Recently Dean Beeby of The Canadian Press wrote an article about lithium opportunities in Canada.  I want to take this opportunity to respond to this article and take issue specifically with some of the comments that relate to our Valleyview Project in Alberta.  Read the full article here [link]: Calgary Herald

The article discusses various lithium projects in Canada and references a March 2012 report by Environment Canada, which states that environmental regulatory agencies are not well prepared to deal with lithium production in Canada.  At LEXG, we commissioned a study in April 2012,authored by a former Alberta government official,to outline what regulatory steps would need to be taken to bring our project online.  Below is an excerpt from our study:

Although this proposed project is designed to recover metallic and industrial minerals from deep brines, the process entails the use of conventional oil and gas wells, the potential separation of hydrocarbons from the brines, storage and transportation of brines (pipeline or trucking), and disposal of any waste products.

As such, the Energy Resource Conservation Board (ERCB) will likely be the primary regulator of the activity. Environment and Sustainable Resource Development (ESRD) has the responsibility to consider applications for the use of public land, the construction, operation and reclamation of chemical manufacturing plants, and the use of water under the Water Act. ESRD is responsible for the application of the Environmental Impact Assessment (EIA) process. Alberta Energy issues dispositions of mineral rights owned by the Province of Alberta and collects royalty on production from the Crown’s mineral rights. [Lithium Exploration Group, May 2012, “ADVICE ON THE REGULATORY PROCESS FOR MINERAL EXTRACTION FROM BRINES”]

The MMER (Metal Mining Effluent Regulations), referenced in the Beeby article, is the Canadian Government’s environmental “catch all” for the waste discharge of metal mining (iron ore, gold, silver, copper, etc.).  This would be the set of regulations that a companyinvolved in hard rock mining for lithium would utilize to deal with the handling of waste byproduct from the milling and extraction of lithium from spodumene.  The type of mining we will be doing is completely different and is governed by another set of regulations. Our study shows clearly that Alberta has a good handle on how to deal with the oil field brine from which we intend to extract valuable minerals.  The regulatory process will go through each of the three government entities mentioned in the study (ECRB, ESRD, and Alberta Energy).  The provincial government of Alberta has done a commendable job over the years in managing these types of situations and, in our opinion, is well ahead of other provinces in this regard.We believe this is the result of their long history in dealing with all aspects of the production of hydrocarbons and the environmental considerations surrounding that industry.  We are developing a project that piggybacks on the infrastructure of oil and gas production, and the minerals we will produce are, at present, a waste byproduct of that production process.

I also take issue with the following excerpt from the article, which was published in the Calgary Herald on July 3, 2012:

And at least three companies are considering lithium-extraction operations using a brine-water process in an area of Alberta about 200 kilometres west of Edmonton. Those plans are in the early stages, and no environmental assessments have been completed, says the [Environment Canada] report.… Lithium extraction is somewhat more advanced in Canada. Hard-rock mining of lithium may have a lesser environmental impact than lithium produced through evaporation of brine, as proposed in Alberta.

The writer is clearly misinformed about what we will be doing in Alberta.  I have to assume that, when he refers to “at least three companies,” LEXG is one of the three.  The assumption is that we intend to use traditional “evaporation ponds” as they do in Nevada, Chile, and Argentina to concentrate and extract minerals from the brine.  This type of evaporation would be virtually impossible in Canada because of the climate, terrain, and population density.  Our stated intention is to utilize mechanical evaporation to concentrate the oilfield brine holding lithium and other valuable minerals.  While this process is more expensive than solar evaporation through evaporation ponds, we believe that, because we will be using existing wells and infrastructure from the oil and gas industry (roads, rail, skilled work force, cheap power, etc.),we will be able to make up the difference in operating expenses by having a significantly lower capital expense to bring our project online.

The statement that our type of project would have a greater environmental impact than an open pit or underground mine in another part of Canada is nothing less than offensive.  We intend to monetize what is today considered a waste byproduct of oil and gas production.  We intend to concentrate the brine through an Ultrasonic Generator, process the cake into saleable minerals and, from the outside, it will look like any other industrial facility in the region.  A mining project cannot get much more “green” than that: we are recycling the waste of another industry while not drilling any new holes or disrupting the natural surroundings,and, at the same time,providing a new source of revenue to the province and new jobs to the region.

In fairness to the author of the article, many of the facts on which this is based came from a study that was intended to deal with the traditional metal mining industry.Because our project is new and innovative, we expect to have to spend time educating the public and the media on the intricacies of what we are trying to accomplish.

I write this blog as a way of sending a message to followers and shareholders of Lithium Exploration Group.  We are blazing a trail to bring a new industry to the province.  The regulations and regulatory bodies are in place to help us do so in Alberta and we have taken the time and effort to be forward-thinking about the issues that impact our project.