NOVONIX (ASX:NVX) said it is divesting its unit, MD South Tenements, holder of contractual interests in the Mt Dromedary natural graphite Project in Queensland, for AU$2 million cash following a share sale and purchase agreement with Lithium Energy (ASX:LEL), according to a Thursday Australian bourse filing.

Lithium Energy has also repaid AU$250,000 advanced by NOVONIX under an initial public offering (IPO) funding deed with Axon Graphite, which is NOVONIX's contribution towards 50% of the IPO related costs incurred by Axon Graphite, the filing added.

"With the sale of the Mt Dromedary asset, we will be focusing our efforts on the production of synthetic graphite, which uses petroleum coke as a feedstock. Synthetic graphite is the preferred anode material for lithium-ion batteries due to improved cycle life and charge rate performance," said Chief Executive Mike O'Kronley.

The company will begin shipping commercial-grade synthetic graphite from its Riverside facility later this year, with mass production starting next year for its lead customer, Panasonic.

The company's shares rose 1% in recent Thursday trade.