murchison confident of extension for oakajee, page-5

���� Valuation: $6.95 (DCF, 10% d.r.)
Our price target is based on a 40% discount to NPV.
Highlights (A$m) 06/09 06/10 06/11E 06/12E 06/13E
Revenues 26 0 0 0 0
EBIT (UBS) 6 (21) (17) (22) (24)
Net Income (UBS) 1 (22) 9 18 (17)
EPS (UBS, A$) 0.00 (0.05) 0.02 0.04 (0.04)
Net DPS (UBS, A$) 0.00 0.00 0.00 0.00 0.00
Profitability & Valuation 5-yr hist av. 06/10 06/11E 06/12E 06/13E
EBIT margin % - <-500 - - -
ROIC (EBIT) % - (72.8) (32.7) (5.9) (2.9)
EV/EBITDA (core) x - -36.4 -30.8 -29.7 -27.1
PE (UBS) x - NM 62.1 31.6 NM
Net dividend yield % - 0.0 0.0 0.0 0.0
Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.
Valuations: based on an average share price that year, (E): based on a share price of A$1.29

���� MMX reports Dec quarter production
Crosslands shipped 368kt during the qtr, -23% q/q and -18% vs UBSe. Shipments fell during the quarter because of a planned cutback causing higher stripping ratios (12.4 during the quarter, up from 3.9 q/q). The higher stripping ratio also had an impact on cash costs, which increased to A$110/t (including royalties), ahead of UBSe of A$85/t. MMX held cash at quarter end was $31m, marginally below
UBSe of $38m. MMX maintains that completion of bankable feasibility studies for both mining and infrastructure projects is targeted for Q2 2011.
���� Downgrading FY11e NPAT on lower volumes and higher costs
Our FY11e NPAT is downgraded to $9m (prev $14m), from incorporating lower volumes and higher costs. We are forecasting MMX to report NPAT of $2m for
H1 FY11e. Near term earnings are immaterial it should be noted relative to the potential from the Jack Hills Expansion project. Our NPV is unchanged at $6.95ps.
���� Buy, sizable potential upside from release of BFS in Q2 CY11 MMX remains a Buy in our view, but not without risks. Investors that take the view that 1) the projects will prove feasible and 2) Mitsubishi is committed to the
projects, have the potential of material upside to the current share price, in our opinion. We estimate Mitsubishi's payment as ~$3.7bn, which can be viewed as a
valuation read-through on MMX compared to the current market cap of $650m.