I guess you are talking about emotions in regard to the SLX share price and in that respect the uranium spot may well have a large influence. My point is that the effect on "fundamentals" is in fact small. As I perceive it the opportunity 1 is the production of 5Mlbs/yr of UF5 from "tails" - the AISC as published by SLX is US$30/lb. The likelihood is that this will be sold by Cameco on the "term" market (85% of the uranium market) where the price is now "steady" at US$80.50/lb (the "spot" market is only 15% and NOT where Cameco operates). In addition the opportunity 1 product from the PLEF is UF
6 (NOT U
3O
8) which carries a premium (for conversion) of about US$40/kg (i.e ~US8/lb - see below) - the sale price is about US89/lb. This gives a margin US$59/lb or US$295m/yr overall (or for 51% $150m/yr + 7% revenue (.07*89*5,000,000) of US$31m) giving a total SLX margin of ~US$180m/yr for opportunity 1.
Then for opportunity 2 (LEU) for 5mlbs of NUF
6 as LEU (@ 4.4% 235UF6 (tails assay .1%
235UF
6) we need (using the Urenco calculator) 7lbs of NUF6 feedstock (i.e the 5Mlbs NUF
6 produces *lbs of 4.4% LEU) and roughly 4SWU/lb (i.e for 714,286Lbs 4.4%
235UF
6 we need 2,857,144SWU/yr) this yields an income (@ US$150/SWU) of US$428,571,600/yr. Assuming a 50% margin and 51% ownership this provides a margin to SLX of ~US$110m/yr + a 7% royalty of US30m/yr for a total of US$140m/yr (note that for a 6MSWU plant (as shown in SLX plans) this margin will roughly double)
So for both opportunities 1 & 2 SLX should receive an income of US$140m/yr (opportunity 2) + US$180m/yr (opportunity 1) = US$320m/yr. At a conservative P/E ratio of 10 this values the GLE shareholding of SLX at about US$3.2Bn or (for 236,875,501 shares) US$13.5/sh (or A$20.16/sh). To this we also need to add Zero spin Si & Medical Isotopes (MIST). The point I am trying to make is that the spot price of uranium has little impact on the "value" of SLX - please point out where my rough estimate (or calculation) are wrong. I have previously done a DCF but need to update the numbers.
