Silex, page-2

Good article about it in todays Financial Review parlap.

Silex savaged amid doubts on backer 21/06/02

AFR News - 21.06.02 05:27

Brett Clegg


One of the last technology bubbles on the Australian Stock Exchange burst yesterday, when Lucas Heights-based Silex Systems lost close to half its market value as a result of signs that its offshore partner had stepped back from funding the commercialisation of its laser uranium enrichment technology.

Silex stock slumped $1.10 to $1.52, wiping $212 million from its market capitalisation, after the United States Enrichment Corp announced it would build a rival centrifuge-based uranium enrichment system, instead of Silex's SILEX (separation of isotopes by laser excitation) technology.

The market ignored the protestations of Silex's managing director, Michael Goldsworthy, who issued a statement saying his company retained full support from USEC, which would continue to fund all of its project costs.

However, an expectation that USEC would commit itself to a $100million pilot plant in the
US has been thrown into doubt.


JP Morgan analyst Michael Willoughby, who downgraded the stock from a "buy" to market underperformer, said: "The announcement clouds the time-line for the commercialisation of the SILEX technology to the point that it is hard to place a value yardstick on the stock other than its cash backing."

Silex has $35 million in cash on its balance sheet, representing only 30¢ a share.

To be used in nuclear power, uranium must be enriched. Existing gaseous diffusion technologies have many failures relating to cost, environmental concerns and efficiency, leaving USEC with a pressing need to find a replacement process.

Under an agreement with Silex, USEC shoulders all R&D costs, pays milestone fees over the course of commercial development and is obligated to pay royalties of 5 to 8.75 per cent if it adopts the SILEX technology. These royalties are now in doubt.

"The reaction is symptomatic of a market where investment appetite for risk is very low," Brian Eley, small-cap portfolio manager at BT Funds Management, said. He said the fall was an over-reaction and that the other project did not rule out SILEX's ongoing development.

Investors have also been disappointed that Silex has not found a backer for its laser technology applied to silicon enrichment, despite rumours earlier in the year it was to stitch up a deal with Japanese conglomerate Sumitomo.

Isotopically enriched silicon increases thermal conductivity by up to 60 per cent. In a typical computer chip this may translate to a drop in operating temperature of 30 to 40 degrees C, enabling processing speeds up to 10 times faster. However the technology is at an early stage.