@working on itin theory a consolidation shouldn't make you any...

@working on it

in theory a consolidation shouldn't make you any worse off - but I stress in theory.

Currently at say a share price of 2.6c, 10 shares are valued at 26c
If you paid 12c for your 10 shares you have invested $1.20

If the consolidation was to happen today at 2.6c per share 26c is where the consolidated share price should land as the intrinsic value applied by the market to the Company's assets has not changed

Does it always work out that way, not always. but often at least initially it does.

As you indicated the company can issue more shares and often they do over time (but in effect they can anyway) without the consolidation, as AUZ did recently.

Will you be worse off given you average is presently 12c - again arguably you shouldn't be worse off but the psychologically of the market can have an impact i.e. it is possibly easier for a share to go from 2.6c to 12c than to go from 26c to $1.20 in this end of the market - it shouldn't make any difference as the intrinsic value of the company arguably is the same , but it does seem to at times.

I would hope that a successful finance proposal would get the company at the very least back up to a pre consolidation 12c - would it get it up to the equivalent of $1.20 after a consolidation (assuming no equity injection at a lower figure - which I think is unlikely) that is where I believe the psychology of the market may play a factor - only time will tell in that regard

In AUZ's case I believe that the consolidation proposal is most likely associated with a finance proposal and they are putting things in train to facilitate that - that is where any dilution of existing shareholders is most likely going to come from.

No doubt others on the forum will have differing opinions - we just have to wait and see how the market reacts, if the consolidation is associated with a funding proposal, if there is any equity injection in the funding proposal, what is price of any equity is to be raised, will existing shareholders be offered the opportunity to participate and on what basis.

So will existing shareholders worse off ?- with all the variables who knows. As an investor in AUZ I am currently anticipating they will get funding and that will increase the value of my investment in AUZ either before or after a consolidation - how much will it increase the value of my investment? that will depend on the specific details of any funding proposal put in place and in particular if there is an equity component and the details of that will be a key factor.

This article re consolidation is a little old but interesting nevertheless http://www.portfoliodirect.com.au/MiningJournal/MJ110915_consolidate.pdf