FLX - Felix Resources

[noirua]

MCC have announced a slow down in the next 2 months on coal exports, and that has hit many companies in the coal sector.
So far Felix have made no forward announcements after reporting their best month in October, recently.
The Minerva Mine (thermal coal in single ship loads) in QLD has coal exports from the RG Tanna Terminal, Gladstone Port, of 64,760 tonnes with ship in berth and 75,000 tonnes with an ETA of 7th Dec. The Yarrabee mine (PCI coal, mixed at port) has just 34,000 tonnes with an ETA of 2nd Dec.

Felix have a further cargo of thermal coal, 85,000 tonnes single ship, with an ETA for 7th Dec.
Shipping of coal from the QLD Minerva mine seems to be going very well. An absence of further coal leaving from Yarrabee is a concern as it is mainly PCI coal.

 

[noirua]

How badly will Felix Resources be hit and why. There are three fully operating mines in QLD and NSW that have no real problems, even if they fail to sell quite so much coal in the future. (aim for 5 million tonnes but this looks a very tough target now).
Yarrabee is opening a PCI coal wash to raise production to 2.7mtpa but the market is softening and it may have to be sold as thermal coal.
Minerva plugs away well selling thermal coal in single ship loads out of Gladstone.
Ashton, NSW is selling mainly semi-soft coke and demand for this looks to have a question mark against it. They may have to switch back to more thermal.

It may be about concern over Moolarben and the probable fact that the bid situation has moved from the fridge to the freezer.

Moolarben will cost Felix about $280 - $320 million (80%) to develop their part of the project. Everything is on order to develop the open-cut mine that should produce in late 2009/early 2010. No chance of reversing this.
The underground/longwall mine will be in production about two years afterwards.

Felix have $300 million in the bank at the end of the last quarter.

 

[pacestick]

How badly will Felix Resources be hit and why. There are three fully operating mines in QLD and NSW that have no real problems, even if they fail to sell quite so much coal in the future. (aim for 5 million tonnes but this looks a very tough target now).
Noirua In your opinion is it likely that despite the international economic situation felix will continue to grow be it at a slower pace than if the crash had not ocurred. I tend to agree with you that a lack of takeover announcements has sent some speculative holders on their way

 

[noirua]

How badly will Felix Resources be hit and why. There are three fully operating mines in QLD and NSW that have no real problems, even if they fail to sell quite so much coal in the future. (aim for 5 million tonnes but this looks a very tough target now).
Noirua In your opinion is it likely that despite the international economic situation felix will continue to grow be it at a slower pace than if the crash had not ocurred. I tend to agree with you that a lack of takeover announcements has sent some speculative holders on their way

My guess, and guess it is only, is that Felix Resources will stay on track and develop the Moolarben open-cut and longwall mines.
Will continue with all other plans; completing the washery to upgrade thermal coal to PCI and increase production out of Yarrabee by 0.9mtpa; continue to develop the Harry Brandt anthracite mine; continue with exploration at the Phillipson SA tenement; and continue with their 15.4% interest in NCIG - the Newcastle Port new coal terminal.

Now it is a matter of further guessing, again, I repeat, my guess. The highest profit guess I've seen was for Felix profits at EBIT $553 million for 2009 (average analyst was $417 million) - little chance I think now.

Guessing further, the thermal coal price is falling fast, towards a possible US$70 per tonne, and the US$240 per tonne for semi-soft coke may more than halve.
Felix profits may well come in at EBIT AU$250 - AU$300 million ($175 - $210 million after tax) for year ending 2009. Last years 53c dividend cost about AU$104 million and with the costs of Moolarben development, I guess a rethink here on any increase above 60c ($116 million).

Markets may, and I guess, think that profit increases are going to be tough for 2010 with forecast sales of 6.5mtpa and 11mtpa for 2011.

 

[pacestick]

Felix is a participant in the ncig project
#


Port Waratah Seeks Approval for New Coal Harbor Access System
Po

Nov. 20 (Bloomberg) -- Port Waratah Coal Services, operator of the two coal-export terminals at Australia's Newcastle, lodged an application with the national competition regulator seeking approval for a new system to manage access to the port.

