Risks and Rewards: Lithium Energy’s Shift from IPO to Full Control of Graphite Assets

Strategic Acquisition Strengthens Graphite Position

Lithium Energy Limited (ASX – LEL) has taken a decisive step in consolidating its footprint in Queensland’s graphite sector by acquiring 100% ownership of the Mt Dromedary Graphite Project from NOVONIX Limited for $2 million in cash. This acquisition directly adjoins Lithium Energy’s existing Burke Graphite Project, effectively merging two substantial high-grade deposits into a combined inventory of 4.42 million tonnes of contained graphite.

The Mt Dromedary deposit alone boasts an indicated and inferred mineral resource of 12.7 million tonnes at 14.5% total graphitic carbon (TGC), while the Burke deposit contributes 9.1 million tonnes at 14.4% TGC. Together with the Corella deposit, Lithium Energy now controls a world-class suite of graphite assets with grades significantly above many global peers.

Operational Synergies and Scale Advantages

By consolidating these adjacent deposits, Lithium Energy anticipates meaningful operational synergies and economies of scale. The contiguous nature of the Burke and Mt Dromedary mineralisation zones opens the door for a larger-scale open-pit mining operation, potentially reducing costs and improving efficiency. This scale is critical as the company advances plans for a vertically integrated Battery Anode Material (BAM) manufacturing facility in Queensland, aimed at supplying high-quality spherical purified graphite (SPG) products to the lithium-ion battery market.

Extensive metallurgical test work on the Burke deposit has demonstrated the ability to produce graphite concentrates exceeding 95% TGC, suitable for further processing into battery-grade anode materials. The company plans to replicate and extend this test work to Mt Dromedary samples, with infill drilling scheduled for Q4 2025 to upgrade and expand the resource base, particularly in the area bridging the two deposits.

Funding and Development Strategy Pivot

This acquisition replaces a previously proposed joint spin-out and initial public offering (IPO) of the graphite assets via Axon Graphite Limited, a subsidiary of Lithium Energy. Market conditions and consultations with the lead manager led to the decision not to proceed with the IPO. Instead, Lithium Energy is now exploring alternative funding and development pathways to bring the BAM business to fruition.

Executive Chairman William Johnson highlighted the strategic value of owning 100% of the combined graphite assets, emphasizing the enhanced control over project development and the potential to capture greater value through vertical integration. The company’s development roadmap includes constructing a BAM pilot plant to refine processing techniques and produce qualification samples for potential offtake partners.

Infrastructure and Location Advantages

The graphite projects are well positioned in North Central Queensland, with access to established transport infrastructure including nearby airports at Cloncurry and Mount Isa, and port facilities in Townsville. This logistical advantage supports potential export opportunities to key international battery markets.

Lithium Energy’s comprehensive work program also encompasses environmental and regulatory assessments necessary to secure mining leases and approvals for both mining operations and the BAM facility. The company is engaging with government bodies to explore funding support and incentives for critical minerals development.

Looking Ahead

With a robust high-grade graphite inventory and a clear strategic focus on battery anode material production, Lithium Energy is positioning itself as a significant player in Australia’s critical minerals supply chain. The coming months will be pivotal as infill drilling results, feasibility studies, and funding strategies unfold, shaping the future trajectory of the company’s integrated graphite and BAM ambitions.