Lithium Exploration Group Inc (OTCMKTS:LEXG) recently announced that it was actively searching for a financial partner to help out with the acquisition of Canadian Oil & Gas assets. The company has initiated talks with potential partners for the deal in the US. The company is however keeping itself from liquidating. The investment is to be done through simple debt, with security over the asset, but not convertible to stock. Oil producers across North America have been heavily hit by the recent decline in oil prices. Most companies have even been driven to the verge of bankruptcy.
The development of this situation means that most of the companies are in dire need of investment, which does open the door for many investors to be a non-operating working interest partner. The drop in oil prices is only temporary and the mining companies just need to buy some time until the oil becomes a dominant asset again. An investment in a mining company, during these hard times should result in a huge return.
Additionally, the company CEO, Alex Wash, expressed his view that since the Canadian dollar is at a historically low point, investing some US dollars would definitely give a greater return. He also accepted the fact that his company had handled its capital structure poorly, by taking convertible debts. He intends to break this cycle, by finalizing a deal free from any convertible debts while moving the company forward.
However, the market did not respond well to these announcements since the stack crashed by 38% on the same day. It is either that the investors see the acquisition as a wrong move or that they simply do not trust the statement of the CEO. If the company somehow is able to get the required amount for the acquisition, it is still unknown how well they would utilize their new assets. The company is involved in mining of precious metals, like lithium, which demonstrate a high probability for long-term production.
Lithium Exploration Group Inc (OTCMKTS:LEXG) closed at $0.0185, losing 38%.