How Critical Elements Canadian Lithium Mines Are Supplied By Energy Storage Markets

Posted on April 12th, 2012 by
   

 

Jean-Sébastien Lavallée, President & CEO, and Jean-Francois Meilleur, VP of Critical Elements discuss their company’s growth and expectations for the upcoming year.

Full transcript:

Ben Lack: I’d like to begin by asking a little bit about how the company started.
Jean-Sébastien Lavallée, President & CEO:  The company was founded in 2006 based on a small gold deposit near Val D’or.
Jean-Francois Meilleur, VP: We are developing a lithium mine to supply the battery business with high quality lithium carbonate. The latest technology is lithium-ion batteries which is used for technology device, energy storage, hybrid cars and more recently 100% powered by batteries. So the problem we are proposing to solve for the future is more green energy solutions and a technology that is 100% recyclable. The demands for those batteries will increase dramatically between now and year 2020. The technology has improved and we are right now one of the major deposits in the world to supply and support this emerging  industry.
Ben Lack: Can you give us a brief background kind of the amount of existing supply that is available globally for lithium and in addition to batteries storage groups and transportation, transporation industries, whatever industries also use lithium as their raw materials?
Jean-Sébastien Lavallée, president & CEO:  Principally, storage and car batteries are the principal markets for the  use of  lithium carbonate. The ceramic market is another consumer of lithium spodumeneconcentrate. The major consummation in the future will be the Storage battery for sure.
Ben Lack: Where is most of the lithium found in the world?
Jean-Francois Meilleur, VP: I have a breakdown from a research report from an institution called Mackie Research which I can get you the breakdown shortly. Basically, the largest producer is the company out of Australia, named Talison.
Ben Lack: Australia,  globally has the largest  amount of reserves.
Jean-Sébastien Lavallée, president & CEO:  Yes, and South America and The Brines.
Jean-Francois Meilleur, VP: The newer players are the Quebec players, as Critical Elements, Canada Lithium, Nemaska Lithium, and Lithium One.
Ben Lack: How do you identify where your mines are going to be located?
Jean-Francois Meilleur, VP: In 2010 Jean-Sebastien made the discovery for the company of this 100% owned lithium deposit located in James Bay, Quebec containing a resource of 26 million tons of 0.98% li2O + 165 ppm tantalum pentoxide. This resource supports a mine life of 17 years and a direct supply of 26 500 tons of lithium carbonate for batteries. This resource qualifies us as one of the future major player in the sector plus we have an edge with the tantalum bi-product destined to the technology industry. We’re blessed for that, all the commodities are around us. We have a road that is maintained by Hydro-Quebec. We have a power line that crossed our property. We have everything that serves this future project in terms of accessibility that a mining company would like to have.
Ben Lack: What are some of the biggest goals the company is trying to achieve in 2012?
Jean-Francois Meilleur, VP: There are a several goals that we are trying to reach this year. The first one is to deliver the market our full feasibility study which will be bankable. Complete the environmental impact study as well. That should be done by September. Signing of date agreements and purchase agreements of lithium and tantalum. We will initiate the permitting process. Initiate the project financing. We will strengthen the management and the mining team.There is still work as well, we always want to optimize as much as we can the metallurgy and the recoveries of the output material. So, for us it is very important. Every percentage of recoveries were increasing in the end, will generate bottom-line economics for our shareholders. So those are the 7 big challenges that we have this year.
Ben Lack: Talk to me a little bit about lithium itself. Why is lithium such a key element in battery storage?
Jean-Francois Meilleur, VP: We’re not battery experts, we are a mining company, but because a battery is a conversion of chemical energy transferred into electrical energy and vice versa. New Lithium-Ion battery technologies deploy more power, last longer and have a smaller foot-print in size and as a direct impact for the environment (easy to recycle). In terms of size, a lithium battery will compared to other metals that have good or less good properties have  a smaller foot print for the same power capacity. The ecological footprint as well is smaller because we can recycle those batteries pretty easily and then the power of those batteries is way better than any other batteries that have been built so far. The cost of those batteries have been going down since about 5-6 years and are still going to go down to serve the smart grid storage and the transportation markets.If you look at the entry price for a Prius from Toyota when they lauched the model in 2001, the price was around 40,000.00 to buy a Toyota Prius. Now  the price is between $20, 000.00 to $27,000.00. So in less than 5-years, the price almost cut in half. This would probably be a trend that we envisioned. Some analyst, some experts in the field are saying that in 2020, one-third of the vehicle that will be purchased are going to be a lithium-ion battery powered vehicles or bio-fuel like Hybrid. That is a big, big, big statement from the industry that a lot of people are getting cautious with oil price getting higher and higher and those alternative fuel powered cars are getting really attractive for a lot of purchaser.
Ben Lack: The mining industry is viewed as a industry that provides a major impact on the environment because it is so intensive. What steps does your company take to make sure that your processes are sustainable?
