Lithium Energy and NOVONIX to merge graphite assets and spin-out Axon Graphite via IPO

Lithium Energy Limited (ASX: $LEL) has entered into an agreement with NOVONIX Limited (ASX: $NVX) to acquire its high-grade Mt Dromedary Graphite Deposit, which is located directly adjacent to and is a continuation of the graphite mineralisation within the Company's Burke Graphite Deposit, in Queensland. The merger will result in the formation of Axon Graphite Limited (Axon Graphite) through an IPO, creating a dedicated ASX-listed vertically-integrated mine to Battery Anode Material (BAM) product manufacturing company.

Executive commentary on the merger and IPO

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. We expect significant operational synergies and economies of scale will be gained from the consolidation of these adjacent graphite deposits. We are delighted also to have NOVONIX as a partner in Axon Graphite. NOVONIX has established an enviable position within the global battery industry and their experience and industry contacts will be of great value for Axon Graphite moving forward. Through a priority offer to Lithium Energy shareholders and Lithium Energy's retained interest in Axon Graphite (post IPO), shareholders will benefit from significant upside exposure to a dedicated Australian graphite business.

Summary of the merger and IPO

Lithium Energy and NOVONIX are set to merge their adjoining Queensland Graphite Assets into spin-out company, Axon Graphite Limited (Axon Graphite), through an IPO as a dedicated ASX-listed vertically-integrated mine to Battery Anode Material (BAM) product manufacturing company. The merger will create a substantial, world-class inventory of high-grade natural graphite, comprising the Burke Deposit, Mt Dromedary Deposit, and Corella Graphite Deposit. Axon Graphite plans to raise $20 Million through the IPO, with a minimum subscription of $15 Million and oversubscriptions of up to $5 Million. Post successful completion of the IPO, Lithium Energy and NOVONIX will each hold a 25% cornerstone equity holding in Axon Graphite. The Prospectus for the IPO is expected to be lodged within the next ~6 to 8 weeks.