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FLX - Felix Resources

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The NSW appeals court case concerning Felix Resources mining rights to use 20% of Moolarben Land, owned by Ulan Coal, has been completed. The decision is expected from the three judges of the appeal shortly.

Felix Resources have opened a new office in Adelaide to oversee the mineral exploration of the Phillipson Tenements in S.A. The area already has a known inferred source of sub-bitumous coal of 5 billion tonnes. The rail extension from Alice Springs to Darwin runs through the area, and South to Adelaide.

Meanwhile Felix closed at a days high of $15.50 up 41 cents.
 
Noirua
Perhaps the current buying is coming from clients of USB - surely if they feel FLX is ripe for interest from foreign raiders, they would be recommending their client's take positions. Then we have the double whammy of the Ulan case about to be resolved one way or the other. Certainly exciting times.
 
Reefer said:
Noirua
Perhaps the current buying is coming from clients of USB - surely if they feel FLX is ripe for interest from foreign raiders, they would be recommending their client's take positions. Then we have the double whammy of the Ulan case about to be resolved one way or the other. Certainly exciting times.
Click to expand...
Hi Reefer, Exciting times indeed.
The only possible weakness amongst the major holders appears to be the holding by the CFO, MR David Knappick, who resigned back in January. The holding has been split into two different parcels ( Fibora Ltd, 5.12% and 2.29%), and the last time that happened the substantial holder unloaded the stock.
I would add that there are are no rumours of the above and that this is my humble opinion only.

Main reason for the rise, imho, is the rising coal price and likely coal profits from the low cost Moolarben mine. Coal from this mine will reach about 10.5mtpa, attributable to Felix. The coal is 80% thermal priced about 5% below the benchmark price, this is around US$125 per tonne. The rest of the thermal coal is for power station use and is presently priced around US$98 per tonne. Costs were put at a low AUS$30 per tonne in 2005, this has probably risen substantially now on fuel prices and wage costs - you can probably work out the likely profit from this, providing coal price rises hold.

Felix other mines in Queensland and NSW are likely to reach 6.5mtpa, attributable to Felix, from the 4.6 to 5.0mtpa at present.
Felix has been given a further lift on the back of much higher prices of PCI coal (Yarrabeee mine) and semi-soft coking coal (Ashton Mine). Also the exploration on the Phillipson tenement in South Australia.

Information at http://www.felixresources.com.au
 
Felix are managing to ship higher loads of coal out of the RG Tanna Terminal at the Gladstone Port, as mentioned in the last quarter report. Between 10th May and 5th June, three ship loads totalling 302,120 tonnes are due out, from the Minerva mine. Some is being sold into the spot market in complete ship loads.
Yarrabee mine totals, 133,350 tonnes between 9th May and 8th June, roughly on target.
 
At a price of about $16.00 Felix are capitalized at just under $3.2 billion. The question asked, quite rightly, what are the risks from here.
In a nutshell it's the coal price and everything else pales into insignificance beside it.
The next important factor is the strength of the Aussie against the Greenback.
Following this is the price of fuel and wage costs.
There are other factors that could make a difference; a takeover bid, result of the recent appeal by Ulan Coal, this is awaited; any purchase of coalmines or takeover bid by Felix.

So if everything goes fantastically well, production will spiral. 2008 - about 4.6 million tonnes (report on 31st July 08), 2009 - about 5.2 million tonnes, 2010 - about 8 million tonnes, 2011 - about 9.4 million tonnes, 2012 - about 13 million tonnes ( estimate by MD, Mr Brian Flannery), 2013/14 - about 20 million tonnes (providing Athena and Harry Brandt have reached full production).

In the year ending 2007 (30th June) Felix made virtually no trading profit at 3.6 million tonnes sales. Newcastle benchmark thermal varied between US$48 and US$56 per tonne. The Aussie rose about 15% in value against the Greenback.
Profits made were from asset sales and there were mining development costs at Minerva and Ashton U/G.

In the year ending 2008 Felix are expecting a cost reduction of $20 million and made $18 million trading profit in the first half and paid a 3c interim dividend. Felix have received $160 million for the 20% sale of Moolarben. The Aussie has continued strong against the US Dollar but has not moved much during 2008.
Coal sales are moving towards 4.6 million tonnes. Newcastle benchmark coal started the Felix year at $56 but rose rapidly for agreements, first from 1st Jan 2008 and much higher for later contracts starting 1st April and 1st June.
Felix have also sold some coal from Ashton and Minerva at spot prices.

