It all looks very positive to me. In particular:
In addition to the acquisition of an ownership interest in GLE, Silex retains its rights to future royalties under the exclusive license agreement between the parties.
The retention of the existing royalty agreement makes the new term sheet economically extremely attractive for SLX. For, even if Cameco increase their share in GLE to 75% (and SLX’s share decreases to 25% accordingly), SLX will receive 7%-12% royalty payments on Cameco’s 75% portion of GLE’s revenue in addition to their 25% share in GLE’s profits. This exceeds even my most optimistic expectations.
The Company’s balance sheet as at 31 December 2018 remains in a strong position with net assets of ~$40 million, including ~$29 million in cash and IQE shares of ~$11 million.
Cost control during 1H19 looks very good too. With the exception of the ~2mUS$ in contingent payments to GEH (assuming the GLE restructure goes through), which are additional to the reported balances and were to be expected, the cash burn run rate has been reduced to only 3.6mA$ pa. This, too, is better than I had expected. Note that the increase in value of the IQE shares since December 31st more than covers the contingent payments.
Incidentally, The fact that the reduction in operational expenses was concentrated under Consultants and professional fees, as opposed to Employee benefits, makes me think that there wasn’t much involved in terms of redundancy payments either.
If the GLE deal does go ahead as per the February 6th announcement, and the uranium market remains on track for recovery, I think it is fair to say that SLX has well and truly turned page here.
(20min delay)