The application, made jointly with the Newcastle Coal Infrastructure Group, is necessary ``to provide certainty for producers in 2009 and avoid long ship queues and crippling demurrage costs'' likely to arise once the existing quota system expires Dec. 31, Port Waratah said in an e-mailed statement.

Bottlenecks at Australian ports have helped constrain supplies of the fuel to Asian customers, contributing to record prices earlier this year and increasing costs for mining companies. Newcastle, the world's biggest coal-export harbor, has operated an export quota system since March 2004 as it seeks to reduce waiting times for ships. The systems require approval by the Australian Competition and Consumer Commission, or ACCC.

``The intention is for the short-term arrangement to be a stepping stone to a long-term'' model for allocating port capacity underpinned by contracts, Graham Davidson, general manager of Port Waratah, said in the statement released late yesterday. The application to the regulator assumes a permanent solution is agreed by mid-2009, he said.

Xstrata Plc, Rio Tinto Group and BHP Billiton Ltd. are among mining companies that ship coal through Newcastle.

Newcastle Port is expected to export about 91.5 million metric tons of coal this year, up 8 percent on last year, Port Waratah said. That compares with export capacity of 102 million tons at the two terminals, which is due to reach 113 million tons next year through a A$500 million ($319 million) expansion.

Newcastle Coal Infrastructure Group, which is building a new coal-export terminal at the New South Wales port, is owned by BHP Billiton, Centennial Coal Co., Donaldson Coal and other mining companies.

 

[noirua]

Felix Resources Ltd: The view of Analysts.
http://markets.ft.com/tearsheets/analysis.asp?s=AU:FLX

 

[Real1ty]

I only caught a part of it but a broker from BBY had a buy on FLZ with a 12 month price of $18+

Like i said i didn't catch it all so i'm not sure what they were basing that on...

 

[noirua]

Moolarben Project progress: http://www.abc.net.au/news/stories/2008/11/26/2430306.htm?site=centralwest

 

[noirua]

Felix Resources stock trade at $7.75 up $2.31 in heavy trading, after reaching $10.48 early on. This followed an article in the Business Spectator today that suggested that Yanzhou of China may bid $3 billion for the company.

 

[Sean K]

Felix Resources stock trade at $7.75 up $2.31 in heavy trading, after reaching $10.48 early on. This followed an article in the Business Spectator today that suggested that Yanzhou of China may bid $3 billion for the company.

And they say they are in discussions or something.

Surely they should go into a trading halt.



Could be a nice short term gamble if there are some real discussions going on.

Now,

Black or red?

Hmmmm

 

[noirua]

And they say they are in discussions or something.

Surely they should go into a trading halt.

Could be a nice short term gamble if there are some real discussions going on.
Now,.
Black or red?
Hmmmm

hmmmm is the answer Kennas as this situation has been going on for over 4 months. BHP Billiton became favourite after Xstrata, Rio Tinto and Vale fell on difficult times.
This Chinese company Yanzhou is a new speculation just because they were reported to have been shown round the Felix Ashton mines (60%) in the Hunter.

 

[Sean K]

hmmmm is the answer Kennas as this situation has been going on for over 4 months. BHP Billiton became favourite after Xstrata, Rio Tinto and Vale fell on difficult times.
This Chinese company Yanzhou is a new speculation just because they were reported to have been shown round the Felix Ashton mines (60%) in the Hunter.

I'm holding onto my call that we are seeing a significant correction and readjustment in world finances and Chindia has only just began to develop. They have another 10-20 years to industrialise and get off the rice. It might take us 2-7 years to consolidate and shake off the dead wood, but when we do, maybe there will be an even greater resource boom? I'm happy to be watching this and have a little pot of gold to be ready for the next charge of the bull.

Or, my cash is earning 1% for a while.

