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CEO distributes Newsletter!!
PHOENIX, AZ / ACCESSWIRE / June 21, 2016 / Lithium Exploration Group Inc. (OTCPINK: LEXG) CEO Alex Walsh updates shareholders on company activities.
Dear Shareholders,
I announced last month that we had identified an opportunity to invest in drilling two wells on a preexisting oil field. I have spent the better part of last month working on ways to finance the package, and I am happy to announce that we have agreed in principal on the terms of the agreement with the various parties involved. We are finalizing the due diligence on the oil property and we will be filing an 8k with all of the final documents in the coming weeks.
This is an exciting opportunity for the company and our shareholders because we will be investing in an asset that will generate cash flow to the company to sustain our day-to-day operations while we continue to work on commercializing the technology units with our partners at Sonic Cavitation. There is a natural benefit to buying into an oil and gas asset at today's depressed prices and participating in the long-term appreciation of the asset. It also gives us access to an asset where we can field test the oil unit.
Today we uploaded some pictures of the skid and vessel that were built to test the oil unit outside of Houston, Texas. The piping process has begun and we expect to be able to initiate testing on the unit shortly after July 4th. Initial testing will be done on the site where it is being assembled. They have all of the necessary equipment and power needed, and we will be using various oil feedstock from the surrounding area.
Our intent is to have an independent review of the process for both the input oil, output oil, power consumption, and other pertinent variables that we can share with potential future customers. We will also obviously be sharing data with the public to show what we are doing and point to addressable markets and business strategies moving forward.
We are very excited to be moving on both of these initiatives at the same time and look forward to providing weekly updates on all fronts.
Sincerely,
Alex Walsh
CEO
Lithium Exploration Group
You'll love this new report from Joe Lowry :)
6/18/2016
In the past year I have written about the “End of the Big 3”, the “Rise of China” and asked “Does Nemaska Matter”?
I have been critical of the junior lithium projects that I believe are run by charlatans who are looking to “pump and dump” their shares; however there is no doubt that the lithium world needs a few juniors to be successful in order to meet future demand.
In the end most juniors will fail but I now believe more juniors than I first thought will succeed. I could revise the title of this post to “Maybe Nemaska does Matter”. Demand is growing faster than I envisioned just a year ago as evidenced by the price run-up that began in Q4 of 2015. I believe double digit lithium carbonate prices will last into the next decade and create an investment climate much more favorable to junior projects with the potential for reasonable, if not world class cost positions. Hydroxide price will increase more than carbonate going forward which is great news for a project like Nemaska.
Despite my reputation as being critical of many juniors, I was surprised and pleased to be asked to speak at Lithium conference in Toronto last week which provided a forum for several junior companies to tell their story to potential investors.
The lithium market is changing on a daily basis. No matter what Albemarle says about being number 1 and capturing 50% of future lithium ion battery growth going forward, the former “Big 3” lithium companies now supply less than half the market and Albemarle, despite having the world’s largest lithium business on a sales basis, currently has a shrinking piece of the lithium ion battery business. Their MOU with Chile is still not a contract and even with their expansion coming online starting next year and their tolling strategy in China, the ALB share of the battery market will not grow as their CEO likes to tout.
Yesterday ALB announced a $3.2B sale of the surface treatment business acquired via the Rockwood purchase so perhaps another lithium related acquisition is being considered. Time will tell.
In the next five ALB’s capacity addition of 20K MT of LCE via their expansion at La Negra will be dwarfed by the planned combined supply increases of Galaxy with Mt Cattlin in spodumene and Sal de Vida in brine, LAC with their SQM JV partnership to develop Argentina brine and China powerhouse Ganfeng with their first resource based investment in Neometal’s Mt. Marion and the continued expansion of their conversion capacity.
FMC’s recent announcement that they intend to triple their hydroxide capacity based on sourcing carbonate, debottlenecking and having a toller in an unrelated business in China add capacity for them was not taken seriously by most of the industry. FMC announced a hydroxide capacity expansion a few years ago that never happened - past looks to be prologue in this case. By 2020, FMC will either be number five or six in the industry on both an LCE and sales basis. FMC’s shrinking position proves that the “Big 3” as we knew it no longer exists and will simply be a misnomer people (like me) will continue to use.
Hopefully SQM and the CORFO settle their issues but in any case SQM looks poised to expand capacity via their JV in Argentina with Lithium Americas (LAC) even if the issues with CORFO linger. SQM appears unwilling to cede upstream capacity leadership to ALB for more than a brief period. Early in the coming decade, it will be clear SQM’s purchase of 50% of LAC’s project in Argentina for $25M was a brilliant and well timed move.
