FLX - Felix Resources

noirua said:

The extent of the recent rise may also have to do with the ongoing Chinese interest SPECULATION: http://www.reuters.com/article/euPrivateEquityNews/idUSTRe5521LL20090603

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While I have always believed that a full takeover of felix is unlikely and less likely as time goes by a minority purchase of a mine such as yarrabee by such a chinese fund fits with felix's previous strategy

Check this link:

online.wsj.com/article/SB124507215867615079.html?mod=googlenews_wsj

It says FLX is in discussion with Yanzhou Coal Mining Co. of china for a 3b takeover. Interesting..

I've pasted the news below from wsj.

BEIJING -- While many Chinese state resources companies are looking abroad for natural resources, China Shenhua Energy Co., the country's biggest coal producer by market value, expects sharp growth at home and isn't feeling pressure to chase deals overseas.

Shenhua is focusing on doubling its annual coal output capacity to 400 million metric tons by 2014, getting a tailwind from Beijing's push to consolidate coal reserves in the hands of just a few big miners.

Its plan is a vote of confidence in China's coal sector at a time when Beijing, facing criticism from abroad over emissions growth, is looking to cut its share of coal in its energy mix by boosting renewable energy use.

China has the world's third-largest known reserves of coal after the U.S. and Russia, and relies on the fuel for 75% of its electricity needs. Vast amounts of new thermal generating capacity are installed each year, often near the mouth of mines.

However, Shenhua's focus on bulking up its domestic operations also allows it to avoid some difficulties that many of China's companies face when expanding abroad, including a lack of technical expertise. Companies often need to parachute management teams into each project, tying up resources and making the operational side of the business more complex.

"Our international strategy is very cautious because we haven't done business overseas before," said Huang Qing, board secretary of Shenhua. "Given that we start from zero, we prefer to begin with" a greenfield, or initial-stage, project like exploring for coal in Australia's New South Wales state, he said in an interview.

Shenhua paid 299.9 million Australian dollars (US$243.9 million) to the Australian government last November for a permit to explore the Watermark area in New South Wales, which has estimated reserves of one billion tons of thermal coal. Shenhua is also active in South Sumatra, Indonesia, where it has a project to produce up to three million tons of coal and build two 150-megawatt power generation units by 2012.

But these are small steps compared with the more than A$3 billion takeover of Australian coal miner Felix Resources Ltd. that Yanzhou Coal Mining Co. is negotiating. Yanzhou is China's third-largest coal miner by market value, after second-ranked China Coal Energy Co.

Wang Shuai, a coal analyst at Orient Securities, said Shenhua could afford to be cautious in expanding overseas as China's coal reserves are still able to meet the majority of the country's consumption.

This is in contrast to China's biggest oil companies, which can't find enough new oil fields to meet rising energy needs and replace output declines at existing hubs.

Shenhua, which also operates railways, ports and power plants, has adopted a two-pronged approach to securing growth at home. It is developing two new mines with an annual output capacity of 100 million tons each, and expects to bring them both on stream within five years, Mr. Huang said.

The company, listed in both Shanghai and Hong Kong, has also set its sights on buying three assets of its parent, Shenhua Group, although it has yet to fix a timetable, Mr. Huang said. They include a project to make synthetic fuels from coal in northern China's Inner Mongolia region.

Mr. Huang said the venture -- one of only two large-scale coal-to-liquids plants approved by the Chinese government -- requires oil prices above $45 a barrel to be profitable.

The other projects on Shenhua's radar are Wuhai Energy Limited Co., which is the largest coking coal producer in Inner Mongolia, and a coal-to-olefins project in Baotou in the same region.

””David Winning and Wan Xu

Yanzhou Coal is a subsidiary of the State owned People's Republic of China company Yankuang Group Company. Yanzhou is quoted in Shanghai, Hong Kong and the USA, but Yankuang Group has a controlling share.
This would mean that a takeover of Felix Resources would put their 80% stake in the Moolarben Project in the Hunter under the control of the Chinese Government.
It is thought that this is a main stumbling block in Yanzhou's bid for Felix Resources.
http://en.wikipedia.org/wiki/Yankuang_Group

An article in 'Steel Guru' states that Yanzhou Coal have taken over Felix Resources. It appears to be unfounded and probably an error.


http://steelguru.com/news/index/200...t_steel_output_and_centralize_purchasing.html

Amusing..

