Lithium Exploration Group CEO Distributes July Newsletter Part 3 of 3 — Water Scarcity

Dear Shareholders,

This is the third installment of my three part July newsletter discussing [1] Lithium (Thursday, July 24), [2] Oilfield Waste (Friday, July 25), and [3] Water Scarcity (today). This format provides an opportunity for discussion of a number of key issues at the beginning of our fiscal year without overwhelming you with one long-winded diatribe. My goal is to address some of the ‘macro’ issues facing the industries in which we operate, and to point out how we intend to monetize these opportunities.

Water Scarcity:

Water scarcity is a global issue impacting individual consumption, commercial production, mining, oil and gas prices, and agriculture. Human beings need water to be able to survive but our modern economy consumes massive amounts of water. The issue of water scarcity is one that many acknowledge but few understand. I want to start out by pointing out a few data points that are important to understanding water scarcity and how it impacts various parts of our day-to-day life.

What does all of this mean? It means that it takes a lot of freshwater to support a global population of seven billion, and that freshwater is a scarce resource. We have tipped the scales on the amount of lake, river, and groundwater that is replenished each year by precipitation then taken out for human consumption.

It is no longer only “tree huggers” who are concerned about this dynamic. Companies like Nestle, Coke, and Google are spending billions on curbing their freshwater consumption and finding alternative sources of water to meet their needs. Yes, Google. They need massive amounts of water to cool their servers, leading to an investment in alternative sources of this financial input. They are investing heavily in ideas that will assist in this initiative.

So how does this impact LEXG? Mining and energy are our two primary markets. Both are directly impacted by the ability to access freshwater and, even in Canada where water is generally not a scarce resource, there are pockets that have been experiencing drought conditions for the past decade and others that have such high agricultural needs that the mining or energy operations cannot access the local groundwater for their operations.


Mining operations use water in their extraction process. For solution mining of potash in Saskatchewan thousands of gallons are required each day to pump into the ground and dissolve the KCl bed (potash) into a solution that can be pumped to the surface and sold. Some of these operations that are being built today require pipelines that cover hundreds of miles and cost millions of dollars because there just isn’t enough water available where the resource resides.

Traditional mining requires acid leaching of the ore to extract the targeted mineral, and some mines are literally shut down because they can’t find enough freshwater or can’t find a reliable way to dispose of their waste stream to continue operating. There may be millions of ounces of gold in ‘them thar hills’ but they will never be extracted in present day Canada because, when you take into account the expense of accessing and disposing of the water to operate a mine, the numbers just don’t add up. However, that may not be the case in the Congo due to different environmental standards, which is why water treatment is such a major issue for our addressable market.


Oil and gas producers use huge amounts of water as an input to their exploration and production efforts. They cannot control where the oil and gas is located so, in many cases, they have to ship freshwater hundreds of miles to a remote location to drill a well and produce their resource. The Canadian oil sands projects require millions of gallons of water because they have to mix the tar sands with water, heat it up, then extract the bitumen to be shipped for upgrading. The logistics of the new water input and waste discharge are mindboggling and are becoming a billion dollar problem for many companies trying to tap into that massive resource.

In both the mining and energy industries, starting with freshwater is ideal from a cost and production efficiency standpoint. If you use brackish (high salt content) water as an input for your drilling, fracking, leaching, or solution mining effort, you will not see the same results from your efforts. That leads to lower output and lower profits from the same operation that uses freshwater. This dynamic is changing rapidly and impacting companies all over Canada in both industries.

Here’s an analogy with solution mining for potash because it is the easiest to understand:

Solution mining is like trying to get your hands on a brick of salt (with potassium in it) that is inside a one-gallon milk jug. You get it out by taking the lid off and pouring water into the jug then pouring (or pumping) the dissolved fluid out, letting it dry then you sell the brick. If you use clean water, it only takes you a cup of water to dissolve the entire brick. If you use dirty saltwater, it takes three times as much water to dissolve your brick and three times as long because you have to keep waiting and pouring, etc.

That additional expense in labor and input may make the extraction of the brick uneconomical. This is happening to companies all over Canada so they are basically in a position where, until the price of that salt increases, they are just going to leave it in the jug.

Our technology has the ability to do two things that we believe to be game changing for the energy and mining industries. It will enable us to take brackish, inefficient water and turn it into freshwater that can be used for industrial projects, and it will be able to recycle the waste streams of mining and hydrocarbon extraction to reuse the water that they have on site. Using the example of the brick of salt, we will be able to help that producer use that single cup of water over and over and over again to extract more and more bricks, making his input costs cheaper and his output more profitable.

We are talking about several multibillion dollar industries in Canada alone, and we think we have a solution that will literally change their business models as they are evaluating existing projects’ sustainability and potential projects’ economic viability.

I don’t want to pretend that we have discovered a cure for cancer, because water scarcity is an issue so large on so many levels that it is difficult to quantify. But I do believe that what we have is a new procedure to treat a form of cancer that today is fatal for many projects.


About Lithium Exploration Group

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.