Canada Lithium Confirms Québec Lithium Mine Viability; Schedules Site Construction to Commence Q3, 2011- Default Status Report Pursuant to National Policy 12-203
TORONTO, June 13, 2011 /CNW/ --
TSX: CLQ; U.S. OTC: CLQMF
TORONTO, June 13, 2011 /CNW/ - Canada Lithium Corp. (the 'Company')
(TSX: CLQ; U.S. OTC: CLQMF) announced today the results of the updated
Feasibility Study for the development of a mine and lithium carbonate
processing facility at its Québec Lithium Project (the 'Project') near
Val d'Or, Québec (the 'Updated Feasibility Study'). A National
Instrument 43-101 ('NI 43-101') compliant Technical Report respecting
the Updated Feasibility Study (the 'June Technical Report') will be
filed on SEDAR within 14 days. The June Technical Report will replace
the Technical Report dated January 5, 2011 (the 'January Technical
Report') that was prepared in respect of a Feasibility Study for the
Project that was completed in December, 2010 (the 'Prior Feasibility
Study').
The Updated Feasibility Study contemplates an open-pit mine and
processing plant that will have an initial mine operating life of
approximately 14.9 years. The planned annual output for the Project
remains at approximately 20,000 tonnes (44 million pounds) per year of
battery-grade lithium carbonate (Li(2)CO(3)).
The key parameters from the Updated Feasibility Study are shown below,
with a comparison to the Prior Feasibility Study.
____________________________________________________________________
| |Updated Feasibility|Prior Feasibility Study|
| | Study | |
|________________________|___________________|_______________________|
|Average Annual Li(2)CO | 20,000 | 20,000 |
|(3) production (t) | | |
|________________________|___________________|_______________________|
|Life of Mine (Years) | 14.9 | 14.8 |
|________________________|___________________|_______________________|
|Net Present Value | 190 | 270 |
|pre-tax (US$ million) | | |
|________________________|___________________|_______________________|
|Construction Capital | 202 | 202 |
|Cost (US$ million) | | |
|________________________|___________________|_______________________|
|Average operating costs | 45.09 | 50.58 |
|(US$/t milled) | | |
|________________________|___________________|_______________________|
|Average operating costs | 3,164 | 2,600 |
|(US$/t Li(2)CO(3)) | | |
|________________________|___________________|_______________________|
|IRR pre-tax (%) | 22 | 24 |
|________________________|___________________|_______________________|
|Simple Payback pre-tax | 4 | 4 |
|(years) | | |
|________________________|___________________|_______________________|
|Mineral Reserve Grade | 0.85% | 1.17% |
|(Li(2)CO(3)) | | |
|________________________|___________________|_______________________|
|Stripping Ratio | 5.5:1 | 3.6:1 |
|________________________|___________________|_______________________|
The Project has a pre-tax net present value (NPV) of approximately
US$190 million, (at an 8% discount rate). The reduction in NPV of US$80
million under the Updated Feasibility Study is primarily due to
increased operating costs, resulting from higher stripping ratios and
increased dilution and ore loss factors. As a result of changes in the
geometry of the mineralised zones in the new resource model and
increased dilution factors plus lower mining recovery factors, the
Project's internal rate of return (IRR) has reduced from 24% to 22%.
The simple pre-tax payback period remains at four years.
Initial site construction is planned to commence in Q3, 2011, with
process plant commissioning currently scheduled to be under way by the
end of 2012 and full production expected by the end of 2013, subject to
financing and final permitting.
Location and Infrastructure
The Project, owned 100% by the Company, is located in the northeast
quadrant of La Corne Township, approximately 60 km. north of Val d'Or,
a mining-friendly community that has over 75 years of mining history
and a population of some 32,000 people. Access to the site is by paved
road from Val d'Or. The city hosts an airport and significant support
infrastructure. Québec is one of the top-rated mining jurisdictions in
the world and electricity costs, a key input in mining operations, are
among the lowest in North America.
