Canada Lithium Confirms Qu�bec Lithium Mine Viability; Schedules Site Construction to Commence Q3, 2011- Default Status Report Pursuant to National Policy 12-203

TSX: CLQ; U.S. OTC: CLQMF 

TORONTO, June 13, 2011 /CNW/ - Canada Lithium Corp. (the "Company") (TSX: CLQ; U.S. OTC: CLQMF) announced today the results of the updated Feasibility Study for the development of a mine and lithium carbonate processing facility at its Qu�bec Lithium Project (the "Project") near Val d'Or, Qu�bec (the "Updated Feasibility Study").  A National Instrument 43-101 ("NI 43-101") compliant Technical Report respecting the Updated Feasibility Study (the "June Technical Report") will be filed on SEDAR within 14 days.  The June Technical Report will replace the Technical Report dated January 5, 2011 (the "January Technical Report") that was prepared in respect of a Feasibility Study for the Project that was completed in December, 2010 (the "Prior Feasibility Study").

The Updated Feasibility Study contemplates an open-pit mine and processing plant that will have an initial mine operating life of approximately 14.9 years. The planned annual output for the Project remains at approximately 20,000 tonnes (44 million pounds) per year of battery-grade lithium carbonate (Li₂CO₃).

The key parameters from the Updated Feasibility Study are shown below, with a comparison to the Prior Feasibility Study.

The Project has a pre-tax net present value (NPV) of approximately US$190 million, (at an 8% discount rate). The reduction in NPV of US$80 million under the Updated Feasibility Study is primarily due to increased operating costs, resulting from higher stripping ratios and increased dilution and ore loss factors. As a result of changes in the geometry of the mineralised zones in the new resource model and increased dilution factors plus lower mining recovery factors, the Project's internal rate of return (IRR) has reduced from 24% to 22%. The simple pre-tax payback period remains at four years.

Initial site construction is planned to commence in Q3, 2011, with process plant commissioning currently scheduled to be under way by the end of 2012 and full production expected by the end of 2013, subject to financing and final permitting.

Location and Infrastructure

The Project, owned 100% by the Company, is located in the northeast quadrant of La Corne Township, approximately 60 km. north of Val d'Or, a mining-friendly community that has over 75 years of mining history and a population of some 32,000 people. Access to the site is by paved road from Val d'Or. The city hosts an airport and significant support infrastructure. Qu�bec 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.

Mineral Resources

A recently updated mineral resource estimate was prepared by AMC Mining Consultants ("AMC").  As previously disclosed in a press release dated May 16, 2011, the AMC mineral resource estimate, together with the prior mineral resource estimate of October 18, 2010, is as follows:

Table 1: Mineral Resources (inclusive of Mineral Reserves) reported by Class using a 0.8% Li₂O cut-off grade.  This is the same cut off used previously by the Company and AMC is satisfied that it is reasonable for the delineation of mineral resources.

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 tables below show AMC's estimates of mineral resources over a range of cut-off grades with the preferred 0.8% cut-off estimate emboldened.

Table 2a: Measured and Indicated Mineral Resources

Tonnes rounded to the nearest thousand.

Table 2b: Inferred Mineral Resources

Tonnes rounded to the nearest thousand.

Mineral Reserves

The proven and probable mineral reserve estimates contained in the Updated Feasibility Study were prepared by BBA Inc.("BBA") and are based on 80% ore recovery, a waste dilution factor of 20% at 0.05% Li₂O and a cut-off grade of 0.6%. The Prior Feasibility Study contemplated ore recoveries of 92%, waste dilution of 11% at 0% Li₂O and a cut-off grade of 1.03% had been planned.  The Updated Feasibility Study cut off grade reflects these revised factors.

Table 3: Proven and Probable Mineral Reserves
(Cut-off grade of 0.6% Li₂O for Updated Feasibility Study and 1.03% for Prior Feasibility Study)

Tonnes rounded to the nearest thousand.

