Silex and Cameco agree terms for GLE acquisition

The proposed restructure of GE-Hitachi Global Laser Enrichment LLC (GLE) would result in Silex holding a 51% interest in the company, with Cameco increasing its interest from its current 24% to 49%. This is subject to finalising a binding purchase agreement and obtaining US government approvals. The term sheet also sets out funding for continuing activities at a test loop located at Global Nuclear Fuel's Wilmington, North Carolina fuel fabrication facility, with the companies paying USD300,000 per month pro-rata backdated from 1 September 2018 until closing, or termination of the agreement should closing not be reached.

The term sheet also provides for a deferred purchase price of USD20 million payable to GEH in four annual instalments beginning after the first calendar year in which GLE achieves revenues of USD50 million. This is also to be paid pro-rata according to the interests acquired in GLE by Silex and Cameco.

Other key terms negotiated by the companies include an option for Cameco to purchase from Silex, at "fair market value", an additional 26% interest in GLE. This would be subject to US government approvals, and would increase Cameco's interest in the company to 75%.

Silex CEO Michael Goldsworthy yesterday said the term sheet was a "very positive step forward" for both Silex and GLE. "Should the binding Purchase Agreement be successfully completed, this will provide a viable path for the commercialisation of the SILEX technology through the Paducah project," he said. GLE has an agreement with the US Department of Energy (DOE) to enrich about 300,000 tonnes of depleted uranium tails to natural-grade uranium at a SILEX plant to be built at Paducah, Kentucky.

The parties aim to execute the binding purchase agreement by 30 April. In addition to US government approvals, closing will be conditional on the 2016 agreement for GLE's purchase of DOE depleted tails inventories remaining in full force and effect, Silex said. "The availability of the DOE's tails inventories is critical to the Paducah Commercial Plant project," it noted.

Laser enrichment technologies - which can be atomic or molecular - potentially offer lower energy inputs, lower capital costs and lower tails assays, and hence significant economic advantages over current commercial centrifuge enrichment technology. The molecular technique uses a laser beam to preferentially excite the uranium-235 isotope in gaseous uranium hexafluoride, which can then be separated. The principles of the SILEX (Separation of Isotopes by Laser EXcitation) process were formulated by Goldsworthy and Horst Struve in the early 1990s. GE Energy in 2006 entered a partnership with Silex to develop the process, leading to the establishment of the GLE joint business venture which Cameco joined in 2008.

In 2016 GEH announced its desire to reduce its equity interest in GLE and signed a term sheet with Silex giving the Australian company an exclusive option to acquire GEH's entire 76% interest. Silex in June 2018 abandoned the acquisition, citing risks associated with GLE's business case. At the time it said a "worsening outlook" for the global nuclear fuel market was the overarching factor contributing to its decision, but also named several issues connected with the commercialisation programme.

While some of those risks have now diminished, other risks remain to be mitigated, Silex said yesterday. "In particular, a recovery in the uranium market price, and further work on market access issues and project financing are required to reduce risks associated with the Paducah project," it said. In the meantime, a "reduced but focused" commercialisation effort will continue at the Wilmington test loop facility, together with a parallel effort continuing at Silex's facility at Lucas Heights in Sydney.