www.WallStreetCorner.com
By Lawrence C. Oakley, CEO at WallStreetCorner.com,
Inc.
Research
Report
Lithium Exploration Group, Inc.
LEXG’s Brief Corporate Description
Lithium Exploration Group is a US-based exploration &
development company focused on the acquisition & development
potential of assets in Alberta, Canada that demonstrate high
probability for near-term profitability. Currently, the company‘s
priorities are: Developing its lithium assets; Testing its
Ultrasonic Generator Technology; Acquiring oilfield waste disposal
assets; & Acquiring profitable oil & gas assets.
My Initial
Comment
I interviewed CEO Alex Walsh &
am impressed with the several exceptional markets the company is
capable of developing. For example, in just two of its planned
efforts, it will use technology that can treat either brine to get
out minerals, or upgrade hydrocarbons, while at the same time
providing an excellent source of drinkable water. The technology
allows very large amounts of such brine or hydrocarbons to be
processed in very short amounts of time & can easily be used in
distant locations where other methods involve extremely high costs
& far longer times to achieve the same results.
My
Opinion
Every once in awhile, I indentify a situation that I believe should
be a key part of your mid-term & long-term portfolio of
winners. I believe this is one of those. I say that because in my
opinion, it is engaged in some current amazing opportunities with
the potential to move well over its recent highs. In fact, I
believe it may soon achieve at least a 500% increase of its current
share price. My relatively short term price target is $2.00. If one
looks ahead at a combination of some of the company’s capabilities,
I see the possibility of a long-term upward move to over $20 per
share. This is one that you should carefully look into.
How LEXG is Treating &/or
Disposing of Frac Waste Water
LEXG’s treatment of the waste water related to fracking is a highly
profitable part of its current operations. The fact that major oil
companies have difficult water problems because of their fracking
operations has resulted in LEXG either treating or disposing of the
water these majors have to get rid of. The amount of waste water
that LEXG accepts for disposal is discharged into wells that LEXG
has. Fortunately, LEXG has reached its current maximum capability
which has caused that particular phase of its business to generate
tremendous revenues for LEXG & at the same time keep the
environment safe. In order to increase this part of its business,
LEXG is negotiating for the acquisition of additional wells to
increase its profits.
Actually, several major oil companies are in a position to need to
substantially increase the quantity of water that they have to get
rid of. The Canadian government will either constrain or fine the
majors if they fail to dispose of all of the water they use to do
their fracking -- it’s the primary reason that LEXG is striving to
increase its service to those major oil companies.
After further tests of its Ultrasonic Generator, LEXG should be
able to offer two important ways to increase its services to the
majors. By treating the waste water used in fracking using the
Ultrasonic Generator, LEXG will be able to separate distilled water
from the waste water & at the same time separately discharge
the waste water’s mineral content. The distilled water & the
mineral content can be sold, & what’s left after those two
processes can be discharged into disposal wells. Getting such a
large percentage of waste water profitably utilized should greatly
reduce the amount of what is left to be fed into disposal
wells.
LEXG’s Role in Lithium
Production
I covered lithium in my Conservative Speculator newsletter on
9/16/2011, including its background, where it comes from, its use
in batteries, & the size of its battery market. Since then,
that market has begun an explosive increase, & in my opinion
will grow at an amazingly high pace.
LEXG is proving its ability to cost effectively remove lithium from
brines, & one of its planned efforts this summer is to do a
feasibility study regarding its methods of extracting lithium from
brine.
Just one possibility it is looking into is related to the electric
Tesla Model S automobile created by Elon Musk. I just read a
detailed extremely positive review of the car, which is powered by
a 7,000 cell lithium-ion battery pack that lies below the floor of
the car & uses almost the entire width & length of the
car.
