“Classified Uranium Enrichment Secret”

By Travis Johnson, Stock Gumshoe, April 3, 2007

This one has come in from a few different readers recently, and most of the emails I’ve seen have had the subject “Classified Uranium Secret Could Launch $5 Stock to $57”

This is for a uranium enrichment company, and it comes from Andrew Mickey at Breakaway Investor, yet another Taipan publication. Here’s the sell:

This company has a new kind of uranium enrichment using lasers, which has the potential to be much cheaper and more efficient than the old centrifuge and gas diffusion techniques. According to Mickey, this new kind of enrichment is the “holy grail” for nuclear power, since enrichment adds so much cost to raw uranium (which itself is plenty expensive enough these days).

And Mickey sells himself, too, detailing his background and claiming that “there aren’t 15 people on the planet who possess my exact expertise in nuclear technology, weapons security, and uranium enrichment.”

That may well be true, I have absolutely no idea.

Thes very long email ad is essentially a sell piece for nuclear power in general — so it talks about improved safety, the demand for energy, the money that uranium companies have made recently, etc. That doesn’t help us find this company, so we’ll skip it.

And then we get to the intriguing part (and the intrigue, if you believe in conspiracy theories):

“A high-level U.S. government ‘cover-up’ has helped this tiny $5 company knock its competition out of business… and secure a virtual monopoly on its laser-enrichment technology.”

This company has had it’s technology classified because it could be used both for nuclear weapons and for nuclear energy, so it has “RD” (restricted data) status with the Department of Energy, which from Mickey’s description sounds like a super-patent: Not only do you get to keep the technology for yourself and your customers, but you don’t even have to tell anyone how it works, and you don’t have to publicize any details about it.

This has made plenty of folks very mad, though I don’t know if that will be an issue for investment in this company or not. They’ve had this status for nearly six years, and are apparently the only private company to have it.

And this company has a deal with a big energy corporation to commercialize the technology, so there may be a path to profits in the very near future (they tease doesn’t mention much by way of the financials, so I’m assuming we’re talking about a “pre-profitable” company without anything to brag about in that regard).

So that’s a little background — a unique uranium refinement technique, owned by one company, and we all know the excitement that uranium and nuclear companies have brought to the market in the face of high oil prices.

Now what about specifics to help us tease out the company name?

It’s a “$5 stock”

Just secured a “monster contract” with that “BIG Energy company” I noted above. And they give probably too good a hint on that one, saying the market cap of the big company is $374 Billion.

And there’s a quote from the CEO of BIG Energy, using pseudonyms for everything: “BIG Energy’s agreement with [$5 company] comes at an ideal time, just as the global nuclear industry is preparing to build new reactors around the world,” said Andy White, president and CEO of BIG Energy. “These new reactors will require a steady supply of enriched fuel. We expect the new technology to help us fulfill the industry’s growing fuel demands.”

The company has $26 million in cash.

“The stock is up 15% in the past month … and trading volume has doubled in recent days.”

“the founder of this company has already snapped up 6.39 million shares”

And the final sell to keep this interesting:

“I wouldn’t be surprised to see it deliver a tenfold return by September 2007.

(I see this phrasing so often as advisors cover their arses that I sometimes wonder what it would take to surprise them.)

So that ought to be enough, right? Let’s put that into the Stock Gumshoe pensivometer and see what we find …

AHA!

This company is …

Silex Systems Limited (SLX on the Australian exchange where it’s primary listing is, SILXF.PK on the pink sheets)

Which is sort of an acronym, by the way, for Separation of Isotopes by Laser Excitation. Fun, huh? You can check out their website for this tidbit and an education about what the different enrichment technologies do and why theirs is better if you’re interested (and if you promise to come back!)

They signed their deal with General Electric — which is of course the only company that could be that $374 billion BIG energy co. — back in May of last year.

It’s not a $5 stock anymore, though it was at just about $5 back in the beginning of March when the current iteration of the email probably started its rounds — but if it’s really going to grow tenfold by September there’s certainly plenty of space left before you hit the ceiling. I’ll credit it with $8.25 on my spreadsheet since that’s what you would have had to pay on March 19, the date of the earliest of these emails that I have a copy of, though I suppose you can give them credit for a $5.60 price back in early March if you’re feeling charitable.

Either way, if you believe that $57 target you’ve got a “sevenfold” opportunity, if not a “tenfold” one … I don’t know much about the nuclear power industry, so you’re on your own with this one — just keep in mind, it has already ramped dramatically in the last month, perhaps due in part to some of these newsletters pushing it, and it is roughly in the middle of the range it’s traded in for the past year (on the ASX, at least). It also got clobbered in Australia earlier today (or was that yesterday? Tomorrow? I get confused with that Int’l Date Line), though I have no idea whether or not that means anything. I get the impression that actual production of enriched uranium using this technology is still a couple years away, but that’s after only a cursory examination and I could be wrong.

So as usual, your friendly Stock Gumshoe gives you the name and you take everything after that with a big ‘ol grain of salt — I’m not buying these shares, but that doesn’t mean much. Research and enjoy.


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8 Comments on "“Classified Uranium Enrichment Secret”"

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sam
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sam
April 6, 2007 5:18 am

SILXY is another way to buy this stock, for every share of SILXY , you own the equivilant of five shares of SILEX

Stock
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Stock
April 6, 2007 2:56 pm

Thanks Sam — good point. This is SILXY.PK if you’re looking on Yahoo Finance, though Yahoo doesn’t index it under a ticker symbol search for “Silex” for some reason. Unlike the ticker I provided for the 1:1 shares, this is a sponsored ADR through Bank of NY for those who prefer this extra level of security. Not sure how the volume compares.

Thanks again, sorry I didn’t point that out in the original piece.

Clark Champ
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Clark Champ
April 9, 2007 7:28 pm

Take a look at cobalts price history. Hint the prices in the news letter that says they are high have been at these prices before, like just last year.

http://metalprices.com/FreeSite/Charts/co_9980_charts.html?weight=lb

Jim
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Jim
October 3, 2007 5:56 pm

Before you bet the farm on uranium stocks (either mining or processing), you might want to consider the impact of thorium – it’s about 3 times more plentiful, and every bit of it can be turned into nuclear fuel, without isotopic separation.

There are some technical hurdles to running a thorium-only reactor, but they’re not insurmountable, and I predict they’ll be solved in a big way long before uranium hits $600 a pound

KRL
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KRL
August 23, 2008 4:26 pm

Silex cannot at this time achieve the enrichment levels desired. They are likely dead in the water.

If you want exposure to uranium, look into USEC INC(NYSE:USU). Although not without voltaile risk, I think their worst troubles are behind them and we may be handsomely rewarded in the years to come.

Junior miner Fronteer (FRG) may pan out (pun intended), especially if gold prices ascend in the future. They do have a small amount of uranium finds on some of their properties.

Ed Eastman
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Ed Eastman
June 18, 2009 9:49 am
Len Aaron
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March 3, 2010 4:18 pm

URZ: A THORIUM fueled Rocketship?

DenverDave
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DenverDave
September 5, 2008 10:53 am

I have heard that China is developing a few of the thorium-only reactors. I don’t have any knowledge about the technical problems nor how they are dealing with them, successfully or not.

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