Mineral Resources
A recently updated mineral resource estimate was prepared by AMC Mining
Consultants ('AMC'). As previously disclosed in a press release dated
May 16, 2011, the AMC mineral resource estimate, together with the
prior mineral resource estimate of October 18, 2010, is as follows:
Table 1: Mineral Resources (inclusive of Mineral Reserves) reported by
Class using a 0.8% Li(2)O cut-off grade. This is the same cut off used previously by the
Company and AMC is satisfied that it is reasonable for the delineation
of mineral resources.
____________________________________________________________________
|Classification|AMC Estimate|AMC Estimate|October 28/10|October 28/10|
| |(Tonnes) |Grade (% Li | Estimate | Estimate |
| | | (2)O) | (Tonnes) | Grade (% Li |
| | | | | (2)O) |
|______________|____________|____________|_____________|_____________|
|Measured (M) | 6,101,000| 1.16 | 5,654,000 | 1.15 |
|______________|____________|____________|_____________|_____________|
|Indicated (I) | 23,194,000| 1.20 | 41,015,000 | 1.20 |
|______________|____________|____________|_____________|_____________|
|Total M I | 29,295,000| 1.19 | 46,669,000 | 1.19 |
|______________|____________|____________|_____________|_____________|
| | | | | |
|______________|____________|____________|_____________|_____________|
|Inferred | 20,935,000| 1.15 | 57,581,000 | 1.18 |
|______________|____________|____________|_____________|_____________|
Notes: Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Tonnes rounded to the nearest thousand. The AMC resource figures are
constrained by a pit shell, whereas the October 2010 resource model was
not.
The tables below show AMC's estimates of mineral resources over a range
of cut-off grades with the preferred 0.8% cut-off estimate emboldened.
Table 2a: Measured and Indicated Mineral Resources
___________________________________________________________________
| | Measured (M) | Indicated (I) | Total (M I) |
|________|__________________|___________________|___________________|
|Cut-off | Tonnes |Li(2)O %| Tonnes |Li(2)O %| Tonnes |Li(2)O %|
| (%) | | | | | | |
|________|_________|________|__________|________|__________|________|
| 0.0 |9,089,000| 0.93 |39,782,000| 0.89 |48,871,000| 0.90 |
|________|_________|________|__________|________|__________|________|
| 0.6 |7,148,000| 1.10 |29,010,000| 1.10 |36,158,000| 1.10 |
|________|_________|________|__________|________|__________|________|
| 0.8 |6,101,000| 1.16 |23,194,000| 1.20 |29,295,000| 1.19 |
|________|_________|________|__________|________|__________|________|
| 1.0 |4,623,000| 1.25 |16,620,000| 1.31 |21,243,000| 1.30 |
|________|_________|________|__________|________|__________|________|
Tonnes rounded to the nearest thousand.
Table 2b: Inferred Mineral Resources
_______________________________
| | Inferred |
|___________|___________________|
|Cut-off (%)| Tonnes |Li(2)O %|
|___________|__________|________|
| 0.0 |33,432,000| 0.92 |
|___________|__________|________|
| 0.6 |27,301,000| 1.05 |
|___________|__________|________|
| 0.8 |20,935,000| 1.15 |
|___________|__________|________|
| 1.0 |12,960,000| 1.30 |
|___________|__________|________|
Tonnes rounded to the nearest thousand.
Mineral Reserves
The proven and probable mineral reserve estimates contained in the
Updated Feasibility Study were prepared by BBA Inc.('BBA') and are
based on 80% ore recovery, a waste dilution factor of 20% at 0.05% Li(2)O and a cut-off grade of 0.6%. The Prior Feasibility Study contemplated
ore recoveries of 92%, waste dilution of 11% at 0% Li(2)O and a cut-off grade of 1.03% had been planned. The Updated
Feasibility Study cut off grade reflects these revised factors.
