FLX - Felix Resources

[noirua]

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

Hi, I haven't checked the cash held situations of Vale, BHP and Rio yet, though I guess they are in good shape.

Xstrata looks a good deal poorer now and look set to dump their bid for Lonmin, and as their shares are down 60% from 12 months highs, a bid for Felix looks doubtful now.

The benchmark thermal coal price fell US$10 last week as some companies turned back to gas.
Hopefully the Aussie$ will fall with the coal price and save the day.

Companies holding lots of US$'s will see a Felix bid costing a lot less now. So, maybe a bid from a number of companies is likely now, even Peabody or AMCI themselves.

 

[michael_selway]

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

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

Hm do you think FLX is bullish or bearish at current prices?

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

 

[zaz]

Hm do you think FLX is bullish or bearish at current prices?

.....

thx

MS

I think that Felix is WORTH a lot more than it's currently trading for. Probably between 25 and 35 AUD (even more with the current AUDUSD).

However I expect the SHARE price is almost entirely supported by the possibility of a bid. In the absence of such a bid I'd expect the same as happend to MCC. A drop of 33%. I could easily see a bid producing 33% on the upside.

What do you think?

Cheers, Neil

 

[Quillan]

Vale is stacked with cash it raised when it proposed to take over Xstrata.
$13 billion rings a bell. No doubt Noirua will confirm or correct !!!
I still reckon the Xstrata connection with Flannery is important, and the proximity of Ulan to Moolarben may be more significant than we realise. If Xstrata had the financial lines set up to bid for Lonmin, then FLX is comparative chicken feed. Note the reasonable number of 60,000 plus share purchasers of FLX today

 

[zaz]

I try not to read too much into random noise but how did Felix manage to close up 4.2% today and go out near the high for the day!

 

[noirua]

I try not to read too much into random noise but how did Felix manage to close up 4.2% today and go out near the high for the day!

Interesting, though the types of trades do look fairly ordinary and picking off the fence does seem absent. Press comments have pointed towards Felix being undervalued despite the market turmoil. Maybe some see FLX as a good gamble in otherwise dire markets.

A bid of AU$26 would now cost about US$20.50 against US$24.60 not long ago (exchange rate London fix half hour ago, AU$1.277 to the US$1).

 

[Reefer]

The fall in the Aussie dollar must be cushioning the miners a fair bit imo. At around 78c against the USD at present and onlt two months back was 98c. 20% drop must add a little to the bottom line. Superb performance by Felix today.

 

[noirua]

Vale is stacked with cash it raised when it proposed to take over Xstrata.
$13 billion rings a bell. No doubt Noirua will confirm or correct !!!
I still reckon the Xstrata connection with Flannery is important, and the proximity of Ulan to Moolarben may be more significant than we realise. If Xstrata had the financial lines set up to bid for Lonmin, then FLX is comparative chicken feed. Note the reasonable number of 60,000 plus share purchasers of FLX today

Hi Quillan, Your figure of $13 billion might be right as "Companhia Vale Do Rio Doce" are generating cash at a high rate.
At the half way point for Y/E 2008, Vale had generated $6.4 billion cash and that generation may well be nearer $10 - $12 billion by now. They held about $1.6 billion cash at Y/E 2007, so it looks as if you're spot on. You must have done your homework.
They have liabilities of $6 to $7 billion, as a bit of a guess, to date.

At the market price , afternoon today in the States, Vale stood at $19.80 a share, giving a market cap of around $103 billion. The PE Ratio is 10.0 and yield 2.05%.

Stocks 12 month high was $44.15 and low $19.78.

