Value Microcaps Free-For-All

[lbas]

SLX.AX/SILXF.PK - Here’s some DD on Silex Systems, an R&D company that I believe has a bright future. It is an energy “story stock” having some really exciting technologies in two hot fields: Nuclear and Solar.

Shares Outstanding ~145 million Market Cap: ~ $1 billion

The caveat is that their technology is not yet commercially proven.

Nuclear – SLX has developed a uranium enrichment process that is an order of magnitude more efficient than the technologies currently used. Currently used technologies are gas diffusion (invented in the 40’s) and centrifuges (1950s). 87% of nuclear enrichment is currently done using these technologies. SLX is the only 3rd generation technology currently available. The nuclear enrichment market globally is estimated at $6 billion.

They have exclusively licensed their technology to a partnership formed by GE and Hitachi called GLE. SLX received a $34 million milestone payment from GE generating a profit after tax of $8.7 million in 2007. They raised $50 million in a inst. investor oversubscribed share placement last October and currently have a strong working capital position of $65 million.

Another biggie Cameco (CCJ) has invested $124 million for a 24% stake in GLE which utilizes SLX’s enrichment technology. Read this (http://djysrv.blogspot.com/2008/06/laser-enrichment-gets-boost.html) and you’ll appreciate why this technology is compelling. Letters of Intent have been signed with Entergy and Exelon for laser enrichment services with SLX’s technology.

The US Nuclear Regulatory Commission has approved a license amendment (to an existing nuclear facility licence) to operate a Test Loop for SILEX laser-enrichment technology. The Test Loop is currently under construction in Wilmington, NC. GLE will use information from the Test Loop demonstration to make a decision on construction of a commercial facility in 2009.
SLX has a toll booth model for generating profits.

Their agreement with GE gives them a base royalty of 7% on REVENUES and an additional royalty of 5% based on total cost of deployment. Nice work if you can get it.

Solar – Their solar technology is just as compelling and exciting. SLX’s 71% owned subsidiary Translucent is currently testing an ultra high efficiency solar cell which has an efficiency of twice today’s commercially available PV cells. PV cells available today have a max efficiency of around 20%. Translucent is expected to have sample cells available for industry validation sometime soon, possibly next month. If successful, this could be a near term catalyst for significant increase in SP.

Silex Investor Presentation http://www.silex.com.au/public/uploads/investor/Lodge%20Conference%2011-04-08.pdf

The stock has been moving up after a sell-off earlier this year. I bought some SLX shares to hold and mold.