Canada Lithium gets C$75m loan
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By: Matthew Hill
13th February 2012
Updated 3 hours ago
TORONTO (miningweekly.com) – Canada Lithium Corp’s stock rose by over 8% on Monday morning, after the company, which is building a mine in Quebec, said it secured a C$75-million loan to advance the project.
Scotiabank and Caterpillar Financial Services are providing the loan, and Investissement Québec, the province’s economic development agency, has agreed to partially guarantee the financing.
Further, Cat Financial has agreed to provide up to $17-million in lease financing for the mobile mining equipment at Canada Lithium’s mine, located near Val d'Or.
At the start of February, the company had C$100-million in the bank.
It started building the $207-million Quebec lithium mine in August last year, and has completed 75% of the process plant’s construction, with commissioning set for late 2012.
The some C$92-million in funding the company unveiled on Monday, coupled with the C$26-million it has already spent on the mine, and the money in the bank, leaves Canada Lithium with about C$4-million more than the anticipated capital cost of the mine.
Given the cost inflation that has forced many mining companies to hike their capital estimates a number of times, the funding situation for Canada Lithium might get too close for comfort.
CEO Peter Secker won’t confirm whether or not the company aims to raise more money, only saying in an interview “we monitor our cash on a weekly basis, and at the moment we’re looking good.”
TSX-listed Canada Lithium is in advanced talks with potential customers for off take agreements, and the company might receive what he calls “pre-off-take payments”, where by customers would pay a small amount up front, and the rest on delivery of the product.
Secker said the company also discussed potential partnerships with the companies.
Canada Lithium currently plans to produce 20 000 t/y of lithium carbonate, as well as around 20 000 t/y of spodumene – a rawer type of lithium concentrate.
In an earlier presentation, Secker outlined how the company was also investigating the viability of building a lithium hydroxide plant and a lithium metal plant in Quebec, which would produce higher value products.
For example, spodumene sells for between $400/t and $500/t, while lithium carbonate is worth $6 300/t to $6 400/t. Pure lithium metal, meanwhile, is worth around $60 00/t.
“Tertiary processing is the way we would like to go,” said Secker.
Canada Lithium chairperson Kerry Knoll showed in a presentation how three large producers currently account for more than 80% of global lithium supply, operating out of Chile, Argentina and Australia.
China is also a major producer, accounting for around 11% of world supplies.
Knoll said that demand from sectors including electric vehicles, electricity grid stabilisation, and backup power, were set to grow significantly over the next few years, particularly in Asia.
TSX-listed Talison Metals, which owns a mine in Australia, is the biggest lithium producer, but currently only produces the metal in concentrate. Last week, it said it selected the Kwinana industrial area in Western Australia to host its planned lithium carbonate plant.
Shares in Canada Lithium climbed 8.7% to close the day at C$0.75.