CANADA LITHIUM ANNOUNCES POSITIVE FEASIBILITY FOR QUEBEC LITHIUM PROJECT; CONSTRUCTION TO COMMENCE MID-2011; FULL PRODUCTION IN 2013

TORONTO, Dec. 17 /CNW/ - Canada Lithium Corp. (TSX: CLQ; U.S. OTC: CLQMF) announced today the results of its National Instrument 43-101-compliant Feasibility Study (FS) for the development of a mine and lithium carbonate processing facility at its Quebec Lithium Project near Val d'Or, Quebec. Initial construction is planned to commence in mid-2011, commissioning is currently scheduled to be under way by the end of 2012, with full production expected in 2013, subject to financing and final permitting.

Feasibility Study Highlights:

(* During the first two years of operations, the kiln will operate on propane gas and operating costs will be marginally higher.)

The Quebec Lithium operation, which will consist of an open-pit mine and processing plant, is expected to produce over 20,000 tonnes (44 million pounds) per year of battery-grade lithium carbonate (Li₂CO₃) at the new plant site near Val d'Or, Quebec. The component sections of the FS (accuracy of +/-15%) have been prepared by a number of leading Canadian-based consultants, including SGS Lakefield (SGS), Genivar Inc., Technology Management Group Inc., BBA Inc. and Golder Associates.

"This Feasibility Study indicates the Quebec Lithium hard-rock operation can compete financially with the South American lithium brine operations," said Peter Secker, Canada Lithium President and CEO. "Our competitive advantages are that we have good infrastructure, access to relatively cheap power and a clean ore. Canada Lithium will be producing a very pure, 99.5% - 99.9% battery-grade lithium carbonate and we can develop this project on a faster timeline than most proposed brine or hard-rock projects."

Other highlights:

• Measured and Indicated Mineral Resources of approximately 46.7Mt at 1.19% Li₂O and an additional Inferred Mineral Resource of approximately 57.6Mt at 1.18% Li₂O, as previously disclosed in October 2010
• Initial development covers a production period of 14.8 years, mining and processing approximately one million tonnes per year
• The plant would produce high-quality, battery-grade product of 99.5% - 99.9% Li₂CO₃
• The project has excellent existing road, rail and power infrastructure and lies within a 5-hour drive to the Port of Montreal, that can access European and Asian markets and a 14-hour drive to Detroit, the emerging North American centre for electric vehicle and battery manufacturers

Following the positive outcome of the FS announced today, Canada Lithium will commence detailed design engineering with a development schedule based on commencement of construction activities on site in May 2011 and planned plant commissioning before the end of 2012.

Economic modelling at a preliminary Scoping Study level (+/-35%) indicates that the project has the potential to produce an additional 40,000/50,000 tonnes per year of a 6.5% spodumene product that could be saleable to the North American and European glass, foundry and ceramics markets. When the potential revenue from this material is used as a co-product credit, unit operating costs are expected to be lowered to US$0.97/lb (US$2,140/t), demonstrating what is believed to be a comparable operating cost structure to the South American carbonate brine producers. Additional financial and resource modelling is being undertaken to further develop this strategy.

Project Introduction

The Quebec Lithium Project, owned 100% by Canada Lithium Corp., is located in the north-east quadrant of Lacorne Township, approximately 60 km north of Val d'Or, Quebec. Access to the site is by paved road from Val d'Or, 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.

Canada Lithium's Quebec property hosts one of the larger known lithium deposits in North America. The property consists of 19 contiguous claims covering 643 hectares. The spodumene mineralisation is hosted within a number of steeply dipping pegmatite dykes ranging between 10 and 50 metres in width over a strike length of up to 1,500 metres.

In April 2010, the Company released a 43-101 Pre-Feasibility Study (PFS) for development of the Quebec Lithium mine and processing plant producing 19,300 tonnes per year of lithium carbonate at an operating cost of US$2,850/t, estimated capital cost of C$166.0 million and a mine life of 14.8 years. Since completing the PFS, the C$/US$ exchange rate has moved unfavourably; in addition, there have been some changes to the grinding and hydrometallurgical flow sheets based on the results from the metallurgical pilot plant testwork. The overall capital costs have, therefore, been slightly impacted.

