FLX - Felix Resources

[noirua]

as it has done ever since I bought into this wonderful piece of crap... dooooooooooooooooooown 15% today... mutherf^&*er... this stock has obliterated my portfolio... 6 months salary gone just on this pig in 3 weeks... ouch ouch ouch...

Sorry to hear the news of your misfortune with Felix Resources stock. Some were fortunate to buy in 1979 at 55 cents or 38 cents in 2003, not much consolation I know, so many are still happy with the performance.

The Aussie$ falling 33% will ramp up profits for Felix in Y/E 30/6/2009. It won't be all one way traffic as the opportunity to sell at high spot prices is likely to evaporate.

It will be interesting to see if the semi-soft and PCI coal prices slump or not, in the face of lessening demand for steel.

Hope it improves for you Rastan. The share price performance has been awful but the companies is very good.

 

[pacestick]

tend to agree with noirua wish i had more loot to buy in now dont have to sell bvecause never have and never will buy on margin is an excellent company biggest danger for me is that sale will take place below $17.80 that i bought at would prefer no sale to that dont have the readies to average down either. Can take an optonmistic view as over the years I have taken more out of market than i have ever put in only do this for fun and a bit of pocket money dont think im good enough to majke aliving at it. Always suspicious that the combination of margin borrowing and short selling would come back to bite those who did it.Unfortunatly we are all getting collateral damage

 

[noirua]

tend to agree with noirua wish i had more loot to buy in now dont have to sell bvecause never have and never will buy on margin is an excellent company biggest danger for me is that sale will take place below $17.80 that i bought at would prefer no sale to that dont have the readies to average down either. Can take an optonmistic view as over the years I have taken more out of market than i have ever put in only do this for fun and a bit of pocket money dont think im good enough to majke aliving at it. Always suspicious that the combination of margin borrowing and short selling would come back to bite those who did it.Unfortunatly we are all getting collateral damage

I broke my promise to myself not to buy any more stock, added a few as they went under $12.00. Profits should rocket in 2009 and the low cost Moolarben open-cast mine should be producing in late 2009 or early 2010.
The low Aussie will add greatly to profits and the analysts average profit forecast of $412 million should still be achieved in these tougher markets, in Y/E 30th June 2009.

 

[fawkner]

Have held Meekatharra/Auiron/Felix since 1990 when Ballymoney, Northern Ireland was all the rage. Now that coal mines in the UK are becoming a viable consideration again, what value does Felix put on their interests there, or have they virtually "written off" lignite? It seemed once to be a valuable proposition.

 

[noirua]

Have held Meekatharra/Auiron/Felix since 1990 when Ballymoney, Northern Ireland was all the rage. Now that coal mines in the UK are becoming a viable consideration again, what value does Felix put on their interests there, or have they virtually "written off" lignite? It seemed once to be a valuable proposition.

Hi fawkner, The Northern Ireland Government is due to look at the mining license situation near Ballymoney at the latter end of 2009. There was a lot of opposition supported by the, now ruling DUC. The opposition group have been given charity status and are well organized.
Chances of a mine are quite unlikely as the Ballymoney area is prosperous with unemployment near zero. About 95% against the mine and power station.

 

[tomsum]

Seems to have taken a few hits over the last few days, I'm a very new poster here and have only just added FLX to my watchlist because it looked like an interesting share. Does anyone who has been watching the share for a long time have any thoughts?

Cheers,

Tom.

 

[noirua]

Felix Resources have now been dumped like all the rest and it is important now to look at the companies value at the present price.
The battle is to sell coal and take the advantages of the low Aussie$.
First Quarter results will be out in a few weeks and the AGM on 31st October 2008.

Downside for all coal miners is whether they agree to holding back semi-soft and PCI coal deliveries: Thermal coal deliveries are likely to be more certain. Later will be agreements for coal from 1st January, 1st April and 1st August 2009.

Everything points to excellent results in Y/E 2009 and a complete reassessment for profits in Y/E 2010.

 

[noirua]

To hell with it all! Seeing Felix drop below $9.00 I just had to buy a few more, despite being a bit top heavy in this one.
I have great faith in the Aussie economy and especially in exports of thermal coal.
These power stations will need coal and few will shut down. Steel is an entirely different matter as companies will head for the tubes.
Coal prices will plummet but the weak Aussie Dollar will give a helping hand.

