FLX - Felix Resources

[Quillan]

Hang on Noirua, Flannery said recently he did not anticipate any delay in the commissioning of Moolarben. You know something he doesn't? I see the Press is saying Xstrata is still interested in bidding. Their cause will not be helped by this announcement below. Words such as "foot" and "shot" come to
mind !!
This from Globalcoal. Any FLX followers not familiar with this site should visit it regularly for the Coal news items and the Friday fix for Newcastle thermal prices.
This letter below just written to Flannery. He knows I am quite a large shareholder in individual terms.

---------------------------------------------------------------------------

Xstrata offers coal contracts to Japanese at $175/t
Xstrata Plc (XTA.L: Quote, Profile, Research, Stock Buzz) has tabled its offer to some Japanese utilities for thermal-coal term contracts starting in October at $175 a tonne, up 125 percent from a year ago, a source familiar with negotiations said on Monday.

"They offered (coal) at $175 a tonne during negotiations last week," said a source who is familiar with the Japanese position.

Reuters - 1-Sep-08


As reported now on Globalcoal site. Included in email to Flannery
----------------------------------------------------------------------------
Hi Brian,
Shareholders need to understand what this means. Does it mean Xstrata is offering to tear up the existing April-April contract and charge an extra $50 to extend the contract through to October 2009?
For a Thermal user to think this is a good idea, they would have to be thinking that the contract price next April will be at least $225, to be in a break-even situation by October 2009.
Xstrata's offer price.
Price April to April 2009 = $125+$175/2 = Av $150 for the year to April 2009 + $175 to October 2009, giving a total paid for 18 months on say 1m tonnes pa of $150m,--- plus $175 0n 500,000 tonnes in 6months to October 2009.= $237.5 million
Existing contracts pay $125m for 1mt to April 2009, so they would need to assume a price of $225 per tonne for 500,000 tonnes in the first 6 months from April 2009, to pay the same costs for 1.5mt in the 18 month period.-- ie $237.5 million up to October 2009.
Does Xstrata know something we don't? Like war with Iran, which Bush would like to instigate, and Obama has shown his eagerness for, by cementing his bond with US-Israeli Groups.?
Either the Japanese will laugh in Xstrata's face, or there is some very serious merit in this proposal? Now Xstrata is not going to insult the Japanese customers with a wholly outrageous price proposal, and I must assume they are saying, "Tie this price of $175 down whilst you can still get it."
In which case we must be looking at $225 or more next April?
If the Japanese bite, will other contractors such as Felix follow suit?
I am thinking aloud as this letter will soon be on the Felix blog site,
Aussie Stock Forums.
This must be a hugely important negotiating factor with Vale or any other suitor, and I cannot imagine any Felix shareholders being bought out on the cheap when this news gets around.
Even you Brian will surely not accept a price of $40 a share if there seems to be strong evidence of a Thermal price well in excess of $150 within 7 months?
It's OK, I'm thinking aloud and realise you couldn't answer the question until someone comes out with an offer. Then we will see if it is to be a hostile bid
or not !!
I would think a statement from you would be keeping shareholders informed about the implications behind this Xstrata offer. For once they appear to have done Felix a favour !!
Slightly odd this, since it is now rumoured they would like to bid for Felix again.

Best wishes,
John.

 

[noirua]

An update from the Mudgee on the updating of the 1992 mining act and whether it can be retrospective in the case of Ulan v Moolarben: http://mudgee.yourguide.com.au/news...al-battle-prompts-changes-to-act/1264042.aspx

 

[michael_selway]

An update from the Mudgee on the updating of the 1992 mining act and whether it can be retrospective in the case of Ulan v Moolarben: http://mudgee.yourguide.com.au/news...al-battle-prompts-changes-to-act/1264042.aspx

Still very good

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 208.6 268.2 249.8
DPS 53.0 106.4 119.4 157.6

Back
Date: 29/8/2008
Author: Mark Ludlow
Source: The Australian Financial Review --- Page: 58
Vale global coal boss, Renato Paladino, declined to speak on the group'splans for Felix Resources in his address to the Brisbane Mining Club. Reportsrecently emerged that Vale had secured access to the listed Australian coalminer's data room. Paladino did, however, state that his Brazilian group iswell-positioned to withstand any supply and infrastructure challenges

