>
It doesn't work because the %1 doesn't refer to the transcoded WAVE file.
Instead of
lame ... %1 "%~dpn1.mp3"
use
lame ...
"%~dpn1.wav" "%~dpn1.mp3"
See
Path Manipulation in a Batch File
BTW, using
"%~dpnx1" in place of
%1 enforces quote wrapping instead of trusting the OS to do it.