Share price, page-1438

From what MG has said (hope I recall it correctly) "fair market value" should be the NPV value and I would assume that they have pre-agreed many of the factors (i.e the DCF interest rate etc); i guess other factors will come from the TRL/6 trials (e.g enrichment/depletion factors and thoughput). MG has said the royalty (which impact the return to GLE - but is additional to SLX) is based upon the capex and of course the amount of capex required with depend a lot on the throughput of each stage in the cascade and power required both for the lasers (these will have a low efficiency) and the pressurization of the UF6 through the separator and recovery of the carrier gas. IMO the efficiency of the laser will be major factor - if they are still using multiplexed CO2 lasers (with raman shifter) then to power efficiency (e.g the power required to produce the 16 micron IR at sufficient fluence) is likely to be poor. If they have gone to Quantum Cascade Lasers (QCL's) then it will be much better and better still if they are using vertical-cavity surface-emitting lasers (VCSEL) - again probably pulse lasers multiplex to form a (near) continuous 16 micron beam; problem is that we do not know the latest state of this technology (but of course SLX and Cameco do) but should not be contentious. MG has said that the Beam Contol System (BCS) works well so power wasted lack of beam continuity should be minimal (this will help throughput and enrichment/depletion factors). MG has said that the enrichment factor is between 2 & 20 (centrifuge about 1.3) and inferring some numbers back from a report in 2016 (the Hatch report for the SA Government "royal commission") it would appear to be about 5 but this may well have changed since 2016.

MG has also said that if the parties (SLX & Cameco) that there is provision in the option agreement for a third party to arbitrate the "fair value" (no doubt based upon experimental results from the TRL/6 prototype tests). Since the TRL/6 tests will be verified by an "independent expert" I would hope these parameters would not be too contentious (but you never can tell). I would guess a primary issue would be the amount of improvement in the process that can be reasonably expected over time but I guess mach of this will be captured by the royalty payment. As I understand it the option agreement expires 3 years after the conclusion of the TRL/6 trials so Cameco may wish to delay exercise of the option if they consider the parameters coming out of the TRL/6 are optimistic but conversely they may wish to exercise them quickly if they feel that efficiency et al are likely to improve once the option arrangement is concluded (but these improvement may also increase the royalty - so not all would be lost)