It was with the backdrop of rapidly growing demand requiring at least 120K MT of capacity increases by 2020 and a lack of adequate response by the major companies, that I went to Toronto to listen to the junior lithium companies present and also share my thoughts on the lithium market.
For the most part junior lithium companies are run by managements with more of the proverbial "skin in the game" than their Big 3 counterparts. I have also found junior management teams to have more in depth knowledge of the lithium market than many members of the "major's" management teams who all too often seem to consider their customers beholden to them. The shortage only makes their "entitled" attitude worse.
Unfortunately, all too often junior companies do themselves, their peers and their shareholders a great disservice by exaggerating their opportunity and performance. In my opinion the first speaker in Toronto from ORE continues to fall into this category. ORE is getting great pricing for off-spec product. As an incremental supplier in a shortage, they are able to get a premium to ALB’s battery grade for material that most of the time has to be sent to the “cleaners” prior to use for cathode production. This is great news for shareholders so why not just tell the story that the company is “riding the price wave” until they can work the purification issues out? Instead the speaker declared his company a “member of the lithium oligopoly” and claimed they will produce 100% battery grade by September and double capacity by 2018. Wishing it were so does not make it so…….
Rather than dwell on what I consider to be an unfortunate lack of candor and certainly not a “misunderstanding” - I will wait for the full year data to be available before commenting further on ORE. Yes, Hot Copper crowd, I stand by my past comments.
The other presenters included: Pure Energy, Nemaska, LAC and Lithium X. They did what you should do at an event like this – cast your company in the best possible light without a lot of BS. Of the assembled group I am most bullish on LAC’s prospects especially after their deal with SQM.
After the conference, I had dinner with several investors that asked many interesting and insightful questions. There seemed to be consensus on three things: interest in investing in lithium has never been higher, confusion over the potential best investments has never been greater and most companies do not help their credibility by making claims about their cost position that are hard to believe.
This is where I espouse what is considered by many to be heresy in the world of orthodox resource investing: “low cost is less important in the next decade than project execution and speed to market”. Any junior that is able to enter the market with a reasonable capital investment and produce a quality product with a cash cost even double that of an ALB or SQM will be a big winner. In 2016 more half the world’s supply will be high cost – coming from converted spodumene and low quality Chinese brines. This supply provides a price umbrella that will last well into the next decade and allow projects to achieve payback quickly even with what are perceived to be high costs. Think of the China spodumene converters and brine producers as a “no cost hedge” for new projects.
The day after the Toronto conference, I went on a tour of Nemaska’s operational sites in Quebec. Given my past comments about the project I was surprised to be given a seat on the plane. I have always loved the fact that Nemaska has focused on hydroxide and is trying to commercialize electrolysis for lithium production. My doubts about the Nemaska have always been focused on the high total capital cost and execution risk. Now with a rapidly growing hydroxide market that is obviously underserved by the major players outside of China and prices that are likely to remain high for an extended period, Nemaska will be playing in the sweetest spot in the lithium market. If their small phase one plant can prove their new process works for a reasonable cost; I believe they can be a winner. Meeting with the plant team also helped ease my concerns on execution risk. I can also see a scenario where they prove the technology and win without developing their mine but that is certainly not their plan.
So, for now, my three favorite juniors in planning to produce lithium chemicals are: Galaxy, LAC and Nemaska. There will be another Canadian name on this list by the end of summer so stay tuned…….
To be clear, I consider Tianqi and Ganfeng as majors so from my perspective the future of the lithium world is now in the hands of the Big Five and select juniors including ORE. My parting shot is that Pilbara will likely also be in the mix long term as a spodumene major but that story is still emerging.
https://www.linkedin.com/pulse/lithium-juniors-update-joe-lowry
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Only a portion of my shares were at that price. I bought at higher levels as well. But, anyway, that is good advice.
I won't pretend to know what he or his company has to do with the LAC/SQM deal. But the "upper hand" might have been the cheap price to get in with only 25 mil. Don't know. He probably bought at 20 cents in January like I did, except he knew what was going on whereas I just got lucky. That's an upper hand if I've ever heard of one.
LAC management and blueprint was fully vetted by SQM before investing millions of dollars with the JV. This was not the only offer LAC had, but the best one...and an emergent one based on the trouble SQM was having with Chilean gov't.
Listen to the conference call with LAC after JV with SQM was announced. It has good details and reasoning.
Is a buyout possible? Sure. But holding on and letting SQM do a lot of the leg work seems like a good idea to me. There's a lot more money to be made by seeing it thru. The stars are alining with this resource and the emergence of EVs, and the dearth of short term (< 10 yrs) supply if all these car companies follow through.
