SILEX SYSTEMS LIMITED — Capital/Financing Update 2015

Sep 14, 2015

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Silex Systems Limited A.C.N. 003 372 067

Silex Systems Ltd Level 8, Suite 8.03 56 Clarence Street Sydney NSW 2000 Australia www.silex.com.au

Agreement signed with IQE, the world’s leading epiwafer supplier, for Translucent’s unique ‘cREO™’ technology

15[th] September 2015

(For simultaneous release 4.00pm AEST and 7.00am GMT)

Key points:

• Silex subsidiary Translucent Inc. signs a License and Assignment Agreement with the world’s leading epiwafer supplier, IQE Plc;

• The agreement provides for completion of commercialisation of the Translucent cREO™ technology with a significant perpetual royalty on sales revenues; and

• Translucent operations in Palo Alto, California will be closed with IQE taking over commercialisation activities.

Silex Systems Limited (“Silex”) (ASX: SLX) (OTCQX: SILXY) is pleased to announce the signing of an agreement between subsidiary Translucent Inc with UK-based IQE Plc (LON: AIM) for the license and assignment of Translucent’s innovative ‘Rare Earth Oxide’ (cREO™) semiconductor technology.

The agreement includes an initial payment of US$1.5 million for a license of up to 30 months to complete product commercialisation, followed by potential acquisition of the technology by IQE for an additional US$5 million. An attractive perpetual royalty would apply to the advanced semiconductor products sold by IQE utilising Translucent’s technology, as detailed below.

Silex CEO Dr Michael Goldsworthy said today: “This is a great result for Translucent, representing an excellent path to market for the cREO™ technology after an extensive research and development program over the past decade by our team in Palo Alto, California.”

“IQE is the world’s leading epiwafer supplier, providing a key platform for the introduction of new high performance materials which are enabling the continued evolution of the global semiconductor industry. IQE is very well positioned to capitalise on the introduction of new semiconductor materials, and is the best commercial partner to take Translucent’s unique technology to market.”

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IQE CEO Dr Drew Nelson added: “This is a first class deal and great opportunity for IQE. We are at the forefront of a new era in the semiconductor industry which is bringing to market unique high performance Compound Semiconductor materials required for the modern ‘Internet of Things’ world, whilst at the same time leveraging the low cost and large wafer size benefits of the silicon industry that has been at the core of the information technology revolution over the last 40 years. We are very excited to be able to take Translucent’s unique ‘cREO™’ technology to market, and thereby create a significant new platform to drive our business into several new large volume areas”.

In summary, the agreement involves the following key terms:

• An exclusive license for up to 30 months to complete product commercialisation (and qualification with potential customers) of Translucent’s cREO™ technology in return for an initial payment of US$1.5 million, payable within six months of execution in either cash or IQE stock;

• An option, exercisable at any time during the 30 month license period, for IQE to acquire the Translucent cREO™ technology through an assignment of all rights to the technology in return for a payment of US$5 million within six months of the exercise of the assignment option and the payment of the royalty described below. Consideration will be in either cash or IQE stock;

• A perpetual royalty will be payable to Translucent on the sale of any IQE products that utilise Translucent’s cREO™ technology. In the case of bare cREO™ template products, a royalty of 6% on sales will be payable. In the case of finished epiwafers fabricated on top of cREO™ templates, a royalty of 3% of sales will be payable. It is expected that the cREO™ template will account for around 40% to 50% of the value of any finished epiwafer product;

• Should the License expire after 30 months without IQE taking up the assignment option, or should the Agreement otherwise be terminated, all rights to the cREO™ technology will revert to Translucent.

In order to facilitate the transfer of the technology to IQE during the license period, Translucent will retain the services of two key engineers to work with the IQE team over the next 12 months. Certain development and prototype production assets will be transferred to IQE. In the meantime, Translucent’s operations at the Palo Alto, California facility will be closed down by the end of the calendar year.

Initial commercialisation of the cREO™ technology by IQE will focus on application to Gallium Nitride (GaN) based products for the power electronics device market – worth several billion dollars annually and growing. If successfully commercialised, sales expectations could reach a few million GaN epiwafer products annually, resulting in significant royalty flows back to Translucent in future years.

For more detailed information on Silex Systems Limited, please visit www.silex.com.au

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About Silex Systems Limited:

Silex Systems Limited (ASX: SLX) (OTCQX: SILXY) (“Silex”) is an Australian high-tech company focused on the delivery of its unique and disruptive ‘SILEX’ laser enrichment technology as the next generation technology for the global uranium enrichment industry. The SILEX Technology has been exclusively licensed to GE-Hitachi Global Laser Enrichment, a business venture of GE (51%), Hitachi (25%) and Cameco (24%) based in Wilmington, North Carolina.

Until recently, Silex also had active interests in solar and semiconductor technologies. Under a restructure announced by the Silex Board in June 2014, a divestment process has been undertaken in order to return the Company’s focus to the SILEX Technology. For more information, refer to the Silex website at: www.silex.com.au.

About IQE Plc:

IQE is the leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.

IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epiwafers') to the major chip manufacturing companies, who then use these wafers to make the chips which form the key components of virtually all high technology systems. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms.

IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, base stations, GPS, and satellite communications; and optical communications.

For more detailed information on IQE Plc, please visit iqep.com.

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 Translucent 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 outcomes of the Company’s interests in the development of various semiconductor 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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