Silex Systems Limited

Thanks, Andrew. So yes, we do call our presentation The World’s Largest Above Ground Uranium Mine. And you might wonder what a laser enrichment technology has to do with mining, which is my job to educate you in the next ten, 15 minutes. And really, that encapsulates what I’m gonna try and describe. It’s taken us over 30 years, and I have to tell you in 15 minutes what it’s all about. [laughs]

So just a few key points. We do have this third-generation laser-based enrichment technology which we invented in Sydney some years ago. We licensed that to a US-based joint venture, Global Laser Enrichment, and that is currently owned 51% by Silex. Silex, my company, listed on the ASX with a market cap of around one billion US. And Cameco Corporation based in Canada, you’re probably all familiar with Cameco holding 49%. There is a technology license in place in perpetuity. The technology’s classified, so we can’t publish patents, so the technology has no IP sunset essentially, and the royalty is therefore perpetual.

We completed a key demonstration last year, large scale technology readiness level six, which is a scale that many governments and companies use around the world. We’re now in the final stage of engineering, so in about a year from now we’ll be completing all the full-scale demonstration of commercial equipment in Wilmington, North Carolina. The first project is based on a contract and agreement signed between the US Department of Energy and GLE back in 2016, which gives GLE access to over 200,000 tons of depleted uranium tails, and I’ll explain what those tails are in a minute. But that material will be our feedstock for our first project for 30 years of production of natural-grade uranium. In other words, the same grade of uranium that the miners produce, and that’s why we call it an above-ground uranium mine, at a sizable rate of five million pounds a year for the 30 years.

And just recently, we signed an offtake agreement between GLE and Cameco, which will see Cameco as GLE’s sole customer. So Cameco is going to be the purchaser of all GLE’s products, including the 150 million pounds odd of natural-grade uranium from that first project. Just to point out, there’s two distinct value propositions. Firstly, our equity ownership in GLE at 51%. There is an option for Cameco to go to 75% by acquiring 26% of equity from Silex at fair market value. That’s a discussion for the future, but that window for Cameco to exercise is until April ’28. And as I mentioned, there is a perpetual royalty in place, minimum 7%. So just briefly, if we have a decent-sized operation of eight million units of enrichment with our laser enrichment technology operating, then that could bring in about $100 million of cost-free royalty streams from GLE back to Silex, if that eventuates.

I’m going to skip all the way down through here to the nuclear fuel supply chain. This is the conventional supply chain. Uranium mining conducted around the world, including our partner Cameco, one of the largest uranium miners, produce natural-grade uranium. This is the same assay wherever you find it. So that means that the assay of the active isotope, U-235, uranium-235, is about 0.7% of the naturally mined uranium, and the less active isotope, uranium-238, is 99.3%. To make nuclear reactors work effectively, firstly, the oxide, uranium oxide, has to be converted to uranium fluoride. That’s a conversion industry, and that’s traded in kilograms of converted uranium. Today’s price is about $60 US, and of course, the uranium price, we all know, is $90 to $100 a pound. And then the third step is enrichment, where the uranium-235 isotope is enriched from 0.7 to around 4% or 5% assay, and then that is active enough. It’s made into nuclear fuel rods and goes into nuclear power plants to make electricity.

There’s some market slides here which we don’t really have time for today, but just noting America has very little in terms of uranium resources, producing 1% at best of its own uranium requirements. So this resource I’m going to talk to you about today is by far the largest uranium resource in the United States by a fair margin.

So our technology is third-generation laser enrichment. I can come back to this slide shortly if we have time, but basically, it is much more efficient than today’s centrifuge machinery that does the enrichment around the world. A very high efficiency factor and an enormous throughput compared to centrifuge machinery. All that means our footprint’s much less, our CapEx is much lower, potentially only half the CapEx of centrifuge, and our operating costs are lower. As I mentioned, we’re in the final stage of engineering. After that, we move into commercial plant construction in our site at Paducah, Kentucky. GLE, our JV, has those two sites shown here on the East Coast, headquartered in Wilmington, North Carolina, and the commercial plant will be built in Paducah, Kentucky.

