GLE has been undergoing a restructure for a number of years necessitated by the decision of majority shareholder, GEH to exit GLE due to changing business priorities and difficult market conditions. Silex has participated extensively in restructuring activities since early 2016.
A key objective in the GLE restructure is to enable the Company to create opportunities by becoming more directly involved in the SILEX technology commercialisation program and GLE's business development path. In particular, the Company places considerable value in the Paducah commercial plant opportunity in Kentucky, US, which remains underpinned by a 2016 Agreement signed between the US Department of Energy (DOE) and GLE for the re-enrichment of ~300,000 tons of the DOE's tails inventories using the SILEX technology.
The Company was pleased to announce on 6 February 2019 the signing of a new Term Sheet outlining terms for the joint purchase of GEH's 76% interest in GLE by Silex and existing 24% GLE shareholder, Cameco Corporation. Subject to finalising a mutually satisfactory binding Purchase Agreement and obtaining US Government approvals, the proposed restructure of GLE under the new Term Sheet would result in Silex acquiring a 51% interest in GLE and Cameco increasing its interest form 24% to 49%.
The new Term Sheet followed the Company's June 2018 withdrawal from a Term Sheet which may have resulted in Silex acquiring all of GEH's 76% interest in GLE. While some of the risks related to the GLE restructure and the reasons for the Company's withdrawal from the original Term Sheet (as detailed in our 12 June 2018 announcement) have diminished, such as the lower cash burn level anticipated under the currently proposed transaction, other risks remain to be mitigated. 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 GLE's Paducah project. This notwithstanding, provided the proposed restructure is successfully completed, this will provide a viable path forward for the continued commercialisation of the SILEX technology in the US.