FLX - Felix Resources

Has some potential building

The main producing mines are Yarrabee, Minerva and Ashton that are estimated to produce A$58 million profits after tax for the year ending 2006. Early projections were for profits, before tax, as high at A$105 million for 2007, these estimates are being scaled back due to lower thermal coal prices.

Coming onstream is Ashton underground that should be fully producing in a year or so.

The jewel in the crown is the Moolarben tenement. The open-cut mine is planned to produce 4 - 6 million tonnes pa of premium thermal coal for the year ending 2008. It will be a low-cost mine that Felix are very much looking forward to fast track.

The Moolarben underground will be in full production at 4 million tonnes pa for the year ending 2010.

Other projects are Athena, Harry Brandt, Phillipson ( option for royalties ), Hawks Nest and other iron ore tenements and ADC ( 21.5% interest with Ausmelt ).

All this coal has to be sold of course, not stockpiled.

GSJB Were Reverses Sell on Coal Sector.

http://www.aireview.com/index.php?act=view&catid=8&id=3494&setSub=1

noirua said:

GSJB Were Reverses Sell on Coal Sector.

http://www.aireview.com/index.php?act=view&catid=8&id=3494&setSub=1

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hehe yeah, keep an eye on

EXL, CEY, MCC, GCL, FLX, COK

michael_selway said:

hehe yeah, keep an eye on

EXL, CEY, MCC, GCL, FLX, COK

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Felix does have a question mark, long term, costs versus profits.

Some seem to have forgotten ( that includes GSJB Were and all the other analysts and forecasters ) the other assets held by Felix Resources.

A). Phillipson Basin tenements in South Australia ( contains over 5 billion tonnes of sub-bitumous coal ) that include the Ingomar Trial Pit and 100 million tonnes of easily accessible coal. At present NRG Flinders Power Partnership, has an option agreement giving it the right to explore on, evaluate and purchase the tenements. If NRGF acquires the tenements Felix will receive an upfront payment and be entitled to royalties for coal produced from the tenements.
An agreement was signed in May 2004. If Flinders go ahead by May 2007 payments will markedly increase over the next 3 year period.

B). Felix have a holding in Hawks Nest ( 90% via their subsiduary S.A.S.E. )and the Peculiar Knob and Sequoia tenements. These are estimated to hold around 800 million tonnes of Iron Ore that varies between low and high grade. An evaluation is being carried out on Sequoia and Peculiar Knob, they hold approx 21 million tonnes of high grade iron ore.

C). Felix owns a 21.5% stake in ADC with Manager Ausmelt who hold 78.5%. This involves the building and supply of future top lanced ferrous technology. ADC also owns the Pig Iron evaluation plant that Felix has certain rights over through its 90% ownership of S.A.S.E.
S.A.S.E. owns the rights to the supply of Ausmelts Ausiron(R) top lanced technology in South Australia.
Felix also own 2.5% of Ausmelt.
Ausmelt have stated - http://www.ausmelt.com.au - that companies have recently shown increased interest in furthering a ferrous top-Lanced Pig Iron plant in South Australia.

D). Felix own 100% of Ballymoney Power and Associate Companies, which are being directed and Managed through Felix MD Mr Jon Parker. The Ballymoney Power mine holds approx 600 million tonnes of lignite in Ballymoney, Northern Ireland. The NI Government have put a hold on further exploration rights until November 2008.

E). Felix Gold Holdings, that were due to be floated in Canada about 11 years ago - it never happened. Felix have certain rights to royalties on these gold holdings. Felix have not made any comment on these holdings recently.

noirua said:

Felix does have a question mark, long term, costs versus profits.

Some seem to have forgotten ( that includes GSJB Were and all the other analysts and forecasters ) the other assets held by Felix Resources.

A). Phillipson Basin tenements in South Australia ( contains over 5 billion tonnes of sub-bitumous coal ) that include the Ingomar Trial Pit and 100 million tonnes of easily accessible coal. At present NRG Flinders Power Partnership, has an option agreement giving it the right to explore on, evaluate and purchase the tenements. If NRGF acquires the tenements Felix will receive an upfront payment and be entitled to royalties for coal produced from the tenements.
An agreement was signed in May 2004. If Flinders go ahead by May 2007 payments will markedly increase over the next 3 year period.