 

[pacestick]

i dont think this one is going to get any further than the rest the sheer impossibility of giving the board a price that they would like rummoured to be above $20. while explaining to to your own shareholders that you paid a premium far above the market price presents a real challenge. The board control about 30% of the shares and are probably inm no hurryu to sell or else we would have had a deal by now

 

[noirua]

The shares of Yanzhou Coal, China's third largest coal company, have been suspended. This appears to have been following the initiation of a rumour that they may bid for Felix Resources. It is not known as to whether this was following an application by the company.

 

[noirua]

Felix Resources (FLX) will be added to the Dow Jones Global Select 100 index at the start of trading on 22nd Dec 2008.

 

[noirua]

The shares of Yanzhou Coal, China's third largest coal company, have been suspended. This appears to have been following the initiation of a rumour that they may bid for Felix Resources. It is not known as to whether this was following an application by the company.

Yanzhou applied to the Hong Kong and NYSE markets for their shares to be suspended. The shares of Yanzhou have plunged 77% since May and their Market Capitalization stands at around AU$4 billion against Felix at AU$1.5 billion. As of Friday 5th December 08.

 

[justiceotp]

This stock has performed well again today mind you so has most of the market, any fresh news on potential chinese takeover moves?

 

[noirua]

This stock has performed well again today mind you so has most of the market, any fresh news on potential chinese takeover moves?

Hi justiceotp et al, My knowledge of Chinese companies is desperately poor. I realise now that Yanzhou has a parent company, YanKuang Group Company http://en.wikipedia.org/wiki/Yankuang_Group . It's all these A and H shares that confuse the issue.
Will check further, though the English translations are not that good.

 

[michael_selway]

Hi justiceotp et al, My knowledge of Chinese companies is desperately poor. I realise now that Yanzhou has a parent company, YanKuang Group Company http://en.wikipedia.org/wiki/Yankuang_Group . It's all these A and H shares that confuse the issue.
Will check further, though the English translations are not that good.

Yeah FLX not bad today

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 191.2 253.8 290.7
DPS 53.0 100.0 107.8 145.0

Date: 9/12/2008
Author: Ayesha de Kretser
Source: The Australian Financial Review --- Page: 19
The falling price of coal has prompted Merrill Lynch to downgrade itsrecommendation on Gloucester Coal and Macarthur Coal. However, the firm stillrates Felix Resources as a stock to buy. Meanwhile, UBS has changed its ratingon Felix to "buy", in the wake of China-based Yanzhou CoalMining's interest in the coal producer

Date: 5/12/2008
Author: Brett Clegg; Ayesha de Kretser; Michael Vaughan
Source: The Australian Financial Review --- Page: 1/56
Yanzhou Coal Mining is believed to have offered more than $A3 billion for FelixResources. Executives from the Chinese company are thought to have inspected theAustralian mining corporation's New South Wales operations on 4 December2008

Quote from another site

For the number savy folks out there, here's a summary of figures released recently by FLX & some calcs.

These look promising to any potential buyers out there.

Profit b4 tax: $254.3m (+411%)
NPAT: 188.5m (+300%)
Cash: $300m
Debt: $91m
Gearing Ratio: 14%
Coal Sales tonnage/Production: 4.6 mtpa ('08)
Reserves: 368.5 MT
JORC Resource: 1.3 BT (FLX's share out of 2 BT)
Shares issued: 196.3m
SP: $8.4
Mkt Cap: $1.648b
EPS: 188.5m/196.3: 0.96c/share

Based on the above, one can work out the EV scenario,

Current EV: MC+Cash+Debt: $2.039b
EV/EBITDA multiple: 2b/254.3m : 8.02
EV/Resource: 2b/1.3b: A$1.568/ton
EV/Sales Tonnage: 2b/4.6m: A$443/ton

Would b good to see how the other coal miners compare against these numbers.

