It is exciting to be in a position to report that we have made progress on the proof-of-concept stage of our Ultrasonic Generator.  We have solved the technical issues that we knew about and we have proactively identified other problems.  The power regulation issues detected this summer have been resolved and the inventor of the technology, Victor Glotov, was able to observe the operating unit in action and identify an additional operational issue and provide a solution.

He confirmed that cavitation was taking place in the reaction chamber by measuring the frequency of the sound waves.  At 70% of optimum RPM, the temperature of the water rose from 40 to 62 degrees Fahrenheit.  At these levels, which are well below optimum speed, he was able to detect that the RPM rate and pressure did not match his calculations.  He suggested that the reactor be removed from the tank for inspection before proceeding.  The team removed the reactor and was able to identify that the shaft was misaligned, restricting the water flow and limiting the generator’s performance.

We have taken steps to resolve this issue by modifying the setup of the unit, thus ensuring that, when the reactor is installed, we have a way to double-check the alignment of the shaft so that the performance of the unit is not restricted.  We hope to have these modifications made over the holidays and be back to testing in early January.

It is important when discussing this technology to focus on what it means for our company both near-and long-term.  We intend to utilize the controlled cavitation reaction within the generator to artificially produce the extreme heat required to flash evaporate the liquid.  This will be done without the need for huge amounts of natural gas or electricity which are usually required to heat thousands of gallons of water an hour.  When the water is heated to extreme levels and then released from the reaction chamber, it will vaporize, separating any suspended solids from the solution and allowing us to extract valuable minerals to be processed and sold at our lithium brine project in Valleyview, Alberta, Canada.

This technology uses a patented process to induce the cavitation, producing the extreme heat needed to vaporize liquid.  Our core business will be monetizing the minerals suspended in the water with lower cost inputs and thus increased profitability.  However, the technology has many other uses that go beyond the extraction of valuable minerals.  The ability to efficiently and cost-effectively produce evaporation of liquid has applications in traditional water treatment.  Through this process of vaporizing liquid and condensing it back into liquid form, all impurities (salt, other minerals, and chemical compounds) are removed, leaving solid waste and fresh water.

The ability to cost effectively perform this water purification could be used in the mining, oil and gas, chemical, pulp and paper industries, as well as many others.  Treating water is a huge undertaking and a very expensive task for the company producing the waste water.  At the present flow rate of the unit being tested in Pennsylvania, we expect to be able to treat twice as much fluid stock as comparable technologies on the market today.  We have built comparison charts of other technologies and will publish the comparison once we reach steam, have run the unit consistently for a week, and have had the data independently validated.

This is all-important information because we have rights to this technology in Canada that go beyond our own use for extraction of valuable minerals.  We have exclusive distribution rights to the technology in the mining and mineral processing industry and limited exclusivity to distribute units to other industries.  This ability to receive passive revenues from the distribution of these units to other end-users will provide near-term cash flow which could fund our operations and exploration efforts for years to come. This will give us a distinct competitive advantage over other exploration companies who have to rely on dilutive financings to advance their efforts.

Our responsibility to our shareholders is our main focus, and the successful testing of this technology is an important catalyst for providing long-term shareholder value and profitability for Lithium Exploration Group. The patience of our shareholders during this extended but vital testing period has been sincerely appreciated by all of us at LEXG.