Table 3: Proven and Probable Mineral Reserves
(Cut-off grade of 0.6% Li(2)O for Updated Feasibility Study and 1.03% for Prior Feasibility Study)
____________________________________________________________________
| | Updated | Updated |Prior Feasibility|Prior Feasibility|
| |Feasibility|Feasibility| Study | Study |
| | Study | Study | | |
|________|___________|___________|_________________|_________________|
|Category| Tonnes | Li(2)O % | Tonnes | Li(2)O % |
|________|___________|___________|_________________|_________________|
|Proven | 6,605,000 | 0.92 | 3,930,000 | 1.12 |
|________|___________|___________|_________________|_________________|
|Probable|10,459,000 | 0.95 | 11,520,000 | 1.19 |
|________|___________|___________|_________________|_________________|
|Total |17,064,000 | 0.94 | 15,450,000 | 1.17 |
|________|___________|___________|_________________|_________________|
Tonnes rounded to the nearest thousand.
Due to the changes in the geometry of the mineralised zones in the new
resource model, the increased dilution factors and the lower mining
recovery factors, the Updated Feasibility Study mineral reserve grade
is now 0.85% Li(2)O, compared to the Prior Feasibility Study mineral reserve grade of
1.17% Li(2)O. In addition, the Updated Feasibility Study Life-of-Mine stripping
ratio has increased to approximately 5.5:1, compared to the Prior
Feasibility Study stripping ratio of 3.6:1.
In addition to the Proven and Probable Reserves in Table 3 above,
additional low-grade reserves grading between 0.25% Li(2)O and 0.60% Li(2)O (as disclosed in Table 4 below) will be stockpiled and subsequently
processed from Year 13 to the end of the mine life.
Table 4: Low-Grade Mineral Reserve
____________________________
|Category| Tonnes |Li(2)O %|
|________|__________|________|
|Proven |1,199,000 | 0.39 |
|________|__________|________|
|Probable|2,072,000 | 0.38 |
|________|__________|________|
|Total |3,271,000 | 0.38 |
|________|__________|________|
Tonnes rounded to the nearest thousand.
The aggregate Proven and Probable mineral reserves total 20,335,000
tonnes at 0.85% Li(2)O.
Mining Operations
The mine is planned as an open-pit operation using conventional
drill/blast, truck/shovel mining methods. Mining operations will be
carried out with a fleet of hydraulic excavators( )and mine-haul trucks and an ancillary fleet of dozers, graders and water
trucks. The mining design indicates a total of 20.3 million tonnes of
ore to be treated over the planned 14.9-year mine life.
The mining schedule uses a declining cut-off grade strategy starting
with a cut-off grade of 0.90% Li(2)O in Years 1 and 2, followed by a cut-off grade of 0.60% Li(2)O in Years 3 to 12, following which the lower grade reserves will be
processed.
Capital Costs
Mining capital equipment costs are based on BBA's recent work on a
number of open-pit mining projects in northern Québec and quotations
from equipment suppliers. The open-pit mining capital costs are based on an excavator/shovel fleet
and, at full production, up to seven 100-ton (st) haul trucks. In
addition, there is an ancillary mobile fleet. The initial capital cost
of the open-pit mining equipment is estimated to be US$9.1 million.
Final quotations have been received for the delivery of this equipment
in 2012 and 2013. Pre-stripping costs have been capitalized until the
commencement of commissioning and first ore production.
The metallurgical processing facility capital cost estimate is based on
an on-site processing plant comprising all new equipment, producing
battery-grade lithium carbonate. The processing plant has been designed
to initially process 2,950 tonnes of ore per day, with the spare
capacity, subject to permitting, to increase to 3,800 tonnes of ore per
day subsequent to the commissioning stage of the Project. The Project's
construction capital costs remain unchanged from the previously
announced US$201.7 million, with GENIVAR Inc. in charge of the
Engineering, Procurement, Construction and Management (EPCM).
The capital cost estimates for infrastructure, Tailings Management
Facility (TMF) construction, EPCM fees, owner's costs and general
administration costs were determined by independent consultants and
Canada Lithium personnel.
