The Moolarben Project in the Hunter Valley is the jewel in the crown of Felix Resources that has helped it out perform most other small and medium sized miners. Even so, the stock price is down from $23.30, quite a fall.
Felix own 80% of Moolarben and developing all the open-cut and underground (longwall) mines will cost about $320 million (perhaps down to $280 million in the present credit crunch market. About $20 million of costs have already been paid out.
Felix interest is on 3.2mtpa from the open-cast mine (from 2010) and up to 7.2mtpa from the underground mine from 2012).
Some coal from the open-cast mine will provide lower grade thermal coal for the new power station in the Hunter region. The rest is higher grade thermal that sells from 6% to 10% above benchmark prices for export.
The open-cast mine is very low cost ( 2004/5 estimate AU$30 per tonne)at around AU$40 per tonnes guess-estimate for 2009. With likely thermal coal prices for 2009 in the range US$70 - US$80 per tonne (AU$100 - AU$115), then profits from the mine remain very good.
FLX Price at posting:
$8.52 Sentiment: ST Buy Disclosure: Held
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