FLX - Felix Resources

[noirua]

I opened a small pos yesrerday at 5.36, buying on the stochastic looking o/sold, has done me well of late, although had a bad one on the13/06 pos, but really coined it on the26/27 june positions(2) with stoch divergence, closed both 5.65 6 july.porkpie

The present position for Felix Resources may well show you have timed this one brilliantly. Felix results are due at any moment and should show production way up on last years, prices obtained for all coals will have risen dramatically in the second half. Currency strength and Newcastle Port restrictions will not have helped results but FLX are in a very strong position despite this.

It's all about 2008 and cash should come piling in from asset sales and profits from the three mines at Yarrabee, Minerva and Ashton open-cut & Longwall.

In addition takeover rumours persist about interest from Xstrata and the Moolarben Mine go-ahead will spur Felix on further.

 

[noirua]

Felix remain fairly solid at $5.52 on Friday night. Trading was stronger with about 5 trades being more interesting than usual, FLX trading being usually very light, and these appear to be matched trades being put through the ASX.

There may be a lot of nervousness amongst the Board and major holders of stock, as they perceive a sudden announcement that a few holders may accept an offer from Xstrata - there are no announcements anywhere that anyone has been approached as yet. The position of AMCI with 19.2% remains interesting on the basis that adding more stock could be in their minds. Many have added to their holdings in the last 12 months and may be doing so now.

A UK broker, Hargreaves Lansdowne, have sent further letters to UK holders of stock offering to sell their holding without commission. They, Hargreaves Lansdown, were floated on the LSE recently and are now amongst the largest UK brokers.

 

[porkpie324]

Interesting trading on Friday FLX posted a SP increase on 966k shares traded (3 times average), and that was with a very bear market, so even though I have just a small position it helped in otherwise a very bad day (for me that is). porkpie

 

[noirua]

Felix Resources retain a royalty position on production from the Western Plains Resources, Iron Ore Tenements, through their 90% owned subsiduary S.A.S.E. (Ausmelt and Krakatau Steel each own a 5% stake).

Excellent news from WPG this morning in their latest Quarterly Report shows that their is 19 million tonnes of 63.7% high grade ore at Peculiar Knob.

9.1 million tonnes of 60.1% high grade iron ore at the Buzzard Tenement.

Buzzard East and Kite South, in Hawks Nest, have found two separate high grade deposits of iron ore.

AS time goes by this is gradually becoming a major find as previous surveys show up to 800 million tonnes of various grades of iron ore on Hawks Nest.

http://www.asx.com.au/asxpdf/20070730/pdf/313p25g3dhbd4z.pdf

 

[noirua]

Felix Resources 4th Quarterly report is now more than a week overdue. The shares continue their recovery this morning with a rise to $5.82. Trading is brisk this morning compared with the usual average.

 

[porkpie324]

I noticed that this morning on my CFD platform, quote at 5.81 but nothing much below until 5.70, so closed my 2 pos at 5.81, took a reasonable gain, so now wait again until possible SP pressure.porkpie

 

[noirua]

Fourth Quarterly Report for the year ending 30th June 2007:http://www.asx.com.au/asxpdf/20070731/pdf/313qgk9rcl9wxt.pdf

 

[noirua]

Fourth Quarterly Report for the year ending 30th June 2007:http://www.asx.com.au/asxpdf/20070731/pdf/313qgk9rcl9wxt.pdf

These fourth quarterly results, yet again, show that big profits are still just around the corner for Felix Resources. The strong Aussie Dollar and the storm at the Newcastle Port, will have left profits lower than expected, as MD Mr Brian Flannery appears to indicate. That may mean a dividend of around 5 cents, up from 4 cents last year, as the growth importance is the main factor here.

THe Yarrabee agreement to sell 49% for $68 million fell apart as Felix gave up waiting for funds to be raised. Now further talks continue to sell 49% of Yarrabee, this time, to Japanese, Korean or Chinese partners who will also guarantee taking up agreements to purchase coal. Better in the long run for Felix and the money should roll in during the latter part of 2007.

Expenditure in expanding reserves, just over $1 million, appears well spent as a further uplift in coal reserves at Moolarben takes it to 615 million tonnes. The mine should remain in operation far longer than expected and production may be pushed up well beyond indicated figures of 10 million tonnes per annum to nearer 13 mtpa. The 10% interest purchased by Soljitz of Japan, conditions attached, will bring in $90 million and reduce felix expenditure on development from around $300 million to $270 million. Felix are in further talks with prospective partners to sell a further 20% interest.
This could nean that FLX's target for 15mtpa under management by 2010 to be very conservative.
Further increases in reserves can be expected for Yarrabee, Ashton and Athena.

THe interests in iron ore, through royalties, will add to profits, starting in 2008. The Phillipson coal position should lead to further royalties from coal production further down the line, 2010 onwards. The ADC interest of 21.5%, managers Ausmelt, could lead to a flotation or issue of Ausmelt stock to Felix in 2008.

