Canadian lithium producer Canada Lithium Corp on Tuesday said it would receive a $5-million prepayment from Chinese offtake partner Tewoo-ERDC (Tianjin Products and Energy Resources Development).
The company said the prepayment would strengthen the Tewoo/Canada Lithium relationship as the two companies continued to advance their lithium carbonate business in China.
Canada Lithium and Tewoo were also in discussions about future prepayments based on further milestone achievements.
The funding from Tewoo would be used for working capital purposes as the company continued to commission the Québec Lithium project located near Val d'Or, Quebec.
At the end of August, the company announced a three-week suspension of commissioning activities at its process plant for maintenance and upgrades. Operations were scheduled to restart by mid-September, and the company would subsequently restart lithium carbonate shipments to Tewoo, in China, in October.
The project was still scheduled to complete commissioning and be at full production by the end of the first quarter of 2014.
Meanwhile, the Ontario Superior Court of Justice had on August 28 permitted a class-action lawsuit, initiated by Ontario-based Siskinds LLP against Canada Lithium for misrepresentation of mineral resources, to go to trial.
John Keyton and Hugh Latimer, on behalf of various shareholders, accused the lithium miner of supplying misleading information in an October 2010 resource statement and a January 2011 prospectus regarding the volume of mineralised ore and the grade of lithium at the company’s Quebec lithium project.
The plaintiffs were seeking the cancellation and refund of shares bought between October 28, 2010 and February 28, 2011 based on the resource statement.
The losses were allegedly the result of Canada Lithium’s March 2011 independent review of the mineral resource estimate for the lithium project, which identified geological modelling errors and led to a material reduction in the mineral resource estimate.
The company, along with deputy chairperson and CEO Peter Secker, president and COO Charles Taschereau, director and VP for explorations Mitchell Lavery and geologist Michelle Stone, who were also named in the lawsuit, would defend the allegations and denied that they would be proven at trial.
The company's stock gained 16.67% on Tuesday on the TSX, to change hands at C$0.45 apiece. The stock traded at about C$0.90 at the end of January.
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