Canada Lithium plans 42.6-million-lb-per-year lithium carbonate mine by late
2012

TSXV: CLQ; U.S. OTC: CLQMF

TORONTO, March 22 /CNW/ - Canada Lithium Corp. (TSXV: CLQ; U.S. OTC: CLQMF) announced today completion of a National Instrument 43-101-compliant Pre-Feasibility Study (PFS) of the Quebec Lithium Project 60 km north of Val d'Or, Quebec.

Pre-Feasibility Study Highlights:

    
    - Stage 1 Open Pit Mine:              2,950 tonnes per day (1 million
                                          tonnes/year)

    - Average Annual Stage 1 Production:  42.6 million lb (19,300t) Li2CO3

    - Average Annual Stage 1 Revenue:     US$115 million

    - Stage 1 Pre-tax NPV @	           US$325 million
      8% discount:

    - Pre-tax Internal Rate of            33.6%.
      Return (IRR):

    - Cash Operating Costs:               US$2,815 per tonne (US$1.27/lb of
                                          Li2CO3)

    - Total Initial Capital Costs:        US$148 million (includes $27M
                                          contingency)
    

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.

Other highlights:

    
    - 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 vehicle and battery 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 following table presents the summary of lithium resources:

Table 1: Measured and Indicated Mineral Resources

    
    -------------------------------------------
    Category               Tonnes        Li2O %
    -------------------------------------------
    Measured            6,896,000        1.10
    -------------------------------------------
    Indicated          24,740,000        1.11
    -------------------------------------------
    Total M+I          31,636,000        1.11
    -------------------------------------------
    

Table 2: Inferred Mineral Resource

    
    -------------------------------------------
    Category               Tonnes        Li2O %
    -------------------------------------------
    Inferred           38,940,000        1.12
    -------------------------------------------
    (Inferred Mineral Resource is exclusive of total Measured and Indicated
    Mineral Resources.)
    

Mining Operations

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% (@ 0% Li2O)

Table 3: Proven and Probable Mineral Reserves

    
    -------------------------------------------
    Category               Tonnes        Li2O %
    -------------------------------------------
    Proven              5,169,700        1.06
    -------------------------------------------
    Probable           10,330,300        1.05
    -------------------------------------------
    Total Reserves     15,500,000        1.05
    -------------------------------------------
    (Measured and Indicated Mineral Resources are inclusive of Proven and
    Probable Mineral Reserves)
    

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).

Table 4: Initial Mining Capital Costs

    
    ------------------------------
    Category                Total
                          (US$000)
    ------------------------------
    Mining equipment       11,361
    ------------------------------
    Ancillary equipment     3,268
    ------------------------------
    Other/Pre-strip         3,857
    ------------------------------
               Sub Total   18,486
    ------------------------------
    Contingency             4,621
    ------------------------------
                   Total   23,107
    ------------------------------
    

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. The following table summarizes the initial process plant, infrastructure and tailings management facility capital costs by area.

Table 5: Plant Capital Costs

    
    ------------------------------
    Category                Total
                          (US$000)
    ------------------------------
    Process Plant          63,506
    ------------------------------
    Infrastructure         16,349
    ------------------------------
    Tailings and Water
     Management             2,595
    ------------------------------
               Sub Total   82,450
    ------------------------------
    EPCM/Owner cost/Other  20,160
    ------------------------------
    Contingency            22,409
    ------------------------------
                   Total  125,019
    ------------------------------
    

These costs were determined using BBA's in-house database and budget price proposals for the larger components of new equipment. In addition, sustaining capital costs for the life of the mine are estimated at US$18 million (including a contingency of $3.5 million).

Operating Cost Estimate

The operating costs (+/- 30% accuracy) have been prepared for a plant annually processing approximately 1,000,000 tonnes (2,950 tonnes/day) of ore, with annual production of approximately 42.6 million lb. (19,300 tonnes) of Li2CO3 (lithium carbonate). The total operating cost for the mine, primary and secondary processing facilities are presented below.