Table 5: Construction Capital Costs
______________________________________
|Category |Cost (US$000)|
|________________________|_____________|
|Mining equipment | 9,111 |
|________________________|_____________|
|Pre strip | 3,006 |
|________________________|_____________|
|Sub-total Mining | 12,117 |
|________________________|_____________|
|Crushing/Flotation plant| 38,200 |
|________________________|_____________|
|Hydrometallurgical plant| 86,200 |
|________________________|_____________|
|Sub-total Processing | 124,400 |
|________________________|_____________|
|TMF and infrastructure | 9,450 |
|________________________|_____________|
|EPCM/Owner cost | 24,400 |
|________________________|_____________|
|Other | 9,375 |
|________________________|_____________|
|Contingency | 21,958 |
|________________________|_____________|
|Sub-total Other | 65,183 |
|________________________|_____________|
|Total | $201,700 |
|________________________|_____________|
In addition, there are working capital requirements of approximately
US$14 million. The Life-of-Mine sustaining capital requirement is
approximately US$39 million.
Operating Cost Estimate
The mining and processing operating costs are for an operation achieving
average annual production of approximately 20,000 tonnes of
battery-grade, 99.5% Li(2)CO(3.) The estimated average operating cost for the mine, primary and
secondary processing facilities are presented below.
Table 6: Overall Project Operating Costs
____________________________________________________
|Category |US$/t (milled)|US$/t (Li(2)CO(3))|
|__________________|______________|__________________|
|Mining | 15.61 | 1,095 |
|__________________|______________|__________________|
|Crush/Grind/Float | 9.93 | 697 |
|__________________|______________|__________________|
|Hydrometallurgical| 17.17 | 1,205 |
|__________________|______________|__________________|
|Administration | 2.38 | 167 |
|__________________|______________|__________________|
|Total | 45.09 | 3,164 |
|__________________|______________|__________________|
Mining unit costs have reduced as a result of higher production
requirements compared to those used in the Prior Feasibility Study. The
stripping ratio and mined grade have impacted average unit lithium
carbonate costs, which have increased from an estimated US$2,600/t Li(2)CO(3 )in the previous study to the current average of US$3,164/t.
These average operating cost estimates are based on using natural gas as
the fuel source in the spodumene conversion kiln. However, during the
first two years of operations the kiln will operate on propane gas and
operating costs will be marginally higher. Negotiations with a supplier
are under way regarding the natural gas supplies, and sufficient
capital funds have been included in the sustaining capital cost
estimates for the capital cost of the gas line.
Cash Flow Analysis
The Project is currently estimated to have a simple pre-tax payback
period of four years. Cash flows are based on a 100% equity funding
basis and the economic analysis indicates a pre-tax NPV, discounted at
8%, of US$190 million, at a US$2.67/lb (US$5,875/t) price for lithium
carbonate. The projected pre-tax IRR is 22%.
Life-of-Mine revenue is estimated at US$1.7 billion, with earnings
before interest, taxes, depreciation and amortization (EBITDA) of
approximately US$0.79 billion. A C$/US$ exchange rate of 1:1 has been
used for the 2011 and 2012 construction phase of the project and 1.1:1
over the remaining life of the mine.
Community and Environment
In August 2009, the Company appointed GENIVAR Inc. of Amos, Québec, to
undertake an environmental study for the proposed mine development. In
September 2010, the mining license application for the mine was
submitted to the relevant government authorities. At the same time,
submission of detailed environmental documentation also commenced.
As part of the environmental program, the local communities are being
involved in the Project development process. The first public meetings
were held in January 2010. A second round of 32 meetings was held in
October/November 2010, inclusive of two meetings with the local
Anishinabe First Nations. A number of additional meetings will be held
over the coming months as the Project development stages commence.
In late May 2011, the Company received a construction permit from the
local Municipality of La Corne, for construction of surface service
infrastructure at the Project. This permit is the first of a number of
approvals required for the Project to proceed to the construction and
operations stages.
Ongoing Work
The Company has now completed approximately 30 holes of the planned
50-hole program currently under way at the Project. The purpose of the
drilling program is to infill the resource within the current pit
design and also to extend the ore zones along strike and at depth. Upon
the completion of the drilling and assaying program, an updated
resource model will be prepared. Any new resources will be incorporated
into a new mining plan with the intention of optimising the stripping
ratio during the first five years of the mining operation.