It is interesting the price drop from $15 to just below $12.50 yesterday, but there is definitely strong support there. It will be interesting to see what negotiations are underway, it is hard to find further details.

gfresh said:

Amusing..

It is interesting the price drop from $15 to just below $12.50 yesterday, but there is definitely strong support there. It will be interesting to see what negotiations are underway, it is hard to find further details.

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Hi gfresh, Felix have board meetings on Monday and Tuesday of this week but I can't see the takeover issue being discussed, except off the record.

Article that is quite bullish for Felix Resources: http://thebull.com.au/articles_detail.php?id=4059

Report from The Australian Business concerning a recent visit by Yanzhou Coal to Felix Resources: http://m.theaustralian.com.au/business/BusinessNews/fi41906.htm

Felix have once again issued a statement that they do not expect anything to happen in a hurry re takeover. I would add if ever. Its a pity that media speculation causes these problems. I have found in recent years that the media is only good as a lead to do further investigation from

pacestick said:

Felix have once again issued a statement that they do not expect anything to happen in a hurry re takeover. I would add if ever. Its a pity that media speculation causes these problems. I have found in recent years that the media is only good as a lead to do further investigation from

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I still can't see Yanzhou Coal being interested in most of Felix Resources. Their eyes seem to be on the Ashton mine at Singleton in the Hunter.

Felix are exploring the area to increase reserves and the mine life. That factor seems to be the reason Yanzhou visited Felix again as they already know the quality of the semi-soft coal at Ashton.

Yanzhou also know that Felix are set to up production at Ashton to 6.5mtpa and may well be looking for a stake in the mine, combined with an agreement to purchase coal over the life of the mine.

So Yanzhou; if they are uncertain this would only be due to wanting to see the results of further drilling at Ashton.

IMC purchased their 20% stake in the Ashton Mine on 14/6/2005 for AU$30.425 million. This was before the underground mine was developed and they would have had to pay their share of development costs.

A fellow investor in Felix Resources thought that Yanzhou Coal were interested in Felix's Phillipson bitumous coal, oil from coal prospect in S.A. This has 3 - 4 billion tonnes resource that Felix are exploring out of their Adelaide office, set up last year.
Although this is an interesting scenario and Felix are exploring the area, there appears to be no justification at this stage. The recent drop in oil prices, despite Aussie weakness, does not, imho, look to be viable at present prices.
Felix also continue to explore for other minerals, but there has been no statement so far from the company.

Back in the days of Meekatharra, Phillipson was reckoned to be cheap to mine, as it would be open cast. The coal price was lower than it is today, and the idea then was to supply the ageing local power plant, whose coal resources were becoming more expensive to dig out as the seams got deeper. Phillipson is situated adjacent to the main railway line north to Darwin and south to Adelaide.
At the time samples were sent to Japan for analysis, to support the transportation of liquid coal products--coal to oil.
In those days I used to lunch with Don O'Callaghan in London, and he was pretty bullish about the prospects. Also for some of the iron ore resources nearby. Hence why Meeka was renamed Auiron Energy. Ah! The grey hairs it gave me when their proprietary Iron smelter blew up, and along with it all our hopes !!
Ref.Yanzhou-- US ticker YZC. It seems to be a good investment in its own right, on a PE of around 7, despite its 70% rise this year. It appears to have monopoly supply situations due to minemouth generators at its mines.

If China continues its present 7%-10% growth p.a. then surely the energy companies are the place to be. The fact thay YZC is trawling Australia for any resources it can pick up on the cheap, supports this scenario.
No doubt Noirua will enlighten us with his opinions.
[Some say his real initials are B.F?] That's no insult !!

