Yanzhou Ready to Pay A$3 Billion for Felix Resources

There is a takeover talk of Felix Resources (FLX) by Yanzhou Coal Mining Co. for about A$3 billion or US$ 1.9 billion. It is said that, executive of Yanzhou have visited Felix's Ashton coal mine in New South Wales this week to review its accounts. As a result of this, the share price of Felix Resources Ltd. has gone up by 44% on Friday.

Major share holders of Felix expect a price more than A$15 per share, even as its shares closed at A$7.84 on Friday. Tom Sartor, a mining analyst for ABN Amro Morgans said at Brisbane that, Felix could be valued "in that ballpark certainly and higher, I could justify a higher price than that", "It's a meaningful company up for sale and it would diversify Yanzhou's geography and operating risks” and also added that "It's got a great asset in Moolarben and a share in a port which is worth a lot”.

Yanzhou Coal has revealed that, it is not having a formal talk with the company and have also said on Friday that it was looking into a number of overseas assets in a statement on Hong Kong's stock exchange and no decisions have been made yet.

Yanzhou Coal in an official statement to the Hong Kong market on Friday said that, it “has not yet entered into any definitive agreement with any overseas coal mining companies, and the major terms of the recommended projects, including consideration amount, have not been agreed," seemed to imply that the Felix news is no big deal.

Felix Resources, which had a fourfold increase in profit last year, is also building the Moolarben mine in New South Wales which cost about $405 million. The company is also a part of Newcastle Coal Infrastructure Group which is building a new terminal at an estimated cost of $1 billion. So, 3 billion A$ will be a cheap bid for a company like Felix Resources Ltd.