Positive study for Canada Lithium

Canada’s most advanced lithium project took a big step closer to production in mid-December when Canada Lithium (clq-t) produced a positive feasibility study for its Quebec Lithium project near Val d’Or, Que.
The study found the deposit at Quebec Lithium could support an open-pit mine and flotation facility processing 2,950 tonnes of ore daily to produce 44 million lbs. lithium carbonate (Li2CO3) a year. The product would grade better than 99.5% Li2CO3, so Canada Lithium could sell it into the battery market.
A recent update to the estimate for Quebec Lithium put the project’s measured and indicated resources at 46.7 million tonnes grading 1.19% lithium. Inferred resources add 57.6 million tonnes averaging 1.18% lithium. When constrained within an economic pit those resources convert to reserves totaling 15.4 million tonnes of 1.17% lithium, enough to support a 14.8-year mine life in a pit with an average strip ratio of 3.6-to-1.
Ore from the pit would be crushed and ground, and then floated to produce a 6.5% lithium oxide spodumene concentrate. A hydrometallurgical process comprising a rotary conversion kiln, a leaching circuit, a series of precipitation tanks, an ion-exchange circuit, and a packaging system would then produce a 99.5% lithium carbonate product. The process will recover 67% of the ore’s lithium.
Building the mine will cost US$202 million, which will allow Canada Lithium to produce a pound of lithium carbonate for US$1.17.
Based on a lithium carbonate price of US$2.67 per lb., the Quebec Lithium project carries a pretax net present value of US$270 million, using an 8% discount rate. The mine should generate a 24% internal rate of return, enabling capital payback in four years.
“This feasibility study indicates the Quebec Lithium hard-rock operation can compete financially with the South American lithium brine operations,” said Peter Secker, Canada Lithium’s president and CEO, in a statement. “Our competitive advantages are that we have good infrastructure, access to relatively cheap power, and clean ore.”
It wouldn’t be the first mine built at the site – between 1955 and 1965 the project operated as an underground mine, drawing ore from a system of spodumene-rich dykes. That operation left behind a site with road and rail access. The port of Montreal is nearby and Detroit, the emerging North American centre for electric vehicle and battery manufacturers, is a 14-hour drive away.
The company hopes to start construction at Quebec Lithium before mid-2011. Before then, it needs to obtain financing, complete the engineering and design work, and obtain government approvals. If things go according to plan, the mine would start commissioning in the fourth quarter of 2012 and achieve commercial production a year later.
On news of the feasibility study Canada Lithium’s share price gained 16¢ in two days to close at $1.38. About six months ago, its shares were trading at 50¢. The company has 152 million shares outstanding, 174 million fully diluted.