Canada Lithium pushing to make first shipment

Canada Lithium (CLQ-T) is adding Canadian hard-rock production to the lithium market, although it’s taking a little longer than expected.

Commercial production at its Quebec Lithium project near Val-d’Or, Que., was originally scheduled in March. The company has wrapped-up wet commissioning and initial tests of the major hydrometallurgical plant-circuit, but it’s still under the gun to meet its first shipment. The delay has to do with the kiln operation, which upgrades the lithium-bearing spodumene. Now the kiln is working intermittently at medium operating temperatures for mechanical testing.

Officials from the Canadian Standards Association need to inspect the kiln again before it can be commissioned. The officials are due to return on-site in May.

The kiln is part of the hydrometallurgical circuit, or the “back end” of the processing facility. Commissioning of the plant’s “front end,” which includes the crushing, grinding and flotation circuits, is also ongoing.

As part of the process the plant produced spodumene in the first quarter, and 32,000 tonnes of ore was mined in March at a head grade of 0.95% Li20, which is slightly better than the reserve grade of 0.94% Li2O.

The company says that 400,000 tonnes of waste rock went into finishing the tailings management facility. It announced positive results from a water-discharge test at the facility in mid-April, with the test showing acceptable levels of metal discharge into the environment.

This clears the way for Canada Lithium to push towards meeting its first carbonate shipments to China very soon. The initial shipment will be less than anticipated, however, as commissioning tonnages build.

The company has signed off-take agreements with Tewoo-ERDC, one of China’s largest commodities traders, and Marubeni, a Japanese commodities trading company. The five-year off-take deal with Tewoo calls for at least 12,000 tonnes of lithium carbonate per year, while Marubeni is set to receive 5,000 tonnes per year.

A full ramp-up to a production rate of 20,000 tonnes of battery-grade lithium carbonate per year is expected by the fourth quarter. This level of production would account for 12% of the world’s lithium carbonate supply.

While the economics of hard-rock lithium mines relative to lower-cost brine producers in South America raises a few questions, Canada Lithium expects cash costs to be under US$2,500 per tonne, which would place it in the lower half of the cost curve amongst current producers.

Only the lithium-rich brines from the Salar de Atacama in Chile have lower production costs than what Canada Lithium is anticipating. By way of comparison, Talison Lithium’s (TLH-T) Tianqui hard-rock mine in Australia has costs in the US$4,000-per-tonne range.

The Quebec Lithium deposit being mined by Canada Lithium is made up of a series of spodumene pegmatite dykes and has proven and probable reserves of 17.1 million tonnes, with an average grade of 0.94% Li2O. At press time, the company had just raised $21.1 million via a debenture bought deal.