Silex Systems : Implements Major Strategic Review

Silex Systems Limited

A.C.N. 003 372 067

Level 8, Suite 8.03

56 Clarence Street Sydney NSW 2000 Australia PO Box 364

Sydney NSW 2001

Tel: + 61 2 9704 8888

Fax: +61 2 9279 1051 www.silex.com.au

 Primary focus on foundation technology and core asset - the SILEX Uranium

Enrichment Technology and supporting Licensee, GE-Hitachi Global Laser Enrichment

 Cessation of operations at ChronoLogic (pursuit of License opportunities only)

 Accelerated transition to market for subsidiaries Translucent and Solar Systems

 Significant reduction in operational cash burn across the Company in FY 2015

The Board of Silex Systems Limited ("Silex") (ASX: SLX) (OTCQX: SILXY) has completed a strategic review of the entire business and has determined to refocus efforts on its primary economic asset, the SILEX Uranium Enrichment Technology, and to significantly reduce cash burn from the beginning of FY 2015.
The restructure is expected to deliver a number of financial and operational benefits to Silex. A single focus on its foundation technology - the SILEX process - has been determined as the best path forward to building shareholder value.
The SILEX Uranium Enrichment Technology is licensed to Global Laser Enrichment LLC (GLE), a consortium of GE (51%), Hitachi (25%) and Cameco (24%), which has worldwide exclusive rights for the commercial exploitation of the technology. GLE has invested hundreds of millions of dollars to date, and subject to satisfactory economics, market conditions and regulatory requirements, continues to fund the program towards potential construction of the first commercial production plant. The SILEX Technology represents the most significant future revenue potential with Silex to receive a perpetual royalty between
7% and 12% of GLE's revenues (based on calculation of cost per unit production installed).

As announced in May, the Company is pursuing strategic commercial partnerships or transactions for its subsidiary businesses ChronoLogic, Translucent and Solar Systems (refer ASX release 20/05/14). This program is now being accelerated considerably with the aim of completing the restructure by the end of the first half of FY 2015.

Planned activities for the Company's subsidiaries during this period are as follows:

The decision has been made to cease operations at ChronoLogic in order to end any requirement for Silex investment in the business beyond Q1 FY 2015. Several license opportunities will continue to be pursued over this period.

Accelerate efforts towards finalising a value-creating agreement with an industry/strategic partner (via co-investment or divestment) with the aim of eliminating parent cash burn by the end of the first half of FY 2015. Several leads with third parties are currently being pursued.

Accelerate efforts towards finalising a strategic partnership or equity transaction during the first half of FY 2015 aiming to achieve a value-creating outcome and potentially eliminating the need for further parent company investment. A structured process has been agreed by the Board and initiated. During this period, the business is expected to require minimal, if any, parent company investment.
The execution of this strategic restructure, together with agreed reductions in corporate overheads, is expected to deliver a reduction in cash burn of between 60% and 80% in FY
2015 (compared to FY 2014) and further significant reductions in FY 2016 (without factoring in any income that may result from potential transactions).
Silex CEO, Dr Michael Goldsworthy said: "With current cash reserves of approximately $64 million, zero bank debt and a plan to substantially reduce cash burn and overheads, we will remain in a strong financial position over the coming years which we believe will see us through to revenue generation. The cuts in cash burn are across the board in all areas of the business," he added.
"Subject to completion of the Phase II commercial scale-up work and obtaining the necessary license from the US Nuclear Regulatory Commission for the Paducah facility, the world's first commercial laser enrichment plant could be in operation later this decade. We firmly believe that a more concentrated focus on the commercialization of the SILEX Technology is the best path forward for Silex and our shareholders," Dr Goldsworthy said.
Silex will provide regular updates on the progress of the commercial strategies and transition plans for the subsidiary businesses over the coming months.

Silex has been informed that negotiations concerning the establishment of the Paducah Laser Enrichment Facility (PLEF) continue to proceed constructively, albeit slower than hoped. Whilst we await an outcome from these negotiations, it is important to understand that this proposal involves the potential disposition of hundreds of thousands of tons of depleted tails inventories owned by the DOE over a 40 year period. In this light, it is not entirely unexpected that the negotiations, which only began in earnest in the New Year, have taken longer than originally indicated.
Subject to prevailing market conditions and regulatory requirements being met, a positive outcome from these negotiations would potentially provide a clear path to market for our disruptive laser enrichment technology and set a strong commercial path for Silex. That said, shareholders should also appreciate that the market for nuclear fuel will remain depressed in the short term, with both uranium and enrichment pricing at decade lows and only likely to begin recovering when reactor restarts occur in Japan.

Shareholders and investors are invited to join a conference call for a more detailed update on the company's activities to be hosted by Dr Michael Goldsworthy, at 4.30pm (AEST) today as per the details released on Friday, 27th June 2014 (details restated below). A recording of the conference call will be released through the ASX shortly afterwards.

Conference ID: 494 615

Toll free access numbers:

Further information on the Company's activities can be found on the Silex website:
www.silex.com.au or by contacting the persons listed below.

About Silex

Silex Systems Limited (ASX: SLX) (OTCQX: SILXY) is a world leader in research, development and commercialisation of leading edge technologies in key strategic markets, including nuclear power, solar power, semiconductor materials and instrumentation. Silex is a member of the S&P/ASX 300 index and operates four divisions:

Forward Looking Statements and Business Risks

Silex Systems is a research and development Company whose assets are its proprietary rights in various technologies, including, but not limited to, the SILEX technology, Solar Systems technology and business, Translucent technology and ChronoLogic technology. Several of the Company's technologies are in the development stage and have not been commercially deployed, and therefore are high-risk. Accordingly, the statements in this announcement regarding the future of the Company's technologies and 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: results from the SILEX uranium enrichment commercialisation program; the demand for enriched uranium; the risks associated with the development of Solar Systems technology and related marketing activities; the outcomes of the Company's interests in the development of various semiconductor, photonics, instrumentation and alternative energy technologies; the time taken to develop various technologies; the development of competing technologies; the potential for third party claims against the Company's ownership of Intellectual Property associated with its numerous technologies; the potential impact of government regulations or policies; and the outcomes of various commercialisation strategies undertaken by the Company.

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