B). Felix have a holding in Hawks Nest ( 90% via their subsiduary S.A.S.E. )and the Peculiar Knob and Sequoia tenements. These are estimated to hold around 800 million tonnes of Iron Ore that varies between low and high grade. An evaluation is being carried out on Sequoia and Peculiar Knob, they hold approx 21 million tonnes of high grade iron ore.

C). Felix owns a 21.5% stake in ADC with Manager Ausmelt who hold 78.5%. This involves the building and supply of future top lanced ferrous technology. ADC also owns the Pig Iron evaluation plant that Felix has certain rights over through its 90% ownership of S.A.S.E.
S.A.S.E. owns the rights to the supply of Ausmelts Ausiron(R) top lanced technology in South Australia.
Felix also own 2.5% of Ausmelt.
Ausmelt have stated - http://www.ausmelt.com.au - that companies have recently shown increased interest in furthering a ferrous top-Lanced Pig Iron plant in South Australia.

D). Felix own 100% of Ballymoney Power and Associate Companies, which are being directed and Managed through Felix MD Mr Jon Parker. The Ballymoney Power mine holds approx 600 million tonnes of lignite in Ballymoney, Northern Ireland. The NI Government have put a hold on further exploration rights until November 2008.

E). Felix Gold Holdings, that were due to be floated in Canada about 11 years ago - it never happened. Felix have certain rights to royalties on these gold holdings. Felix have not made any comment on these holdings recently.

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Omg it dropped so much today!

Is thsi one still cheap?

-----------------------------

7 February 2006
Felix Company Update
SUMMARY
1. First-half unaudited profit after tax for FY 2006 is estimated at $14 million
This compares with $1.67 million ($1.57 million IFRS adj.) in the previous corresponding
period.
2. First-half sales are down 4%; costs are in line with budget
3. Sales volumes for FY 2006, in aggregate, are on track
Lower than budget PCI and semi-soft coking coal sales volumes are forecast to be
offset by additional thermal coal sales.
4. Revised guidance for the full financial year is $29 million to $34 million
The revision is a reduction in profit of approximately 50% compared to that indicated
previously. The decrease is mostly due to lower revenue caused by a softening in PCI
and semi soft coking coal markets; prices to be realised for Felix production are now
likely to be materially less than budget.
5. Production and sales from Minerva are ramping up over the March Quarter
A new truck fleet will be commissioned by end of March allowing mining productivity to
increase significantly. Commissioning of a dedicated Minerva stockpile at the Port of
Gladstone is due in April and is expected to ease port constraint risks for Minerva.
6. Development of the Ashton underground mine is on track
● Mine development is advancing as planned
● Key equipment ordering and delivery and design work are progressing well.
7. Moolarben pre-development is proceeding according to plan
● The Moolarben Major Project Application has received ministerial acceptance
● Final exploration for the initial phase of mining is now concluding and will result in an
upgrade of the Resource to Indicated & Measured status
● Scoping for engineering design for the mine and wash plant are progressing well

michael_selway said:

Omg it dropped so much today!

Is thsi one still cheap?

-----------------------------

7 February 2006
Felix Company Update
SUMMARY
1. First-half unaudited profit after tax for FY 2006 is estimated at $14 million
This compares with $1.67 million ($1.57 million IFRS adj.) in the previous corresponding
period.
2. First-half sales are down 4%; costs are in line with budget
3. Sales volumes for FY 2006, in aggregate, are on track
Lower than budget PCI and semi-soft coking coal sales volumes are forecast to be
offset by additional thermal coal sales.
4. Revised guidance for the full financial year is $29 million to $34 million
The revision is a reduction in profit of approximately 50% compared to that indicated
previously. The decrease is mostly due to lower revenue caused by a softening in PCI
and semi soft coking coal markets; prices to be realised for Felix production are now
likely to be materially less than budget.
5. Production and sales from Minerva are ramping up over the March Quarter
A new truck fleet will be commissioned by end of March allowing mining productivity to
increase significantly. Commissioning of a dedicated Minerva stockpile at the Port of
Gladstone is due in April and is expected to ease port constraint risks for Minerva.
6. Development of the Ashton underground mine is on track
● Mine development is advancing as planned
● Key equipment ordering and delivery and design work are progressing well.
7. Moolarben pre-development is proceeding according to plan
● The Moolarben Major Project Application has received ministerial acceptance
● Final exploration for the initial phase of mining is now concluding and will result in an
upgrade of the Resource to Indicated & Measured status
● Scoping for engineering design for the mine and wash plant are progressing well