As part of the Project's ongoing mineral processing improvement
strategy, the Company is undertaking additional photometric sorting
testwork on representative ore and waste samples from the orebody, with
the intention of installing a photometric sorting circuit at the
primary crushing stage. This would have the potential to reject waste
material prior to milling and flotation and increase the grade of ore
entering the plant, thereby increasing lithium carbonate production and
reducing processing costs.
Lithium hydroxide metallurgical pilot plant testwork is now being
completed in order to allow the Company to better access the lithium
iron phosphate battery market in North America and Asia.
In order to take advantage of the North American and European spodumene
markets, ongoing optimisation testwork is under way with samples of
spodumene concentrates to finalise flow sheets for a commercial
spodumene off-take circuit within the processing plant.
Project Timetable
The Company and the EPCM engineers are planning for initial plant
commissioning at the end of Q4, 2012, based on commencing site works in
August 2011 and subject to final economic analysis, engineering
reviews, government approvals, board approvals and general market
conditions. This would allow for first production of lithium carbonate
in Q1, 2013. Over the next two weeks, the Company will finalise design
specifications and place orders for key long-lead equipment such as
ball mills, crushers, high-voltage infrastructure and the processing
kiln.
Default Status
In a press release dated May 2, 2011, Canada Lithium Corp. (the
'Company') (TSX: CLQ; U.S. OTC: CLQMF) announced that the Ontario
Securities Commission ('OSC') had noted the Company in default of its
continuous disclosure obligations under Ontario securities law due to
the Company's announcement on February 28, 2011 that an internal review
had indicated a material reduction in the measured, indicated and
inferred mineral resource for its Québec Lithium Project (the
'Project') announced on October 28, 2010.
The February 28(th) announcement stated that the Company had appointed Roscoe, Postle &
Associates ('RPA') to undertake a preliminary independent review of the
October 28, 2010 mineral resource estimate. On March 16, 2011, the
Company announced that RPA had confirmed there were significant issues
with the geological modelling that had produced the mineral resource
estimate announced on October 28, 2010. The Company also confirmed that
it had appointed AMC Mining Consultants (Canada) Ltd. ('AMC') to
independently conduct a mineral resource estimate for the Project and
expeditiously prepare a new technical report compliant with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ('NI 43-101') .
In a press release dated May 16, 2011, the Company announced that AMC
had completed its mineral resource estimate for the Project.
An NI 43-101 compliant Technical Report supportive of the AMC mineral
resource estimate dated June 3, 2011 has been filed on SEDAR.
The press release of May 16, 2011 also disclosed that BBA Inc. was then
in the process of completing a mineral reserve estimate and mine
planning based on the AMC block model and mineral resource estimate.
BBA's mineral reserve estimate is set out above under Mineral Reserves.
As disclosed above, this work will comprise part of an updated NI
43-101-compliant Feasibility Study Technical Report to be filed within
14 days.
The OSC has noted that the Company will remain in default until it files
the updated NI 43-101- compliant Feasibility Study Technical Report.
The updated NI 43-101-compliant Feasibility Study Technical Report will
replace the existing Feasibility Study Technical Report filed by the
Company on January 11, 2011, which contains the October 28, 2010
mineral resource estimate.
As previously announced in its press releases of May 2, 2011 and May 16,
2011, the Company applied to the Canadian securities regulatory
authorities pursuant to National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults ('NP 12-203') requesting that a management cease trade order be imposed
upon the Chief Executive Officer ('CEO') and the Chief Financial
Officer ('CFO') of the Company in lieu of a general cease trade order
in respect of the Company's continuous disclosure default. On May 10,
2011, the OSC imposed a temporary management cease trade order on the
CEO and CFO. On May 20, 2011, the temporary management cease trade
order was replaced by a permanent management cease trade order that
will remain in effect until two business days following receipt by the
OSC of all filings the Company is required to make under Ontario
securities law, or further order of the OSC. A copy of the permanent
management cease trade order has been posted on the Company's website.
