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.