silex price, page-4

The recent sp weakness is not stock specific. Our peers (Boss, Bannerman, Paladin etc.) have been similarly hit. If anything, we are down less than other U stocks, so it simply seems that U is in a bit of a consolidation phase. This is corroborated by the fact that SPUT is trading at a 13% discount to NAV.

But the fundamentals haven't changed at all. The demand for U is still there and growing exactly as predicted, and the supply is still well on track to fail at keeping up.

There's definitely no Nobel Prize in economics for anybody who figures out what happens to prices when supply fails to keep up with inelastic demand in a product that lacks substitutes.

The only explanation I can come up with is that a sustained $90 per lb is regarded as the magic number that is needed to stimulate new supply. We are really close to that number right now, so some might see this as a good time to take profits. However, I think that this thinking is flawed. For prices to simply peacefully re-equilibrate at $90 with additional supply matching additional demand is just not the way these sort of things happen.

Also keep in mind that between today and 2027 it's not obvious that Silex would see any operational benefit from a higher U price because although a higher U price would result in a higher SP, which would mean less dilution when raising capital (i.e., good for shareholders), it would also mean higher costs for staff and equipment without any improvement in our revenues. It may very well be that the best scenario for SLX shareholders could be a lukewarm U price between now and 2027 and for the U price to launch into the stratosphere immediately thereafter, which would also mean bad returns for impatient shareholders.