easy based on size. There's a lot of different ways you can do that. In the PFS, we outlined using some equipment called a falcon to do that. Yeah, you want to get rid of that calcite because then your next step is going into acidification. And of course, calcite will just eat up acid. So it's nice to get rid of that. Once you get to the acidification, we need to hit the ore with sulfuric acid. We will have a sulfuric acid plant on site that will bring in sulfur and turn that to sulfuric acid. also generating some energy. Once you have hit the clay with the sulfur, you get it in solution, and you get a lot of other stuff in solution too.

8:05So then the rest of the process is really about cleaning up your lithium solution that has magnesium and sodium and potassium and cleaning that up before you kind of get into your battery grade part of the plant where you can crystallize that into first kind of a technical grade carbonate and then into a battery grade carbonate. Looking at the PFS, you do have plans for front loading the higher grade material, I believe 4 ,340 and then over the 10 years that averages down to 3 ,928. Maybe talk about the economics right now in that grade. Well, it's looking really good. I mean, the reason we go for the higher grade materials is the deposits kind of blessed in the sense that the higher grade materials right at the surface.

9:00And then, you know, it does come down a little bit, but it stays pretty high throughout most of the life of mine. Of course, when it comes to grade, grade is always king. It reduces your operating cost. you know you're just sending less material through the plant um at about 4 000 ppm that's still a lot of material you got to send through a plant and so any bump you can get on grade um it's just you know across the board is going to help your operating costs um let's uh step back a thacker pass is an obvious uh comparison about 200 miles away um how is nevada north different and what have you learned from uh watching uh lithium americans uh build uh its thacker pass yeah so you know in the 1980s the bureau of mine from the u.s which isn't isn't around anymore did a bunch of piloting work on on mcdermott and they they were the first ones to kind of look at all the different kind of flow sheets you could use with clay and one of the flow sheets that they tested was the acid leach and that's what what thacker passes picked up on and and that's where we've picked up as well so we're both kind of looking at that flow sheet the The fundamental concept is the acid leach and then purification.

10:17We differ here. Conceptually, our flow sheets are pretty similar. We do, well, we have tested it based on our ore, and that just gives you some different results because our ore is slightly different. So you've got to size things different. The amount of reagents you might need is going to be different. The amount of how you filter it. It's all just dependent on the test characteristics of the ore. So we have made some changes, and I don't know exactly their complete design criteria either. That being said, you know, Docker Path clearly is a model for these types of deposits, and they really are paving the way.

11:01So we're really cheering them on, and we hope they're going to be successful. They're in construction right now, and I think about a year or so, they'll be starting to produce. Mentioned at the top that Evolution Mining has about a third of the project. They are a gold producer. Why did they want in? Also, look, they're gold miners. Lithium clay is going to be a different type of operation. What technical expertise can they offer to actually advancing this? Yeah, so Evolution, they didn't really come to us. We kind of came to them. So they did some exploration work in Nevada a long time ago, and our project site had some claims that were owned by pollution mining.

11:49So we JV'd with them for that reason. They have kind of let us be the operators, but they are also funding part of the PFS, and they will likely continue funding into the feasibility study. And so they're proving to be great partners. um they you know they're very mature and well-respected mining company in australia uh it's you know they're gold company they like to do gold it's it's unclear you know i guess the they don't seem like they want to necessarily operate lithium right now um but they're good partners uh they bring a lot of knowledge they know how to build mines they know how to operate mines and having that type of maturity that we can tap into is a real asset.

12:42I did mention at the top that the final investment decision is looking towards a 2028 from surge battery metals, looking at a first phase capital of about 2.77 billion. Can you talk about the landscape for government support and how you're viewing it right now over the next few years. So Thacker Pass, which we mentioned, it got$2.26 billion from the Energy Department. It looks like now that this administration prefers to kind of take equity stakes of projects. What are you navigating, I guess, over the short term and also can even look to the long term? Yeah, I mean, with the kind of capital that this project is looking at, there's a there's a high chance we'll need some type of some type of government support um loans and you know maybe that's from the ex-im bank or whoever's kind of offering that at the time um we kind of view it as um we would like to get some strategic partners in um that can can contribute some capex uh we'll probably need some government government money as well and then finance the rest through their typical methods um we have been in contact with the government uh we've been active from the early days um and we we update them regularly on the project and the status and the development i think there is interest there continues to be interest um you know the the how how much they want lithium uh that kind of ebbs and flows you know sometimes they seem to want uh other metals become you know the focus um and then other times kind of lithium comes back but really the messaging we've got is that they want large projects they They want to fund big projects.

14:41And they keep saying, when you're ready, come to us and we'll talk it out. So that's what we're doing. Lastly, talk about major milestones over the next 12 months. So we're going to be doing some, there's going to be a lot. We're going to be piloting. We got some drilling going on now. Yeah, pilot work. We're going to be well on our way on the feasibility. We're going to start pretty soon really getting in on permitting. We're in active discussions with OEMs and potential offtakers. That's ongoing. So we hope we can have more movement on that in the next year. So there's a lot of catalysts to happen in the next year.

15:37Stephen Ball, thanks for speaking with Mining Stock Daily

15:39Stefan Ball: Alright, appreciate it, thank you The information presented should not be considered investment advice Mining Stock Daily and its 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