Date: 29/8/2008
Author: Michael Vaughan
Source: The Australian Financial Review --- Page: 58
The New South Wales Government has flagged plans to amend the Mining Act toprovide greater clarity on the issue of land rights. The move follows a disputebetween Felix Resources and Xstrata regarding land rights at the Moolarben coalproject. In late August 2008, the state Court of Appeal ruled in favour ofXstrata on the matter

Date: 29/8/2008
Author: Sarah-Jane Tasker
Source: The Australian --- Page: 27
Felix Resources has reported net income of $A188.5 million for the year to 30June 2008. Revenue increased 82 per cent to $A440.6 million and the companypledged to provide shareholders with a $A0.50-a-share final dividend. Strongcoal prices contributed to the results. Felix anticipates cash flows for fiscal2009 will be strong. The group is currently involved in a legal dispute withXstrata over the Moolarben coal project in New South Wales

thx

MS

 

[noirua]

Still very good

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 208.6 268.2 249.8
DPS 53.0 106.4 119.4 157.6 thx MS

Some excellent info m_s. Coal miners have fallen badly with the whole sector. Probably a combination of the view that they became overpriced and the lack of faith, that coal prices can stay high with oil in sharp reverse.

The other side of the coal coin, not believed by sellers, is that a combination of the weak Aussie$, against the US$, will cushion any falls in coal prices.

Hopefully, the coal sector, especially in semi-soft coking coal, will remain very strong due to the number of power stations being built.

 

[pacestick]

Questions from a learner

1. does vales refusal to answer questions on Felix at recent Brisbane conference indicate an interest
2 If the court wanted submissions by 28/08/2008 when will the court make orders
3.if the prospective buyer succeeds in their objective without a takeover by say buying out several directors what does this do to the share price


just wondering

 

[noirua]

Questions from a learner

1. does vales refusal to answer questions on Felix at recent Brisbane conference indicate an interest
2 If the court wanted submissions by 28/08/2008 when will the court make orders
3.if the prospective buyer succeeds in their objective without a takeover by say buying out several directors what does this do to the share price

just wondering

Hi pacestick, MD Brian Flannery, did promise we would not end up with the same situation as at MCC. That is, a larger holder selling stock and thereby blocking a potential bid.
From this, we can only trust that he has the word of all the major holders, who have 69% of Felix, that they will act together and not break ranks.

On the NSW Court of Appeal making orders. These I think were the words of Mr Brian Flannery, "the appeal court has not yet made any orders concerning the Ulan Land as to how this will affect the mining permit for Moolarben...". Submissions were due in within 21 days, but I believe further time has been given due to clarifications being sought.

On the Vale replys about any interest in Felix Resources. It is now known that Vale and Shenua Energy have been shown around Yarrabee, Ashton and Minerva mines. Maybe nothing will come of it all.

 

[pacestick]

thankyou I wondered why we hadnt heard from the court orders and while nothing may come of the interest shown by other miners. the fact that there is more than one is a vote of confidence in the future of the company ihttps://www.aussiestockforums.com/forums/images/smilies/smile.gif

 

[Quillan]

I wonder that no one, especially noirua has commented on my Post#681?
The fact that Xstrata thinks it can sell the idea of charging $175 for thermal coal from next month to some of its customers amazes me.

As I suggest, the only way Xstrata can persuade customers that this is a good deal is if they can convince customers that contract prices for April 2009-10 will be above $225.

Could tightness in the market be enough to cause this? If there is to be a serious confrontation with Iran in the next few months, you can bet the plans are already in place. Could that account for the huge rise in the Dollar against all currencies in the last few weeks? Wars are always good for the dollar. The state of the borrowings by the US Government means that the country is technically bankrupt

Those in the know will have already bet millions of dollars on Forex, if they are privy to such Bush plans.Could be his final swansong to make his close buddies even richer, and ensure plenty of Consultancy Fees and Directorships in his retirement?

Doesn't this purported attempted deal, which may have gone through, [we don't know], have enormous significance in any price negotiations for FLX?
I have passed this quote from Globalcoal to Flannery, back to Global London Office, and to Bloomberg.au for their comments or flaws in my argument.

I realise Flannery cannot reply at this point, but this possible deal by Xstrata has huge implications for coal-related costs everywhere, so these commentators should surely express an opinion. No responses so far.

If you are a FLX shareholder you should want to give this info max publicity with any media outlets you can think of. We need to get this debate under way, as part of our defence strategy. Local radio,TV, Newspapers etc.

