Canada Lithium starts mine commissioning

Canada Lithium (CLQ-T) is commissioning the open pit and processing plant at its Quebec Lithium mine near Val-d’Or, Que., with first production of spodumene concentrate expected shortly, followed by lithium carbonate output early this year. 

“We are exactly where we thought we would be at this time of the year,” Charles Taschereau, Canada Lithium’s chief operating officer, says of the company’s progress to date.

The construction has been completed and the equipment is in place, he adds, noting that all the mechanical and electrical testing has been done on the first part of the plant or the concentrator. And if everything goes well, in the next few days, the company should start producing spodumene concentrate.

Part of the concentrate will be sold, but most will be processed into lithium carbonate once the second part of the plant, or the hydrometallurgical circuit, is commissioned, Taschereau says.

Production of lithium carbonate should begin in February, with the first shipment slated for late March.

In November 2012, Canada Lithium signed a five-year offtake and joint-venture agreement with a subsidiary of China’s Tewoo Group, where it expects to sell a minimum of 12,000 tonnes battery-grade lithium carbonate per year.

It would deliver the product free on board to the Vancouver or Prince Rupert ports in B.C., and sell at market prices, adjusted quarterly.

“The market [price] has been going up quite a lot in the last few years because demand is increasing much faster than the development of any new projects or mines,” Taschereau says, adding that lithium carbonate is sold for US$6,000 to US$6,600 per tonne, while the company’s production costs are estimated at US$3,200 per tonne, before netting by-product credits.

Under the agreement, Tewoo can increase its offtake volume by up to 20% a year over the previous year’s deliveries. If it does this in 2014, Canada Lithium would be responsible for delivering up to 14,400 tonnes that year.

At full production, the mine would generate 20,000 tonnes lithium carbonate per year, and is on track to reach that rate in the last quarter of 2013. It has a 14-year life.

The Quebec Lithium project also has the potential to generate 2,000 tonnes of battery-grade lithium hydroxide and up to 30,000 tonnes of sodium sulphate a year in late 2014. These co-products are expected to bring another US$20 million a year in revenue.

The junior is looking for offtake buyers, particularly for lithium hydroxide, which sells for around US$7,500 per tonne.

While 80% of the demand in the lithium market is for battery-grade lithium carbonate, Taschereau notes that the demand for lithium hydroxide is rising, and “we want to make sure we can supply all the various chemicals to the various customers in the lithium market.”

The junior has 119 full-time employees on-site, but sees this number growing to 200 once the mine reaches full production. The company plans to wrap up the commissioning phase in early January.

At press time, Canada Lithium shares traded at 65¢ apiece, within a 52-week price range of 34¢ to 81¢.