FLX - Felix Resources

[noirua]

Felix Resources, once owned Way Linggo gold holdings in Indonesia and other assets, thought to have been converted into royalties between 1999 and 2003 (Questions have been raised about this) have once again surfaced. These holdings were once valued at C$300 million and were later of little value due to the slump in the gold price.
This matter has now been raised to Mr Brian Flannery, MD of the company, and hopefully this time the matter will not be ignored.

Further information and very many links to follow.

Hi m_s et al, I have now sent two emails to Felix MD, Mr Brian Flannery to update him on this past matter that he may not be fully up to speed on.
This "Takeovers Panel" decision in 2003 at 12 tells the position as it stood on these gold and silver royalties (this has been disputed and I hesitate to say that the panel was in error) though the KMPG report was not in full certainty : http://www.takeovers.gov.au/display.asp?ContentID=657
Further information has come to light concerning these holdings that now involve Kingrose Mining. I have sent emails to their "standin" MD, Mr David Hatch: http://www.asx.com.au/asxpdf/20080429/pdf/318tdxnnbnc8s0.pdf

 

[noirua]

Felix shares have jumped to $19.50, up $1.91, after advising, through the ASX, it has received interest from several parties.
Interest is preliminary, incomplete, non binding and conditional.
No formal written offer has been received.

 

[noirua]

Felix shares have jumped to $19.50, up $1.91, after advising, through the ASX, it has received interest from several parties.
Interest is preliminary, incomplete, non binding and conditional.
No formal written offer has been received.

Bloomberg have mentioned that Arcelor Mittal, known to act with other parties in bids, are interested in coal assets.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=asEhAwPMAksI

 

[noirua]

Bloomberg have mentioned that Arcelor Mittal, known to act with other parties in bids, are interested in coal assets.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=asEhAwPMAksI

Arcelor Mittal have now been tied in with POSCO and Citic as possible interested parties in bidding for Felix. Confidence does not appear that high at the moment with Felix under $20 a share against a high this year of $23.50.

Former White Mining shareholders have 48.7% of Felix and AMCI 19.2%.

 

[michael_selway]

Arcelor Mittal have now been tied in with POSCO and Citic as possible interested parties in bidding for Felix. Confidence does not appear that high at the moment with Felix under $20 a share against a high this year of $23.50.

Former White Mining shareholders have 48.7% of Felix and AMCI 19.2%.

Hi hopefully it wont be too cheap like NHC and sale of Saraji Project to BHp recently


Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 7.8 43.6 224.9 254.2
DPS 6.0 10.3 19.1 21.6

Date: 28/7/2008
Author: Michael Vaughan; Brett Clegg
Source: The Australian Financial Review --- Page: 1/16
Directors of Australian-listed coal mining group Felix Resources have receivedexpressions of interest by larger takeover predators. Some limited due diligencehas been performed by these entities for the $A3.5bn business, which could addto a recent consolidation trend in the sector. Felix forecasts a 200% increasein annual output for its mines in Queensland and New South Wales by 2012, toclose to 16 million tonnes. The board owns about 57% of the issued scrip, withprivate equity investor AMCI also holding a large stake. On 25 July 2008 thestock closed at $A17.59, up $A0.48 for the day

FELIX RESOURCES LIMITED ADVISES IT HAS RECEIVED INTEREST FROM SEVERAL PARTIES
The Board of Felix Resources Limited (“Felix”) advises that several parties have expressed interest in relation to a potential change of control transaction.
At this stage the interest shown by these parties is preliminary, incomplete, non-binding and conditional. No formal written offer has been made to Felix.
The Board has appointed Citigroup Global Markets Australia Pty Ltd and Wilson HTM Corporate Finance Ltd to assist it.
There is, and can be, no assurance that any transaction will be proposed, but the Board undertakes to keep shareholders informed if matters develop.

http://business.smh.com.au/business/suitors-circle-felix-resources-20080728-3m0g.html

Thx

MS

 

[noirua]

Felix continue to strengthen despite negative markets elsewhere. Still a touch shy of $20 in early trading as it looks as if the key holders, former White Mining and AMCI, are looking to retain a key stake in Felix Resources despite, maybe, accepting giving up about 51% - 60% of the company, far short of the important 90%.

 

[Julia]

Has there been any further comment about potential take-over?
The SP seems to be giving back much of yesterday's gains.

 

[noirua]

Has there been any further comment about potential take-over?
The SP seems to be giving back much of yesterday's gains.

Hi Julia, Looking at previous deals by Felix over Moolarben it does look as if the major holders are negotiating a behind the scenes deal.

They may well sell down their holdings in Felix with one selling up completely. This will most likely see a price about 5% - 7% above yesterdays closing price. A deal will be done, if this happens, to sell a large quantity of coal for many years ahead.

