Surge Battery Metals, Inc. (OTC Pink: NILIF) stock is higher by over 25% in April, resulting from several announcements showing that in addition to NILIF strengthening its asset base, it's also expediting drill programs to tap into significant revenue-generating opportunities this year. Still, while its drill programs add to its running start in 2023, the most exciting part of the value proposition is that NILIF doesn't necessarily have to drill holes to create shareholder value. (*share price on Friday, 4/28/23 of $0.20 on Yahoo! Finance, 04:15 PM EST)
Proving they are sitting on metals and minerals stockpiles can be enough to support and justify higher share prices. They have done that. And factoring in news about accelerating manufacturing from potential clients in its target markets, including a growing number of EV manufacturers needing metals and minerals to create battery power sources for their products, gains for NILIF stock, even pre-drill, can be more than appreciable; they can be potentially exponential.
Speculative, yes. But it's no secret that companies like Tesla (NASDAQ; TSLA), Ford (NYSE: F), and General Motors (NYSE: GM) are aggressively bidding for the types of output NILIF intends to market. Tesla has put itself in the headlines suggesting it wants to create its own lithium production facility. Wishful thinking or not, Tesla's message is clear. They will buy and/or source as many precious minerals and metals as possible to power their vehicles. What choice do they have- without batteries, Tesla vehicles are only shiny showroom pieces.
Multi-Sector Demand Positions Surge For Growth
Frankly, all EVs would be. And while Tesla is more demonstrative about its intent, purchasing lithium claims on 10,000 acres in Nevada, perhaps the quickest and most efficient path to securing necessary ingredients is to go to companies already positioned or positioning to deliver. That includes NILIF, which is more than blazing its trail to provide; important from an investor's perspective, they are increasing its capacity to do so.
Last month, Surge Battery announced entering into an option agreement with Nickel Rock Resources Inc. to acquire the remaining 20% interest in the HN4 and the N100 mineral claims in central British Columbia. This new agreement enhances an existing one where NILIF had a Property Option Agreement to earn an undivided 80% interest in specific mineral claims from Nickel Rock, a project comprising two non-contiguous mineral claims groups of six separate blocks in central British Columbia. They are of significant size and depth.
One of the claims in the Mount Sidney Williams area (claim HN4) covers 1863 hectares (approx 4603 acres) immediately south of and adjacent to the Decar Project. That project is already being advanced by FPX Resources, including 5 claims in the Mitchell Range area, northeast of Decar (N100 Group), covering 8659 hectares (approx 21,396 acres). Here's the benefit to Surge Battery. As a result of the newest consolidation agreement, Surge Battery Metals will own a 100% undivided ownership in the claims, three of them subject to 2% net service revenue. Both projects target the nickel/iron alloy mineral "Awaruite" and are hosted by serpentinized intrusive rocks of the Trembleur Ultramafic Unit that also hosts, regionally, two large-scale nickel/iron deposits under exploration and development by FPX Nickel Corp (OTC Other: FPOCF).
Once these claims transfer, the consolidation into a 100% ownership position in the HN4 and N100 group of claims provides NILIF with much greater flexibility when charting future exploration activities for the Surge Nickel Project. Keep in mind that the properties have already demonstrated metallic mineralization, including nickel, cobalt, and chromium. Notably, while nickel and cobalt mineralization on the properties have yet to be intensely explored for nickel's presence in the nickel/iron alloy, awaruite has recently been documented. While all three present a trifecta of revenue-generating opportunity, developing the potential inherent to just the latter can justify and support a sustainable boost to NILIF's valuation.
An Impressive Asset Portfolio Supporting Higher Valuations
Reaching that potential, of course, takes money. Surge Battery checks that box after completing its previously announced private placement that raised total gross proceeds of $908,082 subject to final Exchange approval. Those funds were raised with intent.
