Canada Lithium Announces Revised Mineral Resource Estimate for Québec Lithium Project and Confirms Proposed Development Timeline; Capital Costs Unchanged at $201.7 million

Default Status Report Pursuant to National Policy 12-203

TORONTO, May 16 /CNW/ - Canada Lithium Corp. (TSX: CLQ) (OTCQX: CLQMF) announces the following:

  • AMC mineral resource estimate for the Québec Lithium Project (the "Project") confirms material reduction from previous estimate announced October 28, 2010
  • BBA Inc. now completing updated mineral reserve estimate, modelling and mine planning
  • Effect of mineral resource reduction on the project will be addressed within the updated reserve modelling.
  • Upon completion of updated mine plan and reserve modelling, an updated NI 43-101 Feasibility Study Technical Report will be completed
  • Mine and plant capital costs confirmed at approximately $201.7 million
  • A 10,000-metre, 50-hole drill program is under way with two rigs on-site

The Company reports that AMC Mining Consultants (Canada) Ltd. ("AMC") has completed an independent mineral resource estimate for the Project.  The AMC mineral resource estimate, together with the previous October 28, 2010 estimate, is as follows:

Mineral Resources Reported by Class (0.8% Li2O cut-off)

Classification AMC Estimate AMC Estimate October 28/10 Estimate October 28/10 Estimate
  (Tonnes) Grade (% Li2O) (Tonnes) Grade (% Li2O)
Measured (M) 6,101,000 1.16 5,654,000 1.15
Indicated (I) 23,194,000 1.20 41,015,000 1.20
Total M + I 29,295,000 1.19 46,669,000 1.19
         
Inferred 20,935,000 1.15 57,581,000 1.18

Notes: Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Tonnes rounded to the nearest thousand.
The AMC resource figures are constrained by a pit shell, whereas the October 2010 resource model was not.

The mineral resource review undertaken by AMC (see press release dated March 16, 2011) involved the re-evaluation and re-estimation of the mineral resource estimate previously announced on October 28, 2010.  The October 28, 2010 resource estimate involved a commonly used inverse distance squared (ID2) modelling technique that should have delineated the main pegmatite dyke systems within what in geological terms are known as constrained boundaries.  These boundaries are defined from sampled drill-core sections and, where relevant, underground workings, and should contain only mineralized material.  Within these boundaries, or "mineralized envelopes," resource volumes were calculated using a block model and grades estimated using ID2 methods. This is an accepted and widely used industry practice.

Based on this methodology, only mineralized material with an associated Li2O grade lying within these envelopes should be incorporated in the resource estimate. The review by AMC identified certain issues with regard to the mineral resource estimate previously announced on October 28, 2010. Some of the mineralized envelopes, as originally developed, were broad, included some waste material and, in certain cases, did not conform to the pegmatite dyke boundaries. Therefore, some reinterpretation of the original model was required. In addition, some of the intervals within the dyke boundaries, which had not been sampled or assayed, were not assigned a zero grade. Consequently, some of the resource blocks should have been classified, in whole or in part, as waste material rather than having Li2O grades assigned to them.

The Company will file a NI 43-101 compliant mineral resource estimate technical report within 45 days of this release.

BBA Inc. is currently reviewing the resource model prepared by AMC and completing mineral reserve estimates and mine planning.  The results of this work, together with the mineral resource estimate announced today, will comprise part of an updated N1 43-101 Feasibility Study Technical Report that will be prepared once all of the updated information is available.

Update on Project Development

During the past six weeks, mine and plant design has continued according to schedule. In addition, BBA Inc. has commenced an updated mineral reserve estimate based on AMC's mineral resource estimate.  Project commissioning, based on the current timetable, is still being scheduled to commence in December 2012, assuming key equipment orders are finalised by the end of May 2011.

Canada Lithium noted that the Québec Lithium Project's construction capital costs remain unchanged from the previously announced $201.7 million (Feasibility Study estimate announced December 17, 2010), with GENIVAR Inc. in charge of the EPCM.

As a result of the time taken to prepare the revised mineral resource estimate, GENIVAR has proposed a revised construction schedule, with site work on the project near Val d'Or, Que., commencing in the third quarter of 2011, as opposed to the May commencement date previously announced. The proposed schedule for commissioning of the mine and processing plant indicates commissioning should be under way by late 2012 and initial lithium carbonate product sales could be under way during the first quarter of 2013.  This schedule assumes that delivery timetables for the major key equipment purchases are finalised by the end of May 2011.