 

[Quillan]

Thank you Noirua. Praise indeed !! But actually I read it somewhere recently. I wouldn't mind taking Vale shares straight. In these times of turmoil and with the Vale price down 50%, I think it would be a good holding over 5 years.
I see China's quarterly figures continue to leap ahead, so they seem set to continue their amazing pace, which must be good for all of Vale's minerals.
With Brazil and much of South America on an upward curve, it certainly seems a good geographic area to invest quite a good proportion of assets. Perhaps we will be appearing on the Vale blog site soon !!
Another tempting FTSE 100 share is KAZ.L, the mining conglomerate in KAZAKSTAN. Don't run a mile !! It's based in London and the President of Kaz owns a chunk of the company. Also the company does a lot of good work in the country. But a PE of 4.75? Has been Pounds 20 recently. It has just missed its copper production figures by a tiny amount due to cold weather and maintenance work, but just look at all the producing assets it has !!
The lost production was minimal when the copper price is riding high and it is#10 in the world in production. In June it was selling at P16. Now it's under 7 Pounds.Check it out. KAZ Not the pound, which of course would hurt me if the offer for FLX was in cash, and I wanted to bring it back to the UK. GBP-AUD has risen from $2.05 to $2.25 in the past few weeks.
My laptop has decided not to print the pound sign today. Could be an omen!!

 

[zaz]

Felix first mentioned a potential takeover on 28th July. It's now 6 weeks later. Does anyone have any insight into what takes so long? Any thoughts on whether the chances are increasing or decreasing?

Macarthur Coal first mentioned that they were in talks with "a 3rd party" on 21st April and it was around 1st July that he press announced Talbot's sale. That makes for about 9 weeks.

Obviously this is a premier asset etc... but with everything going on in markets right now it seems that the chances of a successful transaction are decreasing. That said BHP and Vale are cashed up but there are many awesome opportunities out there aside from Felix at today's prices.

After all a buyer only needs to evaluate the financials (a few days to a week), evaluate their ability to pay (a few days) and then start negotiations. The Moolarben situation only affects a very small portion of the value in Felix so I don't believe that's holding things up.

I'm mostly curious as to what other people's thoughts are.

 

[pacestick]

zaz
The board has so much of the shares tied up that a hostile bid would be most unlikely to succeed . The amount of companies who are supposed to have looked at felix would indicate that the first mover has to deal with a counter offer. While the company has significant other assets the unclear situation on the big M is a factor with a number of potential bidders. Therefore they may be waiting the court orders which seem to have disapeared into Dr whos Tardis.
that's my guess

 

[noirua]

There could be problems shortly starting with coke and coking coal. Priced from US$240 to US$300 per tonne for semi-soft to coke. With the US$ rising quickly we could see a sharp tumble to the US$160 - US$200 range for spot.
In Aussies it is helped by the 21% plunge in the currency.

Thermal coal is in shorter supply as everyone with semi-soft coking coal is shipping it instead of thermal, because of the higher price.
Prices up to US$194 for thermal, already retreating quickly, could go under the US$125 per tonne agreement from 1st April last.

The above setting is causing concern as it remains to be seen if the Newcastle Port problems help keep the price stronger than expected. QLD companies shipping out of Gladstone have mainly rail problems and are shipping out as fast as they can.

Felix have longer term agreements to supply coal. This especially applies to the Moolarben future mine.

 

[Quillan]

Here's my Penny's worth. We will either read of an agreed bid, or a withdrawal of all interests. There's no point in announcing a bid which doesn't have the approval of the Directors, and possibly of 67% of shareholders, so the negotiations will continue until an agreed price, or share swap is struck.
The good news is that the time taken suggests they are dealing with more than one bidder, unless Moolarben is the sticking point.
According to Flannery the outcome of any alterations in the Law concerning these 2 pieces of land, would probably only affect 5mt I think? of total production.The change in the law was to be a clarification.It seems this is in FLX's favour, since the Government didn't like Xstrata's behaviour over the disputed turf.
If there is only one bidder, then the bidder has the upper hand.
"That's our final offer. You know what will happen to the share price if it is not accepted."
But with 2 bidders, the scenario is very different. Neither wants to lose the prize to the other.
Good to see 2 sizeable trades at the end of today, but hardly surprising to see the price drifting a bit.
One wonders who is buying 100,000 shares at this stage, unless they know something?
Considering the state of the rest of the markets, and the falls in the major mining conglomerates, Felix shareholders have fared well. I'm hanging in there.
Whatever offer may have been made 6 weeks ago, will not now be so generous, unless there are 2 or more really keen to get their hands on these assets.

