Canada Lithium's stock rises 38%Don't know if this was posted before, Canada Lithium’s share price rose on 38% on Thursday, after having shed nearly half its value in the two previous days when the company said the resources at its Quebec project might be “materially” smaller than previously thought.
In a statement on Thursday, the TSX-listed firm said it decided to get an independent review of its resources after the author of its resource report, Michelle Stone, at the time employed by Caracle Creek International, did additional analysis on the resources in February.
The purpose of this additional analysis was “for potential future long-term debt, project equity or product off-take investment”, Canada Lithium said.
Stone, now Stonegate Agricom exploration VP, declined to comment when approached by Mining Weekly Online.
The company did not say specifically what the problems with the resource calculations were.
DOWNGRADE
A Toronto-based analyst said he had downgraded Canada Lithium’s target share price to C
,90 from C$1,75 previously, because of uncertainty risks related to the news.
“We don’t know the magnitude of the discrepancy that was discovered,” the analyst said, asking to remain anonymous.
Canada Lithium spokesperson Olav Svela told Mining Weekly Online on Tuesday evening that the company decided to conduct a review after its experts were "running the geological numbers" and looking at potential mine models.
On Monday Canada Lithium asked the TSX to suspend its shares, later announcing it had appointed Roscoe Postle and Associates Inc. to undertake a preliminary independent review of its previously announced mineral resources.
It said this followed an “internal review that indicated a material reduction in the measured indicated and inferred mineral resources”.
Canada Lithium closed at at C$1,00 a share Toronto, after having fallen as low as C
,72 the previous day.
The company aims to complete the independent review within two weeks. A detailed audit could take “a number of months” if required, the company said.
Olav said that the company continued to have “full confidence” in the Quebec project.
HISTORY
In Thursday’s media release, Canada Lithium gave a detailed history of the project, which was an operating mine from 1955 to 1965.
The company bought the project from Iamgold in May 2008.
“Management’s probably trying to say ‘this thing isn’t going to zero folks’,” the analyst said.