Company: Silex Systems Ltd
Ticker: ASX:SLX | OTCQX:SILXY
Market Cap: 262M AUD
An essential part of the nuclear fuel cycle that most uranium investors know about, but don't have in their equity portfolio is the uranium enrichment process. Silex Systems Limited is an Australian technology company focused on the commercialization of the innovative SILEX laser enrichment technology which is co-developed by the United States of America and Australia and licenced to the US based Cameco/Silex joint venture Global Laser Enrichment. 43% of the global enrichment market market is controlled by Russian market leader Rosatom/TENEX. The invasion of Russia into Ukraine led to Geo political turmoil, sanctions and companies cutting ties with Russia. There was a trend to be less dependent on the east for a couple of years but this trend will likely be accelerated now. Silex developed the world's only 3rd Generation laser uranium enrichment technology. SLX is a picks and shovels play for uranium and also quantum computing. In this article I will give an overview of the uranium enrichment market, share my investment thesis for Silex Systems Ltd. and explain why I sold Centrus Energy (NYSE:LEU).
Structure
What is uranium enrichment?
In order for uranium to be used as reactor fuel, it is processed along the nuclear fuel cycle. An important and technically difficult process during the fuel cycle is uranium enrichment. 30% of the cost of nuclear fuel can be attributed to the enrichment process.
Source: Centrus Energy
U-235 (~0.7%) and U-238 (~99.3%) are the two main isotopes of uranium. However, it is the U-235 atom that has to be split (fission) in order to produce energy in nuclear reactors. Enrichment refers to the process of concentrating one isotope relative to the others. The enrichment level depends on the type of reactor that is operated. Today's commercial reactors require uranium to be enriched from 0.7% to 3-5% U-235. This fuel is called low-enriched uranium (LEU). For the newer generation of reactors called Advanced Nuclear Reactors or Small Modular Reactors (SMR) enrichment levels as high as 20% are required. This type of fuel is called high-assay LEU (HALEU). There is a common misconception that nuclear fuel can just be used to create atom bombs. This is of course not the case, as uranium used for nuclear weapons would have to be enriched in plants specially designed to produce at least 90% U-235.
Companies offering enrichment services sell these services in the form of Separative Work Units (SWU). SWU represent the effort needed to increase the U-235 concentration. As a rule of thumb, the higher the enrichment level the more SWU is required.
The dominant use of centrifuge technology for enrichment and the over supply of natural uranium since the downturn in the nuclear industry started in 2011 due to the tragic Fukushima incident, led to the phenomenon of underfeeding
The World Nuclear Association's (WNA) explanation of this concept:
"The utilities which buy uranium from the mines need a fixed quantity of enriched uranium in order to fabricate the fuel to be loaded into their reactors.
The quantity of uranium they must supply to the enrichment company is determined by the enrichment level required (% U-235) and the tails assay (also % U-235). This is the contracted or transactional tails assay, and determines how much natural uranium must be supplied to create a quantity of Enriched Uranium Product (EUP) – a lower tails assay means that more enrichment services are to be applied. The enricher, however, has some flexibility in respect to the operational tails assay at the plant. If the operational tails assay is lower than the contracted/transactional assay, the enricher can set aside some surplus natural uranium, which it is free to sell on its own account. This is known as underfeeding.
With reduced demand for enriched uranium following the Fukushima accident, enrichment plants have continued running, since it is costly to shut down and re-start centrifuges. The surplus SWU output can be sold, or the plants can be underfed so that the enricher ends up with excess uranium for sale, or with enriched product for its own inventory and later sale. The inertia of the enrichment process thus exacerbates over-supply in the uranium market and depresses SWU prices (from $160/SWU in 2010, the spot price in March 2016 was $60)."
To explain this in a more simpler terms: Imagine a juice maker who regularly buys a certain number of oranges to produce juice. He can squeeze them to produce juice and then sell the juice. Now imagine him squeezing some of the oranges a bit more than usual and thus having some excess oranges left. He could not only sell the juice but also sell the excess oranges to the market to generate additional revenue.
