Surge Battery teams up with Evolution Mining on Nevada lithium prefeasibility

[Redator]

Surge Battery Metals (TSXV: NILI) will partner with Australia’s Evolution Mining to advance the development of its flagship lithium project in Nevada, viewed as a potential low-cost producer of battery-grade material for the US market.

On Tuesday, the Vancouver-based lithium developer announced that the companies have a non-binding agreement to form a joint venture on the Nevada North lithium project (NNLP), with a 77% interest held by Surge and 23% by Evolution. The agreement becomes binding once the companies conduct their respective due diligence and Surge completes an equity financing of at least C$3 million.

The JV’s initial focus, it said, will be to complete a preliminary feasibility study (PFS) for NNLP for further evaluation.

In June, Surge released a preliminary economic assessment (PEA) for NNLP, outlining a potential 42-year mine with annual lithium carbonate equivalent (LCE) production of 86,300 tonnes. The project will be built in two phases, with Phase 1 costing nearly $3 billion and Phase 2 costing another $2.35 billion.

Using an LCE price of $24,000/tonne as the base case, that study gave NNLP an after-tax net present value (at 8% discount) of $9.21 billion and an internal rate of return of 22.8%. Its operating cost is pegged at $5,097/t LCE, owing to the near-surface, high-grade mineralization at NNLP. The payback period is projected at 4.7 years.

“The combination of low opex, great ROI, and the ability to produce large quantities of battery-grade lithium carbonate, including a peak of 109,100 tonnes in one year, showcases the Tier 1 status of NNLP,” Surge Battery Metals’ CEO Greg Reimer said at the time of the PEA release.

Shares of Surge Battery Metals fell by 3.4% on the news, giving the company a market capitalization of C$49 million.

JV details

In Tuesday’s release, Reimer said the collaboration with Evolution on NNLP will combine the Australian miner’s “proven track record in mine development and operational excellence” with its own lithium expertise.

As Evolution also holds various land packages within and around NNLP, the JV ownership interest will be based on the companies’ respective contributions of mineral claims to the venture.

Under the terms, Evolution will contribute its 75% mineral interest in an 880-acre private land that was part of the PEA report, as well as 75% mineral rights in over 21,000 acres of private land in and around the property.

Following the formation of the JV, Evolution will sole fund, in stages and subject to certain conditions, up to C$10 million for the completion of the PFS. In exchange, it will gain additional ownership interests in the JV. Upon satisfaction of this funding obligation, Evolution’s ownership interest in the JV will increase to 32.5%. Any additional expenditures of the JV shall be jointly funded by the parties on a pro rata basis.