The Company intends to continue satisfying the alternative information
guidelines prescribed by NP 12-203 by issuing bi-weekly default status
reports in the form of press releases so long as it remains in default
of continuous disclosure requirements.
Qualified Persons
The June Technical Report was integrated and prepared by Technology
Management Group Inc. under the supervision of Peter Woodhouse, P.Eng.,
a registered professional engineer in the Province of Ontario, and
independent Qualified Person under the standards set forth by National
Instrument 43-101. Mr. Woodhouse has read and approved the contents of
this press release.
The AMC mineral resource estimate was prepared by Dinara Nussipakynova,
P.Geo, Senior Geologist, AMC, under the supervision of J. Morton
Shannon, P.Geo., Geology Group Manager and Principal Geologist, AMC.
Ms. Nussipakynova and Mr. Shannon are independent Qualified Persons as
defined by NI 43-101. Mr Shannon has read and approved the contents of
this press release.
Mitch Lavery, P.Geo., is the Qualified Person for the Project in
accordance with NI 43-101. Mr. Lavery has read and approved the
contents of this press release.
The mineral reserve estimate and mine plan was prepared by BBA Inc.,
under the supervision of Colin Hardie, P.Eng., Engineering Manager.
Mr. Hardie is an independent Qualified Person as defined by NI 43-101.
Mr. Hardie has read and approved the contents of this release related
to the mineral reserve estimate and mine plan.
The Measured, Indicated and Inferred Mineral Resource and Proven and
Probable Mineral Reserve estimates in this press release were prepared
in accordance with the CIM 'Definition Standards on Mineral Resources
and Mineral Reserves' adopted by the CIM Council on December 11, 2005,
and the CIM 'Estimation of Mineral Resources and Mineral Reserves Best
Practice Guidelines,' adopted by CIM Council on November 23, 2003, in
compliance with NI 43-101 guidelines, using inverse distance squared.
About Canada Lithium Corp.
The Company holds a 100% interest in the Québec Lithium Project near Val
d'Or, the geographical heart of the Québec mining industry. The Company
plans to build an open-pit mine and processing plant on-site.
Metallurgical tests have produced battery-grade lithium carbonate
samples. The Company trades under the symbol CLQ on the TSX and on the
U.S. OTCQX under the symbol CLQMF.
Cautionary Statement Regarding Forward-Looking Information
This press release contains 'forward-looking information' within the
meaning of applicable Canadian securities legislation. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as 'plans', 'expects' or 'does not
expect', 'is expected', 'budget', 'scheduled', 'estimates',
'forecasts', 'intends', 'anticipates' or 'does not anticipate', or
'believes', or variations of such words and phrases or statements that
certain actions, events or results 'may', 'could', 'would', 'might' or
'will be taken', 'occur' or 'be achieved'.
Forward-looking information is based on reasonable assumptions that have
been made by the Corporation as at the date of such information and is
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance or
achievements of the Corporation to be materially different from those
expressed or implied by such forward-looking information.
Forward-looking information in this press release includes, among other
things, disclosure regarding the anticipated timing for completion of
the independent review and audit and the review of the existing mine
plan of the Company.
Although the Company has attempted to identify important factors that
could cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be
no assurance that such information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not place
undue reliance on forward-looking information. The Corporation does not
undertake to update any forward-looking information referenced herein,
except in accordance with applicable securities laws.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/June2011/13/c5172.html
For further information please contact:
Peter Secker, President and CEO (416) 361-2821
Olav Svela, Director, Investor Relations (416) 361-2821 or (416) 479-4355 or email osvela@canadalithium.com
Christine Stewart, Renmark Financial Communications Inc. (416) 644-2020 or email cstewart@renmarkfinancial.com
Please visit the Canada Lithium website at www.canadalithium.com.
Corporate Office: 401 Bay Street, Suite 2010, P.O. Box 118, Toronto, ON, M5H 2Y4