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TWST: What is Canada Lithium?
Mr. Secker: Canada Lithium (CLQ) is the developer of the first of the new wave of lithium carbonate projects in North America. We will be developing the Quebec Lithium Project, which is located just north of Val-d'Or in Quebec. We are currently finishing a bankable feasibility study that will be completed by the end of this year. We want to start construction of the project in the second quarter 2011 and be in production by fourth quarter 2012. What we are going to do is basically build the first large-scale lithium carbonate producer in North America that will produce battery-grade lithium carbonate for the North American, European and Asian markets.
TWST: If we were speaking 12 months ago, what would be the goals and expectations you have for the company? What would be your performance report for the past 12 months?
Mr. Secker: Twelve months ago, we were at the exploration stage. At that time, we had an historic resource, which was about 15 million tons of ore in the ground. Over the past 12 months, we've significantly expanded that to 31.6 million tons in measured and indicated mineral resource and another 39 million tons in inferred resource. We have a world-class deposit that is capable of sustaining our mining operation for up to 50 years. So it's a long-term project. We have also done a significant amount of metallurgical test work. We have produced marketing samples that have gone to our marketing partner Mitsui, in Japan, and those samples meet all the requirements for battery-grade lithium carbonate. At the same time, we have completed a pre-feasibility study, which has demonstrated the economics of the project with a capital cost of about $148 million and operating costs of about $2,815 per ton, which is equivalent to about $1.27 per pound of lithium carbonate. The pre-feasiblity demonstrated that we have a project that is both financially viable and technically viable. We had a fairly busy 12 months!
TWST: What would be the priorities for the next 12 to 24 months? What would make that time frame a success?
Mr. Secker: We have already started the bankable study. So that's a study to plus or minus 10% accuracy required to finance the project. That will be completed by the end of this year. We are also going to start a new drilling program in the middle of the year. What we want to do hopefully is expand the current resource to a total of over 100 million tons combined, which is sort of 50 million tons in the measured, indicated and 50 million tons in the inferred categories, which transforms the project from a 50-year mine life to probably a 70-year mine life. In that event, we would have a long-term producer that's capable of expanding production down the track if we need to.
TWST: So what's the funding and financial history of Canada Lithium? What's the current status of the balance sheet and P&L?
Mr. Secker: We raised $15 million in a bought deal last September 2009. We already had some money in the bank, so we still have just under $15 million, about $14.5 million cash in the bank. We have no debt, and that money is more than sufficient to get us through to the end of the bankable feasibility and to the start of the construction phase.
TWST: Would you introduce us to your top-level management team? Who are two or three of your key individuals?
Mr. Secker: I am the CEO and President. I am a Mining Engineer, I have a history of building mines all over the world. I built two mines in Australia and I built two mines in China. My role is basically to lead the company through the next phase of development, which is the feasibility, the design, the construction, the commissioning and operations of the company. Second key person would be our Chairman, Kerry Knoll. Kerry is a a company builder. He has a history of building successful companies, such as Wheaton River, which is now Goldcorp. And his latest success was Thompson Creek, the formerly private molybdenum mining company that was taken public in an approximate $800 million deal through Blue Pearl, a company Mr. Knoll co-founded. And then in terms of other key people, Mark Ashcroft, is our VP, Corporate Development. Mark is a Banker, a Financier and a Mining Engineer with the history of raising funds for mining companies. And his role is to raise the next round of debt required to build a project starting out in 2011.
TWST: What historically has been the shareholder base for Canada Lithium, and has that base undergone any recent changes?
Mr. Secker: Directors and officers of the company hold roughly 15% of the company. Then there are two institutions, Canadian institutions, holding another 15%, and a number of small institutions, holding maybe 2% or 3% each. The rest is held by small investors, retail investors.
TWST: In your discussions with the investment community, are there any recurring questions or misperceptions you encounter? Do you believe the Canada Lithium story is as well understood as you would like?
Mr. Secker: There is always a big debate about operating costs. There are two types of lithium carbonate producers: the hard rock, or spodumene, producer, and the other is the brine producer. There has been a big debate for many years about whether the hard rock producers can be commercially viable compared to the brines. So it was very important that we got pre-feasibility study numbers out last week that demonstrated that we are extremely viable. The approximate cost for our operation would be $1.27 per pound of lithium carbonate. With current lithium carbonate prices around $2.70 to $2.80 per pound, that's certainly viable and can compete with the brine producers throughout the world. So that's a key question, and the second question we always get is, can you produce a quality product? What some people may not know is that the Quebec Lithium Project produced lithium carbonate between 1955 and 1965. We have a history of production that was, in essence, a 10-year pilot plant that showed us the project made high-quality lithium carbonate. We spent the last 18 months and almost $3 million proving that deposit samples still meet requirements of today's battery-grade market, which is 99.5% lithium carbonate. Not only that, we've demonstrated that we can produce 99.5%, 99.6%, even 99.9% lithium carbonate.
TWST: How should investors assess your performance?
Mr. Secker: The next stage is to do some more exploration drilling. We are starting the exploration drilling program in May, June. So we will have a new resource update, an increased resource update by September this year. At the same time, we are progressing the pilot plant metallurgical test work that's ongoing, and that will be completed by July this year. That should again demonstrate the quality of the product. We then move to completion of the bankable feasibility by the end of this year, by December. A detailed design phase follows, and then we take that final step and build the mine and processing plant for approximately $150 million.
TWST: In conclusion, what do you feel are the points that tell investors to include Canada Lithium as part of their current portfolio and their long-term investment strategies?
Mr. Secker: The key thing about the project is that it is in Canada and it is in North America. So if electric vehicle manufacturers and battery makers want a secure supply of lithium carbonate for the North American electric vehicle industry, we are going to be the only producer coming onstream in the short term. So security of supply is the key and Canada Lithium is the go-to source in North America. If they want a long-term supplier, a supplier that's going to be in production for 50 to 70 years, then again, Canada Lithium offers long-term supply. And if they require a supplier that can withstand the vagaries, the ups and downs of the lithium market, we should be able to provide that as well, because our cash costs fall into the second quartile of comparative operating costs across the industry. Finally, by the time we come onstream, we will be producing about 19,000 tons of lithium carbonate a year. That will make us the third-largest producer in the world, and because of a large resource base, we have the upside and the potential to increase production above that. Therefore, as lithium carbonate consumption increases, as demand for electric vehicles and plug-ins increases, our mine in northern Quebec will meet those rising requirements for battery-grade lithium carbonate for years to come.
TWST: Thank you. (KL)
Peter Secker
Chief Executive Officer & President
Canada Lithium Corp.
401 Bay Street
Suite 2010
Toronto, ON
Canada M5H 2Y4
(416) 361-2821
www.canadalithium.com
- See more at: https://www.twst.com/interview/27532#sthash.EFQJgDdq.dpuf