Due to the changes in the geometry of the mineralised zones in the new resource model, the increased dilution factors and the lower mining recovery factors, the Updated Feasibility Study mineral reserve grade is now 0.85% Li₂O, compared to the Prior Feasibility Study mineral reserve grade of 1.17% Li₂O. In addition, the Updated Feasibility Study Life-of-Mine stripping ratio has increased to approximately 5.5:1, compared to the Prior Feasibility Study stripping ratio of 3.6:1.

In addition to the Proven and Probable Reserves in Table 3 above, additional low-grade reserves grading between 0.25% Li₂O and 0.60% Li₂O (as disclosed in Table 4 below) will be stockpiled and subsequently processed from Year 13 to the end of the mine life.

Table 4: Low-Grade Mineral Reserve

Tonnes rounded to the nearest thousand.

The aggregate Proven and Probable mineral reserves total 20,335,000 tonnes at 0.85% Li₂O.

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 mining design indicates a total of 20.3 million tonnes of ore to be treated over the planned 14.9-year mine life.

The mining schedule uses a declining cut-off grade strategy starting with a cut-off grade of 0.90% Li₂O in Years 1 and 2, followed by a cut-off grade of 0.60% Li₂O in Years 3 to 12, following which the lower grade reserves will be processed.

Capital Costs

Mining capital equipment costs are based on BBA's recent work on a number of open-pit mining projects in northern Qu�bec and quotations from equipment suppliers. The open-pit mining capital costs are based on an excavator/shovel fleet and, at full production, up to seven 100-ton (st) haul trucks. In addition, there is an ancillary mobile fleet. The initial capital cost of the open-pit mining equipment is estimated to be US$9.1 million. Final quotations have been received for the delivery of this equipment in 2012 and 2013. Pre-stripping costs have been capitalized until the commencement of commissioning and first ore production.

The metallurgical processing facility capital cost estimate is based on an on-site processing plant comprising all new equipment, producing battery-grade lithium carbonate. The processing plant has been designed to initially process 2,950 tonnes of ore per day, with the spare capacity, subject to permitting, to increase to 3,800 tonnes of ore per day subsequent to the commissioning stage of the Project. The Project's construction capital costs remain unchanged from the previously announced US$201.7 million, with GENIVAR Inc. in charge of the Engineering, Procurement, Construction and Management (EPCM).

The capital cost estimates for infrastructure, Tailings Management Facility (TMF) construction, EPCM fees, owner's costs and general administration costs were determined by independent consultants and Canada Lithium personnel.

Table 5: Construction Capital Costs

In addition, there are working capital requirements of approximately US$14 million. The Life-of-Mine sustaining capital requirement is approximately US$39 million.

Operating Cost Estimate

The mining and processing operating costs are for an operation achieving average annual production of approximately 20,000 tonnes of battery-grade, 99.5% Li₂CO_3. The estimated average operating cost for the mine, primary and secondary processing facilities are presented below.

Table 6: Overall Project Operating Costs

Mining unit costs have reduced as a result of higher production requirements compared to those used in the Prior Feasibility Study. The stripping ratio and mined grade have impacted average unit lithium carbonate costs, which have increased from an estimated US$2,600/t Li₂CO₃ in the previous study to the current average of US$3,164/t.

These average operating cost estimates are based on using natural gas as the fuel source in the spodumene conversion kiln. However, 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

The Project is currently estimated to have a simple pre-tax payback period of four years. Cash flows are based on a 100% equity funding basis and the economic analysis indicates a pre-tax NPV, discounted at 8%, of US$190 million, at a US$2.67/lb (US$5,875/t) price for lithium carbonate. The projected pre-tax IRR is 22%.

Life-of-Mine revenue is estimated at US$1.7 billion, with earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$0.79 billion. A C$/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.

Community and Environment

In August 2009, the Company appointed GENIVAR Inc. of Amos, Qu�bec, 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 Anishinabe First Nations. A number of additional meetings will be held over the coming months as the Project development stages commence.

In late May 2011, the Company received a construction permit from the local Municipality of La Corne, for construction of surface service infrastructure at the Project. This permit is the first of a number of approvals required for the Project to proceed to the construction and operations stages.

