Gral, I agree with your comments except that you have said the...

Gral, I agree with your comments except that you have said the $13.20 sp is undiscounted.

This is not right. Merrills have been careful to down play the $13.20 sp as an "insurance" that the $5 sp will be achieved and that it is not an "ultimate price target".

However, the $13.20 NPV is based on removing the conservative assumptions BUT STILL RETAINS A 10.8% DISCOUNT.

What would the NPV be if this 10.8% discount was removed? Can someone work that out please?

Even though they say $13.20 in not an ultimate target IMO they would not have identified it if was not achievable. When/if MMX gets to that level Merrills will say: "We told you so when the sp was $2.10"

QUOTE FROM REPORT:
"To arrive at our NPV, we have made a number of conservative assumptions, and
used a 15.8% discount rate. If we were to remove all the conservative
assumptions, the NPV rises to A$13.20/sh on a discount rate of 10.8%. We are
not arguing that A$13.20 is an ultimate price target. Rather, we see plenty of
insurance that our A$5/share target is well supported."

Re the MMX Resource
On 13 March 2007 MMX did a presentation for investors in Sydney. (See asx report on mmx web site)

http://www.mml.net.au/images/murchison---ohpux.pdf

That report says:

1. Jack Hills resource estimate is 380 million tonnes
2. Weld Range resource potential is 300-400 million tonnes.
3. In 2013-2014 proposed production rises to 50 mtpa.

OPTIMISTIC CONCLUSION: 800 MILLION TONNES

IF THIS COMES TO BE THEN MMX = FMG

AND IF quality of 60%+ Fe is maintained then we are looking at a very valuable operation indeed.

Re Infrastucture
The key to MMX sp rising to great highs is the financing of the stage 2 infrastructure. When some corporation puts its hand up and offers $2 billion to build and operate the rail and port then the sp will exceed the expectations of the conservative pundits like Merrills.

The issue is what is the return on a 2 billion investment? The operator of the infrastructure could reasonably charge MMX and MIS something like US$5-$10 per tonne (say US$7.50 as a guess) and be shipping 50mtpa. Thats 1 mtp week. I hope the port will be big enough. Over a 25 year life the rail and port infrastructure will be v v v profitable. If they float the infrastucture company I want shares and hopefully MMX shareholders will be given first chance to buy in.

IMO its a goer and I have put my money where my mouth is.