Beginning in 2013, the lithium market will welcome a handful of emerging companies with newly producing projects, including Canada Lithium (TSX:CLQ), Lithium Americas (TSX:LAC) and Orocobre (ASX:ORE,TSX:ORL). While both Orocobre and Lithium Americas are advancing projects in lithium-rich Argentina, Canada Lithium is on track to become its namesake nation's only lithium producer.
Canada Lithium: reviving a past-producer in Quebec
Canada Lithium's Quebec lithium project is located in one of the most mining-friendly provinces in the world. A past producer, the deposit was first mined between 1955 and 1965 and supplied both spodumene and and lithium carbonate products to the North American market. Commercial production is slated to commence in the first quarter of this year. The company expects to be in full production by October 2013, with a planned annual production rate of 20,000 metric tons (MT) of battery-grade lithium carbonate — nearly 12 percent of global supply.
Canada Lithium began construction of the project in September 2011 and initiated operations at its lithium carbonate processing facility last month. A feasibility study on the project shows a pretax net present value (NPV) of $190 million and an internal rate of return (IRR) of 22 percent. Proven and probable reserves are estimated at 17.1 million MT of lithium carbonate.
The project's North American location gives it a premiere position in Canadian and US battery markets, but for now its products are destined for Asia. In November, Canada Lithium signed a five-year offtake agreement with Tewoo-ERDC, one of China's largest commodities traders, for the majority of its lithium production.
Given Rockwood Holdings' (NYSE:ROC) failed acquisition bid for Talison Lithium (TSX:TLH), Dundee Capital analyst Mansur Khan believes Canada Lithium could be a prime alternative takeover target for the industry major as it looks to geographically diversify its holdings, Mineweb's Kip Keen reported.