Everything is not decided behind closed doors.The pressure on FLX to ensure we are not carpetbagged, just because it suits them to get out now, if that is the case, will be enormous, if Xstrata attempts to defend the price of $175 in public. We may bring this about if sufficient fury erupts in the media, at the suggestion that $225+ is on the cards for next April, which is only 7 months away.

USD$100 on the price of thermal is worth probably AUD$570m on the profits, less say 7% extra paid in state Taxes on the price, say $530m after this tax-- less Corporation Tax at 30%, gives net earnings of $370m, or $1.90 per share. If that is worth a PE of 20, then this $100 increase would be worth $38 on its own, to the FLX share price.

I assume in these rough calculations that PCI prices would increase at the same rate as thermal prices next year, if the proposition that $225+ is on the cards for next April.
I also assume that total [attributable to FLX] production next year will be 5mt
for all coals.

Lastly, where does the recent contributor--can't scroll down to check, but someone with a handle like w_s get his/her earnings/dividends for the next 5 years from? About 4 Posts down--#684?

I shall be very happy to stay with the present management if next year's dividend turns out to be 106 cents as suggested !!

 

[Quillan]

Discovered this in plugger.com.au which brings together all news items on Companies. Writing from Malta, I might miss some comments which you find locally.This was published on Sunday, but I had not heard about the story. Note also further down the date order a posting suggests Xstrata is still interested.

"DJ Felix Resources Draws Interest From BHP and Rio - Report
Sun. September 07, 2008; Posted: 06:22 PM
Stocks RSS
:batman:
- FLRFF | Quote | Chart | News | PowerRating -- BHP Billiton Ltd. (BHP.AU) and Rio Tinto (RIO.AU) have reportedly joined Brazil's Companhia Vale do Rio Doce (RIO) in looking at purchasing coal miner Felix Resources Ltd. (FLX.AU).

Felix said in July it had been approached by a number of parties over a potential takeover and was holding discussions.

Without citing sources, The Australian Financial Review newspaper reported Monday in its Street Talk column that BHP and Rio have joined Vale in the data room for Felix, but said it is not clear if they have a genuine interest in the assets.

The newspaper said it appears there has been no serious interest from Chinese groups in bidding for Felix.

 

[michael_selway]

Discovered this in plugger.com.au which brings together all news items on Companies. Writing from Malta, I might miss some comments which you find locally.This was published on Sunday, but I had not heard about the story. Note also further down the date order a posting suggests Xstrata is still interested.

"DJ Felix Resources Draws Interest From BHP and Rio - Report
Sun. September 07, 2008; Posted: 06:22 PM
Stocks RSS
:batman:
- FLRFF | Quote | Chart | News | PowerRating -- BHP Billiton Ltd. (BHP.AU) and Rio Tinto (RIO.AU) have reportedly joined Brazil's Companhia Vale do Rio Doce (RIO) in looking at purchasing coal miner Felix Resources Ltd. (FLX.AU).

Felix said in July it had been approached by a number of parties over a potential takeover and was holding discussions.

Without citing sources, The Australian Financial Review newspaper reported Monday in its Street Talk column that BHP and Rio have joined Vale in the data room for Felix, but said it is not clear if they have a genuine interest in the assets.

The newspaper said it appears there has been no serious interest from Chinese groups in bidding for Felix.

Hm yeah could be interesting

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 208.0 284.4 240.2
DPS 53.0 111.0 122.8 130.0

Date: 29/8/2008
Author: Mark Ludlow
Source: The Australian Financial Review --- Page: 58
Vale global coal boss, Renato Paladino, declined to speak on the group'splans for Felix Resources in his address to the Brisbane Mining Club. Reportsrecently emerged that Vale had secured access to the listed Australian coalminer's data room. Paladino did, however, state that his Brazilian group iswell-positioned to withstand any supply and infrastructure challenges

thx

MS

 

[Quillan]

Scrolling down to the Xstrata news item re $175 a tonne on plugger.com, 9 days ago, referred me to the original item in Business Spectator, which suggests a deal could be done at $160-$ 175, and also names the Japanese companies concerned,
Consequently I have just emailed this to BS, and copied to Flannery.at Felix.

