can give you my email thoughLeveraged to the long termInvestment...

can give you my email though

Leveraged to the long term

Investment Highlights

Cheap optionality on resilient pricing. BRM remains one of the cheapest iron ore exposures in our coverage universe trading at 7x FY10 and 4x FY12 earnings, and at an 89% discount to our DCF derived valuation of A$5.45/sh. BRM offers exceptional leverage to ‘stronger for longer’ commodity pricing courtesy of a large, low-grade resource base. Despite recent resource upgrades, BRM remains undemanding on peer comparison, trading at EV:Resource metrics A$4.60/t in-situ DSO hematite versus a sector average of A$10.70/t. We reiterate our Speculative Buy recommendation as development studies progress.
Rapid Development. BRM is aggressively progressing baseline environmental and development studies for Stage 1 & 2 projects while simultaneously pushing to crystallise a commercial haulage solution.
DSO scoping study positive. BRM delivered a positive scoping study for development of a Stage 1 10mtpa DSO project at Marillana assuming several scenarios and capital cost estimates to +/-30% accuracy.
Detritals the main game. Testwork has confirmed the 1.1bt detrital resource overlaying DSO mineralisation at Marillana is upgradeable using conventional beneficiation technology. We identify potential for a long-life, +25mtpa detrital project at Marillana and assuming BRM achieves a timely haulage solution, we expect significant value uplift will follow.
Catalysts. (1) emerging clarity regarding third party infrastructure access in the Pilbara (port and rail); (2) successful execution of ‘starter’ production Q4 CY09 at +/-2mtpa as a precursor to Stage 2 (requires timely feasibility study, permitting, funding, haulage infrastructure, port handling); (3) Potential direct investment by Chinese groups commensurate with several CA’s entered into and announced by BRM.

Disclosure: Patersons Securities Limited acted as Lead Manager to the issue that raised $8.14m at $1.05 per share for BRM in December 2007. It received a fee for this service.

Josh Welch
Director | Resources Analyst