This from the FT 24th June is quite interesting. It adds a bit to other news that day.
"Felix indicated yesterday that its own discussions with interested parties regarding a takeover deal were ongoing.
Felix's shares have more than doubled to A$13 on the back of takeover speculation that Yanzhou would launch a A$3bn-plus take-over bid - after a previous attempt to engage with the company in December was unsuccessful. It is understood that Yanzhou executives returned to Australia two weeks ago to re-examine the miner's assets. Brian Flannery, managing director of Felix, said the company was in discussion with a number of people about buying coal and a few of them had expressed interest in taking an equity position.

Xstrata Coal is also understood to have looked at Felix. The London-listed miner said yesterday it would not comment on speculation.

Analysts said a tie-up with Xstrata made sense for Felix because the groups' operations were adjacent and Felix had port allocation in place courtesy of the new 30m tonnes per annum-coal port being built at Newcastle by Xstrata and BHP Billiton.

Paul McTaggart, an analyst at Credit Suisse, said a bid by Xstrata or Yanzhou would only succeed if the suitors raised their price expectations.

"We value the stock at A$18 a share so we believe the stock is currently trading at a 30 per cent discount to that," he said.

"A deal won't happen at current prices. And [if] the . . . Moolarben project in NSW can realise its full potential, Felix could command north of A$20 per share."

Felix shares yesterday closed down 3.6 per cent at A$12.50 while Linc dropped by more than 9 per cent to A$1.57.

Copyright The Financial Times Limited 2009

To describe some as having the initals BF on this thread is in my opinion a compliment indeed. I still believe that the Felix will not be sold just as is usual for felix a percentage of a mine

I think Mr Brian Flannery MD, is very much a White Mining man and considered the takeover of White Mining by Felix Resources in 2005 really in the form of a reverse takeover, as was RMM's before them in 2003.

The Moolarben Project and the Ashton Mines were in fact once White Mining's companies (also Harry Brandt Project and UCC operations). The Yarrabee Mine was owned by RMM and a 70% stake in Minerva (now 51%) was bought by Felix Resources in 2004.

The Auiron Energy (now part of Felix Resources) in 2003 was principally a company holding about $20 million in cash with all the other assets non-producing.
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I can't see Xstrata bidding for Felix with their own problems, having tried to join with Anglo American. Felix are not in a happy frame of mind after the run of court cases over Moolarben.
True, Xstrata have mines close to Moolarben and Ashton. The Ulan open-cut mine adjoining Moolarben has closed but Xstrata continue with a longwall mine there. Xstrata's mine near Ashton closes in March next year.

As stated before, Yanzhou Coal is owned by a special voting share held by a Chinese State owned Yankuang Group Company. Problems if they bid, though Felix's board may be hoping for an over the top cash bid between $20 - $25 a share.

Felix Board are still probably hoping that BHP Billiton will become seriously interested at some stage. As they can bid a mixture of stock and cash to reduce capital gains tax liabilities.
Several have said BHP don't need coal mines, maybe they're right.

Most seem to be going for Yanzhou Coal taking an interest in Moolarben's future Underground Mines and Ashton's Underground mine, combined with a semi-soft coal purchase agreement over the life of the mines.
Felix will need more cash with development of Moolarben, Wilpeena, Athena (560 million tonnes resource) and further Ashton Development.

Felix Resources' 80% owned Moolarben Coalmine Photo Gallery: http://www.moolarbencoal.com.au/PhotoGallery.htm

Felix Resources, like other coal miners, are cheered by higher thermal coal prices and a forecast by UBS of US$90 per tonne, $10 up on their previous forecast.

Companies are increasingly turning to China to take their coal and the continuing holdups at the Port of Newcastle is keeping prices stronger than they may otherwise have been.

There is still some speculation that Yanzhou Coal are pouring over projections for development of the Ashton mine and the mine prospects for the future underground mines at Moolarben indicated to be ready at the end of 2011. Both mines are and will be mining semi-soft coking coal, Ashton up to 6.5mtpa (Felix interest 3.9mtpa) in the future and Moolarben underground in excess of 8mtpa (Felix interest 6.4mtpa) - Moolarben open-cut will produce 4mtpa (Felix 3.2mtpa) of thermal coal.