Others now know they must move quickly IF they are interested in Felix, but I doubt they'll come in and bid around $27 - $30 in cash to get the company. BHP or RIO are the only companies in position to offer their own stock and thus let holders out of the capital gains tax trap.

Interesting days ahead.

 

[Julia]

Hi Noirua, well if that's the case, why would you think the SP dropped today?
In the scenario you describe, I'd have thought there would have been an additional rise today?

 

[noirua]

Hi Noirua, well if that's the case, why would you think the SP dropped today?
In the scenario you describe, I'd have thought there would have been an additional rise today?

What you say would seem so Julia, but the Felix case is complex indeed.

The appeal by Ulan (90% Xstrata) is going through the NSW appeals court and this decision has now been delayed for six weeks. Also the talks between Ulan, Felix and the NSW Mining Warden are 3 weeks delayed, reference purchasing land from Ulan covering the Moolarben tenement, 80% owned by Felix through Moolarben Coal. This appeal could yet end up in the Federal High Court in Canberra and delay the Moolarben development.

There could be talks going on, there were talks last year, between representatives of Felix and Xstrata. Some think Xstrata are after 29% of Moolarben and half of Felix's stake in NCIG - Felix can export large amounts of extra coal out of Newcastle Port extension from 2010, Xstrata are light in NSW on port capacity.
Xstrata may agree to pay for the rest of Felix's development of Moolarben, gift them 20% of the Moolarben land owned by Ulan, plus $100 million or so, in exchange for 29% of Moolarben.

The above would not stop the Consortium grabbing a large stake in Felix and only if they hold 30% or more would a bid for the rest of the stock follow. We could be left high and dry if the Consortium pull out, or take less than 30%. The consortium are only really after coal supplies from all of Felix's mines and particularly semi-soft coking coal out of the Hunter Valley, Ashton Mine.

The consortium could yet agree to purchase a 49% stake in the Yarrabee Mine, QLD, as another party dropped out last year. An outside possibility if other agreements fail.

Always a chance for a bid from RIO but the Xstrata mess may keep them on the sidelines as a bid would have to be very high. Therefore many do not thing they will try. RIO are also in a takeover bid situation with BHP that may preclude their being able to bid, I don't know.

Felix's Fourth Quarter Report is out on Wednesday and it should show good sales and mined coal in that quarter. Problems at the Ashton Mine should have been out of the way and shipping of Minerva Coal, QLD, should have been excellent as it is not mixed and goes in single ship loads.

 

[noirua]

The Chief Mining Warden, Wardens Court, Muswellbrook, has set a price of $580,323.28 as the purchase price, for which Felix must pay Ulan Coal (90% Xstrata, 10% Mitsubishi) for the tenement covering 20% of Moolarben.

Felix will go ahead with development in August. Equipment orders will now be secured for delivery.

Felix closed at $20.22 +82c on the present bid situation.

 

[michael_selway]

The Chief Mining Warden, Wardens Court, Muswellbrook, has set a price of $580,323.28 as the purchase price, for which Felix must pay Ulan Coal (90% Xstrata, 10% Mitsubishi) for the tenement covering 20% of Moolarben.

Felix will go ahead with development in August. Equipment orders will now be secured for delivery.

Felix closed at $20.22 +82c on the present bid situation.

Hm not bad today

Date: 29/7/2008
Author: Barry FitzGerald
Source: The Age --- Page: B2
Speculation about a possible takeover bid bolstered the share price ofAustralian-listed Felix Resources on 28 July 2008. The stock gained $A2.11 toclose at $A19.70 after the mining company advised shareholders that it has beenapproached by potential suitors. Felix stressed that there has been no formaltakeover offer as yet. Xstrata is widely seen as the most likely bidder forFelix. Any bid would need the support of Felix directors, who control some 57per cent of the coal miner's shares

Date: 29/7/2008
Author: Michael Vaughan
Source: The Australian Financial Review --- Page: 14
Australian coal miner, Felix Resources, is allowing potential suitors access toa data room. The company has received several approaches about a possibletakeover. The prospect lifted its share price by $A2.11 to $A19.70 on 28 July2008, making the company worth nearly $A3.9 billion. A takeover deal would haveto be friendly, as four of the five directors control nearly 49 per cent of thecompany

thx

MS

 

[noirua]

Hi m_s et al, Don't believe in this friendly comment. Last time RMM sold their 19.2% holding in Felix Resources (Chairman of Felix was with RMM) whilst MD Brian Flannery was negotiating a price for Moolarben with Xstrata. Reports were that he nearly fell off his chair when he was told the Companies Chairman had sold out under him. Xstrata went mental over it and dragged Felix through court after court.

Brian Flannery ran the Ulan Mine before Xstrata took it over (its alongside Felix's Moolarben Project (80% owned)) so he's ripe to join the Xstrata Board for a mint. He doesn't need it now really as he and other directors, including manager Joseph Butta, are among minings richest in Aus.

