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Lithium Exploration Group Inc (OTCMKTS:LEXG) On The Acquisition Trail

Lithium Exploration Group (LEXG) (“Lithium”), the US-based exploration and development company, focused on the acquisition and development of potential of lithium brines, communicated on March 20, 2017 that it had reached a non-binding Memorandum of Understanding (MOU) with Solaris Power Cells Inc. (OTCNKTS: SPCL) to help this company develop its PESA™ Energy Storage Technology. The companies communicated that they are working together to reach an agreement on or before May 1, 2017. We believe that if the merger agreement is reached, it may bring a lot of price volatility to the company, which could become an investment opportunity in the very short term.

If you are the kind of stock trader that appreciates investing in super depressed stocks, you may like Lithium since its shares are trading at 52 week’s lows. Please take a look at the chart:

Source

The news

Alex Walsh, the CEO, commented that “this technology provides a truly differentiated way of collecting and storing energy that can be very useful for the Sonic Cavitation Ltd. Ultrasonic Generator’s water application. We intend to use it to capture the energy from the steam released from the generator and reuse that energy to run the unit, potentially generating enough power to run the entire system without outside energy needs”. In addition, the CEO commented that this new merger will permit the company to file patents around the industry applications. According to the same executive, the deal will be beneficial for both companies since Solaris will be earning an ongoing royalty in perpetuity.

History of the company – Why the stock price is so low?

Lithium Exploration Group, Inc. first called Mariposa Resources, Ltd., was incorporated on May 31, 2016 in the State of Nevada. The company changed the name in November 30, 2010. According to its last annual report, the corporation is engaged in the acquisition, exploration, and development of resource properties. As per 10-K, the company is engaged so far in some acquisitions. We will make an analysis of all acquisitions here:

  •  Blue Tap Resources Inc.: On October 18, 2013, this company was acquired, and then on September 4, 2015, the company was sold to a Canadian entity called Cancen Oil Canada.

  • Tero Oilfield Services Ltd.: On March 1, 2014, the company acquired 50% of the issued and outstanding shares of this Canadian company. On May 1, 2015, the company entered into a share purchase agreement with an individual and sold its interest in Tero.

We believe that the market did not appreciate these acquisitions and the fact that the company sold them later. Lithium may be paying a large amount of money for them and selling for a lower amount. This is the only way that we could explain the historical market price.

Loans

In the annual report, it is mentioned that the company received a large amount of loans from third parties. These loans can be converted to shares of the company, so investors should be aware of it. The loan holders could increase the dilution of the stock. In any case, the fact that the company is able to obtain these loans from financial institutions may be viewed by investors as a good factor. These companies are bringing money to the company because they trust its future operations. Below, there is a list of names that I obtained from the last annual report of these companies:

  • JDF Capital

  • JMJ Financial

  • JSJ Investments Inc.

  • Centaurian Fund

  • LG Capital Funding, LLC

  • St. George Investments LLC

  • Vista Capital Investments, LLC

  • Union Capital, LLC

  • Iconic Holdings, LLC

  • Adar Bays, LLC

  • Black Mountain Equities, Inc.

  • 514742 B.C. Ltd.

  • Cardinal Capital Group, Inc.

  • InLight Capital Partners, LLC.

  • Louis Feld

  • River North Equity LLC

  • VES Investment Trust

The total amount of convertible promissory notes is $1,162,058. According to this high figure, it seems that investors are willing to invest in the company through loans. We thought that perhaps our readers may be interested in bringing money to the company in this way instead of buying shares. In any case, again we repeat that the fact that these institutions gave such a large amount of funds to the company is a sign of trust in the operations of Lithium.

Conclusion

According to the last press release that we received from Lithium Exploration Group, the company may engage itself in another acquisition with Solaris Power Cells Inc. If everything goes well, Lithium will be able to close this merger and will obtain rights to acquire new patents. If the company negotiates well the acquisition price with Solaris, the merger may end up being good news for this company.

In addition, we informed our readers that the company obtained a large amount of convertible notes from financial institutions. These companies were interested in delivering loans to the company and Lithium accepted them to finance its acquisitions. Although the number of loans is quite high, the fact that these companies wanted to give these loans may be seen by investors as a good sign. To sum up, the company is still respected by the financial institutions and it is able to raise capital. The deal with Solaris could be the one that reverses LEXG’s downtrend.

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Disclosure: We have no position in LEXG and have not been compensated for this article.

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Lithium Exploration Group Inc (OTCMKTS:LEXG) On The Acquisition Trail
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