Lithium Energy and NOVONIX To Spin Out Queensland Graphite Assets

Lithium Energy Ltd (ASX: LEL) and NOVONIX Ltd (ASX: NVX) have agreed to merge their adjoining Queensland graphite assets into a spin-out company, Axon Graphite Ltd, through an initial public offer (IPO).

Axon Graphite Ltd will trade on the ASX as a vertically integrated mine-to-mine-to-battery anode Material (BAM) product manufacturing company.

Substantial inventory of high-grade natural graphite

NOVONIX’s Mt Dromedary Graphite Project directly adjoins Lithium Energy’s Burke Graphite Project, with the merger creating a substantial, world-class inventory of high-grade natural graphite comprising:

  • Burke Deposit: Total mineral resource of 9.1 million tonnes (Mt) at a grade of 14.4% total graphitic carbon (TGC) for 1.31Mt of contained graphite; and
  • Mt Dromedary Deposit: Total mineral resource of 14.3Mt at 13.3% TGC for 1.908Mt of contained graphite.

Axon Graphite will also own Lithium Energy’s Corella Graphite Deposit, which holds an inferred resource of 13.5Mt at 9.5% TGC for 1.3Mt of contained graphite.

Location of Lithium Energy’s Burke and Corella Graphite Projects and NOVONIX’s Mt Dromedary Graphite Project in Queensland.

$20 Million IPO

Axon Graphite plans to raise $20 million under the IPO, with a minimum subscription of $15 million and a maximum subscription of $25 million at $0.20 per share.

The company will seek admission to the ASX.

Lithium Energy and NOVONIX will both retain upside exposure through each having a 22.2% to 28.6% (based on a raising of $15 to $25 million) cornerstone equity shareholding in Axon Graphite post IPO.

The Axon Graphite IPO will contain (pro-rata) priority offers to existing eligible Lithium Energy and NOVONIX shareholders.

Significant operational synergies

 Lithium Energy Executive Chairman William Johnson said: “The consolidation of the adjacent high quality Burke and Mr Dromedary graphite deposits will create a world-class inventory of high-grade graphite to support plans to develop an Australian-based, vertically integrated battery anode material (BAM) business.”

Since the Mt Dromedary and Burke graphite deposits form part of the same graphite mineralisation zone, there is potential for significant operational synergies and economies of scale to be gained by combining these two deposits.

Vertically integrated BAM business

Axon Graphite’s vertically integrated BAM business envisages mining graphite initially from the combined Mt Dromedary/Burke Graphite Deposit and producing a +95% TGC graphite flake concentrate at the mine site.

The flake concentrate will then be transported to a proposed BAM Manufacturing Facility in Queensland for processing by first mechanically shaping and spheronising the flakes.

Then chemically purifying the spheronised graphite to form Spherical Purified Graphite (SPG), a high-quality BAM product.

It is proposed that this SPG product will be sold as a battery anode material for use in lithium-ion battery manufacturing or for battery energy storage solutions.

Articles of Interest