commsec analysis, page-3

Looks like 2010 is the most appropriate year for valuing ADY with the full year effect of Rincon Salar and the rampup of iron ore Production.

ADY's current Market Capitalisation:

981.9 M Shares x 0.395 = A$387.9M.

Lodge Partner's 2010 EPS forecast: 12.2 cents
Therefore, 2010 earnings forecast of 12.2 x 981.9 M = A$119.8M. This puts ADY on a 2010 forward P/E ratio of 3.2.

The A$119.8M earnings forecast compares with ADY's forecast in their September 2007 presentation of earnings of:
Iron Ore US$67.5M, Lithium/Potash US$90.0M = Total US$157.5M;
In A$ = A$179.0M. However, no Depreciation, interest or tax included in ADY's forecast. Therefore, Lodge Partner's forecast may be reasonable and consistent with ADYs.

In July, State One issued a report on ADY. A summary is at:
http://www.hotcopper.com.au/post_threadview.asp?fid=1&tid=516536#1986552
They then estimated 2010 earnings for ADY as:
Rincor Salar NPAT A$70.0M, Iron Ore A$114.8M (890 x 12.9 cents) on its then 50% share (now 60%).
Therefore, total NPAT projected then A$184.8M. Therefore
ignoring ADY increase in equity in the iron ore (from 50% to 60%), Stateone projected income (NPAT) compared to todays market capitalisation of ADY of A$387.9M puts ADY on a projected 2010 P/E ratio of 2.1.

Therefore, using the forecast 2010 profits from Lodge Partners, ADY's September Presentation and StateOne's July report place ADY on a forward 2010 P/E ration between 2.1 and 3.2.

It is quite obvious that, if iron ore prices hold up or increase as expected over the next two years, the return on holding ADY shares should be quite significant.

Regards

SP