The value or at least the outlook for Felix Resources would change with a go-ahead at Moolarben, near Mudgee, Central West NSW.
Moolarben open-cut would start at 4 mtpa and gradually ramp up to 9 mtpa with an additional 4 mtpa in 2010 at the longwall underground mine.
Will there be outside interest for Moolarben and would Felix Resources welcome this? I say welcome, because the main 5 shareholders have over 60% of the companies shares.
Moolarben is valued at A$800 to A$900 million by one analyst and Felix will need A$80 million to develop the open-cut mine and A$150 million more for the underground mine. ( 2005 prices )
Felix should make EBITDA$45 -55 million for the current tax year and this should total around EBITDA $110 - 125 million after asset sales. This should give Felix enough cash to develop the Moolarben Open-Cut mine.
Why then would Felix like a partner. Well, all this coal will need to be sold, principally to China, Japan and Korea. A deal with a major Asian company or companies would cement the sales for the future.
Also Felix would like to accellerate their longwall mine at Moolarben and perhaps their 51% owned Athena tenements.
Moolarben may well be worth around A$800 - A$900 million and an asset sale worth around A$200 millon or more would quickly accellerate Felix Resources on to the ASX200 and then ASX100.
Shareholders would also be looking for rewards in the form of increased dividends, capital return and a company buy-back of shares.
At a share price of nearly $5.00, a dividend of 20 cents a share, 16 cents up on last years dividend, would be nearer the mark.
It's a case of expand and expand for Felix Resources and this does cost a great deal, especially, if the company rewards its shareholders as well.