back on track and a great step forward

BBY UPDATE 30JUL08- 12 MNTH TARGET $5.00 VAL $6.44


We maintain our BUY recommendation on Murchison Metals
Ltd (MMX) after the WA Government awards Oakajee Port
and Rail (OPR), a MMX / Mitsubishi consortium, the right to
build and operate key mid west infrastructure. Strategically
this a great outcome for MMX as it places the company in a
strong position to facilitate further consolidation in the Mid
West iron ore belt. Port and rail infrastructure CAPEX is
forecast between A$3.1-A$3.5B. Our infrastructure
valuation for 100% of the project is estimated between
A$0.45-A$0.55/sh assuming that Midwest Corporation (MIS),
Gindalbie Metals (GBG), Golden West Resources (GWR) and
Oakajee Industrial Estate utilise the infrastructure. In its
public release, the WA Government stated the OPR proposal
was markedly superior to the competing Yilgarn
Infrastructure proposal. We maintain our 12 month share
price target of A$5.00 but have lowered our MMX valuation to
A$6.44/sh (previously A$6.89/sh) reflecting higher forecast
infrastructure CAPEX and revised Stage 2 commencement
from DecH11 to JunH12.