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Oh well, it's only a matter of weeks ago that MD Mr Jon Parker, agreed that 2006 profits would drop A$8 million to A$58 million after tax - after pressure from the ASX.
How things have changed that much is puzzling, did the MD really not know what the true situation was when the ASX announcement was made?

Are they still cheap? - Ask me in 2010 when Felix reach full production.

Makes you wonder if you can trust even these figures , could there be another down grade in 2 months time . Wouldn't but these now for any
amount above $1.50 .

Bit of a spinning day. In no way fif this ever present itself as a buy for me. Ironically though todays action could actually be a fantastic buy opportunity.

Probably best to see the dust settle on Felix after recent events.

SASE Project ( Explanation of the tie up of Felix Resources and Ausmelt - http://www.ausmelt.com.au/ausiron.htm )

Shareholders approved the transaction on 28th March 2003.

Key aspects of the agreement include:

A newly formed 100% owned subsiduary of Ausmelt ("AET")- AUSIRON DEVELOPMENT CORPORATION Pty Ltd ( "ADC") - became the sole vehicle for the development, marketing and commercialisation of AUSIRON(R) Technology.
Ausmelt assigned to ADC the perpetual exclusive global rights to the Ausiron(R) Technology.

Felix Resource's ("FLX") 90% 0wned subsiduary SASE Pty Ltd ("SASE") transferred its Whyalla pig iron DEMONSTRATION PLANT to ADC in return for a 21.5% share of ADC's royalty and licensing revenues.
SASE has the right to convert the revenue share ( at no cost ) into a 21.5% shareholding in ADC if ADC is publicly listed, or into Ausmelt shares of equivalent value if ADC is not listed withing 4 years. ( Ausmelt have a 5% interest in SASE and Krakatau Steel 5% )

FLX subscribed for 1 million shares in Ausmelt at $1 each and Ausmelt invested the funds in ADC to provide working capital. The shares were released from escrow by April 2004.

SASE has a two year option to increase its interest in ADC to a maximum of 28% on payment of $280,000 per 1% increment.
AS no announcement was made by March 2005 the option is taken to have lapsed.

SASE also has the right to participate in any projects using the Ausiron(R) Technology where ADC is able to obtain an equity interest.

Existing rights and benefits of SASE to use and apply the Ausiron(R) Technology are preserved. ( This refers to rights within South Australia )

SASE and ADC have undertaken to contribute equally to payment of the $1.665 million termination payment in regard to the R & D START grant. ( Payments were made in 2003 )

If ADC is not listed within 4 years, and SASE elects to convert its ADC interest into Ausmelt shares. Ausmelt may choose to pay SASE the equivalent value in cash rather than issue Ausmelt shares.

( There is also a right in certain circumstance for the Whyalla Demonstration plant to be returned to SASE ).

( SASE also owns the 100% rights to the Iron Ore reserves at Hawks Nest, Peculiar Knob, Giffen Well and Sequoia tenements in South Australia, as well as the Watson Limestone reserve. )

Ilwella Pty and Gaffick Pty have increased their substantial holdings in Felix Resources.

trader said:

Makes you wonder if you can trust even these figures , could there be another down grade in 2 months time . Wouldn't but these now for any
amount above $1.50 .

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yeah they missed forecasts by 50%

At current

However based on not updated forecasts, their current forward 2008 P/E is 3.6


Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 10.1 28.7 35.3 52.7
DPS 2.0 5.9 7.6 9.8

michael_selway said:

yeah they missed forecasts by 50%

At current

However based on not updated forecasts, their current forward 2008 P/E is 3.6


Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 10.1 28.7 35.3 52.7
DPS 2.0 5.9 7.6 9.8

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Omg on Comsec, see the difference to the forecats now...nearly halved for 2008!