An updated mineral resource estimate was prepared by Michelle Stone, P.Geo., a geologist with Canada Lithium Corp. and released Oct. 28, 2010.  The technical report detailing the estimate has been posted on SEDAR. The following tables present the summary of lithium resources reported at a 0.8% Li₂O cut-off and rounded to the nearest 100,000 tonnes.

Table 1: Measured and Indicated Mineral Resources

Table 2: Inferred 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/front-end loaders and mine-haul trucks and an ancillary fleet of dozers, graders and water trucks. The stripping ratio is approximately 3.6:1. The Stage 1 mining plan indicates a total of 15.4Mt of ore to be treated over an initial 14.8-year mine operating life. The proven and probable mineral reserves are based on a 92% ore recovery and a dilution of 11% at 0% Li₂O.

Table 3: Proven and Probable Mineral Reserves (1.1% Li₂O cut-off)

An additional 3.24Mt of Inferred material, at a grade of 1.28% Li₂O would be mined within the pit shell. This material would be stockpiled during the mining operation and its economic viability reviewed. This material has not been included in the economic model.

Notes

*Percent Li₂O is reported to two decimal places.

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 Dec. 11, 2005, and the CIM "Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines," adopted by CIM Council on Nov. 23, 2003, in compliance with NI 43-101 guidelines, using inverse distance squared.

Metallurgical Processing

Metallurgical pilot plant testwork for the FS was performed at SGS on samples from the Quebec Lithium deposit. This work resulted in the production of marketing samples for delivery to North American, European and Asian end users at a purity of >99.9% Li₂CO₃. Based on this testwork, the process flow sheets and engineering design concepts 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. The flotation circuit is followed by a hydrometallurgical treatment process comprising a rotary conversion kiln, leaching circuit, a series of precipitation tanks, ion exchange (IX) washing/filtration circuits and a packaging system to produce a >99.5% battery-grade Li₂CO₃ product. Overall process plant lithium recovery of >67% is anticipated to be achieved. In addition, a sodium sulphate circuit has been integrated into the current process flow sheet.

Open-pit Mining Capital Costs

Mining capital equipment costs are based on BBA's recent work on a number of open-pit mining projects in northern Quebec and budgetary quotations from equipment suppliers. The open-pit mining capital costs are based on a fleet of one 10m³ hydraulic excavator, one front end loader, up to four 90-ton haul trucks at full production, plus an ancillary mobile fleet. Pre-stripping has been capitalised until the first ore production. The capital cost of the open-pit mine is estimated to be US$12.2 million (with an accuracy of +/- 15%).

Table 4: Initial Mining Capital Costs

Process Plant Capital Costs

The capital cost estimate prepared for the metallurgical processing facility is based on an on-site processing plant comprising all new equipment, producing battery-grade lithium carbonate. The plant would be capable of processing 2,950 tonnes per day of ore (dry basis). The total cost to design, procure and construct the plant facilities and associated infrastructure is US$151.1 million (with an accuracy of +/-15%). The following table summarizes the initial process plant capital costs by area.

Table 5: Plant Construction Capital Costs

These processing plant capital cost estimates were determined using BBA's in-house database and budget/tender price proposals for the larger components of new equipment.

Infrastructure, Owner's Costs and Sustaining Capital

The capital cost estimates for infrastructure; Tailings Management Facility (TMF) construction; Engineering, Procurement, Construction and Management (EPCM) fees; Canada Lithium owner's costs and general administration costs were determined by independent consultants and Canada Lithium personnel and are shown in Table 6.

Table 6: General Capital Costs

In addition, there are working capital requirements of US$12.0 million.

