Few floats were as successful or as well-timed this year as  Lithium Energy’s IPO in May.

Tapping into the rising passion for battery metals and the global energy transition and in a year dominated by the pandemic and fears for humankind’s ability to arrest global warming, it was Strike Resources’ (ASX:SRK) lithium/graphite spinoff that really came up with something unique.

While some companies focused on just one commodity like lithium, nickel, copper or cobalt, maybe with a smattering of exposure to others via by-products, Lithium Energy (ASX:LEL) went to market with twin pillars to lean on.

Brine most fertile and the height of graphite

On one side it has lithium, in the form of its Solaroz lithium brine project in the heart of South America’s Lithium Triangle, host to the most fertile lithium brine reserves in the world.

On the other, its LEL’s Burke graphite project in north Queensland, one of the highest-grade resources of graphite on the ASX at 16% TGC.

Both lithium and graphite are used in the two main battery technologies, NCM and LFP, and both have seen sharp price rises in 2021 amid supply shortages.

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Having listed at 20c in a $9 million IPO seven months ago, LEL is now trading at 72c, having traded as high as $1.23.

“We secured the battery minerals projects within Strike between  2016 and 2019,” LEL executive chairman William Johnson said. “Strike has been focussing on its core iron ore assets in over the last two years and with the growing interest in the battery minerals space last year, we could see a few global trends indicating that it was going to be a good time to potentially spin out these battery minerals assets into a new vehicle.

“We did the IPO in May this year, listed at 20 cents and it was very well received, reaching as high as $1.23 this year.

“And I think that clearly reflects the quality of our assets together with the very strong interest in the global energy transformation that’s happening from fossil fuels to renewables.”

“Lithium Energy is uniquely positioned to take advantage of this energy transformation, given that we’re the only ASX company that has direct exposure to the two most critical ingredients of electric vehicle batteries, which are lithium and graphite.”

Solaroz ready to fire in 2022

Exploration activities at Solaroz have yet to begin in earnest, as the Company is waiting for the final approvals required to commence its exploration program of geophysics and drilling, which it hopes to start in the first quarter of next year.

Solaroz comprises 12,000 hectares of prime lithium tenure directly next to $6bn Allkem’s Olaroz project (formerly known as Orocobre).

Very large indeed

LEL is excited to get on the ground and begin large-scale exploration at Solaroz next year, with drilling required to test its exploration target of 1.5-8.7Mt of lithium carbonate equivalent, comparable to the size of the JORC 2012 resource on Allkem’s concessions.

“The Solaroz project is really exciting because of its location,” Johnson said. “It’s located on the Olaroz Salar, which is where ASX listed Allkem (previously Orocobre) has been producing lithium carbonate for the last five years, we’ve got a very large land holding right next door to their concessions.

“All of the historical exploration work done by them and others on that concession indicates that the lithium rich brines they’re currently extracting lithium from extend underneath our tenements.

“So we’re looking forward very much to starting the work there. We’ve got a program of geophysics planned, starting early next year subject to getting all of our environmental approvals, to be followed by drilling.”

Let the sun do all the heavy lifting

Johnson sees the lithium brine industry, one of two major forms of lithium mining and processing along with Australian style hard rock mines, as having a great ESG investment profile.

“We’re fortunate in that Allkem/Orocobre has been operating there for four or five years,” he said.

“So they’ve learned a lot about the chemistry of the brine, and how they’re processing it. The great thing about these lithium brine projects is that they do have a very low carbon footprint compared to hard rock projects, because essentially, they’re the ultimate solar powered production facility.

“Once you pump up the brine from the subsurface aquifers, it sits in evaporation ponds and  the sun then does most of the work concentrating the lithium in the brine.

“So from an environmental perspective, there’s some very positive aspects of these lithium brine projects.”

Graphite test work to head further downstream

Burke is one of the most interesting graphite deposits in the world given the fact its Inferred resource of 6.3Mt at 16% true graphitic content (about 1Mt of contained graphite), with a higher-grade component of 2.3Mt at 20.6% TGC.

That’s astonishingly pure given most large-scale mines in Africa operate at a grade of around 5-6%.

But LEL is not only looking to mine and export the battery mineral. It wants to go further downstream, processing it into purified spherical graphite, a battery grade product that can generate 10 times the revenue of the raw material.

It has two advantages in that regard. Firstly, the deposit is located in North Central Queensland, with established transport infrastructure linking it to the new battery materials hub being proposed for the North West Queensland city of Townsville.

Secondly, LEL has started a partnership with the CSIRO to test and optimise the Burke product for its suitability to be converted to PSG, which could make LEL a highly sought after supplier of value-added battery anode material.

Johnson says Burke is one of the highest-grade graphite deposits held by an ASX company anywhere in the world.

“What’s really interesting and a very exciting opportunity that we’re looking at now is to not only just look at mining and selling the raw graphite or graphite concentrate from the project, but moving up the value chain and creating a much higher value product called purified spherical graphite and purified spherical graphite is what you use to put into batteries,” he said.

Purified spherical profit

“Typically, a graphite concentrate can sell for about US$500 a tonne, whereas purified spherical graphite can sell for 10 times that US$5000-6,000 per tonne.

“And so we’re very excited by the opportunity to potentially look at creating a manufacturing facility in or close to this Townsville battery hub to take our raw material and potentially process it into a much higher value material for use in the battery space.”

Exploration and particularly drilling will be big catalysts for LEL at Burke in 2022. Drilling is planned at a prospect to the south known as Corella, while purification and spheronisation test work will continue with the CSIRO.

“We’ve done some geophysics there and that looks highly prospective along with some surface sampling, which has shown some very promising results of surface graphite there,” Johnson said.

“So we’re looking to do some drilling there next year, and potentially do some more drilling at the main Burke concession.

“As well as that we’ll continue with the CSIRO test work to further optimise the processes that we would use to convert the mined graphite into high value products.”

EV market showing no signs of slowing down

Johnson is particularly buoyed by plans for the radical take up and production of EVs by the world’s largest vehicle manufacturers.

As of November the lithium chemical index was up an incredible 239.6% year to date according to Benchmark Minerals Intelligence. Its graphite index is up 17.4%YTD.

Johnson sees the conditions in the broader market to keep metals for lithium ion batteries well supported going forward.

“If you look at all of the announcements from car manufacturers, such as Volvo, Renault, Ford, they’re all saying that they’re going to convert anywhere between 50 to 100% of their vehicle production to electric by the year 2030,” he said.

“So that’s less than 10 years away. With the current sales of electric vehicles only accounting for a couple of percent of vehicle sales, that’s going to transition within 10 years to a much higher percentage.

“And so there’s an order of magnitude change going to occur in the raw materials required to build the batteries to support those fleets of electric vehicles.”


While other competitors in the green transport space include hydrogen fuel cell technologies, Johnson said lithium ion batteries remain the frontrunner.

“Whilst there are other technologies out there, I personally believe that lithium ion batteries are going to continue to be the dominant technology for electric vehicles and also grid storage batteries for quite some time to come,” he said.

“So we just see that there’s a tremendous growth potential out there for these key ingredients for batteries being lithium and graphite.

“And as I mentioned we’re well positioned to take advantage of that from our lithium and graphite projects.”




This article was developed in collaboration with Lithium Energy, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.