Seeking Alpha: Sirocco Isn't The Deal Canada Lithium Investors Want

Tis the season of tougher times for many mining companies. Thompson Creek (TC) is groaning under the threat of not being able to raise enough cash to complete its expansion plans, Mercator Minerals (OTC:MLKKF) sold itself at a fraction of NAV due to severe funding/cash issues, and even the major players like BHP Billiton (BHP) and Rio Tinto (RIO) are pulling back on their capex and exploration budgets. In that regard, then, there's nothing so particularly strange about Canada Lithium (OTCQX:CLQMF) (CLQ.TO) agreeing to a deal with Sirocco Mining (SIM.TO) that buys them time, breathing room, and cash.

Although arguably necessary, this isn't the deal that investors in Canada Lithium are hoping to see. With a hard rock lithium mining asset in Quebec that could produce over 10% of the world's lithium carbonate, the hope here is that a major lithium producer like Rockwood (ROC), FMC (FMC), or Socieded Quimica y Minera (SQM) steps up and acquires Canada Lithium as a means of diversifying its lithium assets. I believe that's still a viable expectation, and although this is a speculative, high-risk opportunity, the de-risking of Canada Lithium's balance sheet and the prospects for profitable near-term production make this a name worth watching.

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Sirocco Isn't The Deal Canada Lithium Investors Want