Title: Canada Lithium powers it up

Sub-title: Val D’Or property could be key contributor in helping meet global demand for lithium.

 

Top mining industry professionals have one thing in common: they are good at identifying opportunities. As a result, many spend at least a part of their careers with hat in hand, trying to get financing to turn their dreams into reality. Preliminary indications are that those who put money in Peter Secker’s hat could one day do well.

 

Secker is president of Canada Lithium Corp, which is currently raising funds to finance the set-up of an extraction facility at a property 60 kilometers north of Val D’Or Quebec. The company bought the open-pit lithium carbonate development in May 2008, from Iamgold, for 6 million shares and $350,000 in cash. Last month Secker stopped in Montreal to try to drum up some of the $148 million he estimates he will need to develop the site. “We are very optimistic,” said Secker, regarding the project for which pre-feasibility work has been done. A feasibility study is currently under way and if all goes well, the company expects commissioning to be completed by 2012.

 

“All the pieces add up,” said Secker. “Lithium demand is expected to be strong during the coming years. Val D’Or would be a relatively low cost operation, in a mining friendly province, and the resource base there is impressive.”

 

Lithium batteries: a growing power source

Timing is everything in mining and right now things look to be falling in place for Canada Lithium, a junior player whose key executives have fairly long track record in the business. Although lithium is used in greeces, glass & ceramics and aluminum, Secker’s main interest is in its potential in the battery market, which is growing by leaps and bounds.

 

According to Secker, lithium contains three times the energy density of nickel hydride but only weighs about a third as much. Furthermore, lithium batteries can operate at extremely low temperatures (as low as -60 degrees C) and can last between 10 and 15 years. As a result, lithium batteries, long used in a variety of products such as cell phones, computers and power tools, are increasingly finding new things to power including chainsaws, wheelchairs and scooters.

 

However according to Secker the biggest source of future lithium demand could come from the car industry. Steadily growing environmental concerns, brought starkly to the fore in recent months, due to the massive oil spill at BP’s Gulf of Mexico facility, are driving customers into more carbon-light alternatives.

 

More than 300,000 hybrid cars were sold in the US last year alone and as unit production increases and government subsidies pour into the market, costs will almost certainly come down in the coming years. For example the US government alone has announced $27.6 billion in loans or grants to car and battery makers. According to Secker, the auto industry, attracted by the performance of the Chevrolet Volt, which travels at the cost equivalent of 92 miles per gallon, is slated to have 25 Lithium battery-powered car models on the market by 2012.

 

Not surprisingly industry suppliers have been quick to jump on the bandwagon. For example in late May Magna International, Canada’s largest auto parts marker, announced that it would invest up to $600 million on new plants to make lithium-ion batteries.

 

A promising property

However the lithium needed to make batteries for the 10 million or so battery powered vehicles that Nissan CEO Carlos Ghosn expects will be sold annually by 2010, will have to come from somewhere. Lately supply concerns have been expressed in numerous quarters. According to Secker the biggest lithium producers during coming years will be brine deposit facilities operated by SQM and Chemetall in Chile and by FMC Chemical in Argentina. However none of those sites are located anywhere near the US mainland, which raises security of supply concerns among some industry watchers.

 

The pegmatite deposits at Canada’s Lithium’s Quebec property are currently the most attractive North American opportunity Secker says, so much so that the company decided to focus completely on it, after stopping work on two smaller less promising bodies, one at Snow Lake Manitoba and a brine project in Nevada. “We have a major deposit virtually in America’s back yard, and we are moving towards production at a time when a secure source of Lithium carbonate has become something of a national priority.”

 

Because a spodumene and lithium carbonate facility had already operated (at Lithium Canada’s Quebec site) between 1955 and 1965, the property already has excellent existing infrastructure including a 1 kilometer paved road, rail facilities and electric power,” said Secker. “Val D’Or is also a big mining town so there is a readily available supply of skilled labor.”

 

What makes the Quebec site particularly attractive says Secker, is the high grades and relative pureness of the mineralization found there, which is well-suited for use in high-grade lithium carbonate used in car batteries.

 

Getting the product to market

Based on an inferred estimate of 38,940 tonnes at a grading to L12O, Secker believes that the company’s Quebec property could have a useful mine life of between 30 and 50 years. The commissioning/production phase on a mine/processing plant is expected to begin late next year. Annual capacity is expected to be about 19,300 tonnes of battery-grade lithium carbonate.

 

Late last month Canada Lithium Corp. also hired on long-time industry veteran Peter Woodhouse as project manager. Woodhouse brings to the table close to 30 years of engineering, procurement, construction and management expertise, in both resource development and mining operations.

 

Once production gets under way, Secker expects that finding clients and shipping the product to them will be the least of his problems. “We are a just a short drive 14-hour drive from Detroit so customers will have considerable security of supply,” said Secker. “We have also negotiated a marketing agreement with Mitsui to help sell our product in Asia where the bulk of battery operated vehicles will be made in coming years, so the fit is excellent.”

 

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is a Montreal-based freelance business writer.

 

 

 

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