SILEX - Lasers From Down Under.
There is a reason Cameco owns 49% of the JV - with the option to buy 26% more.
EDIT Thursday May 19: Disclosure - I currently own ASX: SLX, and purchased those shares on the 19th of May 2022 (20th for Australia).
Enrichment is a tough business to get into: to my knowledge, there hasn’t ever been a commercially successful non-government backed enterprise. Calling back to my last post all about Centrus ($LEU), you will recall how the market and world events wasn’t really all that kind to them. Silex in many ways was fell prey to the same industry shift to underfeeding (basically, working the UF6 harder). With the underfeeding era (the 2010s), both miners and unestablished enrichers were taken out, leaving the commercial prospects for laser enrichment technology basically dried up.
The first thing you need to understand about Silex is that, absent laws changing in Australia, the only place where this can be deployed and brought into operation is the United States. This is because of an agreement between the US and Australian governments; the effects of which being that both have officially classified the technology. In other words, you can’t just take this to the French.
Silex however is just the people who hold the patents, so they needed a partner for manufacturing. In the 2006, that was found with GE, (Soon after GE-Hitachi), creating the US entity Global Laser Enrichment (GLE). Cameco joined the JV in 2008 with a 24% share. But you know where this is headed: with no real market demand for enrichment, GE-Hitachi wasn’t exactly pouring in the money.
Recall the year 2016: Vogtle needed a miracle - VC Summer was about to be canceled - NuScale was in regulator purgatory (still is), and Westinghouse was close to, and soon would, declare bankruptcy. The writing was on the wall and it said nuclear power is dead. So in 2016, GE-Hitachi declared that they wanted out. An agreement was eventually reached, allowing Silex take up 51% of GLE, with Cameco increasing their stake to 49%, with Cameco having the option to buy another 26% of GLE at the fair market value. Regardless of ownership, Silex is entitled a royalty of 7% in perpetuity of any GLE revenue, as well as their 51% share of bounty of the enterprise.. should it ever happen.
And I am decently bullish that it will. In contrast to what we might get from Centrus, Silex/Laser enrichment does the following:
1 - Literally solves all of the DOE’s problems.
2 - It puts the United States back in the drivers seat as the global leader of the most critical part of the nuclear supply chain: enrichment.
Having said that - some of the advantages of the technology are so good that there is some potential for the deployment, depending on the scale, to have an impact of on the uranium bull thesis. So having said all that, let’s get into it.