In chatting with folks at LEXG, I learned that Elon Musk commented
that he intends to greatly increase his production of Tesla cars,
& build two very large facilities, which Musk calls
Gigafactories. Musk said he intends to use solar & wind power
so he can utilize his own power in order to meet environmental
requirements. He intends to use the two 10-million square foot
plants to manufacture the batteries needed for his automobile
production plans. He also predicted that within a few years, the
world will need 200 such gigafactories to build lithium-ion
batteries to supply the expected growing need for not only Tesla
cars but also other makes of electric & hybrid engine cars.
Musk also expects to have the lithium he needs sent to his
gigaplants right from the sources of lithium – because lithium is
not like other metals such as copper, etc., the car manufacturers
& any lithium-ion battery manufacturers other than car
manufacturers will be negotiating their lithium needs directly with
lithium mines. Please note
the news released on 5/15/2014 quoted in the Recent News section
herein.
Essentials
Where Traded: OTCQB
Symbol: LEXG
Share price on 6/24/2014 at 1:39 PM EDT: $0.04
52-week range: $0.03 – $0.26
52-week high (8/14/2013): $0.26
52-week low (2/5/2014): $0.03
50-day moving average: $0.05
200-day moving average: $0.06
Volume so far on 6/24/2014: 1,360,253 shares
Average volume (3m): 2,177,470 shares
Average volume (10 day): 2,306,530 shares
Market Cap at 6/24/2014: $7.26 million
Approximate shares outstanding: 177.18 million
Approximate float: 152.29 million shares
Revenue (mrq): $18,000
Net income available to common (mrq): ($6,910,000)*
Total cash (mrq): $731.53K
Total current assets @ 3/31/2014: $803,000
Long term investments @ 3/31/2014: $912,000
Total assets @ 3/31/2014: $1,715,000
Total current liabilities @3/31/2014: $4,372,000
Long term debt @3/31/2014: None
Total liabilities @3/31/2014: $4,317,000
Total stockholder equity @ 3/31/2014: ($2,601,000)*
Fiscal year ends: June 30
Most recent quarter (mrq): 3/31/2014
* Note:
These are negative numbers. LEXG is beginning to
emerge from its start-up phase, & as such, its current numbers
are negative, which is to be expected. Do not base your opinion on
start-up phase operations. Look rather at the reasons for the
planned growth expected.
Ultrasonic Generator Technology
In 2011, LEXG invested in the development of an Ultrasonic
Technology to assist in separating suspended solids from brine
water. The technology is based around a transportable ultra-sound
reactor
using patented technology. Successful testing in Q1 2014 has
enabled LEXG to begin to test this
technology on applications in the oil & gas, mining, &
lithium production industries. This technology is viewed as a
game-changer in its ability to provide lower cost, & low energy
solutions to many pre-existing processes within these
industries.
The Ultrasonic Generator, in the form of a single base unit, can
desalinate water at a rate of 25-35 cubic meters per hour. The two
discharge streams are distilled water & marketable minerals.
The unit also has the ability to upgrade crude oil. A single
Ultrasonic Generator can upgrade crude oil into high quality, high
value light petroleum products. Flow rates for crude oil are 25
tons per day, which amounts to about 150 barrels of oil per
day.
Advantages Include: 1. Greatly reduced capital
cost compared to current treatment methods such as heated boilers,
filtration systems such as reverse osmosis, & ion exchange,
which are extremely capital intensive, as is conventional crude oil
upgrading; 2. Small & scalable footprint. The
unit’s design allows it to be tailor-scaled for different sized
applications; 3. Greatly minimized energy input,
allowing for previously unobtainable energy savings;
4. Versatility & ease of transport. The unit
can be easily transported due to its small footprint & can be
repositioned accordingly to meet changing business needs.