This additional supply that was sold in the illiquid uranium spot market was an additional factor that led to historically low uranium prices that are now even below the incentive price that is needed to bring new production online. However, there is also the opposite concept called overfeeding and which reduces the secondary supply quite drastically, leading to higher uranium prices.
Uranium enrichment market landscape
As mentioned above, uranium enrichment is a technically difficult and costly process. Due to the structure of the market and nature of the nuclear industry, the market is concentrated on very few companies which have built up a moat for themselves. The below table gives an overview (until 2020) of the companies & countries involved in uranium enrichment. The majority of enrichment is provided by Russian company TENEX. In light of the current war between Ukraine and Russia, the sanctions imposed on Russia (currently nuclear fuel is not on the sanction list) and the increasing number of western companies cutting ties with Russia, there could be a lot of disruption in this matrix in the coming months and years. The news change every day and on March 9th there were first reports that the USA weighs sanctions on Rosatom/TENEX. Utilities will most likely look to diversify their nuclear fuel supply out of Russia over time. This mid to long term shift in market dynamics is one of the reasons to analyze which companies will be able to benefit from this unexpected shift in demand distribution.
Note: The company USEC in the table is called Centrus Energy now. Areva is called Orano now.
Source: WNA
For better orientation, please find below an overview of the evolution of enrichment technology. The enrichment technology evolved from gaseous diffusion to centrifuges (currently the dominant technology). The 3rd generation technology is already in development. Silex Systems is currently the world's only company with access to this 3rd generation technology.
Source: Silex Systems Ltd
There are multiple private and public companies offering uranium enrichment services. I will give a short overview of them below but will not do a deep dive on each company.
Urenco is an international supplier of enrichment services and fuel cycle products for the civil nuclear industry. The company serves customers in 21 countries and is a public/private partnership. Two thirds of the company are owned by the UK & the Netherlands and the final third is owned by the utilities RWE & Eon (via their nuclear power plant business unit Preussenelektra). Urenco was founded in 1970 to grant Europe more independence from the USA. The company is highly profitable with a 64% operating profit margin and 1.7 bn in revenue. In 2008 Urenco initiated the U-battery project, which is an advanced/small modular reactor. The goal is to have U-Battery operating by 2028.
Even though Urenco is currently not publicly listed, there were plans by UK & RWE/Eon to float their third of the business as part of an IPO that would generate a market value of € 8-12 bn. Unfortunately, the German federal government had been negotiating with the UK and the Netherlands about a legal framework which ensures that "the sovereign non-proliferation rights of SANP (SANP = Security and Non-Proliferation) can continue to be fully enforced against investors and buyers in a future-proof manner. However, no viable solution acceptable to all three states had been found and the IPO was shelved in 2016.
With the renewed excitement about nuclear energy some might even call a nuclear Renaissance, I assume that an IPO could be on the table again in the coming years. For RWE and Eon nuclear energy is not of strategic interest and the money raised by an IPO would offer them new budget for renewable energy projects.
Recently the SMR company NuScale announced its plans to go public via SPAC in Q2 2022. I wrote about it here. This IPO might be the kick off of a series of advanced nuclear tech company IPOs with TerraPower (the advanced nuclear reactor company owned by Bill Gates and Warren Buffett) potentially being next in line.
Urenco is definitely a company to keep an eye on. Look out for signs of it going public during the next 2-5 years.
Orano formerly AREVA S.A.
Orano is a french company with more than 16,500 employees worldwide. The company was listed on the Paris stock exchange in the past but since AREVA's restructuring in 2016 the company is private and now called Orano. They are active in the areas of uranium extraction, enrichment, reprocessing and disposal.
As seen in the world enrichment capacity graph above, Rosatom is the clear market leader in global uranium enrichment services with a market share of 43% (2020).
