African Rainbow Minerals ups copper game with Surge stake buy

African Rainbow Minerals (JSE: ARI) is buying a 15% stake in British Columbia-focused explorer Surge Copper (TSXV: SURG) for $3.8 million, boosting the South African miner’s exposure to copper.

South Africa’s ARM, through its wholly-owned subsidiary ARM Copper, will subscribe for 39.6 million common shares of Surge at 9.5¢ each, as part of a strategic placement. The figure represents an 18% premium to the 20-day volume, the companies said.

The investment provides ARM a key entry point into an emerging critical metals district in British Columbia. 

The contiguous mineral claim package controlled by Surge contains several advanced porphyry deposits with compliant resources of copper, molybdenum, gold, and silver. Most of these metals are considered critical for the world’s successful transition to a low-carbon economy and related electrification technologies.

“We are excited to be welcoming ARM as a strategic investor into Surge,” chief executive officer Leif Nilsson said in a statement. “They bring significant experience in the development and operation of large-scale mines, with a foundational commitment to operational efficiency and fostering strong community ties.” 

One of the highlights of Surge’s exploration portfolio is the Berg project in B.C. A preliminary economic assessment of the asset last year outlined a net present value (discounted at 8%) of $2.1 billion and an internal rate of return of 20% based on long-term commodity prices of US$4 per lb. copper, US$15 per lb. molybdenum, US$23 per oz. silver and US$1,800 per oz. gold. 

The Berg project is projected to have a 30-year mine life with a total production of 2.6 million tonnes of copper equivalent, including 1.7 million tonnes of copper. The measured and indicated resource is 1 billion tonnes of 0.23% copper, 0.03% molybdenum, 4.6 grams per tonne grams silver per tonne, and 0.02 gram gold.

Surge also owns the Ootsa Property exploration project, which includes the Seel and Ox porphyry deposits, located next to Imperial Metals’ (TSE: III) Huckleberry copper mine.