Hydrocarbon Upgrading Applications: The Ultrasonic
Generator’s ability to upgrade heavier crude into lighter petroleum
products on-site offers many cost saving & revenue-boosting
opportunities for oil & gas producers. Existing treaters &
separators knock out water & most solids. However, they cannot
improve the quality (eg. API) of crude oil & cannot reduce H2S
content. Conventional upgraders are both extremely capital
intensive & based upon a principle of large scale, whereas the
Ultrasonic Technology can upgrade crude oil at a fraction of the
capital cost & is ideal for use within smaller fields or
batteries. The units are also designed to be scalable to
requirements, allowing for tailored solutions for specific oilfield
volume upgrading requirements. This technology can be applied to
all types of crude typically produced in Western Canada – heavy,
medium, & light oil. Heavier crude oil is upgraded on-site into
lighter petroleum products, resulting in lower processing costs
& higher product revenues.
The Ultrasonic Technology can be used in conjunction with oilfield
waste management facilities, including disposal wells, to upgrade
skim oil. This results in higher revenues & lower processing
costs for the facility. The Ultrasonic Generator’s ability to
upgrade on-site allows producers to reduce their transportation
costs since the resulting lighter products will almost invariably
be closer to accepting infrastructure
Water Treatment Applications: The Ultrasonic
Generator’s by-products are clean water (or steam) & marketable
minerals, all of which can contribute valuable revenue streams.
Various tailored fluids can also be synthesized for use in the oil
& gas industry. Saline water resulting from industrial mining
(including oil sands) can be treated & recycled into clean
water to be re-used in various plant processes. Traditional
processes require much larger footprints, capital costs, &
energy usage. The clean water by-product is suitable as a saleable
commodity. In the case that the Ultrasonic Generator is being used
at a remote location where transport costs could make any clean
water sales uneconomic, the purified clean water can be safely
returned to the environment.
Steam: Steam is a by-product of any desalinization
process using the Ultrasonic Technology & can therefore be used
in conjunction with a SAGD process in the oil sands. The key
advantage offered by this technology over conventional steam
generation processes is the extremely low energy input needed to
generate required quantities of steam. The steam by-product created
by the Ultrasonic Generator can also be used to generate
electricity by propelling steam turbines. Once again, low energy
input & scalability are significant advantages over any
existing technologies on the market.
Marketable Minerals: Recovery of marketable
dissolved minerals such as Li, CaCl, KCl, MgCl, NaCl, I, & Br
can be successfully separated from brine or other solutions using
the Ultrasonic Technology. Numerous types of fluids can be
synthesized using the Ultrasonic Technology, including those
required for voidage, formation stabilization, water flood, EOR,
fracking, & other special applications.
Management
Alex Walsh is President & CEO. He has been CEO since 11/2010
& has been the visionary in building the overall strategy for
LEXG, His background includes investment banking & consulting
services to lower middle market private companies, assisting them
in strategic planning, capital markets activity via public &
private investment, & building synergistic relationships for
growth. His primary role is to manage the corporate infrastructure,
focus on the financing strategy, & make decisions on
acquisitions & capital expenditures.
Recent News
I included my slight edits of the following news releases that
should give you some feel for the potential of this situation. I
strongly suggest that you study these & follow all of LEXG’s
future news releases as a part of your own investigation of why in
my opinion this company has the probability to provide unusually
attractive growth. Actually, I plan to alert you to the important
news via some of my email distributions, but I also urge you to
check all future releases.
6/10/2014 – CEO addresses shareholders
with his monthly newsletter:
Dear Shareholders,
We continue to focus our efforts on our disposal businesses in
Alberta to finish the year in a strong position and to set
ourselves up for a great FY2015, the first full year with these
assets as part of our business.
Here is a brief update on both of our facilities:
Morinville -- We are currently turning away
business on high traffic days because we don't have enough storage
tanks on site at present. This is a good problem to have, but
we must be conscious of customer needs and we are presently working
with the regulators to increase our storage near term to get
through the summer. We also have engaged an engineering firm to
provide a plant expansion plan to bring the facility up to
regulatory standards that will allow us to dispose of a wider
variety of much higher revenue liquid waste streams.
