Battery Metals

Canada Lithium is achieving meaningful progress towards completing its Quebec open-pit lithium carbonate mine, which will have a spodumene processing plant on site and is expected to be productive for 15 years.

Earlier this month, the Canadian Environmental Assessment Agency (CEAA) announced plans to conduct a comprehensive impact study on Canada Lithium‘s (TSX:CLQ,OTCQX:CLQMF) open-pit lithium carbonate mine in Quebec. This announcement came shortly after the company disclosed that it had received a mining license for the project from the Quebec government.

Project at advanced stage

Canada Lithium’s project consists of 19 claims on 405 hectares located approximately 60 kilometers north of Val d’Or. Canada Lithium expects the 15-year mine to be commissioned by the end of this year and plans to process initial production of lithium carbonate at the spodumene plant before next summer. Site construction is more than 20 percent complete, and the main mining equipment is onsite, with pre-stripping of the pit area and orebody scheduled to start in late July. The mine is on track to cost $207 million to build and is expected to produce approximately 20,000 tonnes of battery-grade lithium carbonate annually.

Strong support from provincial government

Peter Secker, Canada Lithium’s CEO, described the framework provided by the government of Quebec as “very supportive.” He continued, commenting, “they obviously like the commodity. They see the green energy space as being very critical to the [economic] growth in Quebec. The storage of electrical power, grid storage, and batteries – we will be the feeder for that industry; we will mine it in Quebec, process it in Quebec, and then give it to the battery manufacturers in Quebec.”

Secure financing

The initial investment for development of the mine and processing plant was secured through a joint $75 million debt facility from the Bank of Nova Scotia and Caterpillar Financial Services. Cat Financial is also providing lease financing of up to $17 million for mobile mining equipment. On Monday, Investissement Quebec announced a loan guarantee of $60 million for the project.

Pending litigation

A class action lawsuit alleging that Canada Lithium’s “resource estimates disclosed on October 28, 2010, and related statements were false and/or materially misleading” was filed on behalf of Canada Lithium shareholders in April 2011.

The news release contains the statement that the Quebec lithium project “ranks, in terms of size, among the top two or three known hard-rock lithium deposits in the world.” Canada Lithium has said “it will vigorously defend” the action against the company, its directors, and a geologist regarding the mineral resource estimate for the project.

Analyst’s perspective

Jonathan Lee, battery materials and technology analyst at Byron Capital Markets, offered comments to Lithium Investing News, explaining, “we think the risk with regards to the pending lawsuit is muted. Some processes that were supposed to be filed to move the lawsuit forward were not. This will make the progress of going forward [with the lawsuit] more difficult. That being said, we believe that this [mining license] is good news for Canada Lithium.”

Strong fundamentals

Lee believes “the lithium market is quite strong right now, with demand outstripping supply. Prices continue to increase and we expect that [to continue] over the near term. That being said, if Canada Lithium can meet customer specifications, Canada Lithium should be able to sell its lithium product into the market. The company has done a good job of completing the financing to keep the project going forward.”


Securities Disclosure: I, Dave Brown, hold no direct investment interest in any company mentioned in this article.



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