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Just As The Name Has It
Canada Lithium Will Be Canada’s Sole Producer By 2013
~ By Ted Niles- March 19 2012
Today it is on track to become this country’s sole lithium producer, but this Lithium is used in the manufacture of aluminum alloy, glass and ceram-
time last year things looked grim for Canada Lithium Corp TSX:CLQ. An in- ics, greases and rubber. But the industry’s biggest growth potential is in
ternal review of the October 2010 NI 43-101 technical report for the compa- rechargeable batteries, which consumed 24% of lithium production in 2009
ny’s Quebec Lithium project indicated “a material reduction” in the project’s and is projected to rise as high as 40% of production by 2015. Secker ex-
resources, and the company announced February 2011 it had hired Roscoe plains, “It is the lightest metal. When you combine its weight benefit with the
Postle and Associates to conduct an independent review. News of the ap- fact that it has a very high energy-storage capacity, it is the best metal com-
parent error—confirmed May 2011 in a 37% reduction to the measured and pound that you can have to store electrical energy. Once you start talking
indicated resources—sent the company’s share price plummeting. And a about laptops, cellphones and power tools, you have an increased demand
$50-million class-action lawsuit by shareholders in April didn’t help. for lithium. Moving forward, lithium batteries are the battery of choice for
hybrid and full electric vehicles.”
It is this growth potential that inspired support from the province in the form
of a partial guarantee by Investissement Québec of the aforementioned
$75-million financing. When it starts production at year’s end, the Quebec
Lithium project will have no national rivals. At 20,000 tonnes lithium carbon-
ate per annum, Secker estimates that the project will be producing roughly
12% of the world’s supply. “[The Quebec government] has been extremely
supportive,” he says. “[And] you have a huge, skilled labour force there, so
sorting skilled people is relatively easy. When you combine the competitive
advantage of Quebec with cheap hydro power—at 4.5 cents per kilowatt
hour it’s some of the cheapest in the world—it gives us a significant cost
advantage. You couldn’t ask for a better jurisdiction to build a mine.”
But while the loss of a chunk of its resource was a blow to the company, it Secker continues, “At the moment about 50% of the world’s lithium products
still wasn’t enough to slow the project down. The results of its June 2011 come out of South America. About 30% come out of West Australia and
feasibility study confirmed Quebec Lithium’s essentials were largely intact. another 15% to 18% out of China. If someone wanted a North American
Projected annual production of 20,000-tonnes lithium carbonate remained producer, we would be the opportunity.”
unchanged, as did the estimated life-of-mine—indeed it was fractionally in-
creased to 14.9 years from 14.8 years. The project’s pretax net present value With approximately 80% of lithium carbonate demand coming from Japan,
decreased from $270 million to $190 million as a consequence of higher Korea and China, a significant portion of Quebec Lithium’s production will go
stripping ratios, increased dilution and ore loss, and its internal rate of return there. However, as Secker notes, “There are two battery plants in Quebec.
decreased from 24% to 22%. But due to a lower mineral reserve grade Phostech Lithium has just finished building a $100 million lithium battery
(0.94% Li2O from 1.17% Li20), the project’s proven and probable reserves plant, and Bathium Canada already has a plant there. Obviously we would
actually saw an increase of roughly 1.5 million tonnes for a total of 17.1 mil- love to mine lithium carbonate in Quebec, produce a battery-grade product
lion. Capital costs increased from $202 million to $207 million. in Quebec, and then sell it to the battery manufacturers in Quebec.” He adds,
“We’ll also be looking into the US market at the battery plant down there
The blow was further softened by the December 2011 announcement of an [A123 Systems’ plant in Livonia, Michigan]. But while the USA is catching up,
updated mineral resource estimate which reported measured and indicated we’ll sell material into the Asian market.”
resources of 33.2 million tonnes at 1.19% Li20. An increase of nearly 4 mil-
lion tonnes at the same grade over the May technical report. The company As for Canada Lithium’s share price—which has yet to recover from its 2011
also reported inferred resources of 13.8 million tonnes at an average grade slide—Secker sees it as nothing unusual. “We’re just following the standard
of 1.21%. cycle of evaluation for a single-mine company. We finished the feasibility, and
the share price dropped as we’ve gone into construction. We’re assuming
Not only had Canada Lithium managed to keep Quebec Lithium—located it will rise as we get closer to production, and people actually believe we’re
60 kilometres north of Val d’Or—on schedule, on February 13 it announced going to build it.”
“
$75 million in debt financing underwritten by the Bank of Nova Scotia and
Caterpillar Financial Services, as well as another $17 million in lease financ- At press time, Canada Lithium had 252.7 million shares trading at $0.64 for a
ing from Cat Financial for the mine fleet. Between that and the $130 million market cap of $161.8 million.
the company raised in early 2011, President/CEO Peter Secker reports that
Canada Lithium has the capital to build the project. “Exploration is finished,
we have resources and reserves,” he says. “We started construction of the
By October 2013 we’ll be in full produc-
project itself in September 2011. It’s probably 20% complete, and we will tion and will produce 20,000 tonnes a
be commissioning the plants at the end of 2012. There’s a ramp up that year of lithium carbonate
takes about 10 months. By October 2013, we’ll be in full production and will
produce 20,000 tonnes a year of lithium carbonate.”
– Peter Secker
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