And now we’re going to get to the interesting part about this above-ground uranium mine. This is a picture of the first-generation gas diffusion plant that the US Department of Energy operated from 1952 to 2013. Firstly, to make material for their military or their weapons program in the fifties, sixties, and then more so in the latter part of last century, seventies, eighties, and nineties, to make enriched uranium fuel for the growing nuclear power industry in the US. So this plant was very inefficient, very costly, and because of that, a lot of the tails that came out the back door of this plant still contained high-value uranium-235 assays. And the assays that have been included under the contract I mentioned between GLE and the DOE range between 0.25% to 0.45% assay. So remember that natural is 0.7, and today’s assays are down around 0.2 to 0.18, even less. So that gives you an idea why we’re going to process these, because there’s still appreciable value in the material that came out the back door of this plant for all those decades of operation.

So we will be taking about 200,000 tons, a bit more than that, over time when our first operation is up and running. These materials are stored in cylinders, about 25,000 cylinders, in the yards around those buildings you can see in that picture. So it’s a vast quantity of legacy depleted tails waiting for GLE, and that is exclusive. Those tails are GLE’s for keeps, and they will be processed at a plant built next door to this site. GLE has purchased 700 acres adjacent to the DOE plant, as you can see here.

And our plans will involve firstly a tails processing plant, shown in blue, that will produce the natural-grade UF6. So we’re going from 0.3 back up to 0.7%, the same grade that the uranium miners produce. So that is the above-ground uranium mine. And as I said before, producing five million pounds equivalent a year for 30 years. So that plant in itself, just producing natural-grade uranium, is around half a billion dollars of revenue value at today’s prices. But there’s a bonus here. Because the material stored in those cylinders has already been converted before it went through that first-generation plant, we get the conversion value for free. That trades today at about $60 a kilogram. So that’s icing on the cake for that first project in the blue building.

Then we would build out some capacity of our laser enrichment technology in the gray building on the left to produce low-enriched uranium, which is reactor-grade. So that’s the third step I showed in that nuclear fuel supply chain. That would be built out in the gray building firstly for the DOE material. That would require about two million units of enrichment. A unit of enrichment trades separately at about $180 US today. So that in itself from the DOE material would generate another $360 million of annual revenues for 30 years.

And then there’s room for expansion of the LEU capacity because that’s the big target market for GLE. There is a threatened supply deficit of nuclear fuel in the coming years, in the thirties, 2030s, due to the fact that Russian imports of nuclear fuel into the US and some other Western countries are being phased out. And in the US, there is a total ban on Russian imported fuel from first of January 2028, and basically about a third of America’s nuclear fuel was coming from Russia. So we have potential to expand the LEU capacity quite dramatically from the first two million units to potentially ten million units or more, and noting that Cameco itself produces 20-odd million pounds of uranium a year and also has a conversion business. So there’s a lot of room for expansion at this site that will hopefully come into play in a market that needs more enrichment services. And then there’s a third opportunity shown in green to keep going with the enrichment up to what we call high-assay LEU, which is up to 20% enriched in the 235 uranium isotope, and that would be for small modular reactors.

So right now, we’re focused on that first project. The costs of that first project have been analyzed in quite some detail and compared to uranium mining metrics. So all in sustaining costs of around $30 a pound, maybe a bit less, very competitive, if not tier one level. And as I mentioned, five million pounds for 30 years, 150 million pounds of uranium-contained resource. We know what’s in every cylinder that sits above ground in those cylinders, so this is a very prospective project to start our journey with.

Our timeline sees us finishing the engineering this time next year, followed by a feasibility assessment. We’re also due to receive a full operating and construction license early next year, first quarter ’27. And all that would lead to an FID around the end of ’27 or early 2028. And if that all goes to plan, then we’re into engineering, procurement, and construction of the PLEF laser enrichment facility, that blue building first. And that would take two or three years to get the first production capacity up and running, hopefully before the end of 2030, and then continuing to expand operations from there. The site works are underway. Clearing is happening. The headquarters in Wilmington, North Carolina also contains a very large manufacturing facility, so a lot of equipment will be manufactured in-house. But GE is also lining up its contract manufacturers as we speak and putting in place the supply chain.

So I hope that all made sense, but basically we have a very unique project here, a laser enrichment technology, the first third-generation laser enrichment technology to be commercialized in the world. There’s some startups that are well behind us, a few years behind us, going down paths that are notoriously difficult. So we give ourselves a pretty good chance of becoming the first laser enrichment technology enterprise in the world through Global Laser Enrichment, our joint venture with Cameco. And we’re looking at the triple opportunity beyond the initial project of producing natural-grade uranium, producing LEU, LEU plus, a slightly higher SA the utilities are asking for now, and the HALEU opportunity down the track for small modular reactors.

