Silex : Chair's Address to Shareholders - 2016 AGM

A.B.N.69 003 372 067

Level 8, Suite 8.01

56 Clarence Street Sydney NSW 2000 Australia

PO Box 364

Sydney NSW 2001

Tel: + 61 2 9704 8888

Fax: +61 2 9704 8851

www.silex.com.au

Good morning, ladies and gentlemen, and fellow shareholders. I am pleased to welcome you to our 2016 Annual General Meeting.

After my opening comments, our Founder, CEO and Managing Director, Dr Michael Goldsworthy will provide an operational update. We are also joined today by our other fellow directors Chris Wilks and Robert Lee, our Chief Financial Officer and Company Secretary, Julie Ducie, and our auditor, Steve Humphries from PwC. Steve has announced that he will retire early next year and we wish to sincerely thank him for his services and wish him all the very best for the future.

Before I provide an overview of our activities for the year ended 30 June 2016, it is with great pleasure that I draw your attention to our ASX Announcement released on 11 November 2016 confirming the signing of an agreement between the US Department of Energy (DOE) and Global Laser Enrichment (GLE). The agreement provides for the sale and purchase of DOE-owned high assay tails inventories for re-enrichment with the SILEX technology to produce natural grade uranium for sale into the global market. The finalisation of the agreement is a pivotal event in the commercialisation of the SILEX technology and paves the way for GLE to potentially construct the first SILEX laser enrichment facility in Paducah, Kentucky in the early 2020's. Our CEO and Managing Director, Dr Michael Goldsworthy will take us through the details of the agreement shortly.

Many of you would be aware that this agreement took nearly 3 years to negotiate and finalise and we are therefore very pleased to see this process come to a successful conclusion. It is a testament to our team's tenacity and endurance to have kept our technology moving forward during this difficult period in the market. This agreement is hopefully a turning point for our company and our shareholders.

During the last 12 months, the prices for uranium and enrichment services touched decade lows given the continuing build-up of inventories of nuclear fuel - principally driven by the negative situation in Japan. That being said, the nuclear power industry is forecast to continue to steadily grow over the coming decades, which will increase the demand for nuclear fuel. Therefore we anticipate an improving market environment for the supply of uranium and enrichment services in the coming years.

Notwithstanding the current challenges in the nuclear fuel markets, we continue to push forward with activities to support our Licensee, GLE in the commercialisation of our unique technology - the SILEX laser uranium enrichment technology. Our recent activities include actively participating in the restructure of GLE announced in April this year, with Silex playing a substantially increased role in the commercialisation program and taking the lead on the search for new investors. It is my view, that as inventors and owners of the SILEX technology, we are the best party to lead this investor search. This remains the primary focus of the company and we are pleased to see a number of interested third parties currently engaged in commercial and technical due diligence activities.

We are also pleased with the progress that has been achieved in the engineering and economic validation program in key project activities continuing at both the Wilmington and Sydney project sites. Above all, we remain confident of securing new investors for GLE who have the capability to support GLE's transition to market over the next few years.

During the year, we also completed the Company's strategic business review as announced on 30 June 2014. This resulted in the licensing of the Translucent cREO™ semiconductor technology to IQE Plc based in the UK in September last year. IQE is the global leader in the design and manufacture of advanced semiconductor wafer products. We successfully transferred the technology during the year and IQE's effort and focus on the advancement of Translucent's unique cREO™ technology to date is encouraging. If this technology is successfully deployed by IQE, Silex stands to earn a significant royalty stream of up to 6% of the revenues IQE generates from use of this technology.

We have two world-class technologies currently under license to leading global commercial organisations. We have strong relationships with both our licensees and continue to be heavily involved in our core SILEX laser uranium enrichment technology.

Our Management team and Board continue to make progress against a backdrop of difficult business conditions and strategic challenges. Looking forward, we will continue to pay particular attention to the execution of our business strategy, to risk mitigation and to governance. Our objective is to keep the company focussed and efficient during these difficult times and poised for a substantial increase in activities as GLE commences the complex and exciting task of turning the Paducah opportunity into a commercial reality.

I extend my sincere appreciation on behalf of my fellow Directors to Michael Goldsworthy, Julie Ducie and their team for their hard work over the last year and the difficult preceding years. Finally, thank you to our shareholders for your ongoing support as we work to achieve our goals. As always, we appreciate your feedback on our activities and initiatives.

Dr Lisa McIntyre 15 November 2016

Further information on the Company's activities can be found on the Silex website: www.silex.com.au or by calling +61 2 9704 8888.

Silex Systems is a research and development Company whose primary asset is the SILEX laser uranium enrichment technology, originally developed at the Company's technology facility in Sydney, Australia. The SILEX technology, licensed exclusively to GE-Hitachi Global Laser Enrichment LLC (GLE) in the USA, is currently in the engineering development stage and plans for commercial deployment remain distant and high risk. Silex also has an interest in a unique semiconductor technology known as 'cREO™' through its ownership of subsidiary Translucent Inc. The cREO™ technology is exclusively licensed to IQE Plc based in the UK. IQE is progressing the cREO™ technology towards commercial deployment in various advanced semiconductor products. The outcome of IQE's commercialisation program remains high risk.

The commercial potential of these two technologies is currently unknown. Accordingly, the statements in this announcement regarding the future of the SILEX technology, the cREO™ technology and any associated commercial prospects are forward looking and actual results could be materially different from those expressed or implied by such forward looking statements as a result of various risk factors.

Some risk factors that could affect future results and commercial prospects include, but are not limited to: the outcome of the GLE restructure which the Company is leading, results from the SILEX uranium enrichment engineering development program being conducted jointly by the Company and GLE; the demand for natural uranium and enriched uranium; the time taken to develop the SILEX technology; results from IQE's commercialisation program and the demand for cREO™ products, the potential development of competing technologies; the potential for third party claims against the Company's ownership of Intellectual Property; the potential impact of government regulations or policies in the USA, Australia or elsewhere; and the outcomes of various commercialisation strategies undertaken by the Company and/or its Licensees GLE and IQE.