Operating Cost Estimate

The operating costs (+/-15% accuracy) are for a plant processing approximately 1.0Mt per year (2,950 tonnes per day) of ore, with an average annual production of >20,000 tonnes of battery-grade 99.5% - 99.9% Li₂CO_3. The estimated operating cost for the mine, primary and secondary processing facilities are presented below.

Table 7: Overall Project Operating Costs

The average operating cost estimates of approximately US$51/t mined (approximately US$2,600/t Li₂CO₃) are based on the use of natural gas for the fuel source in the spodumene conversion kiln. During the first two years of operations the kiln will operate on propane gas and operating costs will be marginally higher. Negotiations with a supplier are under way regarding the natural gas supplies, and sufficient capital funds have been included in the sustaining capital cost estimates for the capital cost of the gas line.

Cash Flow Analysis

For the Stage 1 development, cash flows are based on a 100% equity basis and the base-case economic analysis indicates a pre-tax Net Present Value (NPV), discounted at 8%, of US$270.0 million, at a US$2.67/lb (US$5,875/t) price for lithium carbonate (99.5%), as reported by Roskill Information Services in a study on lithium carbonate pricing done for the Quebec Lithium Project. The projected pre-tax Internal Rate of Return (IRR) is 24% (a C$/US$ exchange rate of 1:1 has been used for the 2011 and 2012 construction phase of the project and 1.1:1 over the remaining life of the mine).

Table 8: Sensitivity Analysis

Life-of-Mine revenue for Stage 1 is estimated at US$1.78 billion, with earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$1.0 billion. Initial capital costs are estimated to be US$202.0 million. In addition, there is estimated to be sustaining capital costs of US$47.0 million. The project is projected to have a simple payback period of four years.

Project Timetable

Canada Lithium believes commissioning could begin by Q4, 2012, based on the following milestones and subject to final economic analysis, engineering reviews, government approvals, board approvals and general market conditions:

• Q1, 2011:     Financing, Initiation of Engineering and Design
• Q2, 2011:     Obtain government approvals
• Q2, 2011:     Construction Start-up
• Q4, 2012:     Process Plant Commissioning
• Q4, 2013:     Achieve design production

Community and Environment

In August 2009, the Company appointed Genivar Inc. of Amos, Quebec, to undertake an Environmental Study for the proposed mine development. In September 2010, the Mining License application for the mine was submitted to the relevant government authorities. At the same time, submission of detailed environmental documentation also commenced.

As part of the environmental program, the local communities are being involved in the project development process. The first public meetings were held in January 2010. A second round of 32 meetings was held in October/November 2010, inclusive of two meetings with the local Anishnabe First Nations. A number of additional meetings will be held over the coming months as the project development stages commence. As part of the Environmental Management Plan, the Company may be required to lodge an Environmental Bond of up to C$4.0 million with the relevant Quebec government departments, during the construction phase of the project. These costs are included in the project capital costs.

Report Filing

A 43-101-compliant technical report on the Feasibility Study will be filed on SEDAR at www.sedar.com and at www.canadalithium.com within 45 days of the date of this news release.

Qualified Persons

The Feasibility Study Report was integrated and prepared by Technology Management Group Inc. under the supervision of Peter Woodhouse, P.Eng., a registered professional engineer in the Province of Ontario, and independent Qualified Person under the standards set forth by National Instrument 43-101. Mr. Woodhouse has read and approved the contents of this news release.

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

About Canada Lithium Corp.

Canada Lithium Corp. is a Canadian-based "clean tech" mine developer trading under the symbol CLQ on the TSX and on the U.S. OTCQX market under the symbol CLQMF. 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 from deposit samples have produced 99.9% battery-grade lithium carbonate.

Conference Call

Canada Lithium Corp. will host a conference call at 10:30 a.m. EST on Friday, Dec. 17, 2010 to discuss details of this release and answer any questions from analysts, investment advisers and shareholders.  Company President and CEO Peter Secker and Chairman Kerry Knoll 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 Dec. 24, 2010. To access the archived conference call, please dial 1 (800) 642-1687 and enter pass code 32843037.

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 news 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 and design factors, costs and budget estimates, 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.