Valuation

Let's take a step back and look at what the Company has...and what those assets are worth.

Silex has the following assets:
($ in AUD)

Cash - $60M (a guess of current levels)
PP&E - $20M (book value of $27M, but say $20M is orderly liquidation value)
Net Working Capital - $5M (my estimate of inventory & receivables, net of cash trade payables)
Subsidiaries Held for Sale (e.g Solar, Translucent, etc.) - $0M (let's be ultra conservative here)
SILEX Tech - ???

So we're at $85M (no liabilities since they are already included in my Working Capital), so $85M net assets before SILEX Tech.

If SILEX technology was worth $0, the company could in theory be liquidated today for $0.50/share (170mm shares), before wind-down costs.

So the million dollar question is what is SILEX tech worth. In 2007 it was worth $1.8bn. And that was before the technology was commercially viable and approved by the NRC. 2 years ago (post-license), it was worth $700M (I'm assuming 95% of the market cap is due to SILEX tech). Heck, 4 months ago (when uranium prices were only moderately higher), SILEX tech was worth $300M+.

Now if the path to revenue gets pushed out 1, 2 or even 10 years, that $300M should and will go down. But at the end of the day, Silex Corp. owns a technology with a license that (someday) will generate revenue. As Iceman points out, there are many potential parties that would be interested in buying the technology at the right (meaning bottom basement) price. Do you think GLE (or GE) would be interested in cancelling the licensing agreement by buying the technology ownership for $170M? They might spend far more than that in royalty payments in one year alone 10-15 years from now. Heck, they need to give Silex $15M the minute they decide to move forward with the technology.

The point is, if you assume Paducah doesn't happen and Silex's best path is to liquidate its assets, I would think the SILEX Tech should get you $1.00/share ($170M). Add that to the $0.50/share from above and you've got a price (today) of $1.50 as a FLOOR if Paducah negotiations fail....in my opinion.

Many people obviously see this company differently, hence the current valuation.

Based on the current price of $0.70/share (minus the $0.50/share in net assets before SILEX Tech), the SILEX Tech is being valued at $35M ($0.20/sh x 170mm) if you assume ALL of the other entities are WORTHLESS.

So why should Silex's stock go down 30% because a business subsidiary (Solar) announces it will not be getting government funding, when the Solar business is already being valued by the market at $0, and which had already announced it was highly uncertain if they still had the government funding months ago? Seems rather silly...

CONCLUSION:

Silex shareholders are holding a very valuable (read - cheap) option.

With very little (or even zero) downside at current levels, there is the possibility for a very attractive return if Silex either: (a) liquidates, (b) gets a positive Paducah announcement, or (c) sees an increase in uranium prices 5+ years from now.

The cost of capital is near zero (i.e. what you are giving up if the money was in a savings account), and the downside risk (again, in my opinion, and assuming you don't need to sell in the short term) is about the same as a savings account.

The opportunity cost of missing out on the stock market's rocket upwards is as about the only real risk in my opinion. But even then, Silex can be an EXCELLENT diversification against the broader market. It has ZERO correlation (beta) with the broader market.

Just my seventy cents on why this thing is worth AT LEAST double the current stock price under the most pessimistic of scenarios.