Further speculation re takeover in this article however the more important information is the credit suisse rerating. i suspect that reference to BF letting it be known that the company is for sale predates the statement from the company that they consider a change of control unlikely. However the recomended price is approaching the price I have felt Felix is worth with potential to rise another four dollars as the many projects they have move into action
http://www.theaustralian.news.com.au/business/story/0,28124,25806539-5005200,00.html

pacestick said:

Further speculation re takeover in this article however the more important information is the credit suisse rerating. i suspect that reference to BF letting it be known that the company is for sale predates the statement from the company that they consider a change of control unlikely. However the recomended price is approaching the price I have felt Felix is worth with potential to rise another four dollars as the many projects they have move into action
http://www.theaustralian.news.com.au/business/story/0,28124,25806539-5005200,00.html

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Always hopeful Felix Resources can push on quickly and beat the $20.50 forecast. I doubt any company can sensibly bid without a stock offer and/or cash due to the capital gains tax situation of the major holders.
The high for Felix in 2008 was $23.30 and I have a feeling, guessing of course, that the board of directors want well North of this from a bidder.

noirua said:

Always hopeful Felix Resources can push on quickly and beat the $20.50 forecast. I doubt any company can sensibly bid without a stock offer and/or cash due to the capital gains tax situation of the major holders.
The high for Felix in 2008 was $23.30 and I have a feeling, guessing of course, that the board of directors want well North of this from a bidder.

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Very interesting, thanks

Felix Resources (FLX); Credit Suisse; Outperform recommendation; Target price of $20.50; Last traded at $15.62.

CREDIT Suisse has raised its forecast price and recommendation for takeover target Felix Resources, a coalminer.

Credit Suisse analysts said a visit to the Newcastle port and Felix's Ashton and Moolarben operations led to the upgrades and an increase in sales volume assumptions for Moolarben.

"The Moolarben coal project is a potential company maker for Felix. It is large, low-cost, close to infrastructure and fully funded," their report on the stock says. "It has all the makings of a world-class project at a time when coal deposits are getting deeper, infrastructure is harder to access and costs are continuing to rise."

Last month it was rumoured that China's Yanzhou Coal Mining was back in Australia eyeing off Felix Resources after failing in previous attempts to engage with the company.

In December, Felix managing director Brian Flannery confirmed there was ongoing interest in the Brisbane company and he has made it clear in the past that the coalminer is open to takeover talks.

The Credit Suisse report concludes that Felix provides cheaper leverage than its rival Macarthur Coal.

"While Macarthur provides more pure leverage to a recovery, we feel a significant recovery is already captured in its price," Credit Suisse said. "Felix is cheaper and has better valuation support at current prices while still providing significant leverage to a recovery."

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Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 51.8 133.8 53.3 92.1
DPS 53.0 35.5 22.5 42.1




thx

MS

Still driving on up, excellent charts m_s - ($16.10 +50c), though recovering from a slump from $23.30 down to $4.80 is probably a better way to put it. Looks very high risk indeed on the back of the bucking broncos, Semi-soft coke, PCI coal and thermal coal, and the added takeover spice.

A worthy gamble on both factors, imho - If the money you invest is what you can afford to lose.

Takeover? I bought the stock in May 1983 as just that, a takeover punt. Both takeovers were in 2003 and 2005, unfortunately it was Felix that did the takeovers in reverse takeover style. Still waiting for a proper takeover bid more than 26 years later.

What's the gamble really. Well, Felix coal production should reach 16 million tonnes per annum (MTPA) by 2014, and (complete guess) if the further potential mines come off at Wilpeena, Harry Brandt and Athena, around 20mtpa. Who knows about Phillipson in SA, as an oil from coal project could come about beyond 2020, maybe/perhaps - 3 to 4 billion tonnes of sub-bitumous coal there, MD Mr Brian Flannery said last year.

Will they sell the coal though and at what price? Profits could end up not much or through the roof, depending on coal prices. YES! Felix Resources are a dig-it-out and sell it coal company.

This article was back in April 2009 and refers to Yanzhou interest in Felix Resources - source Xinhua News Agency
http://chinasecurities.com/ir/Yanzh...in-talks-to-buy-felix-resources/messages/2532