Rosatom is a state owned corporation specializing in nuclear energy, nuclear non-energy goods and high-tech products. By a decree of Wladimir Putin in 2007 Atomenergoprom was established. With the founding of Atomenergoprom, the most important nuclear companies in Russia were brought together in a state-owned enterprise. 94.4% of shares in Atomenergoprom are owned by Rosatom, the remaining 5.6% are owned by the Ministry of Finance of Russia. The organization comprises more than 350 enterprises, including scientific research organizations, the nuclear weapons complex, and the world's only nuclear icebreaker fleet. One of these enterprises is Techsnabexport (trademark - TENEX) which is the world’s largest exporter of initial nuclear fuel cycle products, covering a significant share of the worldwide uranium enrichment services demand. TENEX was an essential stakeholder in the signing of the 1993 Megatons to Megawatts Program in which highly enriched uranium extracted from Russian nuclear warheads was converted into low-enriched uranium for use by American nuclear power plants. The agreement lasted until December 2013 and led to 500 metric tons of bomb-grade highly enriched uranium being recycled into more than 14,000 metric tons of low enriched uranium. Half of all energy produced by US nuclear power plants was provided by the fuel from this program. This was another reason for the oversupply and constant drop in uranium prices.
Fast forward to March 3rd 2022: Several US senators introduced the "Ban Russian Energy Imports Act" which (if approved) would allow them to declare a national emergency and essentially prohibit imports of Russian energy commodities, including crude oil, petroleum products, liquefied natural gas and coal. (Enriched) uranium is not on the list of prohibited energy commodities (yet). Moreover, in recent years U.S. utilities purchased about 20% of enriched uranium from Russia according to the EIA. It can be assumed that importing nuclear fuel from Russian entities will not be prohibited short term, but there is of course the danger that Russia decides to drain the west of energy supplies. Regardless of what will happen short term, western utilities & government agencies woke up to the reality that security of energy fuel supply includes diversifying away from TENEX/Russia mid to long term, opening an opportunity window for US based companies Centrus Energy and Global Laser Enrichment (Silex Systems). Even though both don't produce LEU/HALEU yet, contracts in this industry are negotiated and signed long term and involve long lead times.
It is important to highlight that (at the moment at least) Centrus Energy is dependent on TENEX for the majority of supply of their current business (the HALEU business is in the development stage). This is because after Megatons to Megawatts concluded, Centrus Energy and TENEX announced reaching an agreement to modify the terms of their current long-term supply contract and to extend their contractual relationship through 2026. In this amendment the original commitment to purchase 17 million SWU from 2016 to 2022 was reconfirmed along with additional quantities to be purchased in those years.
Centrus Energy (NYSE:LEU) formerly USEC Inc.
Centrus Energy (Centrus) is the company that made me aware of the investment opportunities along the supply chain of the nuclear industry. Most investors focus on natural uranium itself. However, as laid out in the intro there are moats built into enrichment service technology which allow for a sustainable business with constant cash flows, growing margins and thus a more long term investment. The miners are usually a more speculative investment which you enter during the bust cycle, ride up during the boom cycle and sell close to the top. Utilities need enrichment services regardless of the U3o8 price being up or down. So enrichment technology is a great picks and shovels play on the renaissance of nuclear power and the advent of Small Modular Reactors (SMR).
As mentioned above, most Centrus investors might not be aware of the fact that Centrus' current business could be described as acting like a broker for TENEX, Orano and other LEU providers.
Source: Centrus Energy investor presentation
Centrus used to be a LEU producer in the past, operating gaseous diffusion plants in Piketon and Paducah. United States Enrichment Corporation (USEC) emerged from the Department of Energy (DOE) as a state owned uranium enrichment enterprise in 1992. By 1998 USEC was privatized through an IPO. USEC operated two gaseous diffusion facilities in Ohio & Kentucky, but after the US Nuclear Regulatory Commission (NRC) assumed regulatory authority over the Piketon (OH) facility in 1997, USEC ceased uranium enrichment operations in Piketon and consolidated operations in Paducah (KY) in 2001.