Part of it is expected to expedite the development of its significant 2022 lithium clay discovery at its Nevada North Lithium Project (NNLP), a plan in motion after receiving approval from the Nevada Bureau of Land Management (BLM) permitting the next stage of drilling to further delineate this high-grade target. According to Surge management, plans call to drill seven new locations within an extensive surface geochemical covering an area of about 1,700 meters east-west in mid-May 2023, subject to weather conditions. The drill program will occur in two bands, each roughly 300 to 400 meters wide, outlining a highly anomalous zone containing abundant sample points greater than 1,000 ppm lithium with samples as high as 5,950 ppm.
This next stage can be transformational for Surge Battery Metals. And after earning the approvals to commence the expanded drill program, that can happen faster than many think. In fact, related to its Nevada North Project and following the success of its 2022 drill program, the opportunities for NILIf have expanded considerably. Moreover, the seven newly proposed drill locations can strengthen that proposition further by assessing the deposit size of its lithium claystone resource at NNLP. The project's scope isn't random. These new drill targets have been selected to expand the currently identified lithium deposit to the west and north and, simultaneously, to determine continuity between the most northern and most southerly holes drilled in 2022's maiden drill program.
Prior work promotes reasons for optimism. The first round of drilling, completed in December 2022, identified a strongly mineralized zone of lithium clay mineralization over a strike length of almost 1,620 meters from NN2205 in the north to NN2208 in the south. Widths of the mineralized horizons are not as well determined since the holes are mostly on a north-south alignment but are at least 400 meters wide, supported by highly anomalous soil values indicating the potential for these horizons to be much more significant. The industry language is technical.
So, in simpler terms, what's been shown is the potential for a significant lithium deposit. Surge noted that calculus is exemplified by hole NN2207 which intersected the thickest intervals of lithium-rich claystone encountered to date, a total of 120.4 meters (395 feet) averaging 3,943 ppm lithium in four zones. Hole NN2208 had the most potent downhole individual sample of 5,950 ppm lithium between 45 and 50 feet (13.72 and 15.24 meters) of the maiden 2022 program. The company added that the average lithium content within all near-surface clay zones intersected in 2022 drilling, applying a 1000 ppm cut-off, was 3254 ppm.
Bullish Prospects For Surge In 2023
All of the above contributes to a logical assumption: Appreciating the potential of NILIF's programs and prospects, current valuations of $0.20 fall short of what a more detailed and thoughtful appraisal might generate. Even single parts of the whole support a steepening of its share price, including its Nevada Lithium Projects, where NILIF owns a 100% interest in 225 mineral claims located in Elko County, Nevada. Another asset in Nevada is its Nevada North Lithium Project in the Granite Range southeast of Jackpot, Nevada, targeting value from a lithium clay deposit in volcanic tuff and tuffaceous sediments of the Jarbidge Rhyolite package.
There's more. Also in Nevada, NILIF has a Property Option Agreement to earn an undivided 80% interest in 16 mineral claims comprising 640 acres located within Nevada's San Emidio Desert, known as the Galt Property. Recent mineral exploration has generated encouraging samples that show a considerable means to turn ambitions into revenues. Finally, NILIF's 100% interest in 663 ha (1,640 acres) property in the Teels Marsh Project, located in Mineral County, Nevada, can also be a value driver, noting it is an active region for lithium exploration and production.
Best of all, NILIF is developing its potential in the right markets at the right time. Despite occasional pricing pressures, the long-term trend for metals and minerals prices, driven by soaring demand, is higher. And with limited supply and the absolute need for lithium to create rechargeable lithium-ion batteries, that bullish trajectory is not likely to weaken. For Surge, it's an opportunity that is in play. And as an ESG (Environmental, Social, and Corporate Governance)-mandated company, they could seize upon opportunities faster than even the large-cap miners in the space.
Hence, describing NILIF as deserving of blue-chip value is not a stretch. They have the team, the capital, the assets, the locations, and the know-how to transform itself from an exploration company into a miner that can unearth value for itself, its shareholders, and a growing list of current and potential clients needing what NILIF intends to deliver.
Thus, while the window of opportunity at current prices may be short-lived, the demand from a global mission to go green won't be. It's a long-term market opportunity putting many billions of dollars in play, and with an impressive asset portfolio in proven territories, those dollars are better than a target; they are likely in the NILIF crosshairs. In other words, acting on the disconnect sooner than later may be wise.
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