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 10.1 15.9 23.8 27.2
DPS 2.0 4.0 7.9 8.2

michael_selway said:

Omg on Comsec, see the difference to the forecats now...nearly halved for 2008!

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 10.1 15.9 23.8 27.2
DPS 2.0 4.0 7.9 8.2

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The forecasts ( original and revised ) are of course correct, with everything down to the price obtained for the various grades of thermal coal, PCI coal and semi-soft coking in the years ahead.

The worry is the cost of financing the Minerva, Ashton U/G, Moolarben O/C and U/G and Harry Brandt. If thermal coal prices stay at US$48 per tonne or above, then financing will not prove a big problem, however, if the price slips below US$39 per tonne it becomes a different matter.

Buying by major holders of Felix Resources stock has been encouraging, as profits at the low-cost Moolarben Open Cast mine are set to boost profits considerably from early 2008.

Felix do have all the mine developments on track and the financing of Ashton Underground is in place, as are most of the proceeds on the sale of 20% of the Ashton mine.

The following is " forgotten " in analysts estimates :-

Possible go ahead for either Sequoia or Peculiar Knob high grade iron ore tenements is awaited and there remains hope of long term interest in the Hawks Nest, low to high grade, iron ore tenements in South Australia, that are well positioned for future supply to OneSteels plant at the City of Whyalla.

The Phillipson ( 5 billion tonnes ) tenement in South Australia has a sale or/and royalties option for supply of sub-bitumous coal. NRG Flinders holds the three year option until May 2007. ( see post 7th Feb 2006 ).

There are also the Ballymoney Lignite reserves in Ballymoney, ADC and the gold royalties. These are all outside possibilities for future profits.

So, Felix do have more than their coal mines in play here.

The Full Half Yearly report from Felix looks FLAT and the Board set to continue on the same development path. Unless something cheery turns up from the " forgotten " South Australian Iron Ore holdings or Gold options, everything is on the coal price. NOT sending PCI coal as contracted ( SURELY there was a written agreement to supply PCI coal at PCI prices - was there a let out clause ? ), puts food for thought as to whether the present large Board of Directors and two secretaries have lost the plot a bit ??

" COAL, the come-back kid "

http://www.aireview.com/index.php?act=view&catid=5&id=3637&setSub=1

Merrill Lynch has forecast higher prices for thermal coals. 2006 raised from US$43 to US$48 and 2007 from US$40 to US$48 per tonne.

http://www.aireview.com/index.php?act=view&catid=2&id=3663&setSub=1

As Felix Resources continue on their development path regardless they may well be failing to look at other alternatives. As China looks to further development of coal powered Fire PowerStations, surely the board will focus more; firstly on the the steaming coal development, Phillipson ( Arckaringa, with 11 billion tonnes of steaming coal was dropped as an exploration tenement ) and then on the Iron Ore tenements.
After that they must really stop failing to respond on their Gold Royalty position on the Indonesian Gold Mines, they were once valued at C$300 million and must be worth Annual Royalties eventually in the region of A$10 to A$20 million. ( The ASX gives information going back to 1998 in the form of ASX announcements )
The question marks remain, maybe, just maybe Felix will let us know what is happening ???????????????????????

Well, Mr Jon Parker has resigned very sharply from Felix Resources as Managing Director. Mr Brian Flannery replaces him as MD immediately.
This may be just the first of several to head for the exit.

There is much to be done to repair the image of this recovering company that has lost its way recently.

Felix are trading in the A$1.80 to A$2.00 range and are just rising and falling on each scrap of news that arrives on the scene. A new Management impetuous could easily revive this fine company, which in my view is underpriced due to lack of confidence and direction. As the Aussie Dollar weakens and coal prices hold at higher levels than expected confidence should rise and profits accordingly.

Terminal delay at the Port of Gladstone is improving with 15 vessels at anchor for RG Tanna Terminal. Deliveries in Jan / Feb were substantial, about 350k from Yarrabee and 160k from Minerva. March deliveries were lower and final deliveries were confused by lack of mine details.