There were plans for a demonstration gas centrifuge plant, the American Centrifuge Plant (ACP), which were derailed because the DOE did not provide the loan guarantees USEC expected. The fallout led to USEC filing for chapter 11 bankruptcy and emerging from bankruptcy proceedings with a new name, Centrus Energy Corp in September 2014.
The technology for ACP is still in Centrus' hands, while full control of the former Paducah gaseous diffusion enrichment plant was formally handed back to the DOE and deactivated. In parallel, discussions between the Cameco / Silex joint venture - "Global Laser Enrichment" (GLE) and the DOE started about building a facility at the site for the enrichment of high-assay uranium tails from DOE's own inventory.
Centrus focused on progressing the ACP but struggled to secure financing due to the uncertainty in the nuclear energy market following the Fukushima incident, which was still fresh on people's minds even in 2014.
HALEU - The game changer for Centrus & Silex/GLE
"Just 750 grams of HALEU, or about 3 tablespoons, can meet your electricity needs for life" Centrus Energy
Source: Centrus Energy investor presentation
Uranium fuel needed for most U.S. advanced reactors is enriched up to 20% and called HALEU. The efficient fuel consumption allows to achieve smaller designs that get more power per unit of volume. Developers of nine of the ten advanced reactor designs selected for funding under the Department of Energy’s Advanced Reactor Demonstration Program (ARDP), including the two demonstration reactors by X-energy and TerraPower, are expected to operate on HALEU. Based on the announcement dated Nov 2nd 2021 X-energy and Centrus announced that the preliminary design of X-energy’s TRISO-X Fuel Fabrication Facility has been completed and that the companies have signed a contract for Centrus to continue its work as the project enters its next phase. Centrus is working with the DOE, as the department’s plan is to establish a secure domestic supply of uranium metal fuel and HALEU fuel as well as tristructural isotropic particle (Triso) fuel for the deployment of advanced reactors. On June 11th 2021 the U.S. Nuclear Regulatory Commission (NRC) approved Centrus’ license amendment request to produce HALEU at the Piketon, Ohio, enrichment facility. The Piketon plant is the only U.S. facility licensed to enrich uranium up to 20 percent. This first step in getting a domestic source of HALEU enrichment up and running is critical to the future success of advanced reactors in the United States and to reduce the dependency on Russian fuel supply.
Source: Centrus Energy investor presentation Sept 2021
As you can see below the demand for HALEU is expected to be quite high. This new development could be one of the major differences to the last uranium bull market (2004-2007) that ended in a massive bust. The new generation of reactors are more widely accepted and might usher in a sustainable nuclear renaissance.
Source: Centrus Energy investor presentation
In my private portfolio I held both Centrus Energy and Silex. Both are a play on HALEU and the US gaining back nuclear leadership. Centrus has the advantage of already having received the NRC approval to produce HALEU in the US and the relationship with the DOE. Looking back on history, this relationship did not always lead to success for Centrus and I usually don't like having my investment case tied to the plans of a government agency. My reservations were confirmed in Centrus latest 10-K filing (3/11/2022). The DOE’s HALEU demonstration project contract signed between Centrus and the DOE was planned to head toward operation in 2022. However, comments in the 10-K and the Q4 2021 earnings call detail that this contract will end in June 2022 without any HALEU production.
"The DOE elected to change the scope of the HALEU Contract and move the operational portion of the demonstration to a new, competitively-awarded contract that would provide for operations beyond the term of the existing contract. [] While the existing contract ends on June 1, 2022, the DOE has unilaterally changed the scope of the existing contract and plans to compete the operational portion of the demonstration in a new, competitively-awarded contract, with operations to begin in mid-2022 Centrus believes it is well-positioned to compete for a follow-on contract to operate the machines in Piketon but there is no assurance that DOE will award such a contract to the Company."
In addition, an important government agency program for the nuclear supply chain is the US DOE's "HALEU Availability Program" and as you will read below, Silex has applied for this RFI. Centrus is now in a situation where they have to pitch in a RFP against competition that is already showcasing the next generation of enrichment technology. Moreover, their current business is under severe danger due to the dependency on supply from TENEX. Based on this red flag I sold my Centrus position this week and scaled into Silex.