 

[noirua]

Felix Resources trade at $5.79 this morning, up 27 cents. The trading remains fairly light when compared with similar stocks and this may well be the reason for some quite big price movements.

Felix await news on sales of 20% of Moolarben and 49% of Yarrabee, that are expected fairly shortly.

 

[noirua]

Felix Resources strength and nervousness comes from Moolarben. Soljitz $90 million purchase plus about $30 million towards development, for 10% of the project, puts a price on Moolarben of $1.2 billion, or $6.12 a share. The nervousness is the need for a go-ahead both for the open-cut and longwall mines, and the court case to be heard at the end of September in the NSW Supreme Court, Xstrata/Mitsubishi versus the NSW Mining Warden, is the reason for it.

Other assets of Felix are worth around $350 million to give a total asset value of about $7.90 a share. In addition, Felix have previous losses to be set against tax of around $100 million and cash in the bank of about $70 - $90 million.

 

[noirua]

Felix Resources correction that coal sold was 3,691,000 tonnes, up 22%, and produced was 3,722,000 tonnes, up 28%: http://www.asx.com.au/asxpdf/20070807/pdf/313vdk75zs58b7.pdf

 

[noirua]

Felix have recovered during the week after being affected by the general decline in the mining sector and are just 2 cents down on last Fridays' close at $5.77.
The court case over Moolarben ( Ulan Mining (owned 90% Xstrata, 10% Mitsubishi) are trying to prevent their land (covering 20% of Moolarben) being used by Felix Resources as access to their proposed open-cut mines at Moolarben ) starts in seven weeks time on 21st September and should be concluded in October.

 

[noirua]

Felix still have to complete all their fund raising for Moolarben. Debts and cash in the bank should be even, leaving a further $300 million to find for development.

49% of Yarrabee should eventually be sold and yield $68 million. Soljitz will provide $90 million and their share of development costs for Moolarben, around $30 million. Talks continue to sell two more blocks of shares.

From the above, Felix are not quite in the clear on development costs at Moolarben. I remain very confident but post the risks in this credit crunch period. Hopefully Felix will reel in good profits in the year ending in 2008.

 

[noirua]

Quite a chunk of the invested part of my portfolio is in Felix Resources. One part of me says hold-on and the other, start reducing.

The recovery in the US$ will put a smile on the face of good olde MD, Mr Brian Flannery.

Perhaps our MD should also be looking to accept Xstrata as a partner in Moolarben and stop this court case in its tracks.

A few think the joining together of the Moolarben Open-cut and longwall Project with the Open-cut and Longwall Ulan mines would be a good commonsense arrangement.

 

[noirua]

Taking a chance, I added a few Felix Resources shares on Monday. Prices for thermal coal have risen from the 2006 peak of US$54 a metric tonne to US$72.37 on the spot market out of Newcastle.

The Moolarben project was valued at roughly A$1.2 billion and this price MAY now look cheap in the light of Asia's scramble for thermal coal. Some guesses see thermal coal heading for US$100 per tonne.

At the close yesterday, Felix traded at A$5.53 for a market capitalisation of A$1.09 billion.

The following link outlines the coal situation at the Newcastle Dock: http://www.bloomberg.com/apps/news?pid=20601087&sid=axTy1Kg5XA7M&refer=home

 

[noirua]

It's at times like these that I'm glad I kept to my self imposed rule to keep share investments at no more than 30% of my portfolio.
Felix Resources plunged like many in the sector and finished at $5.13, about a dollar below their 2007 high.
Only encouragement for Felix is the dive in the Aussie ag'in the Greenback, now at AUS$1.22. Thermal coal prices remain strong and this has to be a good for Felix profits from here.

 

[noirua]

Felix Resources seem to have bottomed out and trade at $4.84, down 29 cents. Quite an acceptable performance considering today has become "The Great Slide", afterall was said in hopes the problems were over.

As said before, the Aussie Dollar is slipping back against the Greenback and thoughts of interest rate rises have been put in the bottom drawer. My thinking is, that the A$ will go back to A$1.35 to the greenback - this will be excellent news for miners.

This great drop in stocks is well overdone, IMHO.

 

[noirua]

Felix Resources managed to close at $5.12 on Thursday. Trading continues light and the complication over the legal case with Xstrata remains one of the deciding factors.
FLX have been the strongest Aussie coal stock in the last 12 months and should be helped by the decline of the Aussie Dollar. All mining sectors are watching future commodity prices.

 

[noirua]

Felix stock trade around $5 and are beset with concerns over Moolarbens go-ahead or nay. If the court case falls soundly into Felix's corner, then all is well and this stock may well be go on up with other parties ploughing cash in. Any problems and the reverse is the case. So Felix stock is set to be nervous in the usual light trading until October.

 

[noirua]

The Moolarben Court Case moves ever closer and Xstrata have seen fit to put their case in The Financial Times last Thursday.

Xstrata try to explain why others should not develop New Coalmines in NSW whilst forgetting, the fact, that they themselves have only recently opened their Longwall Mine at the Ulan Mine in the Hunter Valley.