There are currently two drill rigs operating at the Québec Lithium site and a 10,000-metre, 50-hole drill program is under way, infilling and upgrading a portion of the 20.9-million-tonne inferred mineral resource to an indicated mineral resource category.  Seven holes have been completed to date. Geotechnical drilling related to the optimal location of the Tailings Management Facility, overburden stockpiles and processing plant location will commence shortly.

Default Status

In a press release dated April 29, 2011, Canada Lithium Corp. (TSX: CLQ; OTCQX: CLQMF) (the "Company") announced that the Ontario Securities Commission ("OSC") had noted the Company in default of its continuous disclosure obligations under Ontario securities law due to the Company's announcement on February 28, 2011 that an internal review had indicated a material reduction in the measured, indicated and inferred mineral resource for its Quebec Lithium Project (the "Project") that was announced on October 28, 2010.

The February 28th announcement stated that the Company had appointed Roscoe, Postle & Associates ("RPA") to undertake a preliminary independent review of the October 28, 2010 mineral resource estimate. On March 16, 2011, the Company announced that RPA had confirmed that there were significant issues with the geological modelling that had produced the mineral resource estimate announced on October 28, 2010. The Company also confirmed that it had appointed AMC Mining Consultants (Canada) Ltd. ("AMC") to independently conduct a resource estimate of the Project and expeditiously prepare a new NI 43-101 compliant technical report.

In its press release of April 29, 2011, the Company reiterated its previously announced belief that the independent resource estimate being prepared by AMC would indicate a material reduction in the measured, indicated and inferred mineral resource estimate for the Project that was announced on October 28, 2010.

The OSC has noted that the Company will remain in default until it files a new National Instrument 43-101 ("NI 43-101") compliant technical report on the updated feasibility study for the Project which will include the independent resource estimate for the Project that has been prepared by AMC. The new NI 43-101 compliant technical report on the feasibility study will replace the existing technical report on the feasibility study filed by the Company on January 11, 2011 which contains the mineral resource estimate announced by the Company on October 28, 2010.

As previously announced in its press release of April 29, 2011, the Company applied to the Canadian securities regulatory authorities pursuant to National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults ("NP 12-203") requesting that a management cease trade order be imposed upon the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO") of the Company in lieu of a general cease trade order in respect of the Company's continuous disclosure default.  On May 10, 2011, the OSC imposed a temporary management cease trade order on the CEO and CFO.  The Company intends to continue satisfying the alternative information guidelines prescribed by NP 12-203 by issuing bi-weekly default status reports in the form of news releases so long as it remains in default of continuous disclosure requirements.

In addition, the Company reports that a Statement of Claim has been filed in the Ontario Superior Court of Justice in respect of the proposed class action lawsuit that was previously announced on April 11, 2011.

Qualified Persons

The AMC mineral resource estimate was prepared by Dinara Nussipakynova, P.Geo, Senior Geologist, AMC, under the supervision of Mr J Morton Shannon, P.Geo., Geology Group Manager and Principal Geologist, AMC.  Ms Nussipakynova and Mr. Shannon are independent Qualified Persons as defined by NI 43-101. Mr Shannon has read and approved the contents of this release.

Mitchell Lavery, P.Geo., is the Qualified Person for the Québec Lithium Project in accordance with NI 43-101.  Mr. Lavery has read and approved the contents of this news release.

*The mineral resource 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.

About Canada Lithium Corp.

Canada Lithium Corp. holds a 100% interest in the Québec Lithium Project near Val d'Or, the geographical heart of the Québec mining industry. The Company plans to build an open-pit mine and processing plant on-site. Metallurgical tests have produced battery-grade lithium carbonate samples. The Company trades under the symbol CLQ on the TSX and on the U.S. OTCQX under the symbol CLQMF.

Cautionary Statement Regarding Forward-Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

Forward-looking information is based on reasonable assumptions that have been made by the Corporation as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information. Forward-looking information in this press release includes, among other things, disclosure regarding the anticipated timing for completion of the independent review and audit and the review of the existing mine plan of the Company.

Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information.  Accordingly, readers should not place undue reliance on forward-looking information. The Corporation does not undertake to update any forward-looking information referenced herein, except in accordance with applicable securities laws.

 

 

 

SOURCE CANADA LITHIUM CORP.

For further information:

For further information please contact:

Peter Secker, President and CEO (416) 361-2821

Olav Svela, Director, Investor Relations (416) 361-2821 or (416) 479-4355 or email osvela@canadalithium.com

Christine Stewart, Renmark Financial Communications Inc. (416) 644-2020 or email cstewart@renmarkfinancial.com

Please visit the Canada Lithium website at www.canadalithium.com.

Corporate Office: 401 Bay Street, Suite 2010, P.O. Box 118, Toronto, ON, M5H 2Y4

Profil de l'entreprise

CANADA LITHIUM CORP.

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