Jean-Francois Meilleur, VP: First thing, our deposits are located in James Bay, Quebec which is far north of any cities or cosmopolitan centers of Quebec.Second thing, right now we are going forward with a feasibility study for the mining case, we will consider a small open pit with an underground mining plant afterwards. So, the footprint of the mine won’t be a large super pit that gives a big environmental footprint in the end. Plus, at the end of the mine life and processing we will revamp and rebuild the site and we are putting capital every year and a big amount of capital to make sure that we will recondition the environmental footprint, to make it nice and clean and that is a law in Quebec. And, no company goes around that.And on the other side, when we do the transformation of our first product which is lithium spodumene to transform it into lithium carbonate for batteries. We’re using a different process that is also JS can comment, but we are not using sulfuric acide which cause and benefit for the environment is very good.
Jean-Sébastien Lavallée, president & CEO:  First of all you don’t have to transport that big amount of sulfuric acid to reach the concentrate. First we burn the spodumene concentrate and after that the leeching will be done with the sodium carbonate. After that we just  add, carbonated gas (CO2), and you can produce a pretty nice lithium carbonate without the acidic sulfuric problem.I can add another thing. The lithium deposit is pretty different from the other mines because we don’t have all  the sulfuric mineral associated with gold, or copper deposits. We already did all the test for the acid generation test and we don’t have any acid problem. We did a lot of lixiviation test and we don’t have any metal lixiviation on the detailing, in the waste, everything is very clean. It is a very big step of environmental impact study.
Jean-Francois Meilleur, VP: If you are aware that gold deposit generate acid and generate afterwards other toxic components, so we did all the test.
Ben Lack: What are the initiatives do you implement in conferences to raise your company profile? One of the reasons to participate in conference is not only brand your business as experts in the space but also simulate the types of discussions you have or want to have about what’s going in the industry.
Jean-Francois Meilleur, VP: Basically, yes, it is important to attend as much conference as it is possible for us but we are going to attend one in New York. We were present in the mining conference in Vancouver and as well as the one in Toronto, named the PDAC. We are as well meeting a lot of the industry players, well, either on the financial industry or either in the mining industry side, the better actors of the sector.
Jean-Sébastien Lavallée, president & CEO:  The Washington Battery Policy conference.
Jean-Francois Meilleur, VP: We have 2 key players in our management team to help us raising the company profile, one of them is Ron MacDonald and the other one is Mark Baggio. I don’t know if you were able to look at our corporate presentation. I can give you a quick background on both them.Ron MacDonald spent two years as Senior Assistant to the Canadian Minister of Foreign Affairs and Deputy Prime Minister and two years as Chief of Staff to the Leader of the Government in the Senate of Canada. >From 1988-1997 he was elected as the Member of Parliament for Halifax, Nova Scotia, during which Mr. Macdonald was appointed by the Prime Minister of Canada as Parliamentary Secretary of International Trade. In 2006, he became CEO of Cansource International; a natural resource focused international marketing and strategic management consultancy. Mr. Macdonald has been a contributing member of the OECD Committee developing international guidelines for tantalum end-users, as well as a member of the EICC committee developing guidelines for their global tantalum smelter verification program and the EU Commission Framework 7 policy paper on ‘Scarcity of Strategic Minerals’ and a presenter at conferences in USA, Canada and Asia on critical, strategic and rare earth markets.Mark Baggio follows the same path. He has provided advice for the B. C. based Lumber Corporation and build extensive relationship and attend to a lot of symposium for international clients for the electronic industry and as well as the ethical sourcing of materials.So, these two guys are for us the “go to guys” on the symposium and as well the, those conferences to leverage our company and give all the expertise that we have on the mining side for green energy.So we definitely have two high profiles guys that are taking care of that and with a long, long time our relationship with the key players in the industry because as you know, majority of the batteries are coming from Asia and these guys are really known over there. What’s the rate of their travels?
Jean-Sébastien Lavallée, president & CEO:  Definitely they go to Korea, Japan and China every month. They pass some weeks to months in Asia.
Ben Lack: I’d like to close by asking each of you a personal question. Why are you doing what you are doing and why is this industry interest you?
Jean-Francois Meilleur, VP: Well, I can speak for myself. I have been involved since 2006 in the financial market and especially in mining sector since 2007-2008 and I haven’t seen such a nice green energy project for the future which is definitely an opportunity to work on a project that will last and be a paradigm shift in the future. So, that’s what really attracts me in Critical Elements. We have two very promising minerals included in one project and there is no known deposit in the world that  have a better economics so far. We really enjoy working together as well, we have a great synergy, we haven’t gone through all the sets of skills that is included in the management but if you have a look at the whole team, everyone completes the other one and makes it a company that goes forward really fast. We have achieved goals in the last 2 years that other peers in the sector took 5-6 years to achieve. So, that’s what really excites me about this project and this company.
  Critical Elements (TSX.V:CRE; US OTCQX: CRECF) will be presenting at the HiAlpha™ Energy Investment Conference on Wednesday, April 25, 2012 at the Roosevelt Hotel in New York City. For additional information, please visit the HiAlpha website at http://www.hialphaevents.com/events.php.

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