Silex tumbles after solar-nuclear switch hits market roadblock

Silex Systems decided in June to dump its solar business to focus on nuclear. But now the nuclear industry has dumped Silex.

Less than one month after Australia’s Silex Systems placed its solar technology assets up for sale to focus on uranium enrichments, it has been dealt a massive blow by the suspension of its nuclear ambitions.

In late June, Silex sought to arrest its slumping share price and preserve its cash reserves by deciding to seek buyers and co-investors in its Solar Systems and Transluscent businesses.

CEO Michael Goldsworthy said at the time he wanted to focus on its laser uranium enrichment process, confident that its partnership with GE and Hitachi (GLE) could mean that the world’s first commercial laser enrichment plant could be in operation later this decade.

But those dreams are now on hold – indefinitely – after GLE said it would cease funding laser development projects at Lucas Heights in Sydney and put the main project facility near Oak Ridge in Tennessee in “cold storage”.

Most contractor-based work on the project will be suspended, with the project facility near Oak Ridge, Tennessee to be placed in a safe storage mode, and GLE-funded activities at the laser development facility at Lucas Heights, Sydney to cease.

Silex appears to to have been shocked by the announcement, saying it was “unexpected” and GLE had already invested “hundreds of millions of dollars” in the project.

The share slump cames just days after “stock pickers” in Fairfax and News Ltd business pages rated Silex as the “best speculative stock” on the ASX. A day after a Fairfax collumnist called Silex “one of the best intelligent speculations on the ASX, the stock plunged rom 94c to a low of 49c. The stock has fallen from a 2009 high of $7.97 a share, and a year ago it was trading at more than $3.

Those brazen calls – and the optimism of its mostly retail shareholders – were based on the optimistic belief that the nuclear industry is about to rebound. But this is mostly based on hope – and an arrogant distrust of renewables – than any actual evidence.

GE CEO Jeff Immelt, who made the call to bring the research to a halt despite investing hundreds of millions, has said privately that nuclear is “too difficult” . (GE was one of the biggest suppliers of nuclear technology in the world.”

Goldsworthy says it is clear that the global nuclear industry is “still suffering the impacts of the Fukushima event” and the shutdown of the entire Japanese nuclear power plant fleet in 2011.

Demand for uranium has been slower to recover than expected and enrichment services are in significant oversupply, and the market could take “several years” to rebalance.

Despite this, and the prospect of no revenue from the royalty deal with GLE in the near future, Goldsworthy is insisting that it should focus on uranium enrichment.

That means it will continues to look for a “strategic partnership” or “equity transaction” for its Solar Systems business, which has built a 1.5MW demonstration plant of its “dense array” concentrated solar PV technology in Mildura, Victoria, where it has plans for a 100MW installation.

It is also nearing completion of a 1MW demonstration plant in Saudi Arabia, and said in March it has plans for a range of 10MW to 50MW plants in Ausralia the Middle East and possible the US.

It is also pursuing several leads for the sale or partial sale of its Transluscent business, which makes novel semiconductor materials based on the ‘rare earth oxide’ family for use in the solar industry and the semiconductor industry.