2009 should see most of Felix coal sold on the Newcastle thermal basis price in the range US$125 - $130 per tonne. Felix have sold about 480,000 tonnes forward into 2009. Sales should reach 5.2 million tonnes minimum and may be higher if larger shipping from Ashton is achieved. All the 1.8mtpa coal from Yarrabee will be sold as PCI coal.
During the year Felix will be developing the Moolarben opencut mine. No asset sales are so far earmarked during the year.

2010 should see the addition of coal from the Moolarben open-cut mine for about 6 - 9 months ( attributable 1.5 - 2.0 million tonnes) and coal production at the other mines increased to around 6 - 6.6mtpa.

2011 should see attributable coal rise to 3.6 million tonnes from Moolarben. The underground mine will be in the progress of development, as will Athena an Harry Brandt.
 
Felix Resources continue to race on up, and it looks like a breakout from a breakout, on the chart, as they hit $17.50, up 59c today.

The stock has so much happening it is taking time for the market to price this one in such a bullish sector. The existing mines will peak in a few years at 6.2mtpa, but the other tenements and projects will take this up near to 20mtpa in about 5 years time. This excludes the huge 5 billion tonnes of sub-bitumous coal at Phillipson tenement, S.A. and the present exploration for other metals on the area. Felix also have iron ore royalty interests at Hawks Nest S.A., and lignite interests in Northern Ireland.
 
noirua said:
Felix Resources continue to race on up, and it looks like a breakout from a breakout, on the chart, as they hit $17.50, up 59c today.

The stock has so much happening it is taking time for the market to price this one in such a bullish sector. The existing mines will peak in a few years at 6.2mtpa, but the other tenements and projects will take this up near to 20mtpa in about 5 years time. This excludes the huge 5 billion tonnes of sub-bitumous coal at Phillipson tenement, S.A. and the present exploration for other metals on the area. Felix also have iron ore royalty interests at Hawks Nest S.A., and lignite interests in Northern Ireland.
Click to expand...

Yep its very hard to forecast from here but does look very bullish

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 7.8 63.6 204.5 166.4
DPS 6.0 10.0 18.8 17.8

Btw what coal stocks are you holding atm?

thx

MS
 
Hi Folks,

I've been in Felix since 2005. I'm a value investor and bought into it because at the time I thought it was very undervalued given the current price of coal. I also thought that coal would appreciate more than oil (hasn't happened yet!). I still think Felix is undervalued and I did some work today on my valuation model.

I think it's worth around $25 and I've published some sensitivities on my blog.It's no longer my favorite idea but I'm not selling any at today's price.

Cheers, Neil
 
michael_selway said:
Yep its very hard to forecast from here but does look very bullish
Btw what coal stocks are you holding atm?
thx MS
Click to expand...

Hi M_S, I'm not in that many coal stocks, on the otherhand there are not many producers left, and some may have to wait for the Government to spend that $21 billion quickly on ports, rail and other infrastructure, as the big miners have tied up all the exports from the docks. Centennial and Felix have a piece of the action with NCIG ( Newcastle Coal Infrastructure Group) and I'm staying with them. Gloucester Coal have Korean, AMCI (American private coal company) and other big investors who should hold sway in bartering for rail and export space, has semi-hard coking coal, and hopefully will continue to do well. Cockatoo Coal and Pike River Coal are hopefull producers but in the gamble stakes, who knows for sure.
Wesfarmers, more a conglomerate, still have coal interests and may come good in time, how much time, who knows? I also hold the Anglo/Swiss Xstrata, though not really a clean coal stock and no Aussie quote, as yet.
Not a good idea to follow me into stocks, afterall - what do I know!?
 
Felix Resources continued their upward march today and peaked at $20.80 +$2.10 before falling back to $20.58.
There are thoughts that something might happen when the result comes from the NSW Appeal Court, concerning an appeal by Xstrata's Ulan Coal Co, over the Moolarben Project.
Speculation has been going the rounds since Xstrata's interest in Macarthur Coal was announced.
 
noirua said:
Felix Resources continued their upward march today and peaked at $20.80 +$2.10 before falling back to $20.58.
There are thoughts that something might happen when the result comes from the NSW Appeal Court, concerning an appeal by Xstrata's Ulan Coal Co, over the Moolarben Project.
Speculation has been going the rounds since Xstrata's interest in Macarthur Coal was announced.
Click to expand...