Just my humble opinion.
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I couldn't possibly disagree with you more, respectfully.
Yep Billy those ~.20 shares are looking might fine right now :)
Although I also bought in at levels far above that. And I also have shares of a couple other Li juniors that I did not time so well. But I think they are winners in the long term.
You make good points. However I will say one thing. People do refer to management being all over the place and only interested in getting bought out. But the entire reason for the SQM deal was to de-risk the situation. Let investors and the industry know that LAC is serious about being a real player. And to prove it, LAC was willing to cut SQM a great deal in order to get it done. A shovel ready deposit, using a proven low cost method with partnership of a proven low cost / high quality producer.
That is solid stuff.
Remember that the juniors with clay and spodumene deposits (which LAC is part of with Li NV) have some proving to do in regards to being able to match the production schedule and quality that the big brine deposits have been producing for a long time.
I know that you know this Over...but a reminder to others.
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We have a revolution beginning and the world is going to need a lot of lithium. Check out this news release about VW....30 new electric models by 2025!
http://www.msn.com/en-us/money/companies/volkswagen-bets-big-on-electric-cars/ar-AAh7ivQ?li=BBnbfcN
Elon Musk offers $325 million for Li start up...
...Back in 2014...this is a must read!
http://www.usatoday.com/story/money/cars/2016/06/08/how-elon-musks-lithium-deal-power-teslas-went-sour/85623760/
Nice one. Holding at these levels is telling without news...we are ready for the next level with an update from the company.
We're going to 5 and beyond. But traders don't care, as long as there are many ups and downs along the greater path. And they will try to create those ups and downs. That way they can make their quick gains.
Here is yet another guy that agrees and picks LAC (5/27/16):
"My view is we are just at the beginning of a 20-year EV, lithium, cobalt, and graphite bull run.
I think right now that the best investment potential is in the lithium miners that are soon about to become producers. This is because they are still not reflecting the full valuations of the producers, and because their earnings will ramp from zero to around $64-91m pa by 2020 or slightly earlier.
The three best valued new producers (by 2020) in my opinion are Orocobre, Lithium Americas, and Bacanora Minerals.
Orocobre is the safest as it is already producing, and I see potential 1.95 times or more upside in the stock by 2020.
Lithium Americas has the potential to rise up to 6 times, although share dilution may reduce this to around 4.5 times. More risk, as not yet in production."
http://seekingalpha.com/article/3978337-lithium-boom-may-just-begun-20-year-bull-run
I don't think this guy is even considering Lithium Nevada, which I believe there are big plans in the making for.
Thank you, I haven't started a position yet. But am doing some DD and may soon get in. Possibly tomorrow. Any insight beyond the headlines?
I can see the PPS doubling in the next 12 months. There is so much activity brewing in the electric car industry...this autonomous driving software is coming along for the ride.
Lithium batteries here to stay for a long while:
http://www.forbes.com/sites/jeffmcmahon/2016/05/26/lithium-ion-will-be-tough-to-beat-says-argonne-battery-whiz/#75b19a3075d3
HOLD LONG :)
Sure is...good info on Mr. K, I like that :)
Usually Friday's are pretty quiet, it's a nice treat to head into the weekend in the green for the day, hopefully.
I guess it depends on your perspective. If you are an SQM shareholder...then certainly. If you are a LAC shareholder, you realize that the problems in Chile are one of the main drivers of the expansion in Argentina of their only growing segment of business (Li). But as a business partner, you want them to have a generally healthy business and relationship with their gov't. So, it's hard to say.
Another good piece of press (Bloomberg) today highlighting the surge of Li opportunity in Argentina, and SQM/LAC's (among others) intentions there.
http://www.bloomberg.com/news/articles/2016-05-19/richest-lithium-nation-risks-being-left-behind-in-tesla-led-boom
Sure is!
good link
reads like Over wrote that ;)
SQM reports earnings and comments on their lithium business and joint venture with LAC:
"...The best news of the quarter has been our lithium business, where we saw significant revenue growth. In response to strong global demand for lithium, we are working to deliver more volumes, and prices have also increased."
"In other lithium news, during the first quarter we were pleased to announce a joint venture with Lithium Americas to develop the Cauchari-Olaroz lithium project in Argentina, which is a great complement to our existing lithium operations in Chile. We are targeting a capacity of 40,000 tons with this joint venture, with production expected to begin by 2019. We believe that our years of experience in this business will contribute to the success of this project, and we should benefit from synergies with our Chilean lithium operations. We are confident that this joint venture will generate value for our shareholders."
http://www.marketwatch.com/story/sqm-reports-earnings-for-the-first-quarter-of-2016-2016-05-18-19203226
If this PPS holds for a while they might be able to make a good dent in their bills.
