Lithium Exploration Group Inc. (OTCQB: LEXG) CEO discusses the lithium industry, the oilfield waste disposal industry, and water scarcity in his July 2014 newsletter:
As we embark on another fiscal year at LEXG, we are excited about what the future holds. After successful testing of our Ultrasonic Generator in February, our partners are preparing to field test it in Texas. They plan to flash evaporate frac water, producing fresh water that can be reused by the oil and gas companies and a contained waste stream of solids to dispose of at a landfill. We also are in the process of having another unit built to field test the technology for crude oil upgrading abilities at our Wardlow Facility in Alberta. Last year we acquired two disposal facilities which are going to be a huge part of our business for years to come.
I will address this month's newsletter in three parts over the next three days, discussing  Lithium,  Oilfield Waste, and  Water Scarcity. This provides an opportunity to discuss a number of issues at the beginning of our fiscal year but not overwhelm you in one long-winded diatribe. My goal is to talk about some of the 'macro' issues facing the industries in which we are trying to operate and point out how we intend to monetize these opportunities.
Over the past six months, the lithium industry has again been sent into a frenzy of demand-driven activity. Every car commercial on TV is touting their hybrid model's fuel economy, the cellular phone market in Asia is really picking up, and every time Elon Musk opens his Twitter account he is promising lithium ion battery world domination.
A recent study published by WhaTech (www.whatech.com) forecasts that the lithium battery industry could grow by 14.4% per year through 2019. Unlike the surge in lithium demand and activity from 2004 to 2008, we are not hearing that lithium prices have increased significantly. The reality is that producers have been hoarding lithium supplies since the recession in 2008 and are not releasing the excess production in order to keep the market price of lithium stable. That pent-up supply should cover the market near-term, but, at present production capacity, the lithium producers will not be able to keep up with the demand projected over the next decade. Why would they spend millions today expanding facilities based on potential demand? The handful of companies controlling the vast majority of the global lithium production stand to benefit massively if there is a future shortage of supply that drives prices higher.
If you have followed LEXG for a while you know that I have been talking about this supply and demand imbalance since 2011. It takes almost 24 months for lithium to be produced via the most traditional form of extraction and production. It takes millions of dollars and many years to establish the acres of ponds and infrastructure to facilitate the solar evaporation in remote locations of Chile, Argentina, and Nevada where the most lithium rich brine is located. So, right now, if you had a lithium-rich continental brine deposit, you could provide lithium to the market in about four years ... and would just have to hope that your projected numbers work out.
That is why Elon Musk should buy his own source of lithium to supply to his battery division. Imagine being a company that builds electric vehicles and being subjected to the volatile market pricing of an oligopolistic industry. It is exactly why Japanese and Korean battery manufacturers did the same thing in 2008 and 2009.
Our goal is to utilize our technology and the existing infrastructure in the Canadian oil and gas market to be able to supply lithium to the market with a lead time of two months rather than 24 months. This will allow us to increase and decrease production to meet the market demands. We will spend far less money to get the plant up and running because the wells already are drilled into the ground, the facilities we own are already licensed to deal with salt water, and all of the infrastructure needed to get the product to market is already in place. The cost to produce lithium and other minerals will be offset by the revenue generated from our disposal activities, resulting in lower overall operating expenses. The combination of lower CAPEX and lower OPEX results in greater profit and lower risk for LEXG versus other entrants to the industry.
I will be back to you tomorrow with an overview of the Oilfield Waste Disposal side of our business.
Lithium Exploration Group
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. Lithium Exploration Group is a fully reporting company traded on the OTCQB under the symbol LEXG. Website: www.lithiumexplorationgroup.com.
Safe Harbor Statement
This news release contains "forward-looking statements". Statements in this press release that are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future testing of the ultrasonic technology.
Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with mineral exploration and difficulties associated with obtaining financing on acceptable terms. We are not in control of lithium prices and these could vary to make development uneconomic. These forward-looking statements are made as of the date of this news release, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Although we believe that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our most recent annual report for our last fiscal year, our quarterly reports, and other periodic reports filed from time-to-time with the Securities and Exchange Commission.
Ten Associates, LLC
SOURCE: Lithium Exploration Group, Inc.