Hm eventually all of these coal producers will be taken over. What do you think of that?

thx

MS
 
michael_selway said:
Hm eventually all of these coal producers will be taken over. What do you think of that? thxMS
Click to expand...
Hi m_s, the only way they can avoid being taken over is for the major holders to stubbornly hold on, and that is the case as far as Gloucester Coal and Felix Resources are concerned.
There are thoughts, though no reports anywhere, that there may have been some stake building in Felix recently and that one holder, no longer with Felix management, may be vulnerable to unloading their stake.
The 5 billion tonne sub-bitumous coal tenement at Phillipson in S.A. is now being explored for resources other than coal. Hard to put a value on this chunky asset with the Adelaide to Darwin rail line running through the middle of it. Sub-bitumous coal has jumped in value and providing coal prices hold up this could become a mega-value asset, IN TIME.

Felix closed the week at an all-time high of $23.10.
 
noirua said:
Hi m_s, the only way they can avoid being taken over is for the major holders to stubbornly hold on, and that is the case as far as Gloucester Coal and Felix Resources are concerned.
There are thoughts, though no reports anywhere, that there may have been some stake building in Felix recently and that one holder, no longer with Felix management, may be vulnerable to unloading their stake.
The 5 billion tonne sub-bitumous coal tenement at Phillipson in S.A. is now being explored for resources other than coal. Hard to put a value on this chunky asset with the Adelaide to Darwin rail line running through the middle of it. Sub-bitumous coal has jumped in value and providing coal prices hold up this could become a mega-value asset, IN TIME.

Felix closed the week at an all-time high of $23.10.
Click to expand...

Hm who woudl have thought! :)

Btw $150+ per tonne now thermal coal prices!

02-May-08 133.00
09-May-08 133.63
16-May-08 134.85
23-May-08 138.35
30-May-08 151.70

29_5_2008_weekly.gif


NHC a star performer as well!

thx

MS
 
zaz said:
Hi Folks,

I've been in Felix since 2005. I'm a value investor and bought into it because at the time I thought it was very undervalued given the current price of coal. I also thought that coal would appreciate more than oil (hasn't happened yet!). I still think Felix is undervalued and I did some work today on my valuation model.

I think it's worth around $25 and I've published some sensitivities on my blog. It's no longer my favorite idea but I'm not selling any at today's price.

Cheers, Neil
Click to expand...

Has anyone else done any work to determine the impact of the extra 3% royalty? I think it knocks about 50c off fair value bringing it down from around $25 to $24.50.

I love the idea that the QLD govt can reach into my pocket and take out what they like :)

Cheers, Neil
http://longterm.blogspot.com
 
zaz said:
Has anyone else done any work to determine the impact of the extra 3% royalty? I think it knocks about 50c off fair value bringing it down from around $25 to $24.50.

I love the idea that the QLD govt can reach into my pocket and take out what they like :)

Cheers, Neil
http://longterm.blogspot.com
Click to expand...

not much of an impact, but still

Date: 10/6/2008
Author: Michael Vaughan
Source: The Australian Financial Review --- Page: 20
Felix Resources has attracted plenty of attention as a takeover target, but CEOBrian Flannery is focused on the company's strategic direction.Felix's share price has doubled in three months, drawing an increasingnumber of investors, but Flannery is determined that selling equity is no longerin the company's best interest for tax regime purposes. The companyrecently announced a new dividend policy. Felix will open a fifth coal mine in2010, and aims to triple annual overall output to 16 million tonnes by 2012

thx

MS
 
very very decent increase in today's prices

was reading this article on bloomberg-not much talk about felix it self-

Felix, Centennial Surge on Coal Price, Profit Outlook (Update1)

By Jesse Riseborough

June 17 (Bloomberg) -- Felix Resources Ltd., the best performer on Australia's benchmark index, rose the most in more than three years in Sydney trading, leading gains by coal-mining companies after the price of the fuel reached a record.

Felix jumped as much as A$2.25, or 12 percent, to A$20.70, the biggest gain since December 2004, and traded at A$20.56 at 2:03 p.m. Sydney time on the Australian stock exchange. Centennial Coal Co., which was raised to ``equalweight'' from ``overweight'' by Morgan Stanley today, rose 8.5 percent to a record A$6.13.


www.bloomberg.com/apps/news?pid=20601081&sid=adTPVZeDG4_c&refer=australia

Thanks

Nick--
 
Felix Resources recovered to close at $22.03 after the big sell off in recent weeks. After thermal coal went above US$160 a tonne and talk on Bloomberg of the price reaching US$180 or more, later this year: Felix may well continue to follow the coal price up.
 

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