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FLX - Felix Resources

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It may be worth looking back at this interview in late September. Since then Felix have reduced their holding in Yarrabee to 51% and their interest in Minerva and Athena to 51% and retain a 60% interest in Ashton.

Ashton coal is semi -soft coking coal and production at the open-cut mine is 1.6mtpa and from March 2007 will add a further 2.4mtpa.

Felix interest coal production will rise to over 4mtpa for year 2007, rising to 10mtpa in 2010.

After sale of parts of Ashton, Minerva, Athena and Yarrabee, Felix have sufficient funds to develop the Moolarben open-cut and underground mine.
 


Semi-soft ( Metalurgical coal ) coal prices are holding up well in the United States at US$90.98 per ton, as at 1st November 06. The following link gives a chart of these prices that shows the strength in metalurgical coal prices. This follows the upbeat forecasts by Felix MD., Mr Brian Flannery for both the Ashton Mine production and metallurgical coal prices here on in.

http://tonto.eia.doe.gov/FTPROOT/coal/newsmarket/coalmar061029.html
 
Felix are recovering towards their $4.00 years high of $4.00 - closed at $3.85 up 5 cents.

Enough said about the sem-soft coking coal at the Ashton mine as we can work out our own figures on projected value, providing prices hold up.

Moolarben is now the future mine for Felix and by selling off 49% of Yarrabee, 49% of Minerva to finance it. A greater part of the future is on this one big time.
4 million tonnes per annum come in during 2008 at the open-cut mine. Costs are at around A$30 per tonne at this part of the mine.
 
The latest analysts report is eagerly awaited, now much delayed on FLX. I suppose much has happened in sales of parts of all of the mines except Moolarben and Harry Brandt.

Yarrabee reduced to a 51% holding, Minerva to 51% and Ashton to 60%. Phillipson under option to be sold and Hawks Nest sold. As said, only Moolarben and Harry Brandt remain clean at 100%.

The last analysts report gave an asset value close to A$1.2 billion and hopes are that this figure will be raised.

Felix trade on a 40% discount to the asset valuation of July 2006.
 
Felix Resources are moving up today in light trading and are close to the years high of $4.00. Together with GLC they remain one of the most improved stocks in the coal sector.

Added interest is in the Phillipson Coal Fields where NRG Flinders Power Partnership have options to purchase or pay royalties on coal production. The tenement holds 5 billion tonnes of sub-bitumous coal and the Adelaide to Darwin Railways runs through it. The Ingomar Trial Pit is the main point of interest at present.
The 3 year trial period ends in May 2007 and Flinders is expected to make an announcement soon.
 
This very light trading can be put down to so much stock being tightly held. Still, that leaves about 90 million shares to be traded each day. It is therefore difficult to trust the stock price, that can move 5% in either direction on very small trades indeed.
 
Felix have 180 million odd issued shares and 82% are held by the top 20 shareholders mainly by the White Mining interests/directors. Only 28% or 50 million available for regular trading, and I suspect the actual tradeable figure is less than that.
They have always been a tightly held stock and when as Aurion they ran up to $13.50 it was on tight volumes and I think in one year they did a 300% plus rise to achieve that level. Came down just as quickly though once the Whyalla smelter blew up, again on tight volumes - they have always been a pretty volatile stock but at least they now have some substance to them with the operating coal mines among their assets.
With the directors holding 70% of the stock they will only ever be able to fund their expansion by selling off part of the farm, as with Yarrabee/Minerva, because the contribution required from the directors in any equity issue would be too massive.
Just my thoughts!
 


I take your point, but FLX are well cashed up and many of the top 20 shareholders are Investment Banks that hold shares on behalf of small shareholders like us, as nominees.
 
Felix have closed the week at over four dollars at $4.05. This is quite significant, as it has been taken as a marker after the run up before the last announcement that was not the one hoped for. ( Yarrabee sale not Moolarben )
Moolarben has been valued alone at more than the present market cap.
 