Only the appeal situation left now in this court battle. Will Xstrata bid? They want a chunk of Moolarben, 29%, may pay A$500 million for it - would benefit Felix as well. Xstrata stock price is down over 20% and a bid in stock and cash would raise questions, needs to be over $25.

Consortium bid? I don't have that much confidence in this behind the scenes possible deal.

Felix Chairman is getting on a bit and former CFO, David Knappick may want out. AMCI are known for selling interests and will sell out, IMHO. UK and German holders that number over 10% of Felix will gratefully take their cash and run.

RIO: Do they want to get into a bidding war for Felix Resources. This could go on for a longtime. Unless they bid $30 in cash or and stock. Cost A$5.9 billion - Too much???

 

[noirua]

Hi m_s et al, I have now sent two emails to Felix MD, Mr Brian Flannery to update him on this past matter that he may not be fully up to speed on.
This "Takeovers Panel" decision in 2003 at 12 tells the position as it stood on these gold and silver royalties (this has been disputed and I hesitate to say that the panel was in error) though the KMPG report was not in full certainty : http://www.takeovers.gov.au/display.asp?ContentID=657
Further information has come to light concerning these holdings that now involve Kingrose Mining. I have sent emails to their "standin" MD, Mr David Hatch: http://www.asx.com.au/asxpdf/20080429/pdf/318tdxnnbnc8s0.pdf

Kingrose Mining (KRM) have confirmed, through their MD, that they are aware of the royalties over the Way Linggo Project, in favour of Felix Resources. They seem very much on the ball.
Felix Resources must now be aware. Having been sent several emails on the subject of Way Linggo, but have not yet confirmed.

 

[michael_selway]

Kingrose Mining (KRM) have confirmed, through their MD, that they are aware of the royalties over the Way Linggo Project, in favour of Felix Resources. They seem very much on the ball.
Felix Resources must now be aware. Having been sent several emails on the subject of Way Linggo, but have not yet confirmed.

Hi Noirua, FLX has been one of the very few superstars of late on the ASX, even in this sort of market, its unbelievable...and you had thsi stock ever since it started!

thx

MS

 

[noirua]

Hi Noirua, FLX has been one of the very few superstars of late on the ASX, even in this sort of market, its unbelievable...and you had this stock ever since it started. thx MS

Yes, it's the final days of Felix Resources. Any bidders know that it's a straight gamble on the price of coal.

Felix will produce 13 (million tonnes per annum)mtpa around 2012, 16mtpa around 2014 and 20mtpa around 2018.
In 2012 an average price for coal at US$100 per tonne = profit about A$400 million, US$125 per tonne = $670 million; US$150 per tonne = A$950 million; and US$200 per tonne = $1.4 billion. Add 50% by 2020.
All a gamble this and fair bet looks for profits around A$800 million in 2012, a forward PE around 8 at A$21.88 a share. At A$1.4 billion profit a PE of 4.5. (PE allows for a full tax bill at 30%).

So Felix are anywhere from a bit expensive to quite cheap, you pays your money and makes your choice.
What is the synergy value worth to Xstrata? Well, quite a bit, but they are not known for paying over the odds.

BHP, Peabody, RIO and a few others could bid just to deprive Xstrata, and of course, the Consortium speaking to Felix are in the ascendancy at the moment.

 

[noirua]

The abrupt falls in the mining sector have come at an unfortunate time for the negotiations by Felix with other parties, concerning a change in major holdings or a bid for the company.
A realistic bid was set once at around the $30 -$35 level by some, but recent falls have pushed expectations well back to $22 - $26. The upper level only likely if other bidders came in.
Interestingly, it is more likely that several holders wish to abandon ship and know they can't sell into the tight market and may accept a bid for their holding below $22: The reason the price has moved back to $20.02 today, acknowledging as well the fall in the sector generally.

 

[noirua]

Felix Resources shares have been placed in pre-open and are in "TRADING HALT" pending an announcement.

 

[noirua]

Felix Resources shares have been placed in pre-open and are in "TRADING HALT" pending an announcement.

The halt is due to a decision issued on Friday afternoon to both parties in the appeal at the NSW Supeme Court of Appeal concerning the Moolarben Project, NSW: Ulan Coal (Xstrata 90% and Mitsubishi 10%) v The NSW Government and 1st defendendant Moolarben Coal (80% Felix Resources, 10% Sojitz, 10% Korean consortium): http://138.25.65.50/au/cases/nsw/NSWCA/recent.html

 

[noirua]

Decision of the NSW Supreme Court of Appeal on Friday 8th August 2008: Ulan Coal Mines (90% Xstrata and 10% Mitsubishi) v Minister for Mineral Resources and Moolarben Coal Mines (80% Felix Resources, 10% Sojitz and 10% Korean consortium): http://www.lawlink.nsw.gov.au/scjud...5dbd4806b7efcf20ca257496001b0360?OpenDocument