Global Lithium-ion Battery Market Set to Grow on Increasing Battery Applications

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According to a report published by Grand View Market Research, the global lithium-ion battery market is expected to grow from $22.8 billion in 2016 to reach $93.1 billion by 2025. The increasing demand for lithium-ion batteries in electric vehicles, portable consumer electronics and grid storage systems are expected to drive the growth of the market. Additionally, technological advancements in lithium-ion batteries will also fuel the increase in demand. Based on application, the consumer electronics segment was valued at $11.92 billion in 2016. Demand for batteries in energy storage system is expected to increase at a compound annual growth rate (CAGR) of 21% during the forecast period. Surge Exploration Inc., Nemaska Lithium, Inc., MGX Minerals Inc., American Lithium Corp., Advantage Lithium Corp. 

The battery raw materials market is growing rapidly as the price of two key battery elements, lithium and cobalt, experienced a dramatic increase in recent years. The electric-vehicle revaluation significantly increases the demand for batteries. According to a report from McKinsey & Company, Battery demand for electric mobility is expected to reach 735 GWh by 2025, while battery demand for power storage is anticipated to reach 130 GWh by 2025. To match the demand, cobalt production will need to more than double from its 2016 production level by 2025.

Surge Exploration Inc. is also listed on the Toronto Stock Exchange Venture under (TSX-V: SUR). Earlier today the company announced breaking news that, "it's wholly owned subsidiary, Surge Exploration Chile SpA has entered into a non-binding Memorandum of Understanding (the "MOU") with Mr. Miguel Angel Pérez Vargas ("MAPV") for an option to acquire up to 100% of the Incahuasi Lithium Project in the prolific Antofagasta mining region in Northern Chile. The Incahuasi Lithium Project comprises 10 exploration concessions totaling 2,300 hectares, and the Incahuasi Salar is located on the Chile/Argentina national border approximately 75 km / 46 mi southeast from the famed Atacama Salar in Chile. The Atacama Salar is well-known to be the world's largest and actively mined source of lithium with approximately one-third of the global supply of lithium contained within its boundaries.

The MOU, when superseded by a definitive option agreement (the "Agreement"), will require Surge to make certain cash and common share payments totaling $2.22 million and making certain work and development commitments during the term of the option agreement.

The Incahuasi Lithium Project exhibits many highly desirable and key acquisition attributes, including:

  • the appearance of both a low-cost resource definition opportunity and a near term production opportunity;
  • the overall project size fits well within the capability of a junior company seeking to quickly define reserves and establish production facilities;
  • the property is well situated within the Incahuasi Salar with nearby highway and paved road access;
  • within the Incahuasi Salar lithium brines appear to exist near the surface resulting in potential lower costs of exploration and extraction; and
  • the proposed Incahuasi lithium exploration concessions lie beside existing lithium exploration operations in Argentina that are held by other publicly traded mining companies.

The Company intends to undertake a preliminary resource definition program upon receipt of the National Instrument 43-101 report, which is expected to be completed in 2019.

"We are excited about the opportunity to earn a significant interest in a lithium concession located in the Lithium Triangle, the world's most prolific lithium producing region with over 70% of the world's lithium reserves. We look forward to develop this concession, for the benefit of all our shareholders." says Tim Fernback, Surge's President & CEO.

Structure of the MOU and subsequent Agreement:

The proposed transaction to acquire 100% of the mining rights associate with the Incahuasi Lithium Project shall be effected by payment of the amounts described below:

  • a non-refundable payment of $10,000 in cash by the Company to be paid to MAPV within fifteen business days of signing the MOU. This payment guarantees a six-month period of exclusivity for Surge to conduct its due diligence and for the negotiation and signing of definitive option agreement.
  • upon approval of the option agreement and transaction by the TSX Venture Exchange, the Company shall pay the sum of US$50,000 in cash immediately (this date is referred to as the "Effective Date");
  • the Company shall pay the sum of $150,000 in cash to MAPV no later than twelve (12) months from the effective date;
  • the Company shall pay the sum of $200,000 in cash to MAPV no later than twenty-four (24) months from the effective date;
  • the Company shall pay the sum of $250,000 in cash to MAPV no later than thirty-six (36) months from the Effective Date;
  • the Company shall pay the sum of $1,540,000 in cash and or common shares to MAPV no later than forty-eight (48) months from the Effective Date. This sum will be paid as follows: i) USD$1,000,000 will be paid in cash and, at the sole discretion of Surge ii) USD$540,000 in cash or equivalent common shares of Surge Exploration Inc.); and
  • the Company shall have the exclusive right to accelerate all payments due under this agreement.

Once Surge has completed the foregoing conditions, the Company must also have completed the following work commitment in order to exercise the option and acquire 100% interest in the Incahuasi Lithium Project.

Work Commitments: - Surge shall be required to complete the following under its "Work Commitment" obligations with the exploration phase starting immediately after the conclusion of the Option Agreement, with the assurance that Surge produces a geophysical survey and at least one drill hole completed within 24 months from the Effective Date (the Exploration Program).

Net Smelter Return (NSR) Royalties: Once Surge completes all the prerequisites of the Agreement, and therefore owns the rights to the lithium mineral claims, MAPV shall receive a 2% NSR in the Incahuasi Lithium Project. Surge will retain the right to repurchase 50% of the NSR to MAPV at a price of $3,500,000.

The transaction will be subject to TSX-Venture approval. Finders fees are payable in connection with the sourcing and negotiation of the potential acquisition of the Incahuasi Lithium Project. Qualified Person: The technical content of this news release has been reviewed and approved by Thomas Eggers. Mr. Eggers is a non-independent Qualified Person within the meaning of National Instrument 43-101 Standards, as a Registered Member of the Chilean Mining Commission.



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