Quebec Lithium project gets bigger, better for Canada Lithium

A new prefeasibility study on Canada Lithium’s (CLQ-V, CLQMF-O) Quebec Lithium project envisages an open-pit mine that would produce 42.6 million lbs. of battery-grade lithium carbonate per year over a span of 14.8 years, but a feasibility study that will come out early 2011 will look into doubling the mine life.

The project, located northeast of Lacorne Twp. about 60 km north of Val d’Or, Que., would be equipped to process 2,950 tonnes of ore per day and cost US$148 million to build with a payback period of 3.1 years.

If everything goes to plan, Canada Lithium would start construction by the second quarter of 2011 with the process plant commissioning in late 2012.

The project has a pretax net present value of US$325 million (using an 8% discount) and a pretax internal rate of return of 33.6%.

Cash operating costs are estimated at US$2,815 per tonne (or US$1.27 per lb. lithium carbonate) with average annual revenue of US$115 million. Pretax cash flow for the life of the project would be US$872 million.

“The study is a good indication that the Quebec Lithium property can compete financially with most of the lithium brine prospects under development, but on a much faster timeline,” said Canada Lithium president and CEO Peter Secker in a statement.

The deposit has measured and indicated resources of 31.6 million tonnes grading 1.11% lithium oxide for a total of 1.9 billion lbs. (867,000 tonnes) lithium carbonate equivalent.

The project also has inferred resources of 38.9 million tonnes grading 1.12% lithium oxide for 2.3 billion lbs. lithium carbonate equivalent.

The company says the resource estimate tops both the original historical estimate of 15 million tonnes grading 1.14% lithium oxide and its own conceptual target of 29-30 million tonnes grading 1.1-1.2% lithium oxide.

The resource estimate was based on 506 drill holes. Most were historical, but 39 holes were drilled in 2009 by Canada Lithium.

The resource comprises a series of parallel, steeply dipping spodumene-bearing pegmatite dykes.

Mineralization included in the resource estimate covers an area of 1 km long by 550 metres wide. Recent drilling has hit mineralization as deep as 430 metres.

To advance the project to the feasibility study level, the company has started pilot plant metallurgical studies with SGS Lakefield and will soon begin engineering studies.

The bulk sample will both fine-tune the metallurgical process as well as produce battery-grade lithium carbonate samples for marketing distribution and testing by potential end users by July 2010.

The company has a marketing agreement with Mitsui & Co. (MITSY-Q) of Tokyo, Japan, and has also been in discussions with North American lithium buyers based on its demonstrated product quality from bench-scale tests done by SGS Lakefield.

The company will conduct extensional and infill resource definition drilling this year to better define the location of the spodumene- bearing pegmatites to both the northwest and the southeast, on strike with the current resource.

Canada Lithium estimates that the feasibility study, due for completion in early 2011, will cost $15 million.