Canada Lithium revises Quebec Lithium’s resource

It has been a bumpy ride for Canada Lithium (CLQ-T) this year as it recently lowered its measured and indicated resource estimate for its Quebec Lithium project near Val d’Or, Que., to about one-third the amount previously estimated last October.

The company says the discrepancy was caused by the geological modeling used to calculate the resource estimate, adding that some of the resource blocks used should have been labelled as waste material.

The revised May estimate prepared by AMC Mining Consultants found that Quebec Lithium has 29.3 million measured and indicated tonnes grading 1.19% lithium oxide, instead of 46.7 million measured and indicated tonnes at 1.19% lithium oxide.

It also noted that inferred tonnes reduced to 20.9 million tonnes grading 1.15% lithium oxide compared to the previous estimate of 57.6 million tonnes at 1.18% lithium oxide.

As a result, the company revised its construction schedule, saying site work at the project would start in the third quarter instead of in May.

Canada Lithium estimates Quebec Lithium will still start producing in late 2012, with the first lithium carbonate sales taking place in early 2013.

The company adds the cost to build the mine and plant remains $201.7 million, and notes that it would comment on the effects of the resource reduction in an updated reserve modeling.

Canada Lithium expects to release a new National Instrument 43-101 feasibility study technical report, once the mine plan and reserve modeling has been updated.

It was only six months ago when Canada Lithium’s stock started its noticeable rise after the company released the October resource estimate, which was based on about 7,000 metres of drilling in 45 holes, and a month later filed a NI 43-101 compliant technical report, and followed that up with a positive feasibility study in mid-December.

The string of good news saw Canada Lithium shares move from a 52-week low of 46¢ (May 21, 2010) into the 80¢-range in October, and then close at $1.24 on the Dec.17 feasibility news, while touching a 52-week high of $2.23 on Dec. 31, before cooling off in February.

The company announced on Feb. 28 that it retained Roscoe, Postle & Associates (RPA) to review the resource estimate, after saying an internal review showed a material reduction in the measured, indicated, and inferred resources.

At that time, its shares were trading for $1.35 apiece, before tumbling in March into the 60¢ range, after RPA confirmed that “significant issues” existed with the geological modeling that was used to estimate the resource.

Also in March, Canada Lithium hired AMC to produce a revised resource estimate on Quebec Lithium and to prepare a new compliant report.    

A month later, the company reported that a notice of action was filed by Siskinds LLP in London, Ont., where the plaintiff requested various orders and declarations, including $50 million in general and special damages.

Company president and CEO Peter Secker said in an April press release that the case is “without merit” and would “ultimately” be dismissed. He added: “The company took immediate action when we learned that there was a potential issue with the previously announced mineral resource estimate and we are working to resolve this matter as quickly as possible.”

On May 16, the company said a statement of claim has been filed in the Ontario Superior Court of Justice for the proposed lawsuit.

The Ontario Securities Commission (OSC) notes that the company will stay on its default list until it files a new NI 43-101 compliant technical report on the updated feasibility study for Quebec Lithium.

The company said in a May 2 press release that it was applying to the Canadian securities to request that a management cease trade order be placed on its CEO and chief financial officer instead of a general trade order.

Canada Lithium currently has two rigs turning at its Quebec Lithium project as part of its 10,000-metre, 50-hole program, to infill and upgrade a portion of the 20.9-million inferred resource. Seven holes have been completed to date.

At presstime, the company’s stock was trading for 59¢.