Silex Systems Ltd (ASX: SLX) is an interesting company in that it's aspiring to be part of the uranium supply chain, but on the technology front rather than the mining front.
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Uranium technology delivering results
The company is focused on commercialising the Silex laser isotope separation technology, which can be used to produce different grades of fuel for the nuclear power industry.
The company held an investor day recently where it invited analysts, including those from Shaw and Partners, to visit its facilities at Lucas Heights in New South Wales.
Shaw and Partners said in a note to clients following the visit:
Silex management outlined the progress post achieving Technology Readiness Level 6 (TRL-6) last year. The first phase of commercialisation is reprocessing tails at the Paducah facility in Kentucky. Silex is on track for first production of uranium in 2030. On the site visit we also saw the zero spin silicon enrichment project in dry commissioning.
The Silex technology is owned by a joint venture company, Global Laser Enrichment (GLE), which is 51% owned by Silex and 49% owned by uranium major Cameco.
Shaw and Partners said the achievement of TRL-6, "started the clock ticking on Cameco's option to acquire a 26% stake in GLE to move to 75% ownership''.
They added:
Cameco now has 30 months to make a decision. We note that Cameco is making increasingly optimistic comments about GLE on its result calls. We hosted a call with Cameco early this week at which Cameco repeated its optimism on the GLE technology.
Shaw and Partners said the Silex technology had the potential to re-enrich about 150 million pounds of previously processed uranium tailings back into mine-grade uranium.
They added:
One way to think about this opportunity is that (the Paducah facility) I will be a 5Mlb/yr uranium mine producing uranium at a cash cost of less than US$30/lb. For reference, Paladin's Langer Heinrich operation is expected to produce 5-6Mlb of uranium at a cash cost in the high US$30s/lb once at full operation.
Silicon also a potentially large oppportunity
The company also announced on 29 June the construction of the world's first laser-based silicon enrichment plant.
The company said:
Enriched silicon-28 in the form of high-purity Q-Si is required for next-generation silicon-based quantum computers being developed by advanced semiconductor companies around the world. Quantum computers, the first of which are expected to be commercialised by the end of the decade, could revolutionise the computing industry by providing an immense increase in computing power, compared to today's most advanced classical chips made by companies such as Nvidia, Intel, IBM and AMD. Quantum computing is therefore expected to underpin a transformational performance uplift in the emerging Artificial Intelligence (AI) industry.
Shaw and Partners has a price target of $12.80 on Silex shares compared to $5.74 currently.
The company is valued at $1.59 billion.