Wardlow (Tero) -- We continue to work on quotes
and designs for the custom treating operation we plan to add at the
Tero facility. We have been discussing the expansion with
customers to get their feedback
& to better understand their needs. This expanded offering
will be rolled out with a full marketing package to expand our
customer base in the area. Many of the smaller customers simply
cannot bring us their produced water because they need to have a
third party remove the oil from the water before it can be
disposed. By adding custom treating, we feel that we will gather
new customers for this service and be able to capture other solid
waste disposal business at the same time.
Later this month, our oil unit is in process to arrive in Texas,
where final assembly and modifications will be made. We are
looking forward to getting that unit up to Wardlow promptly to work
on the commercialization of this great technology.
Our partners at Sonic Cavitation recently set up a Facebook page
(www.Facebook.com/SonicCavitation) to help promote some of their
humanitarian efforts and expand awareness of the
technology. Check out and 'like' the page, there is some great
information there.
As always, we have a lot going on at Lithium Exploration Group and
we are looking forward to what is shaping up to be a pretty
exciting summer. Next month I will produce our first "Annual
Letter" which will not only provide a synopsis of FY2014 activity,
but will also provide some insight into what next year will look
like for LEXG.
Sincerely, Alex Walsh, CEO - Lithium Exploration Group, Inc.
About Lithium Exploration
Group: Lithium Exploration Group is a US-based
exploration and development company focused on the acquisition and
development potential of lithium brines and other precious metals
that demonstrate high probability for near-term production.
Currently the company is focused on its Western Canada lithium
assets, testing its Ultrasonic Generator Technology and the
acquisition of oil and gas related assets in Western Canada.
Website: www.lithiumexplorationgroup.com.
Contact:
Shanon Chilson at 480-641-4790 -- info@lithiumexplorationgroup.com
6/9/2014 –
Lithium Exploration Group's Technology Partners Prepare for
Summer Field Testing of Frac Water & Oil Upgrading
Units:
In February & March of 2014, LEXG & the team from Sonic
Cavitation successfully tested LEXG’s Ultrasonic Generator with
fresh water, reaching temperatures in excess of 275 degrees
Fahrenheit. The unit was run for five hours at each testing
interval to gather data on the performance of the unit, & to
ensure there were no mechanical or power-related issues. With
fresh water testing completed, Sonic Cavitation has been working
with their manufacturing partner over the past few months to design
the appropriate discharge vessel to field test the unit with
oilfield waste water & frac water. This partner is a
global industrial equipment manufacturer, with the ability to
mass-produce as required. Field testing for frac water is
expected to take place this summer in Texas, concurrent with the
delivery of the oil upgrading unit to be tested at LEXG's Wardlow
facility.
"The results of the testing this spring were fantastic. We
were able to see, touch, & feel the technology in action &
know exactly how & at what rpm levels the generator operates
most efficiently," commented CEO Alex Walsh. "Now we need to
field test for water purification & oil upgrading, & have
third party reports produced on the results. We're excited
about the prospect of mass production & scale; & that this
technology will not need millions of dollars & years of R&D
to produce meaningful revenue & upside. Technologies that
impact the oil & gas space are 'hot' right now, & we are on
the cutting edge."
6/5/2014 --
ITEM 3.02 from LEXG’s Form 8-K -- Unregistered Sales of
Equity Securities:
Our company was indebted to JDF Capital Inc. ("JDF") for funds
provided to us on September 16, 2013 in the amount of USD$306,250
& on October 15, 2013 in the amount of USD$306,250 pursuant to
the
conditions of a securities purchase agreement dated September 13,
2013 (the "SPA"), among our company & JDF. On January 6, 2014,
JDF entered into a securities amendment & settlement agreement
(the "Settlement Agreement") with us, where we agreed to convert
the remaining portions of the SPA into Series B Convertible
Preferred Stock of our company (the "Preferred Shares"), being 1
Preferred Share per $1 remaining payable pursuant to the SPA. Each
Preferred Share is convertible into common shares of the
Company by cashless conversion at a price of 50% of the lowest
traded price of the previous 20 trading days of a notice to
convert.