 

[noirua]

Good to see 2 sizeable trades at the end of today, but hardly surprising to see the price drifting a bit.
One wonders who is buying 100,000 shares at this stage, unless they know something?

Hi, I couldn't see these 100,000 trades you talked about. Early on there was a 246,090 T1-51, at $17.69 that took the price down firmly at the start. Recovered to end at $18.25. There were some listed crossings at the end of the day from Wednesday.

 

[noirua]

++++Growth Story of the Year Award - 2008++++

Winner --- Felix Resources
nominees: Gloucester Coal and Aquila Resources

Sponsored by the "Sydney Mining Club".

 

[noirua]

Some more matched trades near the end of the day that look a bit like someones picking up stock gradually.

 

[michael_selway]

++++Growth Story of the Year Award - 2008++++

Winner --- Felix Resources
nominees: Gloucester Coal and Aquila Resources

Sponsored by the "Sydney Mining Club".

Hey interesting, do you have any links?

btw do you have AQA?

AQA - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -6.6 -6.0 34.2 48.7
DPS 0.0 0.0 0.0 0.0


thx

MS

 

[noirua]

Hey interesting, do you have any links thx
MS

This link may not work first off, I will try to get it right:
http://www.abnnewswire.net/press/en...lly_Competitive_Australian_Mining_Sector.html

 

[michael_selway]

This link may not work first off, I will try to get it right:
http://www.abnnewswire.net/press/en...lly_Competitive_Australian_Mining_Sector.html

Yep looks good


2008 National Mining Awards Recognise The Globally Competitive Australian Mining Sector

Sydney, Sept 18, 2008 (ABN Newswire) - The Australian 2008 National Mining Awards held on the 14-16th September, recognise the globally competitive Australian mining sector. Leading the list of achievements are:

The Producer of the year Award: Fortescue Metals Group (ASX:FMG)
The Discovery of the Year Award: Newexco
The Frontier Explorer of the Year Award: Citadel Resources (ASX:CGG)
The Growth Story of the Year Award: Felix Resources (ASX:FLX)
Deal of the Year Award: Gindalbie Metals (ASX:GBG)
Manager of the Year: Worley Parsons (ASX:WOR) for Fortescue Metals
Applied Technology of the Year: Austpac Resources (ASX:APG)

Excellence in Mining & Exploration, Sydney's largest resource sector conference concluded with the National Mining Awards Gala Dinner in the ballroom of the Hilton Sydney. The annual industry program has grown to become a standout event on the resource sector calendar, giving the industry time to reflect on and recognise the past year's achievements.

The award categories and winners for the 2008 National Mining Awards are;

The Producer of the year Award (sponsored by Independence Group NL)
Fortescue Metals Group, for completing the biggest new mineral project in Australia within just 5 years from company formation.

The Discovery of the Year Award (sponsored by Kingsgate Consolidated)
Newexco, for the discovery of the Spotted Quoll deposit for Western Areas in WA which now contains 1Mt at 7.2% nickel.

The Frontier Explorer of the Year Award (sponsored by Mining Journal)
Citadel Resources with Ines Scotland, for securing the first mover advantage in Saudi Arabia with several quality projects including flagship project Jabul Sayid with 74Mt at 1.3% copper.

The Growth Story of the Year Award (sponsored by The Sydney Mining Club)
Felix Resources, for continued strong growth, posting 300% growth in earnings reported in FY08.

The Deal of the Year Award (sponsored by Artemis International Executive Search)
Gindalbie Metals, for securing full project finance for its Karara iron ore project in WA from AnSteel.

Manager of the Year (sponsored by Resource Stocks)
Worley Parsons for Fortescue Metals, for their high quality engineering and project management services at the Fortescue Metals Group project in the Pilbara.

Applied Technology of the Year (sponsored by Australia's Mining Monthly)
Austpac Resources, for developing the world's most versatile, cost effective and environmentally friendly ilmenite upgrading process.