Silex has multiple benefits compared to Centrus, as it is the only company currently developing the new generation of enrichment technology. The NRC approval is definitely important, but I assume that they can apply for this when the time is right. Moreover, Silex has a joint venture with Cameco (the biggest uranium producer in the western world). This JV has multiple benefits and offers utilities the option to fulfill all their nuclear fuel cycle needs (natural uranium, conversion & enrichment) from a vertically integrated provider. Please find my investment thesis for Silex below.
Silex Systems/Global Laser Enrichment company overview
Silex is the abbreviation for the "Separation of Isotopes by Laser EXcitation" process
invented in 1988 by Dr, Michael Goldsworthy and Dr Horst Struve at the Lucas heights facility south of Sydney, Australia. The company listed on the ASX in 1998 during the hype of the DotCom bubble and when USEC still was the biggest enricher of civilian grade uranium. Based on the Agreement for Cooperation between the Government of Australia and the Government of the United States of America signed in 2000, the development partnership of the Silex technology between the USA and Australia regarding the SILEX technology for uranium enrichment was closed. This was followed by the formation of Global Laser Enrichment (GLE) in 2006 to commercialize the SILEX process, starting with the Test Loop Program in Wilmington. GLE is a US based company.
GLE's commercial pathways are
• Enriching DOE tails to produce uranium (DUF6, NUF6 )
• Addressing higher enrichment needs (HALEU)
• Mature into a commercial SWU supplier (LEU)
2008 marked a significant milestone on that journey for GLE, as Cameco acquired 24% equity interest in the company. Cameco is the largest western uranium producer with operational capacity to produce more than 53 million pounds of uranium concentrates annually and 455 million pounds of proven and probable mineral reserves.
During the following years GLE received the first and only US NRC license for construction and operation of a commercial scale laser enrichment facility (2012) and completed “Phase 1” (technology validation at prototype scale) of its multi-phase technology development and commercialization plan (2013). A landmark agreement towards commercialization was signed in 2016 to buy and re-enrich over 200,000 tons of depleted uranium (DUF6 inventories) from the DOE over a 40-year period. On Jan 31st 2021 as part of an ownership restructuring Cameco increased its interest in GLE from 24% to 49% and negotiated the option to attain a majority interest of up to 75%. Based on Cameco's moves since 2008, it is obvious that GLE is a strategic asset for Cameco and that it could be a company they fully acquire once it is in commercial production. It is part of Cameco's long term strategy to align themselves with Canada's and the US' interest in developing advanced nuclear/SMR technologies that need a stable source of North American-based uranium enrichment in order to be de-risked. Currently there is no source of readily HALEU supply with exception to supply coming from Russia. In December 2021 the DOE published a RFI for the HALEU availability program to
address the lack of domestic HALEU production capacity. GLE actually announced on Feb 15 2022 that they had written a response to the RFI and are awaiting to be invited to participate in the sequential RFP. Many investors are unaware that Centrus' first contract with the DOE is running out in June 2022, they have not completed the demonstration and the new, additional RFI has competitors participating that offer more advanced technology than Centrus' centrifuges.
Apart from being the new 3rd gen technology, what I like about Silex's approach is that their business is de-risked through the multiple application possibilities of their technology.
Technology
The SILEX Laser Isotope Separation (LIS) technology initially was investigated as LIS techniques for several stable elements, including Chlorine, Molybdenum, Carbon, Oxygen and Silicon. Being the single largest commercial isotope market in the world, activities also focused increasingly on Uranium enrichment. Silex is currently pursuing two applications of the SILEX LIS Technology (I will cover the second one only briefly).