So we also have a silicon enrichment project which is just hitting commercial production next year, so that’s an exciting side business for us that hopefully will evolve over the coming years. So it’s not just a one-trick pony. We’ve got some diversified activities coming down the pipeline. So I’ll just mention the cash balance now, $180 million. We’re burning about 50 million Aussie a year this year and next year, and then after that we’d switch to project finance, hopefully for the first commercial plant. So thank you very much for your attendance.

Thank you, Mike. Do we have any questions from the floor for Mike?

Thank you for the presentation and answering my questions. So sorry, just the $30 ASEK, is that including the credit for the conversion, or is the conversion on top of that?

No, it includes the conversion. So the conversion is worth about a third of that in terms of... Well, it would be a third higher if you did not include the conversion.

Right. It’s the 2,000 tons at 60 bucks is basically what you’re doing.

Correct. Yep.

Okay. Thank you.

Thanks for your question. Any other questions from the floor?

I think you mentioned production by potentially the end of 2030. Do you know how long ramp-up to the five million pounds would take post-2030?

That’s gonna be driven by the market and the contract portfolio that Cameco builds. Our aspiration is to have the full 2,000 tons production and the two million SWU production up and running three or four years after starting, so maybe 2033, 2034. But look, that’s speculative, aspirational at this point. But it does depend on how much demand there is in the market.

Sorry, and you said the tails assays were two five to four five. When you talk the five million pounds, what are we using as the feed for that? And are those cylinders, is it known where the .545 is—

Yeah…

—versus the .25?

Yeah. It’s back to your question on the ramp-up. Thanks. Yeah. We know what’s in every cylinder. It’s all logged by the Department of Energy. So the average, I think, is just above .3, maybe between .3 and .35. So that’s the average. So we’ll be processing slowly through that, taking the best tails first, obviously.

Do you have a question? Okay. This one. We have one more from over here.

Sorry, I’ll be quick, and it’s on financing. I was fortunate enough to spend a bit of time with the US ambassador to Chile last week. And whilst he was talking about the DFC funding, which is for international, it felt like the impetus to spend money on projects that are critical and linked to the national strategy that Trump administration put out earlier this year is really coming to the forefront. So I’m just wondering what options given your US base are available to you?

So to fund that first plant, it’ll cost around $1.3 billion, plus or minus, depending on how much we’ve front-loaded with other infrastructure. We’ve looked at different funding options at Silex. There is what used to be called the Loan Program Office in Department of Energy, now called Energy Dominance Financing Office. They have a $2 billion fund available specifically for new technologies like this. The solicitation documents actually call out laser enrichment as a qualifying technology. So for that first plant, if it was 1.3, say, for argument’s sake, we’d be looking at debt financing for maybe 70%. That could well come from EDF office. It could come from market debt. And then the equity component of 400-odd million, currently we’re 51% of that. If Cameco exercised its option, then we’d be 25% of that. So at this point, all options are on the table. At Silex, we’ve even discussed an IPO. But, you know, at this point it’s early days.

I think the premise behind that question too, Mike, is clearly you’ve got a very strategic project here in the US context. One of your charts showing that the US consumes about 50 million pounds of uranium a year, only produces two. And your project potentially producing five, but will become the single largest source of uranium production in the US. I note that the NNSA, the National Nuclear Security Administration, recently had an RFI out seeking four million pounds of supply from 2030 of non-obligated uranium. Does your project qualify for that sort of program?

No. Under the treaty that covers our technology between the US and Australian governments, our technology’s excluded from all military applications of nuclear fuel. So I would assume that that relates to US government military needs, and therefore we would not be able to participate due to the fact that our product will be obligated.

Okay. Got it. Nonetheless, you’ll still be a big source of American supply. I think we’ve reached our time limit now. So, Mike, thank you so much for that presentation. Very exciting project. One that, you know, you’ve still got work to do over the next three, four years to bring it into production. But probably just in the right time to meet this incredible growing demand for nuclear fuel that we can all see coming.

Thanks a lot, Andrew. Thanks everyone.