Kerry Stevenson, Managing Director of Resourceful Events, organisers of Excellence in Mining, said "the national mining awards program is a fitting way to round off an event that brings the resources industry and investment community together. Tonight has seen some outstanding Australian mining and mining services companies recognised by their peers, and some very fitting awards across all areas of the industry."

Fortescue Metals Group CEO Andrew Forrest on accepting the Producer of the Year award said that: "Fortescue's culture of never ever giving up has been a driving force in all our achievements. The commitment of every person on our team, including our families and local communities, has been the central tenor in our success, bringing us to where we are today. To be part of Australia's dynamic and globally competitive mining industry sector has been challenging, stressful and huge fun, rewarding for all Fortescue people. No more so than tonight, as we are humbled by the recognition of our industry peers in our pursuit of globally relevant commodity production. "

A full list of all nominees and details about the award categories is below.

National Mining Awards details and full list of nominees

Producer of the year Award (sponsored by Independence Group NL)

New, expanded and sustained production efforts are recognised by the Producer of the Year Award with attention to the value of product, the degree of adversity faced, the quality of management applied and the significance of the effort to production peers.

Nominees:
Fortescue Metals
Kerry Harmanis with Jubilee Mines
Rob Neale with New Hope Coal

Winner:
Fortescue Metals Group

Discovery of the Year (sponsored by Kingsgate Consolidated)

The Discovery of the Year Award is given to the discoverer of a new or emerging resource where size or economic significance of the deposit and, at the discretion of the judges, the ingenuity, scientific endeavour, perseverance, lateral thinking or other human merits have played a contributed to the new resource.

Nominees:
Integra Mining
Newexco
Jabiru Metals

Winner:
Newexco

Frontier Explorer of the Year (sponsored by Mining Journal)

Nominees:
Citadel Resources with Ines Scotland
Central Asia Resources
Globe Metals and Mining

Winner:
Citadel Resources with Ines Scotland

Growth Story of the Year (sponsored by The Sydney Mining Club)

Nominees:
Gloucester Coal
Felix Resources
Aquila Resources

Winner:
Felix Resources
Deal of the Year (sponsored by Artemis Executive Search)

The Deal of the Year Award is for corporate and individual contributions in the re-matching of assets, companies and capital.

Nominees:
Gindalbie Metals
Kerry Harmanis with Jubilee Mines
Rob Neale with New Hope Coal

Winner:
Gindalbie Metals

Manager of the Year (sponsored by Resource Stocks)

Often unseen behind their company leaders are the efforts of the people who do it. Open to any person not an officer of the company, the Manager of the Year Award is open to any person who has led the company or operation to greater productivity. Perhaps this is through better safety, better cultural management or new ways and systems. With so many contenders, Manager of the Year Award is truly the Prize for the deserving.

Nominees:
Worley Parsons for Fortescue Metals Group
Rob Yeates for Newcastle Coal Infrastructure Group

Winner:
Worley Parsons for Fortescue Metals Group

Applied Technology of the Year (sponsored by Australia's Mining Monthly)

From the Bronze Age to the Silicon Age, Man's ascent has been driven by the ability to treat rocks with technologies. With the large, shallow and obvious deposits now mostly depleted, we are looking deeper into the earth of resources, using lower grade bulk resources and chasing an extraordinary new spectrum of materials used in our high-tech lifestyles. Technology itself is leading the cause in satisfying these new levels and types of demand. The Applied Technology Award recognises those who have taken the edge forward in its use.

Nominees:
Austpac Resources
Swick Mining
Marminco
Baleen Filters

Winner:
Austpac Resources


About Resourceful Events

Resourceful Events is the events and conference division of Aspermont Limited, Australia's leading print and Internet publisher to the mining, oil & gas and related sectors.

 

[zaz]

Events over the last few days have increased the chance of news this week:

1. No Short selling -- anyone announcing a deal with scrip is not going to have to deal with arbs shorting their stock
2. No new short selling of FLX, may have seen a short term low in the stock
3. Aussie dollar has probably turned around - foreign buyers are paying more as the AUD strengthens

All together along with the change in sentiment might be enough for one of the procrastinating on lookers to move forward with a deal. It looks like a different land scape to last Wednesday!