Silex Uranium Enrichment
The SILEX technology is a unique laser-based process that has the potential to economically separate uranium isotopes and can be applied for the production of uranium in several different forms including LEU, LEU+ (5-10%), HALEU and Natural grade uranium (Unat). Unat is produced via enrichment of DOE inventories of depleted tails through the Paducah Laser Enrichment Facility (PLEF) project. Even though HALEU has the potential to increase significantly in demand, currently the US and other western entities challenges lie in securing UF6 and LEU supply (that is not of Russian origin).
Highly selective and efficient –ability to fine-tune the process to excite and separate U235 with higher efficiency compared to centrifuge technology
Modularity/flexibility –greater flexibility to produce wide range of fuels for next generation SMR’s (HALEU) as well as installed base (LEU)
Lower capital costs –laser enrichment capacity is expected to be deployed at lower cost per SWU than gas centrifuge technology
Bolster U.S. competitive position–potential to leapfrog centrifuge technology and support re-emergence of US advanced nuclear technology leadership
Source: Silex investor presentation
Currently Silex/GLE are developing the PLEF project in Paducah capable of producing up to 2,000 tonnes of natural UF6 (approximately 5 million pounds U3O8 equivalent) per year for approximately 30 years, which would rank in the top ten of current uranium mines by production volume. The commercialisation timeline can be found below.
Source: Silex investor presentation
Zero-spin silicon for Quantum computing
In conjunction with project partners Silicon Quantum Computing Pty Ltd (SQC) and UNSW Sydney (UNSW) Silex launched a new R&D project to develop a process for the commercial production of high-purity ‘Zero-Spin Silicon’ (ZS-Si). ZS-Si is a unique form of isotopically enriched silicon required for the fabrication of next generation processor chips which will power silicon-based quantum computers. By producing ZS-Si Silex would be able to supply SQC with this material needed for their efforts to commercialise silicon-based quantum computing technology in conjunction with UNSW.
In January 2022 Silex reached an important milestone and successfully demonstrated using the SILEX laser isotope separation technology for the production of ZS-Si with a prototype-scale facility. This resulted in the verification of the efficiency and scalability of the silicon LIS technology and the underlying economics of the process.
Management
Key people of the team I would like to highlight. Dr Goldsworthy is the founder of the company and still CEO to this day
On Oct 14th 2021 Helen Cook was appointed as a director. She is an evangelist for nuclear power and with her experience and government relations, should be a critical director in the commercialization phase.
GLE is also bolstering their executive team with the addition of James Dobchuk as the President and Chief Commercial Officer on June 14th 2021. He formerly was an Executive Director at Cameco Inc. engaged in key US-based strategy, corporate development, project management, government and industry relations activities,
Financials & share structure
Silex generated marginal revenues during the last years and for the purposes of this article I will evaluate Silex like a pre-revenue company.
As at 31 December 2021, the Company’s balance sheet had total assets of $57.8m and net assets of $55.0m, which included $49.2m in cash and term deposits
In Oct 2021 a capital raising was completed with led to net Placement proceeds of ~$31.4 million plus Share Purchase Plan ~$7 million.
Share structure
Common shares: 204,549,989
Insider ownership: 4.26%
Dr Michael Goldsworthy - CEO holds 2.97% of the common shares.
Source: SeekingAlpha
Valuation
SILEX closed a "Commercialisation and Royalty Agreement" with GLE as part of the JV contract. This agreement gives GLE the exclusive worldwide license for the use of SILEX laser technology for uranium enrichment. The license agreement includes US$20 million in payments to Silex triggered by commercial development milestones. However, where things get really interesting are the royalty terms:
Perpetual royalty of 7% (min.) on GLE’s enrichment SWU revenues from use of SILEX for production of natural and enriched uranium
Royalty and milestone payments are in addition to any equity based distribution of profits payable from GLE’s commercial operations
As Cameco will be the main shareholder of GLE and most likely acquire it fully, investing in Silex could be compared to investing in a royalty company. The major benefits of a royalty company are the limited operational risks combined with a steady royalty stream. I wrote about this topic in my article about Carbon Streaming Corp.
For a high level calculation I will use Urenco's revenue as projection for GLE and assume 75% ownership of Cameco.
