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Canada Lithium Corp. announced that it will begin trading on the Toronto Stock Exchange as early as Thursday, June 24. The market responded very positively to the press release, with share prices for Canada Lithium on the Venture Exchange trading 4 percent higher than the previous day’s close, at CAD $ .52.
By Dave Brown – Exclusive to Lithium Investing News
Chief Executive Officer of Canada Lithium, Peter Secker demonstrated his optimism in the press release, “We are delighted to have qualified for a listing on the senior TSX board. It further heightens our visibility in the investing community as we move through the process of a definitive Feasibility Study (FS) on the Quebec Lithium Project.”
The Feasibility Study is anticipated to be completed in the first quarter of 2011 followed by a projected time line to production by late 2012 at an annual production rate of 42.6 million pounds of battery-grade lithium carbonate from an open-pit mine and processing plant that will be situated about 60 km north of Val d’Or, Quebec. The on-site lithium carbonate production facility being contemplated will treat an estimated 1.2 million tonnes per year of crushed pegmatite ores to produce an intermediate 6.5 percent spodumene product that will be upgraded, on site, to produce the battery grade lithium carbonate. The company expects a minimum 15-year mine life with potential upper limit of 50 years pending the outcome and analysis of the study.
Historical Context
The site is a past producer, as it operated as underground mine between 1955 and 1965, drawing ore from a system of underground spodumene-rich dykes. The mine, with its 150 meter deep shaft and lateral workings on three levels was operated under the former Quebec Lithium Corporation along with a surface concentration plant and refinery. Over a period of 10 years of operation, the underground ore averaged a grade of 1.25 percent Li2O. In its producing days the mine output was ceramic-grade and chemical-grade spodumene concentrates, lithium carbonate, lithium hydroxide monohydrate as well as a small quantity of lithium chloride and feldspar. More recently, metallurgical tests from the site produced battery-grade 99.6 percent lithium carbonate.
Proprietary Distribution Agreement
In April 2009, the company signed an exclusive Marketing Agreement with Mitsui & Co. (NAS:MITSY) relating to the distribution of battery grade lithium carbonate in Japan, China and Korea. The broadly-based Japanese trading company is engaged in the sale, import, export, offshore trading and manufacture of various products in the fields of iron and steel production, metal resources, machine and project, chemical, energy, food and retail, as well as the consumer service and information industry.
The company has made headline news most recently as one business unit, Mitsui Oil Exploration Co., has a 10 percent stake in the British Petroleum (NYSE: BP) offshore oil block from which oil has been leaking into the Gulf of Mexico. Mitsui share prices have plunged 25 percent since the April 20 explosion on the Deepwater Horizon rig, and the company has been targeted to pay into a multibillion dollar fund for leak claims by a Washington-based policy analysis firm.
Financing is Key
A critical factor is going to be financing the lithium production, as Mitsui should still be able to finance the project if the production costs per pound can be justified. It would be difficult to build a compelling case for continuing the Quebec project if the potential of cheaper alternative sources of lithium are available for development in South America, pending the feasibility study.
Market Reaction
On June 23, the market responded very positively to the most recent announcement, with share prices for Canada Lithium trading 4 percent higher than the previous day’s close, at CAD $ .52. The current valuation demonstrates bullish sentiment relative to many competitive lithium exploration companies, as the Byron Capital Markets Lithium Index recorded a decline of 2.44 percent for the same duration.