On June 2, 2014, we received a two notices of conversion from JDF
to convert an aggregate of 227,700 Preferred Shares outstanding due
to JDF into an aggregate of 10,715,293 shares of our company's
common stock at a deemed conversion rate of USD$0.02125 per share,
pursuant to the conversion terms of the Preferred Shares, the SPA
& the Settlement Agreement. As of June 2, 2014, we issued an
aggregate of 10,715,293 common shares of our company to one person
pursuant to Rule 506 of Regulation D of the Securities Act of 1933,
as amended, on the basis that they represented to our company that
they were an "accredited investor" as such term is defined in Rule
501(a) of Regulation D.
6/5/2014 –
LEXG Retires Series B Preferred
Shares:
LEXG announced that since January, all 1,134,500 series B Preferred
Shares have been converted into equity & cleared from the
company's balance sheet. "Clearing these shares from our balance
sheet allows us the added flexibility to acquire additional cash
flowing assets. We are exploring a few very interesting
companies right now that would be perfect acquisitions for the
strategy of buying companies & cash flow that support the
development & commercialization of the Ultrasonic Generator,"
commented Alex Walsh.
5/21/2014 –
LEXG Adds Oil Treatment to Product Offering at Tero
Oilfield Services:
LEXG announced it is adding an oil treater to its Tero Oilfield
Services facility in Wardlow, Alberta. This expansion of the
product offering at Tero is an important step toward providing a
full suite of services for customers in the area. Tero is
well-positioned to give its clients a competitively priced product,
while providing a level of customer service with which the bigger
companies in the area are unable to compete. The oil treatment
product offering should be fully operational by July
2014. This expansion also coincides with LEXG’s order of an
oil upgrading unit, which is scheduled to arrive at Tero in
August. The oil upgrading unit is expected to enhance the
performance of the oil treatment infrastructure that Tero is
putting in place with the previously mentioned expansion.
"This expansion is critical for the future of Tero. They
already treat their own skim oil production, but with this
expansion they will be able to handle loads from existing waste
disposal clients. Our goal is to help our local clients by
providing exceptional customer service, honest pricing, & in
almost all cases, we will be saving clients the expense of shipping
to other treatment operations much further away," commented Alex
Walsh. "Our team at Tero has been researching this with
contractors & existing clients for months & see a huge
opportunity for additional revenue from their existing client
list."
5/15/2014 –
LEXG Expects to Address Lithium Supply Shortage Caused by Future
Demand for Car Batteries:
Tesla announced plans to build a gigafactory; a massive battery
plant which will bring with it supply constraints in the lithium
markets. With demand for lithium-ion batteries expected to grow in
the coming years, LEXG is working hard to be in a position to
supply part of this demand.
To address the supply issue, Tesla is scouting sites for the
gigafactory to cut their production costs by 30 percent. "We're
actually quite comfortable that we're heading toward a final
agreement sometime later this year," stated JB Straubel, Tesla's
Chief Technology Officer, on their earnings call. "Groundbreaking
could begin as early as next month," said Elon Musk. Tesla has
named Arizona, Nevada, New Mexico, & Texas as possible factory
sites & said it will break ground in at least two of these
states.
Elon Musk has stated that he believes that more than 50% of all
vehicles sold by 2030 will be fully electric. If his prediction is
correct, this will equate to 75 million vehicles requiring nearly
3,000,000 tons of lithium per year. The worldwide production of
lithium in 2013 was around 160,000 tons. "We have two active
facilities that are bringing brine water in every single day.