"In your last para above I think you mean "potential" not "risk"?
This Xstrata offer to Japanese companies. Simple Maths says Xstrata must persuade them that next April prices must be above $225 for the deal to be at break even by October 2009, for any company which agrees to pay $175 from this October.
Another interesting point. Xstrata is said to be still interested in bidding for Felix Resources.Nice piece of defence material for FLX, isn't it?
"But we must base the valuation of our company on your declared submission that Thermal contracts next April will be above $225."
Or even to quote to another bidder."Xstrata reckons next April's contract price will be in excess of $225, so we will negotiate any offer you intend to make on that basis."
The possible extra US$100 on this year's $125 Thermal price is worth ON ITS OWN AU$38 per share to FLX, assuming a PE of 20, and allowing 7% sales tax, plus 30% corporation tax.
Add the present price of $19.20, which makes no allowance for the value of Moolarben, the Jewel in the Crown, which all bidders are after, and we come up with $57.
Anything south of this FLX shareholders should reject.
10mtpa from Moolarben in 2-3 year's time would value Moolarben at something like $60 a share, assuming a thermal price of $125 NOT $225, and a PE of 20.
This is a carpetbagging exercise by the surrounding hyenas. Send them packing !!

 

[noirua]

I think we should all understand that China has at the moment stopped its Coal companies from selling on the open market. This restriction will be lifted sometime in the future. Held up by continued deaths at smaller mines in the last few weeks.
The above does put some uncertainty in the minds of investors, whether small or large, as to what the future coal price will bring.

Once the Newcastle Port expansion is completed, and remember the other expansions in Queensland, a lot more coal will hit the markets. Moolarben and Anvil Hill (recently renamed) will come onstream in 2010, as well as other mines in Australia.

So coal prices in Australia may well stay steady in Aussie$ terms but may fall back, as anticipated by Felix MD, Mr Flannery (citing his comments at the Sydney Mining Conference), in US$ terms.

Also, Felix contracts do not all start from 1st April. The dates are 1st January, 1st April, and 1st June, with some semi-soft coking coal prices fixed at no specific date.

Xstrata stock has fallen over 50% and they are having to raise a large sum for the takeover of Lonmin. It looks doubtful that they will bid now.

Only BHP Billiton and Rio Tinto are able to bid with a part stock alternative (the bid by BHP for RIO could complicate matters). They also have UK quotes that will satisfy investors there and German holders would probably prefer a European quote.

 

[noirua]

It seems that the Anglo/Swiss Xstrata Mining are about to drop out of their bid for the London quoted Lonmin, so the London Evening Standard says. The bid now looks too high as the platinum price falls and other previously interested parties say, they are no longer interested.

It now makes it quite a bit more likely that Xstrata will renew their interest in Felix Resources.

 

[pacestick]

bring it on be intersting to see how quick others are in responding to first mover.Im still looking for aq significant jump on fridays close just to scare other bidders off

 

[noirua]

bring it on be intersting to see how quick others are in responding to first mover.Im still looking for aq significant jump on fridays close just to scare other bidders off

Hope your right. I have now held Felix stock for nearly 26 years. I last hoped for a bid in 2000, it never came.

 

[pacestick]

I think we should all understand that China has at the moment stopped its Coal companies from selling on the open market. This restriction will be lifted sometime in the future. Held up by continued deaths at smaller mines in the last few weeks.

It would appear that more deaths have occured at mines in china although not coal it may further delay the recomencement of exports

the death toll from a mudslide caused by the collapse of a mine waste reservoir in northern China has climbed to 254, state media said on Sunday.
ADVERTISEMENT

It could take several more days to dig out areas where villagers believe more bodies are buried, Xinhua said

 

[michael_selway]

Hope your right. I have now held Felix stock for nearly 26 years. I last hoped for a bid in 2000, it never came.

Hm it good that you have held on esp in recent years

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 208.0 265.4 362.3
DPS 53.0 111.0 118.9 158.5

thx

MS

 

[noirua]

Hm it good that you have held on esp in recent years
Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 208.0 265.4 362.3
DPS 53.0 111.0 118.9 158.5

thx MS

I suppose we all look at that chart and see two lines drawn showing a marked downward trend: Then pointing out the bid situation and continued high coal prices. Are we brave holding on or ...?

 

[zaz]

I suppose we all look at that chart and see two lines drawn showing a marked downward trend: Then pointing out the bid situation and continued high coal prices. Are we brave holding on or ...?

Buffett has an appropriate quote (as he does for most things!).

We're trying to pick up pennies in front of a steamroller.

 

[pacestick]

I cant see the Lehman situation not reducing the possibility of takeover unless buyers were cashed up in their own right
Love to be wrong