Well there you goes: FLX took a tumble the last few days and I was tempted to unload some more stock. Some how Felix have become a growth stock, moving up from the ASX 400 to ASX300 and looking to enter the ASX200 at the next roll call.
More to go for, me thinks, and that $4.50 mark, mentioned in the companies past reports, is only a short distance away and only a small fence to jump. $13.50 is the Auiron/Felix days all-time high, and a long way off at present.
A Moolarben Joint Venture announcement is possible and that rather than a takeover bid may happen soon.
 
Not sure if they will need to sell off part of Moolarben - the last Wilson HTM report intimated a joint venture of Moolarben but since that report Felix have sold off 49% of Yarrabee and from memory that will be supplying the sort of funds that Wilson HTM were looking for in regard to the Moolarben development. So Felix may have done pretty well if they can go forward owning 100% of Moolarben, probably trading off some short term profits for some glory further out. Looking forward to the next Wilson HTM report, their last one in July was looking at a 12 month price target of $3.00 so it will be interesting to see how they rate the asset sales and the future prospects. Could be time to buy some more if the price slips back a bit further. In 18 months or so I can't see them trading down at these levels.
 
Quite a move back to $4.04 after a low in recent days of $3.78, encouraging.

Felix may not need cash, but may be tempted by an offer for an interest in Moolarben. The $68 million they received for a 49% interest in Yarrabee looks very good, with a life of 6.5 years remaining; sure they will get some more years with further exploration.

Moolarben has been given a value of nearly $800 million and with interest as it is, this could add $400 million to Felix's coffers for 49%. This would equates to $2.10 a share and put a value on Moolarben at $4.20 and that is higher than the present price of FLX.
 


What further announcements can we expect, as Felix at $4.05 trades about 40% below asset value.

Yarabbee: further exploration is expected to increase reserves and the life of the mine. Felix are about to start an exploration programme with their new european partner.

Minerva and Athena: FLX have sold 49% of the mines and exporation continues at Athena to increase the status of the reserves.

Ashton: Felix now have a 60% holding in the open-cut and longwall mine. The prospects have improved greatly with the new partners and everything is ontime and according to plan.

Moolarben: The jewel in the crown of Felix Resources that is valued at close to $800 million and some hope for a partnership to release up to $400 million in cash. Further exploration may well continue to increase the reserves.

Phillipson: 5 billion tonnes of steaming coal in S.A. Flinders will be announcing whether they will take-up their option to purchase the reserves outright by March 2007.

Iron Ore tenements at Hawks Nest... have been sold and owners are now WPG. FLX retain royalties on the expected production at 2mtpa from early 2008.
 
The FLX share price continues to move about in very light trading. Having fallen sharply to $3.86 and bounced back to $4.01 a few minutes ago. The shares have come up sharply from near $1.50 earlier this year and is it a case of running out of steam or holders doing just that, holding.
 
There is a bit of selling pressure around but it does not usually last for long.
Most days the shares are easy early in trading bur recover by the close. The only reason I would contemplate selling any of my holding would be to cash up to buy in again at a lower level. But I'm more nervous about selling and not seeing a further fall than I am about holding. Despite the rise from $1.50 in July I think they are still showing good strength and I think a few investors are getting set for Moolarben. The Rising Tide environmental site gives Moolarben a back-handed tick at http://risingtide.org.au/resources by stating what a huge development it is compared with other developments in NSW, albeit from the perspective of carbon emmissions. I think the shares will see a good return over the next couple of years though we are bound to have a few corrections over the journey.
 

Yes, and we await the next analysts review that should be out this month. As you say, Moolarben is what we are all setting our eyes on. Personally I know of no rumours about bids and many, I do know, are hoping for a move by Peabody or Xstrata who have tenements on each side of Felix Resources in NSW.

Definitely an interesting hold for 2007 and I appreciate your views on how the stock could move. Good Luck.
 
Interesting that the last of the 1 cent options got converted today. The only options left from the 2005 Annual Report are 7,500,000 with an exercise price of 85 cents each and 70,000 which are not easily traceable. The White Mining interests seem to have converted all those related to the purchase of their mines. Don't know of what significance it is but the directors certainly seem to be in for the long haul.
 
An increase in trading this morning, at last, as Felix move on 13 cents at $4.11. Analysts report is due to be published.
 
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