 

[Quillan]

When Flannery made his announcement 2 weeks ago saying he hoped to report further within 2 weeks, the share price was $19. Is it illegal for a Party in discussions to deal in the target shares?
My point is, the shares have been dumped in that period. Suppose a Party, or some other interest in collusion, sold 5m shares short? This halved the share price. The bidder comes back and says, "The $25 we were negotiating is no longer on the table. Now it's got to be $15". They could probably buy those shares back now, and the price would still not be above $15. But if the deal was then agreed by the Directors, the bidder would have saved $10 on the subsequent purchase of around 190 million shares.It wouldn't matter if they didn't buy them back until after they had acquired the company. It wouldn't cost them more than the agreed bid price
Of academic interest, how many of us would have sold out prior to the possible bid talks, had there been no possible takeover, purely on the grounds of the worsening economic condition.?
I reckon most of us were only hanging on for a bid to be announced. It has cost us half the value of our shareholding.
This is one for Noirura's fertile brain. We are waiting !!

 

[noirua]

When Flannery made his announcement 2 weeks ago saying he hoped to report further within 2 weeks, the share price was $19. Is it illegal for a Party in discussions to deal in the target shares?
My point is, the shares have been dumped in that period. Suppose a Party, or some other interest in collusion, sold 5m shares short? This halved the share price. The bidder comes back and says, "The $25 we were negotiating is no longer on the table. Now it's got to be $15". They could probably buy those shares back now, and the price would still not be above $15. But if the deal was then agreed by the Directors, the bidder would have saved $10 on the subsequent purchase of around 190 million shares.It wouldn't matter if they didn't buy them back until after they had acquired the company. It wouldn't cost them more than the agreed bid price
Of academic interest, how many of us would have sold out prior to the possible bid talks, had there been no possible takeover, purely on the grounds of the worsening economic condition.?
I reckon most of us were only hanging on for a bid to be announced. It has cost us half the value of our shareholding.
This is one for Noirura's fertile brain. We are waiting !!

Hi Quillan, If you look back on many of my past posts you will see I remained in 70% to 80% cash and US bonds. That cash % rose with the collapse in coal stocks.
I'm now picking up small amounts of stock and that includes the uranium sector.
This is a gamble I know but there you goes.

Gloucester Coal have just announced a $28 million buyback of shares. This looks to be the way for profitable mining stocks and I feel comfortable with the cash rich companies in the mining sector.

My view only maybe, I don't know, keep calm, don't fume and just wait.

 

[Quillan]

Hang on Noirua, I wasn't fuming. I was merely suggesting a possible scenario if potential bidders are permitted to enter the market, when they are in possession of sensitive information supplied by Felix, to enable them to form an opinion of Felix's true worth.
But here's some encouraging news for us shareholders, published yesterday, but courtesy of the GlobalCoal site. Ok, it only points to the bumper profits to be earned this year, but enjoy the news report.
----------------------------------------------------------------------------
Aussie dollar's demise powers coal industry profits
AUSTRALIAN coal exporters of every type are enjoying a double-whammy windfall from export prices that has seen their gross revenue rise by more than 150 per cent since the start of 2008.

Both thermal coal and coking coal producers have found themselves with exploding margins thanks to a mixture of sharply increased long-term contract prices, signed within the last month and backdated to April 1, and the sharp drop in the value of our dollar to around the US70c level in recent days.

"Everyone's smiling," said Colin Randall, editor of the Hunter Valley Coal Report email newsletter and a long-time coal watcher.

He said that even though the spot price for steaming coal, used in power stations, had dropped from around $US190 to $US130 in recent weeks, prices of almost every type of steaming coal were at historic highs because of revised contract prices and the recent drop in the dollar.

Mr Randall said annual price negotiations with the Japanese power utilities, which lifted US dollar-denominated coal export contract prices by more than 100 per cent in many cases, had begun when our dollar was close to parity and concluded only "a couple of weeks ago" when our dollar was dropping sharply.

About 70 per cent of Hunter Valley coal is bought by Japanese power utilities on contract.

Coal price numbers from Royal Bank of Canada Capital markets, adjusted to Australian dollar equivalents, show the price received for steaming coal delivered to ships at Newcastle "free on board" has jumped from around $65 a tonne at the start of this year for some types to around $178 now, and even at spot prices, supposedly battered by the financial crisis, they are getting around $157.

"The loudest noise in Newcastle is 'ka-ching, ka-ching' as the coal producers check their revenue numbers," Mr Randall said.

Assuming a cash cost of production of around $50 a tonne, the producers' gross margin has jumped from around $15 to almost $128 now, an increase of exponential scale.

The windfall story is even stronger in Queensland in hard coking coal, despite the higher cost of production, conservatively estimated at $100 a tonne, because some Bowen Basin mines are underground and all are further from the coast.

Hard coking coal is top of the range and is only used in steelmaking, which has been widely touted as heading for a major drop-off as steel demand eases.

But Queensland producers have seen their contract price jump from around $112 a tonne at the end of last year to about $428 a tonne, an all-time high and an increase of about 280 per cent in 10 months. Those prices are guaranteed, in US dollars, until the end of March 2009.

