Surface Metals Completes Sale of Manitoba Lithium Assets to Snow Lake Energy

• Surface Metals Inc. sold its remaining 49% interest in 37 Manitoba lithium mineral claims to Snow Lake Energy (NASDAQ: LITM) for $650,000.
• The transaction completes an earn-in agreement initiated in January 2024, with Snow Lake having previously acquired 51% ownership.
• The properties comprise approximately 17,000 acres across three claim groups: Shatford Lake, Birse Lake, and Cat-Euclid Lake in southeastern Manitoba.
• A 2% gross overriding royalty held by Lithium Royalty Corporation remains on the properties.
• Surface Metals continues to focus on its Nevada portfolio, including the Cimarron Gold Project and Clayton Valley lithium assets.

Surface Metals Inc. (CSE: SUR) is a mineral exploration company focused on gold and lithium projects in Nevada. The company's assets include the Cimarron Gold Project in Nye County, located in a historically productive gold district. The company's Clayton Valley Lithium Brine Project contains an NI 43-101 compliant inferred resource of approximately 302,900 tonnes of lithium carbonate equivalent, situated adjacent to Albemarle's Silver Peak Mine. Surface Metals is also advancing a lithium project in Fish Lake Valley, Nevada.

Manitoba Lithium Project Divestiture and Transaction Terms

Surface Metals has sold its remaining interest in 37 mineral claims located in southeastern Manitoba. The properties include 21 claims at Shatford Lake totalling 8,883 acres, 10 claims at Birse Lake totalling 5,196 acres, and six claims at Cat-Euclid Lake totalling 2,930 acres. The transaction value is $650,000 in cash consideration.

The sale concludes an option agreement dated January 29, 2024, under which Surface Metals granted Snow Lake the right to earn up to a 90% interest in the properties. Snow Lake had previously earned a 51% interest under the terms of that agreement. The option agreement terminates upon completion of this sale.

The transaction provides Surface Metals with proceeds from a non-core asset. The company no longer holds any direct interest in the Manitoba properties following this sale.

Snow Lake Energy Acquisition and Royalty Structure

Snow Lake Energy now holds 100% ownership of the Manitoba lithium properties following this transaction. The company, listed on NASDAQ under the ticker LITM, acquired the remaining stake from Surface Metals to complete its consolidation of the project.

The properties are subject to a 2% gross overriding royalty in favour of Lithium Royalty Corporation. This royalty was established prior to the transaction and remains in place. Snow Lake acquires Surface Metal's remaining interest subject to this existing royalty obligation.

A gross overriding royalty is calculated as a percentage of gross revenue from production, paid before deducting operating costs. Surface Metals no longer holds direct ownership but the royalty remains attached to the properties regardless of ownership changes.

Portfolio Focus on Nevada Assets

Surface Metals holds multiple projects in Nevada. The Cimarron Gold Project is located in Nye County in a historically productive gold district. The company's Clayton Valley Lithium Brine Project is adjacent to Albemarle's Silver Peak Mine and contains an inferred resource of approximately 302,900 tonnes of lithium carbonate equivalent, as reported under National Instrument 43-101 standards.

The company is also advancing a lithium project in Fish Lake Valley, Nevada. These Nevada assets represent the company's current operational focus following the Manitoba divestiture.

The sale allows Surface Metals to concentrate resources on its Nevada-based projects. The company's portfolio now consists entirely of gold and lithium assets located within Nevada.

Conclusion

The transaction concludes Surface Metals' involvement in Manitoba lithium properties. The company received $650,000 in proceeds and has exited the earn-in agreement with Snow Lake Energy. Surface Metals' remaining portfolio consists of its Nevada-based gold and lithium projects, including Cimarron, Clayton Valley, and Fish Lake Valley. The properties sold to Snow Lake remain subject to a 2% gross overriding royalty held by Lithium Royalty Corporation.

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