Ongoing Work

The Company has now completed approximately 30 holes of the planned 50-hole program currently under way at the Project. The purpose of the drilling program is to infill the resource within the current pit design and also to extend the ore zones along strike and at depth. Upon the completion of the drilling and assaying program, an updated resource model will be prepared. Any new resources will be incorporated into a new mining plan with the intention of optimising the stripping ratio during the first five years of the mining operation.

As part of the Project's ongoing mineral processing improvement strategy, the Company is undertaking additional photometric sorting testwork on representative ore and waste samples from the orebody, with the intention of installing a photometric sorting circuit at the primary crushing stage. This would have the potential to reject waste material prior to milling and flotation and increase the grade of ore entering the plant, thereby increasing lithium carbonate production and reducing processing costs.

Lithium hydroxide metallurgical pilot plant testwork is now being completed in order to allow the Company to better access the lithium iron phosphate battery market in North America and Asia.

In order to take advantage of the North American and European spodumene markets, ongoing optimisation testwork is under way with samples of spodumene concentrates to finalise flow sheets for a commercial spodumene off-take circuit within the processing plant.

Project Timetable

The Company and the EPCM engineers are planning for initial plant commissioning at the end of Q4, 2012, based on commencing site works in August 2011 and subject to final economic analysis, engineering reviews, government approvals, board approvals and general market conditions. This would allow for first production of lithium carbonate in Q1, 2013. Over the next two weeks, the Company will finalise design specifications and place orders for key long-lead equipment such as ball mills, crushers, high-voltage infrastructure and the processing kiln.

Default Status

In a press release dated May 2, 2011, Canada Lithium Corp. (the "Company") (TSX: CLQ; U.S. OTC: CLQMF) 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 Qu�bec Lithium Project (the "Project") announced on October 28, 2010.

The February 28^th 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 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 mineral resource estimate for the Project and expeditiously prepare a new technical report compliant with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") .

In a press release dated May 16, 2011, the Company announced that AMC had completed its mineral resource estimate for the Project.

An NI 43-101 compliant Technical Report supportive of the AMC mineral resource estimate dated June 3, 2011 has been filed on SEDAR.

The press release of May 16, 2011 also disclosed that BBA Inc. was then in the process of completing a mineral reserve estimate and mine planning based on the AMC block model and mineral resource estimate.  BBA's mineral reserve estimate is set out above under Mineral Reserves. As disclosed above, this work will comprise part of an updated NI 43-101-compliant Feasibility Study Technical Report to be filed within 14 days.

The OSC has noted that the Company will remain in default until it files the updated NI 43-101- compliant Feasibility Study Technical Report.  The updated NI 43-101-compliant Feasibility Study Technical Report will replace the existing Feasibility Study Technical Report filed by the Company on January 11, 2011, which contains the October 28, 2010 mineral resource estimate.

As previously announced in its press releases of May 2, 2011 and May 16, 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.  On May 20, 2011, the temporary management cease trade order was replaced by a permanent management cease trade order that will remain in effect until two business days following receipt by the OSC of all filings the Company is required to make under Ontario securities law, or further order of the OSC.  A copy of the permanent management cease trade order has been posted on the Company's website. 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 press releases so long as it remains in default of continuous disclosure requirements.

Qualified Persons
The June Technical 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 press release.

The AMC mineral resource estimate was prepared by Dinara Nussipakynova, P.Geo, Senior Geologist, AMC, under the supervision of 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 press release.

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

The mineral reserve estimate and mine plan was prepared by BBA Inc., under the supervision of Colin Hardie, P.Eng., Engineering Manager.  Mr. Hardie is an independent Qualified Person as defined by NI 43-101. Mr. Hardie has read and approved the contents of this release related to the mineral reserve estimate and mine plan.

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 inverse distance squared.

About Canada Lithium Corp.

The Company holds a 100% interest in the Qu�bec Lithium Project near Val d'Or, the geographical heart of the Qu�bec 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.