There are very few spot sales of hard coking coal because steelworks regard supply as critical and the market is illiquid. Again, the price has slipped, but only from $US400 a tonne, reportedly for one cargo, back to $US365.

Converted to Australian dollars at today's rates, that supposedly lower price is a nosebleed $521 a tonne.

source: www.theaustralian.news.com.au 09 October 2008

 

[noirua]

Hi, sounds good that post Quillan, unfortunately it's not quite in the real world of today, more in the world of September 2008, an age away.

MGX reported that companies are trying to delay deliveries of iron ore despite contracts and it seems likely that they will also try and delay all the grades of coking coal.
Companies are going bust already in the steel sector as they have difficult servicing development loans, and you get nothing for your coal if the companies is bust.

Felix will suffer as demand drops for semi-soft coking coal and, I expect, PCI coal. However, Y/E 2009 will be a good one even if their is a drop-off quarter by quarter in coal required.
Yes, Felix will gain from the retreating Aussie$ but new contracts in 2009 may tumble considerably. Again, having said that, Felix have could partners at Ashton and Minerva. Only Yarrabee is looking a bit lonely with PCI coal expansion from 1.7mtpa to 2.8mtpa and no partners.

 

[pacestick]

Tensd to agree with you Noirua. Good returns till June. Then we have to wait for real economy to recover could be my guess two to four years. Bit of talk about mkt at or near the bottom at the moment I dont think so the hedge funds probalyt still have alot of redemptions to cover over the next three months and the only way they can do that is by selling. My guess is we mays ee the bottom first quarter 2009 and the shares such as felix will bounce along the bottom for at least one more quarter before slowly rising. We still have excellenta ssets which will eventually be in demand again

 

[michael_selway]

Tensd to agree with you Noirua. Good returns till June. Then we have to wait for real economy to recover could be my guess two to four years. Bit of talk about mkt at or near the bottom at the moment I dont think so the hedge funds probalyt still have alot of redemptions to cover over the next three months and the only way they can do that is by selling. My guess is we mays ee the bottom first quarter 2009 and the shares such as felix will bounce along the bottom for at least one more quarter before slowly rising. We still have excellenta ssets which will eventually be in demand again

Yeah it will be interesting

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 216.7 265.4 362.3
DPS 53.0 111.0 118.9 158.5

Date: 26/9/2008
Author: Jamie Freed
Source: The Sydney Morning Herald --- Page: 21
Australian-listed coal mining group Felix Resources has received strong backingfrom the New South Wales (NSW) Government. It will retrospectively change thestate's Mining Act to negate a decision by the NSW Court of Appeal that hadbeen unfavourable for Felix. Rival Xstrata had sought to prevent Felix fromoperating a mine on land adjacent to its own at Mudgee, but the law change meansthe Moolarben thermal coal project, worth $A405m, can proceed. The issue hadbeen whether Xstrata was bound by a 28-day deadline for objections, which it letpass due to a potential merger with Felix at the time

http://www.theaustralian.news.com.au/story/0,,24472567-16222,00.html

AUSTRALIAN coal exporters of every type are enjoying a double-whammy windfall from export prices that has seen their gross revenue rise by more than 150 per cent since the start of 2008.

Both thermal coal and coking coal producers have found themselves with exploding margins thanks to a mixture of sharply increased long-term contract prices, signed within the last month and backdated to April 1, and the sharp drop in the value of our dollar to around the US70c level in recent days.

"Everyone's smiling," said Colin Randall, editor of the Hunter Valley Coal Report email newsletter and a long-time coal watcher.

He said that even though the spot price for steaming coal, used in power stations, had dropped from around $US190 to $US130 in recent weeks, prices of almost every type of steaming coal were at historic highs because of revised contract prices and the recent drop in the dollar.

Mr Randall said annual price negotiations with the Japanese power utilities, which lifted US dollar-denominated coal export contract prices by more than 100 per cent in many cases, had begun when our dollar was close to parity and concluded only "a couple of weeks ago" when our dollar was dropping sharply.

About 70 per cent of Hunter Valley coal is bought by Japanese power utilities on contract.

Coal price numbers from Royal Bank of Canada Capital markets, adjusted to Australian dollar equivalents, show the price received for steaming coal delivered to ships at Newcastle "free on board" has jumped from around $65 a tonne at the start of this year for some types to around $178 now, and even at spot prices, supposedly battered by the financial crisis, they are getting around $157.

"The loudest noise in Newcastle is 'ka-ching, ka-ching' as the coal producers check their revenue numbers," Mr Randall said.

Assuming a cash cost of production of around $50 a tonne, the producers' gross margin has jumped from around $15 to almost $128 now, an increase of exponential scale.