An offer of $15 by Yanzhou equates to $3 billion. This could look more realistic in days to come, one thinks.

cheers Ya

thx

MS

 

[michael_selway]

Some more charts from another site

FLX have a 1.3bT JORC resource, see breakdown below

Measured: 428.5mt
Indicated: 259.2mt
Inferred: 677.5mt

FLX have 368.5mt of JORC reserves (125.4mt Proved & 243.1 probable)

So EV divided by this will give the multiple. By the way I noticed a minor mistake in my stats with the EV,

EV: MCap+Debt-Cash, $1.66bil + 91mil - 300mil= $1.45b

EV/Resource: $1.45b/1.3bt = A$1.115/t
EV/Sales Ton = $1.45b/4.6mt = A$313/t
EPS: $188.5m/196.3mt = 0.96c

What YZC are eyeing IMO is the production by 2012 of 16.7mt. This is 3.6 times '08 sales figure of 4.6mt. So obviously the assets have a huge potential/demand despite the mow low coal prices.

Felix's sale's tonnage was 4.6MT so the production would have been around 5.3MT. There is some run-off coal hence the sales fig are less then the actual production figures for coal.

I had a look at the NPAT fig's from Macarthur, Centennial & New Hope, Felix certainly looks very attractive.

cheers Ya

"HONG KONG, Dec 08, 2008 /PRNewswire-Asia-FirstCall via COMTEX/ -- Yanzhou Coal Mining Company Limited (YZC:yanzhou coal mng co ltd spon adr h shs
News, chart, profile, more
Last: 6.46+1.09+20.30%

4:04pm 12/08/2008

YZC 6.46, +1.09, +20.3%) announces that, following a request made by the Company to the Stock Exchange of Hong Kong Limited, trading in its H Shares has resumed with effect from 9:30 a.m. on December 8, 2008. Trading in its H shares was suspended with effect from 9:38 a.m. on December 5, 2008 pending the release of an announcement of the Company, the nature of which was price-sensitive.
Trading in the Company's ADSs on the New York Stock Exchange will also resume with effect from 9:30 a.m. Eastern Standard Time on December 8, 2008.

Company Background
Yanzhou Coal Mining Company Limited is the largest coal producer in Eastern China. The Company is principally engaged in the underground coal mining, preparation and processing and sales, as well as the railway transportation of coal. The Company was established as a joint stock company incorporated in the People's Republic of China on September 25, 1997. The Company successfully listed its American Depositary Shares ("ADSs") on the New York Stock Exchange, its H Shares on the Hong Kong Stock Exchange, and its A Shares on the Shanghai Stock Exchange on March 31, 1998, April 1, 1998, and July 1, 1998, respectively.

http://finance.yahoo.com/q?s=yzc

As per the AFR yesterday, Coking coal comprises 57% of Felix's earnings, 77% of MCC's & 35% for Gloucester. Analysts are using thermal coal prices of US$75/t & coking coal $US125/t.

http://money.cnn.com/news/newsfeeds/articles/djhighlights/200812090141DOWJONESDJONLINE000063.htm

Agree Mooralben looks promising out of the 4 producing mines. See breakdown below

Mine/ Type/ Reserves(MT)/ Resources(MT)/ Sale(MTPA)
Moolarben/ Thermal/ 356.8/ 706.4/ 12.4
Minerva/ Thermal/ 28.8/ 78.5/ 2.6
Yarrabee/ Thermal/ 24.8/ 100.8/ 2.8
Ashton/ Coking/ 72.7/ 452/ 3.9
Total: 483.1MT reserves/ 1337.1MT resource/ 21.7MTPA sale

If we split the 21.7 MT saleable coal into 57:43 split between Thermal:Coking, we get 12.3MT & 9.4 MTPA.

Using $75 (TH) & $125 (CK) coal prices, this amounts to a total US$2.0975b of saleable coal per year. So the offer anyone makes for FLX has to have a premium over $2billion minimum & thats why there seems to be no panic with the sale. Buyers will come.

cheers YA

This is not quite what you want but because I have it you may as well see it. It is just the MC/tonnage.

Here is another chart showing the MC/Tonnage but this time divided up into resource.

Thx

MS