Canada Lithium plans lithium carbonate mine by late 2012

The Quebec Lithium operation is expected to produce approximately 42.6 million pounds (19,300t) per year of battery-grade lithium carbonate (Li2CO3) on site. The PFS (accuracy of +/- 30%) has been prepared by BBA Inc. of Montreal in conjunction with SGS Lakefield, Golder Associates, Genivar Inc. and Caracle Creek International Consulting (CCIC).

"This 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. Canada Lithium is positioning itself to become a significant, secure North American supplier of high-quality lithium carbonate within the next two years," said Peter Secker, Canada Lithium’s President and CEO.

"Regional security of supply has become a key consideration for end-users of lithium. We intend to become the first new reliable North American source for an electrical vehicle industry potentially on the verge of explosive growth," he added.

– Measured and Indicated Mineral Resources of 31.6Mt at 1.11% Li2O, representing an estimated 1.9 billion lb. (867,000 tonnes) of lithium carbonate equivalent

– An additional Inferred Mineral Resource of 38.9Mt at 1.12% Li2O (as previously reported on March 4, 2010), representing another 2.3 billion lb. (1.05 million tonnes) of contained lithium carbonate equivalent)

– Stage 1 of the development covers a production period of 14.8 years with significant additional Measured and Indicated Mineral Resources to expand production within the early years of operations and increase mine life to 30 years

– Producing high-quality, battery-grade product (greater than) 99.5% Li2CO3

– Discussions with North American end users indicate a potential market for up to 50,000 tonnes per year (tpy) of spodumene, an intermediate product in the proposed flow sheet. The project has the potential to produce this quantity of material.

– The project has excellent existing road, rail and power infrastructure and is located within a 14-hour drive of Detroit, the emerging North American centre for electric vehicles and lithium ion batteries manufacturers

With the major tonnage expansion of the Quebec Lithium resource (from previous historical estimates of approximately 15 million tonnes), the Company is considering a two-stage development proposal. Initial production from the mine will be based on the PFS Stage 1 production rate of 19,300 tpy of 99.5% Li2CO3. However, within the definitive Feasibility Study (FS), which is about to commence, an economic and technical evaluation will consider a staged expansion to higher production levels (Stage 2).

Following the positive outcome of the PFS announced today, Canada Lithium has commenced pilot-plant metallurgical studies with SGS Lakefield and will soon undertake engineering to advance the project to an FS level. The FS is scheduled for completion during the first quarter of 2011. It will be funded from the Company’s existing cash resources of approximately US$15 million. The Company is currently debt-free.

Canada Lithium has a Marketing Agreement with Mitsui and Co. of Tokyo, Japan, and is also in discussions with North American lithium buyers, based on its demonstrated product quality from bench-scale tests conducted by SGS Lakefield. The Quebec Lithium property has the potential to become a major global supplier of battery-grade lithium carbonate and one of the outcomes of the SGS pilot program is to have a second batch of (greater than) 99.5% Li2CO3 product available for ongoing market distribution and testing by potential end-users by July 2010. In addition, preliminary discussions with a number of North American end users indicate a potential market for up to 50,000 tonnes per year of spodumene product. This will be further evaluated over the next 12 months.

Project Introduction

The Quebec Lithium Project, owned 100% by Canada Lithium Corp., is located north-east of Lacorne Township, approximately 60 km north of Val d’Or, Quebec. Access to the site is via a paved road from Val d’Or. The city of Val d’Or is a mining-friendly community that has over 75 years of mining history and a population of some 35,000 people. The city hosts an airport and significant support infrastructure. Quebec 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.

The Quebec Lithium holding consists of 12 contiguous claims covering 404.69 hectares. Canada Lithium’s Quebec property hosts one of the larger known lithium deposits in North America. The spodumene mineralisation is hosted within a number of steeply dipping pegmatite dykes ranging between 10 and 50 metres in width, and over a strike length of up to 1,500 metres.

The resource has been classified as a Measured, Indicated and Inferred Mineral Resource as defined by CIM Definition Standards. This resource information was previously released on March 4, 2010 (see Canada Lithium news release) by M. Stone (CCIC).

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 stripping ratio is approximately 4.26:1. The Stage 1 mining plan indicates a total of 15.5 million tonnes of ore to be treated over an initial 14.8-year mine operating life. The proven and probable mining reserves are based on a 92% ore recovery and a dilution of 11%.

During the definitive Feasibility Study (FS) stage of the project development, a mine life in excess of 30 years will be evaluated.

(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 the polygonal method.)

Metallurgical Processing

Metallurgical testwork for the PFS was performed at SGS Lakefield on samples from the Quebec Lithium deposit. This work resulted in the production of initial marketing samples for delivery to Mitsui and Co. at grades of 99.6% and 99.9% Li2CO3 purity. Based on this testwork, the process flow sheets and design concept were developed by BBA from the SGS data. The proposed processing design comprises conventional crushing, grinding and flotation to produce a 6.5% Li2O spodumene concentrate. Lithium recovery at this stage is expected to be 82.6%. The flotation circuit is followed by secondary pyrometallurgical/hydrometallurgical treatment process comprising a rotary conversion kiln, leaching circuit, a series of precipitation tanks, washing/filtration circuits and a packaging system to produce a (greater than) 99.5% battery-grade Li2CO3 product. Recoveries in the secondary stage are expected to be 82.8%, for an overall process plant lithium recovery of 68.4%. During the definitive Feasibility Study stage, the Company will evaluate technologies to increase overall lithium recovery and review the possibility of converting some of the plant tailings streams into potentially saleable value-added byproducts.

Open-pit Mining Capital Costs

Mine capital equipment costs are based on BBA’s recent work on numerous open pit mining projects in northern Quebec and budgetary quotations from equipment suppliers. The open-pit capital costs are based on a fleet of 10 m3 hydraulic excavator, front end loaders, 100-ton haul trucks and various ancillary mobile equipment. The capital cost is estimated to be US$23.1 million (including a $4.6 million contingency).

In addition, mining sustaining capital costs for the life of the mine are estimated at US$5.5 million. (contingency of $1.1 million) During the FS stage, the Company will evaluate the use of contract mining operations to further reduce the capital cost.

Process Plant and Infrastructure Capital Cost

The capital cost estimate (with an accuracy of +/-30%) prepared for the metallurgical process is based on a processing plant comprising all new equipment that will produce battery-grade lithium carbonate on site. The plant will be capable of processing 2,950 tonnes/day (tpd) of ore (dry basis). The total cost to design, procure and construct the plant facilities and associated infrastructure is US$125 million.

Community and Environment

In August 2009, the Company appointed Genivar Inc. of Amos, Quebec, to undertake an Environmental Study for the proposed mine development. This is anticipated to take approximately one year to complete (the study has been under way since the fall of 2009) and will outline the environmental strategy for the Company’s development of a 2,950 tpd mining operation. This study is an integral part of the project’s environmental approval process.

As part of the environmental program, the local communities are being involved in the project development process. The first public meetings were held in February, 2010. A number of additional meetings will be held over the coming months.

Canada Lithium Corp. is a Canadian-based resource and exploration company trading under the symbol CLQ on the TSX-V. The Company is currently preparing a definitive Feasibility Study on the Quebec Lithium Project, which will include environmental, metallurgical, geological and engineering studies. It has an agreement with Japanese metals trading firm, Mitsui and Co. Ltd., to market a portion of Canada Lithium Corp.’s product in China, Korea and Japan. Metallurgical tests have produced battery-grade lithium from deposit samples.