Felix expects to make a $A29-34 million profit in 2006 as the company is forced to shift sales away from metallurgical coals towards lower priced thermal coals, and lower realised prices than budgeted.

The news saw the company’s shares plummet 19% to $1.90 at close of business, after opening at $2.36 Tuesday morning.

The company said while the figure was up on previous periods, it described the expected performance as “disappointing”

The drop was attributed to sales agreements pushing out, and in some cases, reducing metallurgical coal purchase commitments. Those tonnages liberated will have to be repositioned to the lower priced thermal market.

Also, new PCI and semi-soft contracts are being negotiated at significantly lower prices than peak prices seen earlier this financial year.

First half unaudited profit after tax for financial year 2006 was $14 million, up from $1.67 million in the previous corresponding period.

Whilst the short-term news was down, Felix has continued its expansion plans to take advantage of the positive long-term coal market outlook.

The company remains on track to achieve coal sales in excess of 13 million tonnes per annum by 2010. Production will be from six operating mines including the existing Yarrabee, Minerva and Ashton opencut mines; the Ashton underground mine now being developed; and the Moolarben opencut and underground mines currently in pre-development.

Minerva construction is concluding and the project is ramping up to design capacity of 2.5Mtpa. Three new technology AC drive 240t trucks are operating onsite and five 190t trucks are scheduled to be progressively delivered and commissioned by early March.

At the Ashton project, an underground mining team is in place and is advancing mine development as planned. Key equipment ordering and delivery and design work are progressing well. The longwall supplier is on track with the longwall design and build program for delivery to site in December 2006.