Table 6: Overall Project Operating Costs

    
    ------------------------------------------
    Category                US$/t      US$/lb
                          (milled)    (Li2CO3)
    ------------------------------------------
    Mining                  10.36        0.26
    ------------------------------------------
    Processing              36.80        0.93
    ------------------------------------------
    Administration           3.29        0.08
    ------------------------------------------
    Total                   50.45        1.27
    ------------------------------------------
    

Cash Flow Analysis

For the Stage I development, the base-case economic analysis indicates a pre-tax Net Present Value (NPV), discounted at 8%, of US$325 million, at a current price (source: Asian Metal News) of US$2.70/lb. (US$5,950/t) price for lithium carbonate (99.5%). The projected pre-tax Internal Rate of Return (IRR) is 33.6% (A Canadian $ to U.S. $ exchange rate of 1.10. has been used over the life of the project.)

Life-of-Mine revenue for Stage 1 is estimated at US$1.65 billion, with pre-tax nominal cash flow (EBITDA) of approximately US$872 million. Initial capital costs, estimated to be US$148 million, have a simple payback period of 3.1 years. A sensitivity analysis for key project parameters has been performed and the results demonstrate that the project economics remain positive under the scenarios tested.

Project Timetable

Canada Lithium's Quebec Lithium project is an advanced stage, open-pit lithium project that the Company believes could commence commissioning by Q3, 2012, based on the following milestones and subject to final economic analysis, government approvals, Board approval and general market conditions:

    
    - July 2010:          Pilot plant metallurgical testwork
    - December 2010:      Environmental reporting
    - Q1, 2011:           Completion of Definitive Feasibility Study
    - Q1, 2011:           Initiation of Engineering and Design
    - Q2, 2011:           Construction Startup
    - Late 2012:          Process Plant Commissioning
    

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.

Report Filing

The complete PFS report will be filed on SEDAR at www.sedar.com and at www.canadalithium.com within 45 days.

Qualified Persons

The Pre-Feasibility Study Report was prepared by BBA Inc. under the supervision of Mr. Colin Hardie, Department Manager - Mines and Metals, an independent Qualified Person under the standards set forth by National Instrument 43-101. Mr. Hardie has read and approved the contents of this news release.

About BBA Inc.

Established in 1979, BBA is an independent Canadian consulting engineering firm with over 450 employees. BBA offers engineering services to clients across Canada and around the globe, focusing on mining, metallurgy and energy sectors. From a project's definition to commissioning, BBA offers a complete range of multi-disciplinary engineering services including feasibility studies, management consulting, process/energy audits, detailed engineering, EPCM and start up assistance. The company is headquartered in Mont-Saint-Hilaire, Quebec and has offices in Montreal, Vancouver and Labrador City. www.bba.ca

About Canada Lithium Corp.

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.

Conference Call

Canada Lithium will host a conference call at 9 a.m. EST on Tuesday, March 23, 2010 to discuss details of this release and answer any questions from analysts, investment advisers and shareholders. Company President and CEO Peter Secker, Chairman Kerry Knoll and VP Corporate Development Mark Ashcroft will be available for the call.

To participate, please dial in North America 1-888-231-8191; Local or International 647-427-7450 about five minutes prior to the start time. The conference call will be archived for replay until March 30, 2010. To access the archived conference call, please dial 1 (800) 642-1687 and enter pass code 64639574. An audio replay of the conference call will be available at www.newswire.ca and www.canadalithium.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Information

The statements made in this press release may contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of Canada Lithium Corp. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of Canada Lithium Corp. management as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the Company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the Company. Canada Lithium Corp. disclaims any obligation to update information contained in any forward-looking statement.

%SEDAR: 00007891E

SOURCE Canada Lithium Corp.

For further information: For further information: Peter Secker, President and CEO, (416) 361-2821; Olav Svela, Director, Investor Relations, (416) 361-2821, osvela@canadalithium.com; Dan Symons, Renmark Financial Communications Inc., (514) 939-3989, dsymons@renmarkfinancial.com; Please visit the Canada Lithium website at www.canadalithium.com

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