PHOENIX, AZ / ACCESSWIRE / August 15, 2017 /Lithium Exploration Group Inc. (OTC PINK: LEXG) CEO Alex Walsh updates shareholders on company activities.
I want to thank all of you for your emails and voicemails over the past few weeks. We have a lot going on right now and I hope this second installment is helpful in understanding how far we have come and where we are headed:
Royalty - Our investment in the White Top project in Louisiana was made as an opportunity to take a financial interest in a field where we are planning to deploy a commercially operational SonCav Oil Unit. The investment was made as a convertible debt to White Top to fund a seismic shoot, which garnered them an option to purchase the field before May 15, 2018. Once the seismic shoot is complete and White Top exercises the option, we may have our investment returned to us or convert the option into a 3% royalty on gross revenues for the life of the field.
Internal projections from White Top predict that the total revenue from this royalty could be between $15 and $18 million over the next ten years. We have received an independent report regarding the field as it sits today, which would put that royalty revenue around $1.5 million. In their report, the geologists suggest that the proven reserve number could go up significantly after the seismic shoot has been processed to define more clearly subsurface structures. We are comfortable with our present position because we still control the destiny of our long-term investment and, if our independent geological team does not feel that the reasonable reserves will generate substantial returns for LEXG, we can simply take our money back and move on.
Seismic Shoot - The aforementioned seismic shoot is underway with the drilling of 1000 'shot holes' that will be used to generate the seismic vibrations that generate the data we are going to collect. Barring delays due to inclement weather, all of the data collection will be complete in August, with the processing and mapping delivered to White Top in October.
Financing Efforts - As I have reported, White Top has been in the process of raising drilling dollars for the past few months to initiate the further development of the field while the seismic is being completed, but it is important to provide clarification on these efforts. The team at White Top has six shallow drilling targets that will not change with the delivery of the seismic data. These targets have been very well defined with the existing seismic and using other well logs that are already in place. They have the option but no obligation to drill these wells. The goal is to drill them to prove up more reserves and provide more cash flow to support the acquisition, but this is not a do-or-die effort.
They are still working with a group out of Oklahoma who provided an LOI in July, and continue to work with another group out of Los Angeles who is also interested in providing drilling and acquisition financing. We are not obligated to participate in that financing as our convertible debt is already set in stone and will not be diluted regardless of the size of the raise or the terms. Our only interest and concern is ensuring that the acquisition is completed before next May, because, until that takes place, we cannot convert our debt and start receiving royalty payments. We feel very comfortable with the positioning of the asset and execution by our partners at White Top. Ultimately, we look at this project as a great way to generate cash flow long-term to support our ongoing efforts as a company and improving our balance sheet.
Oil Unit Testing Completion - As you may recall, a year ago we initiated testing on the SonCav Oil Unit. That testing took place through March of this year. We were able to collect hours of useful operational data and test for a number of different flow rates, temperatures, etc. While we were testing the operational capabilities, we interviewed many industry experts (including the team at White Top) to get feedback on their potential uses for the technology's many applications. We were able to quantify present technologies that are able to heat and circulate oil and have put together a presentation that can be found on the technology page of our website.
Oil Unit Deployment at White Top - As we completed the testing, we had identified one of the White Top fields as an ideal first commercial deployment. They benefit from heating their sale oil tanks to reduce the risk of paraffin wax build up with which the SonCav unit is capable of assisting. The goal today is to have SonCav build a customized unit that can handle the circulation of oil through a series of tanks at White Top. We will also be able to collect field data and use it as a show room of sorts for other interested parties from Canada.
Oil Unit Distribution Efforts - We have initiated outbound sales efforts to Canadian companies that have the same need for heating and circulating crude oil at their operations, with the intent of having more sales that can be executed upon as soon as the first commercial unit is put into operations. There is no timetable for this today, but we are certainly hoping to have the White Top unit put in the field before the end of this year.
We have come a long way in the last year in cleaning up our balance sheet and making investments in technology and oil fields that will have a positive long-term impact. The is a lot of excitement internally about where we have come and where we are heading and I hope that these updates are helpful in understanding our vision for the future and how we plan to build LEXG into a multidimensional small cap company.
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 testing its SonCav Technology and the acquisition of oil and gas related assets. Lithium Exploration Group is traded on the OTCPINK 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.
SOURCE:Lithium Exploration Group
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