We have already begun navigating the regulatory requirements to
produce minerals from these brines; we are merely waiting for the
field testing data from our Ultrasonic Technology to determine the
optimal salinity level for the unit so that we can move to bench
scale testing & begin small production batches of lithium
carbonate," commented CEO Alex Walsh. "We have known that there is
lithium in the Alberta brine for years; the only questions are how
much can we capture & at what price is it profitable to
produce. We believe our technology will be game-changing as it
pertains to those metrics."
4/22/2014 –
LEXG Places Order for Crude Oil
Prototype:
LEXG announced that an order has been placed with Sonic Cavitation
for a Crude Oil Prototype. The unit will be manufactured by
the same partners & with the same design specifications as the
Ultrasonic Generator currently being tested for water purification
in Texas. It will be delivered to Wardlow, Alberta, & used
for testing purposes at Tero Oilfield Services (a subsidiary of
Alta Disposal Ltd). The goal is to test the upgrading
capabilities of the unit on crude oil & to identify commercial
opportunities for future units. The expected delivery date at
Tero of the unit is in August, 2014.
"Our partners at Sonic Cavitation have made huge progress with
their manufacturing partners in Texas & are moving forward on
testing the existing unit for field capabilities in the water
purification space. The goal of this prototype will be to
initiate parallel testing for crude oil so that both markets can be
commercialized as soon as possible," commented CEO Alex
Walsh. "We were able to observe the technology in action in
February & are eager to see the unit running oil through it at
our Tero facility this summer."
4/10/2014 –
LEXG Announced Q1 Production at Tero Oilfield
Services:
LEXG made an announcement about production at Tero Oilfield
Services. During the first quarter of 2014, Tero disposed of
over 115,000 barrels of fluid oilfield waste, 400 tons of solid
waste, & skimmed 1,680 barrels of oil. These production
numbers are in line with production during the fourth quarter of
2013. Traditionally, the first quarter is the slowest by
volume due to the extreme weather conditions.
"The first quarter was solid for Tero, especially considering the
horrific weather in January of this year caused by the Polar Vortex
that impacted much of North America. The company is set up for
success the rest of the year with such strong performance during
the hardest months," commented CEO Alex Walsh. "We are working
diligently to assist Tero with its growth through multiple channels
& look forward to continued success."
Final Comment
This is a situation that I believe has good mid-term &
extremely good long-term potential for very attractive revenue
generation. As one of the things you can do for your own
investigation, I suggest that you check the company’s web site at
www.lithiumexplorationgroup.com.
Please watch for alerts via the email distributions I make when
LEXG reaches an important milestone – if you do not as yet receive
my email distributions, just ask via email to WallStreetCorner@gmail.com to include you on our
free email list along with those who are on that list from over 96
countries.
Contact
The corporate office is 3200 N Hayden Road, Suite 235,
Scottsdale, AZ 95251. Call 480-641-4790 or info@lithiumexplorationgroup.com.
Investor Relations is at 480-641-4780.
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in 96 countries. In the case of LEXG, Larry Oakley created this
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Forward Looking
Statements: This Report may contain forward-looking
information within the meaning of Section 21E of the Security
Exchange Act of 1934, as amended (the Exchange Act), including all
statements that are not statement of historical fact regarding the
intent, belief or current expectations of the company, its
directors or its officers with respect to, among other things: (i)
the company's financing plans; (ii) trends affecting the company's
financial conditions or results of operations; (iii): the company's
growth strategy and operating strategy; & (iv) the declaration
& payment of dividends. The words "may", "would", "will",
"expect", "estimate", "anticipate", "believe", "intend", &
similar expressions & variations thereof are intend to identify
forward-looking statements. Investors are cautioned that any such
forward-looking statement are not a guarantee of future performance
& involve risks & uncertainties, many of which are beyond
the company's ability to control, & that actual results may
differ materially from those projected in the forward-looking
statements as a result of various factors including the risk
disclosed in the company's statements & reports filed with the
OTC Markets. The Company claims the safe harbor provided by Section
21E(c) of the Exchange Act for all forward-looking statements.