I missed out...congrats to everyone who successfully gets in and out today. I'll be watching for trips.
10,000,000,000
I remember the days here when the monthly Newsletter generated excitement...or at least conversation...around here. I guess this is what two reverse splits will do to a crowd.
It is amazing to think of all those factories humming in a few years...wow!
I'm looking at cobalt and graphite too. I started to research graphite last year but ultimately decided not to start a position, but I'm re-thinking that now.
If the Argentina plant, the Nevada plant, and the clay business all pan out...yes, it will be a multi-billion dollar company.
where is everyone? with the news out...LOL
This article is also very interesting, it says that a large portion of SQM is up for sale and a Chinese group may purchase the holding:
A stake in Chile’s SQM—one of the leading producers of lithium, iodine, and potash—is now up for grabs through an indirect shareholder. Oro Blanco late last year invited buyers to bid for its ownership in Pampa Calichera, a Chile-based investment company. Calichera is a major investor in SQM.
China’s CITIC CLSA Capital Markets is said to have a major interest in purchasing Oro Blanco, which put itself up for sale after its owner and SQM chairman Julio Ponce, a son-in-law of former dictator Augusto Pinochet, was forced to resign after scandals, according to a Reuters report.
The groundwork seems in place for a potential acquisition by China. Last month, Chile Mining Minister Aurora Williams announced that the country would not block a foreign takeover of SQM.
http://www.theepochtimes.com/n3/2059468-china-tesla-demand-driving-lithium-price-surge/
My personal opinion is that this bodes very well for the LAC/SQM project as the Chinese are trying to scoop up as much Li as possible. And they are ruthless at getting what they want.
You might be right. But I've been following a long time here and I've seen the financials. I'll buy in somewhere around .0007 if I can. Hopefully catch the bounce to .002 and sell...wait for the next reverse split and repeat. But I do believe in the SonCav unit they are involved in...unfortunately LEXG has little control over its progress and has got into some interesting financial arrangements while waiting on the tech.
SQM reaffirms commitment to joint venture with LAC.
Construction 2017
Production 2019
This is happening folks :)
http://www.reuters.com/article/sqm-lithium-americas-argentina-idUSL2N1820G7
Elon Musk: Tesla will build 1 million cars a year by 2020
http://www.detroitnews.com/story/business/autos/2016/05/04/tesla-moves-ambitious-production-goal/83942378/
That's beautiful thanks Billy. As I said before, go Lithium Nevada!
I'll get back in at trips...always bounces hard.
This is a very welcome addition to the LAC team Billy, very welcome indeed :)
Go Lithium Nevada!
There are people who post to this board that are frustrated that they didn't buy while the pps was floundering late last year and early this year. And because of that they are trying to diminish what LAC is currently trying to do. Yes, I'll admit that I didn't see the SQM deal coming, and I thought the POSCO deal could be a great opportunity for a partnership. But sometimes we get lucky..."the sun's got to shine on a dog's ass someday". Don't listen to them and enjoy the ride. This stock represents a great opportunity.
Of course this could be said for every board on every internet forum.
To those that think they know so much about the industry but missed the .20s and .30s, just swallow your pride, start a new position, and join the party :)
Ok, but why pass up a good opportunity/investment? Why not go in on an investment where a lot of the legwork has been done?
SQM would be wise to get involved with something new and successful for their shareholder's sake...considering all the hoopla surrounding their current operations.
Anyway, we'll see...I have my opinion and you have yours.
One more thing, and I'll get off my high horse for the day.
If you are a 6 billion dollar publicly traded company on the NYSE... you don't tell your shareholders that you're looking at other opportunities around the world, then follow thru by aligning with a company outside of Chile, and tell your shareholders that this partnership will increase shareholder value...and then back out as a ploy to deal with the Chilean gov't.
That sounds like a good way to frustrate and possibly turn away many of your shareholders. Maybe some would think it's clever if it worked after the fact, but what happens next time you make some announcement to your shareholders?
Just sayin.
" But SQM said in an investor conference call in early March that it wanted to increase lithium output in Chile, as well as look at unspecified “opportunities around the world."
Yes, obviously that is an amazing spot in the world to mine lithium. But they need to diversify, just as any business or investor should. Look for the other two majors to do the same.
source for quote: https://www.theguardian.com/technology/2016/mar/23/battery-lithium-south-america-chile-argentina-bolivia