Revenue: 1.7bn
25% of revenue & 7% royalty: $ 544M
Price/sales: 2
Market cap: $ 1.1bn
Current MC: $180M
Potential: 6 bagger
All USD
This doesn't include potential zero-spin revenues and it is important to keep in mind that GLE will most likely have higher margins than Urenco, as they will most likely have access natural uranium at very low prices via Cameco.
Risks
Silex is a development stage company which is progressing fast but holds certain risks. Before investing in Silex it is important to be aware of these risks and to position size accordingly.
Project development is to a certain degree dependent on winning DOE RFPs. Could be a long winding process with no guarantee of success.
Technology risk
Nuclear accident / war
Competition catching up
Dilution
Conclusion
Rating: Bullish
Silex is a good choice for investors that don't want to be involved in mining, but still want to invest in the nuclear renaissance, the nuclear fuel cycle and the trend of SMR/Advanced Nuclear.
Short term Silex will trade based on the uranium market and one can expect volatility based on the moves in the uranium spot price and investor sentiment. Longer term Silex should decouple from uranium stocks, as they will likely pull back when the blow of top has happened. Silex has the advantage of its fundamental business which makes the stock one that investors could even hold after the uranium bull run. During the last uranium bull run we didn't have the new technology of SMR/advanced nuclear and Fukushima made any sentiment change back to the excitement of the 60s obsolete. Times have changed and with the move towards zero carbon and zero emissions nuclear is an important part of the solution.
Keep all of this in mind as SLX will run up a bit with the uranium miners, but the real fundamental run will come later down the road based on their UF6 & LEU (first) and HALEU (later) business going into commercial scale. The quantum zero-spin technology can be seen as optionality and de-risks the investment case, as it is most likely not valued into the current market cap yet.
In summary,
World's only 3rd gen uranium enrichment technology
GLE is a US based company
Operating the Paducah facility previously operated by Centrus
Minimum potential: 6 bagger
Picks and shovels play on the uranium bull market and quantum computing
JV with Cameco: Vertically integrated nuclear fuel cycle provider
Facility in the US playing the geopolitical card
Strategic importance for US based UF6, LEU and HALEU has increased since the Ukraine / Russia war
Business model: Royalty on uranium enrichment
SLX is a 1.5% position of my overall equity portfolio and 4% of my uranium portfolio. Based on future progress, I will scale into my target position over time or sell the position. This will be depending on management execution.
In closing, some food for thought:
"beginning at age 20, concentrating his business on oil refining. Rockefeller founded the Standard Oil Company in 1870. Rockefeller's wealth soared as kerosene and gasoline grew in importance, and he became the richest person in the country, controlling 90% of all oil in the United States at his peak"
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Sources:
Silex Systems corporate presentation: https://clients3.weblink.com.au/pdf/SLX/02491085.pdf
GLE presentation Nov 2021 https://www.gle-us.com/wp-content/uploads/2021/12/NEI-Conference-Slides-1.pdf
Centrus Energy corporate presentation https://investors.centrusenergy.com/static-files/058b474a-c135-4600-a84b-e9908864a7af
U-Battery https://www.u-battery.com/about
Urenco old IPO plans https://www.udo-leuschner.de/energie-chronik/170103.htm
Rosatom wikipedia page: https://en.wikipedia.org/wiki/Rosatom
Centrus & TENEX 2016: https://www.centrusenergy.com/news/centrus-and-tenex-agree-on-decade-of-reliable-supply/
Centrus Energy Wikipedia https://en.wikipedia.org/wiki/Centrus_Energy
GLE history https://www.gle-us.com/about-us/
SLX 2021 annual report https://clients3.weblink.com.au/pdf/SLX/02412713.pdf
Disclaimer: This blog post is purely my personal opinion and is not financial advice. Please do your own research, before taking investment decisions. I am long Silex Systems. No payment was received to write this article. Investments in securities and other financial instruments always involve the risk of loss of your capital.The forecast or past performance is no guarantee of future results.