rll valuation, page-11

jkm010 thanks but thats not what i meant.

From the website:
Q: How will the value and subsequent cost base of the new ADY shares and
Rincon Lithium shares be calculated?
We will get an expert to calculate the value and subsequent cost base of the Santa
Barbara business as well as that of the Rincon lithium business

Q: How will the demerger affect share price?
It is likely that the ADY share price will drop after the demerger reflecting the value of the
Rincon business being extracted.
The Rincon Lithium share price will assume a premium to the value currently held in
Admiralty. This is because pure chemical companies trade at a 25-50% earnings
premium to iron ore companies.
The affect of the demerger is to give shareholders a free increase in price by virtue of the
different P/E’s.

The current price is 16-17cps which values(unbelievably) all assets.
If the demerger occurs and Admiralty Resources (ADY) shares will be consolidated on the basis of 1 new ADY
share for every 3.7663 existing shares held.
As an example, at the time of the demerger a shareholder has 100,000 ADY shares trading
at 20 cents. After consolidation their holding would equate to approximately 26,551
shares trading at $0.75.

Now they expect that the price of ADY will drop because of the reason above. But I cant understand this seeing as the price is so cheap at the moment.Are they saying that the IO business is not worth 20c pre consolidation? I am talking about worth and not what the "market " sees.