Li-S Energy Faces Export Approval Hurdles Amid Ambitious Defence and Production Expansion

Strategic Defence Collaboration

Li-S Energy Limited has taken a significant step forward in its defence ambitions by formalising a collaboration and cell supply agreement with a leading international defence systems integrator. This partnership, following extensive prior collaboration, sets the stage for testing Li-S Energy’s battery cells under rigorous military mission profiles, particularly for unmanned aerial vehicles (UAVs) and soldier-worn systems. The agreement leverages the partner’s two decades of experience supplying advanced military systems across the US, Europe, and Australia, positioning Li-S Energy to integrate its high-energy density lithium-sulfur cells into high-value defence platforms.

Pegasus I Drone Advances Testing

The company’s Pegasus I drone, part of the Emerging Aviation Technology Partnerships (EATP) program, has entered its initial testing phase. This vertical take-off and landing (V-TOL) UAV has completed airframe assembly, propulsion integration, and initial flight tests during the quarter. Hundreds of custom 10Ah battery cells, integrated with bespoke battery management systems, are currently undergoing testing. Flight trials planned for the coming months aim to demonstrate a sovereign, dawn-to-dusk operational capability, critical for applications in defence, surveillance, and agriculture.

Pioneering Lithium Metal Foil Production

Li-S Energy has also commissioned Australia’s first lithium metal foil production line at its Geelong facility, supported by a $1.7 million Industry Growth Program grant. The extruder and inline quality monitoring systems are fully installed and operational, with first production achieved ahead of schedule. This capability not only secures a domestic supply of high-purity lithium foil for anodes but also opens new revenue streams through supplying international customers. Upcoming phases include installing specialized laminating and coating equipment to enhance product offerings with proprietary lithium surface treatments and nanomaterials.

Export Approvals and Global Engagement

Progress continues on export approvals under the AUKUS trilateral partnership framework, enabling Li-S Energy to export its dual-use battery cells to key overseas markets including the US and UK. The company has completed registration with the Australian Defence Export Controls and is applying for permits to facilitate these exports. International visibility was boosted by participation in high-profile defence and aerospace events such as the Special Operations Forces Week in Florida and the Paris Air Show, where Li-S Energy engaged with procurement officers, original equipment manufacturers, and defence primes.

Financial Position and Outlook

Li-S Energy reported a net operating cash inflow of $81,000 for the quarter, supported by government grants and interest income. The company invested $925,000 in property, plant, equipment, and intellectual property, reflecting its commitment to scaling production and technology development. Cash and equivalents stood at a healthy $14.9 million at quarter-end, providing a solid runway for ongoing operations and growth initiatives. The company also reported payments to related parties consistent with prior disclosures, including research collaborations with Deakin University and management services agreements.