Surge Exploration Announces Spin-Out Company and Plan of Arrangement

VANCOUVER, British Columbia, January 11, 2019 /PRNewswire/ --

Surge Exploration Inc. (the "Company" or "Surge") (TSX‐V: SUR) (OTCQB: SURJF) (FRA: DJ5C) is pleased to announce that its Board of Directors has approved, in principle, a strategic reorganization of the Company's assets pursuant to which the Company would spin off its interests in the "Hedge Hog" and "Mineral Mountain" exploration projects, both copper/gold projects in British Columbia (the "Exploration Projects") into a newly incorporated subsidiary CuGold Corp. ("CuGold"). Surge will continue to hold its interest in its cobalt projects in both Chile and Ontario, as well as, its lithium brine project in Chile.

It is proposed that the transaction will be carried out by way of statutory plan of arrangement (the "Spin-Out") pursuant to the Business Corporations Act (British Columbia). Under the terms of the Spin-Out, shareholders of Surge would exchange their existing common shares of Surge for the same number of new common shares of Surge (having the identical terms of the existing Surge common shares) and common shares of CuGold. The number of common shares of CuGold to be issued to each Surge shareholder under the Spin-Out has not yet been determined. There will be no change in shareholders' holdings in Surge as a result of the Spin-Out.

In connection with the Spin-Out, the Company intends to complete a non-brokered private placement (the "Financing") into CuGold for a maximum of 15,000,000 Units at a price of CAD$0.05 per Unit for gross proceeds of CAD$750,000. Each Unit is comprised of one common share of the Company and one share purchase warrant. Each whole warrant will entitle the holder thereof to purchase one additional common share of the Company at an exercise price of CAD$0.05 per share, for a period of two years from closing.  

Finder's fees will be paid in connection with the private placement and all finder's fee payable are subject to Exchange approval.

The net proceeds of the Financing will be used to fund, among other things, the working capital of CuGold, the negotiation of potential joint venture opportunities with respect to the Exploration Projects and potential future acquisitions.

The proposed Spin-Out will be subject to the approval of Surge's shareholders which Surge intends to seek at a special meeting of shareholders (the "Shareholders' Meeting"). The date for the Shareholders Meeting has not yet been determined. The Plan of Arrangement is subject to TSX Venture Exchange ("Exchange") approval and the Spin-Out also requires the approval of the British Columbia Supreme Court.