Felix placed for more growth

BUCKING recent trends, Felix Resources will create new mining jobs later this year as its Moolarben coal mine starts up, while its 60%-owned Ashton longwall and open cut mine had a 14% year-on-year increase in production for the December quarter.
Felix placed for more growth Felix placed for more growth Felix placed for more growth Felix placed for more growth Felix placed for more growth

Underground at Felix Resources' Ashton mine.

Blair Price

Felix said in its latest quarterly report it would develop the open cut section of the Moolarben thermal coal mine in the Upper Hunter Valley in New South Wales, which it expects to be highly profitable at current thermal spot prices and anticipated low cost production.

Development will create 220 construction jobs with a total construction workforce peaking at 550 in mid-2009 when combined with the development of the new NCIG terminal at Newcastle currently underway.

“Mining jobs starting later in 2009 will increase to over 300 when the open cut and underground reach their production targets,” Felix said.

Moolarben construction has started and Felix expects mining to start up in the second half of this year, while the first shipment from the NCIG terminal remains on schedule to take place before March 2010.

Felix added Moolarben had already secured 2.8 million tonnes per annum of sales contracts and thermal coal demand, especially in Asia, would continue to increase over the next few years.

Across the company’s operations, Felix has adapted to the downturn in the steel market by replacing falling pulverised coal injection sales and semi-soft sales experienced in December with thermal coal sales.

During the December quarter, Felix’s Ashton mine produced 785,000t of saleable coal, nearly 100,000t more than the same period in 2007.

With raw coal stocks of 564,000t at the end of last year, Felix said the substantial build-up was expected to reduce significantly towards the end of March as a longwall move is planned in late February.

Felix said most of Ashton’s product was contracted as semi-soft coking coal and there was still a significant amount of tonnage to be shifted with only one contract quarter remaining in the current Japanese financial year ending March 31.

“Discussions are continuing with our customers regarding these tonnages,” Felix said.

“Some of this coal has been diverted to the lower priced thermal market which is experiencing more robust demand.”

For the first six months of the financial year Ashton has produced more than 1.49 million tonnes of saleable coal and sold just under 1.4Mt.

Including 357,000t at the company’s wholly owned Yarrabee open cut and 621,00t at its 51%-owned Minerva open cut, total saleable coal production for Felix’s December quarter reached 1.15Mt, some 5% higher than the 2007 corresponding period.

Total coal sold on the other hand was 1.23Mt, 26% higher than the 2007 December quarter.

At Yarrabee in Queensland’s Bowen Basin, Felix said the coal preparation plant was under construction and on track for completion by the end of June.

To cope with the falling PCI coal market, Felix said the preparation plant would allow for the Yarrabee product to be placed between various markets.

Felix said the expansion of the mine from a 1.7Mt per annum operation to 2.8Mtpa had been placed on hold until PCI coal demand improves.

The Minerva open cut mine in the Bowen Basin had all of its thermal coal from the December quarter shipped at contracted tonnes.

Financial position and takeover talks

Felix has forecast net profit after tax for the first half of the current financial year to be in the range of $A160-170 million.

The Brisbane-based company had a cash position of $A300 million at the end of the year and debt of $37 million.

Felix said discussions were continuing on a potential change of control transaction and the company directors intended to bring these to a conclusion in the near future, but it added that this may not result in a change of control.

Felix has been linked by various media reports to a takeover by Chinese mining major Yanzhou Coal.

Adding further fuel to the speculation, the Australian Financial Review newspaper has reported that Felix has imposed a two-week deadline to resolve its takeover.

Felix shares were trading mid-morning today up 2.03% at $7.04.

Most read Archive



Most read Archive