The windfall story is even stronger in Queensland in hard coking coal, despite the higher cost of production, conservatively estimated at $100 a tonne, because some Bowen Basin mines are underground and all are further from the coast.

Hard coking coal is top of the range and is only used in steelmaking, which has been widely touted as heading for a major drop-off as steel demand eases.

But Queensland producers have seen their contract price jump from around $112 a tonne at the end of last year to about $428 a tonne, an all-time high and an increase of about 280 per cent in 10 months. Those prices are guaranteed, in US dollars, until the end of March 2009.

There are very few spot sales of hard coking coal because steelworks regard supply as critical and the market is illiquid. Again, the price has slipped, but only from $US400 a tonne, reportedly for one cargo, back to $US365.

Converted to Australian dollars at today's rates, that supposedly lower price is a nosebleed $521 a tonne.

 

[agro]

i missed the opp to get on the FLX ride to $20

had it on my watchlist earlier this year around 7

might be my time to get in soon

 

[noirua]

A report from the Sunday Morning Herald on how the bid situation is going for Felix Resources: http://business.smh.com.au/business...decision-on-global-auction-20081012-4z5c.html

 

[noirua]

ASX announcement that bid talks now include other parties but will not be completed within the original time frame due to market volatility.

 

[zaz]

I think that in a market like this deals take a lot longer than expected but they can still get done. I also think that FLX is motivated to sell at the right price and they want to make sure they sell their life's work - FLX at the best price.

It sounds like the auction is continuing. It also sounds like the original offers may not have been good enough so they're talking to other potential buyers. The alternative explanation is that the original buyers have made a decent offer and FLX is just making sure that there isn't something even better out there.

What does everyone make of the announcement?
Do you think this means a deal is more or less likely?
I'm really interested in other people's thoughts...

 

[noirua]

I think that in a market like this deals take a lot longer than expected but they can still get done. I also think that FLX is motivated to sell at the right price and they want to make sure they sell their life's work - FLX at the best price.

It sounds like the auction is continuing. It also sounds like the original offers may not have been good enough so they're talking to other potential buyers. The alternative explanation is that the original buyers have made a decent offer and FLX is just making sure that there isn't something even better out there.

What does everyone make of the announcement?
Do you think this means a deal is more or less likely?
I'm really interested in other people's thoughts...

Reuters have reported that the original talks with several parties have in fact failed. New talks are now taking place with a few other parties.

http://www.reuters.com/article/rbssCoal/idUSSYU00529220081014

 

[Quillan]

I realise that Noirua is something of an expert in the field, but don't take everything he says as Gospel.

He tells us he has bought some more shares below $9, and then talks about plummeting coal prices. See Posts #743,,#748 and later.


MacAthur has just reported non-thermal sales are holding up well.Noirua reckons 2009-10 Thermal contracts will be severely lower.

Here's an opinion which doesn't subscribe to his views. I wonder who has the better judgement?

I am not being unduly optimistic, but just pointing out there are other informed views, and I imagine that Flannery's arguments will be largely based on the kind of opinions expressed below.

Remember, Spot prices have little relevance to Contracted coal. Obviously with the fall in demand, the demand for top-up supplies from the Spot market has all but disappeared.

Here's today'y quote from Globalcoal:

"Newcastle coal traded below the $125 a ton contract price for a third week and is 46 percent off a record $194.79 set for the week ended July 4. The monthly index fell 10 percent to $144.82 a ton in September from $160.90 the previous month.

``The risk is still on the downside and sentiment is very much focusing around demand at the moment, not supply,'' ANZ's Pervan said.

Declines `Overdone'

Still, demand for thermal coal remains intact and price declines are ``overdone,'' analysts at RBC Capital Markets said in an Oct. 17 report, where they maintained their forecast for a 16 percent gain in 2009 contract prices to $145 a ton.

``The `low' thermal spot price will undoubtedly be used by consumers as evidence of softening demand and hence justification for a reduction in the Japanese fiscal year 2009 contract benchmark,'' analysts led by Sydney-based Geoff Breen said. ``We would point out again that most sales are not spot sales and physical coal sales into the spot market have been for small volumes and trade has for the most part been in coal swaps.''

Exports from Newcastle, the world's biggest export harbor for the fuel, fell 10 percent in the week ended 7 a.m. local time today, dropping to 1.7 million tons from 1.9 million tons a week earlier, Newcastle Port Corp. said today on its Web site. A total of 25 ships, waiting to load 2.1 million tons of coal, were lined up outside the port, up from 24 last week.

Coal ships waited 8.8 days to load coal in the week, up from 8.6 days a week earlier, Newcastle Port said. The waiting time compared with 0.08 day for general cargo vessels last week, it said.