Surge Announces Positive Pre-Feasibility Study at Nevada North: After-Tax NPV8% of US$9.81 Billion, After-Tax IRR of 23.6% and Operating Cost of US$4,719/tonne Lithium Carbonate

Surge Battery Metals Inc. (NILI) released the completed NI 43-101 Pre-Feasibility Study (PFS) for the Nevada North Lithium Project (NNLP) after market close on October 2, 2026. Led by Fluor, with IMC handling the mine plan and reserves, and RESPEC managing resources, the study represents a 100% project-level assessment, with Surge holding a 67.5% interest and Evolution Mining 32.5%.

The PFS presents improved headline economics compared to the prior Preliminary Economic Assessment (PEA). After-tax NPV8% is US$9.81B, up from US$9.17B, while the after-tax internal rate of return (IRR) rose to 23.6% from 22.8%. Pre-tax NPV8% stands at US$11.55B. The after-tax payback period is 4.2 years, a reduction from 4.6 years. Level-of-mine cash operating expenses are US$4,719/t LCE, approximately 10% below the PEA’s US$5,243/t. Overall recovery increased to 84.9% from 82.8%.

Capital costs for Phase 1 initial development are US$2.77B, a 6.7% decrease from the PEA’s US$2.97B, while Phase 2 capital remains unchanged at US$2.35B, bringing total capital to US$5.12B. Level-of-mine production is estimated at approximately 3.87 Mt LCE, averaging about 92,250 tpa and peaking at roughly 111,400 tpa, compared to 3.63 Mt in the PEA.

The PFS is built solely on a Proven & Probable Mineral Reserve of 218.3 Mt @ 3,928 ppm Li, containing 4.56 Mt LCE. This defines a 42-year mine life with no Inferred material in the mine plan. Metallurgical data supporting the production of battery-grade 99.95% Li₂CO₃, announced on September 15, 2026, is incorporated into the study. The economics remain positive across a full ±30% sensitivity range, with NPV8% remaining at approximately US$4.6B at a 30% lower price of US$16,800/t, and an IRR of approximately 19% at a 30% capital increase. First production is targeted for the second half of 2031, with Front-End Loading 3 (FEL 3) starting in the fourth quarter of 2026.

Surge Battery Metals Inc. (NILI) has completed a scheduled milestone in its Project Claystone development, converting the resource to a Mineral Reserve within a Class 4 study. This transition marks a step-change in technical maturity from the previous Preliminary Economic Assessment (PEA), moving the project from inferred material to reserves and materially lowering development risk. The updated study reflects incremental improvements over the PEA, with operating expenses (Opex) coming in 10% lower and capital expenditures (Capex) 6.7% lower, alongside higher recovery rates. These improvements across essentially every input support the study’s "bankable" framing, while battery-grade product has already been demonstrated end-to-end on Project Claystone, confirming the metallurgy is not a future promise.

The project-level figures, presented on a 100% basis, show a US$9.81 billion NPV8%. Surge Battery Metals Inc. holds a 67.5% share of this value, equating to approximately US$6.6 billion. While this figure is large relative to the company’s ~C$215 million market capitalization, the headline numbers overstate the ownership interest of Surge shareholders. The event was pre-telegraphed, with the Q4 2026 Pre-Feasibility Study (PFS) repeatedly guiding toward this outcome, limiting the surprise factor.

Development remains capital-intensive, requiring US$2.77 billion for Phase 1 and approximately US$3.24 billion spent prior to first production. First production is estimated for the second half of 2031, roughly five years out. Given the scale, the company cannot fund this on its balance sheet, implying a need for large future dilution, partners, a strategic or sovereign backer, or a potential takeout.

The project’s value is highly leveraged to lithium prices; a 30% price drop would cut the NPV8% by approximately 53%, reducing it from US$9.8 billion to US$4.6 billion. Lithium price volatility remains the dominant swing factor. Additionally, Class 4 accuracy is only ±25%, and Phase 2 is estimated at a lower level of definition than Phase 1. The study also flags that water demand may exceed the design basis, presenting potential regulatory and water risks.

Surge Battery Metals Inc. (TSXV: NILI; OTCQX: NILIF; FSE: DJ5) is a pre-revenue mineral exploration and development company focused on domestic U.S. lithium. Its flagship asset is the Nevada North Lithium Project (NNLP), a large, high-grade lithium claystone deposit located in Elko County, northeastern Nevada, approximately 74 km north-northeast of Wells and 140 km northeast of Elko. The project is held via the Nevada North Lithium LLC joint venture. The mineralized clay zone features a strike length exceeding 4,700 meters and a known width greater than 2,000 meters.

The project’s PFS-scale asset snapshot includes a Proven & Probable Reserve of 218.3 million tonnes at 3,928 ppm Li, equating to 4.56 million tonnes of lithium carbonate equivalent (LCE). Additionally, there is a Measured & Indicated Resource of 657.5 million tonnes at 3,007 ppm Li (10.51 million tonnes LCE) and an Inferred Resource of 271.3 million tonnes at 2,160 ppm Li (3.12 million tonnes LCE). Planned production involves battery-grade lithium carbonate extracted through open-pit, free-digging mining that requires no blasting, followed by on-site gravity beneficiation and sulfuric-acid leaching utilizing a sulfur-burning acid plant.

Management is led by President, CEO, and Director Greg Reimer, with Graham Harris serving as Chairman and Alan J. Morris as Geological Advisor and Qualified Person. The company also references a San Emidio Lithium Project option, allowing it to earn up to an 80% interest, which is distinct from the flagship NNLP asset.