Lithium Energy is selling its Queensland graphite projects for $20 million to M Battery Materials, which plans an ASX listing focused on battery minerals. Shareholders may receive MBM shares in-specie, gaining direct exposure to a growing battery materials platform.
- Sale of Burke, Mt Dromedary, Corella graphite projects for $20 million
- Consideration split $5 million cash and $15 million MBM shares
- MBM targets $15 million IPO to list on ASX as battery materials specialist
- Lithium Energy shareholders to receive MBM shares via in-specie distribution
- Transaction subject to due diligence, ASX and shareholder approvals
Strategic Sale to Specialist Battery Materials Player
Lithium Energy Limited (ASX:LEL) has agreed to sell its entire stake in three high-grade Queensland graphite projects, Burke, Mt Dromedary, and Corella, for a total consideration of $20 million. The deal with M Battery Materials Pty Ltd (MBM) includes $5 million in cash and $15 million in shares, positioning MBM as a significant player in the battery materials sector.
MBM plans to raise a minimum of $15 million through an Initial Public Offering (IPO) and list on the ASX as a dedicated battery materials company. The company’s focus will be on developing and supplying critical minerals like graphite and vanadium, essential to the global energy transition. This move leverages MBM’s existing Queensland assets, including the nearby Yambungan Graphite Project, creating a geographically consolidated portfolio.
Shareholder Exposure via In-Specie Distribution
Lithium Energy intends to distribute the $15 million worth of MBM shares directly to its shareholders through an in-specie distribution, subject to ASX escrow conditions and shareholder approval. If no escrow is imposed, shareholders could receive the full parcel of MBM shares before MBM’s ASX listing, effectively granting them direct exposure to a larger, vertically integrated battery minerals business.
This strategic securitisation aims to attract specialised financial and technical support to scale the graphite assets into a vertically integrated mine-to-battery anode material (BAM) manufacturing operation. The in-specie distribution also allows Lithium Energy shareholders to maintain exposure to the graphite assets without retaining them on Lithium Energy’s balance sheet.
The transaction is conditional on multiple approvals, including due diligence completion by 8 June 2026, ASX’s acceptance of MBM’s listing suitability, and Lithium Energy shareholder approval for both the sale and share distribution. If escrow is imposed on the consideration shares, Lithium Energy will seek approval to distribute 75% of the shares post-escrow.
High-Grade Graphite Assets with Growth Potential
The graphite projects boast a combined JORC mineral resource of approximately 4.42 million tonnes of contained graphite, with Burke and Mt Dromedary deposits featuring grades above 14% total graphitic carbon (TGC), well above many global peers. Recent drilling programs at Burke and Mt Dromedary have focused on resource upgrades, with initial assays showing promising thick, high-grade graphite mineralisation. These efforts are part of Lithium Energy’s broader strategy to enhance resource confidence and scale.
Metallurgical test work on Burke graphite has demonstrated high purity and recovery rates, confirming its suitability for battery anode material production. This technical foundation supports MBM’s ambition to accelerate development towards BAM production, leveraging its integration within the M Resources Group ecosystem, which brings expertise in resource development, supply chains, and finance.
Governance and Future Capital Structure
Post-transaction, Lithium Energy shareholders will collectively hold about one-third of MBM’s issued capital, assuming a $15 million IPO at a $0.50 share price. Lithium Energy will also nominate a director to MBM’s board, with its Chairman William Johnson set to join as a Non-Executive Director following due diligence completion.
MBM’s leadership includes Matt Latimore, founder of M Resources, who will serve as Non-Executive Chairman, and Gerhard Redelinghuys, former CEO of Bowen Coking Coal, as Managing Director. Their combined experience signals a strong management team focused on scaling battery minerals assets.
This transaction builds on Lithium Energy’s recent activities, including resource upgrades and drilling campaigns at Burke and Mt Dromedary, highlighted in recent assay releases and resource announcements. It also complements Lithium Energy’s broader portfolio expansion efforts as it prepares for a substantial exploration push and ASX relisting after a suspension period.
Bottom Line?
The deal offers Lithium Energy shareholders a direct stake in a focused battery materials company, but the timing and extent of share distribution hinge on ASX escrow decisions and shareholder votes.
Questions in the middle?
- Will ASX impose escrow conditions that delay or limit shareholder exposure to MBM shares?
- How will MBM’s IPO pricing and capital raise size impact Lithium Energy shareholders’ effective ownership?
- What are the potential tax implications of the in-specie distribution for Lithium Energy shareholders?