is the capitalisation too high, page-28

ADY announced for the iron ore activities an EBITDA of aprox 68 Mio USD for 2009.
Earning after tax and depreciation should be somewhere about 40 Mio USD.

For Rincon the bottom line should be around 75 Mio/USD p.a. In the 2006 AGM-presentation ADY announcend 65 Mio net profit after tax for this project. But you have to consider an increase in revenues due to higher lithium spot-prices of about 15-20 Mio USD, approx an increase of about 10 Millions p.a. in the bottom line.

In total the net earnings could be about 115 Mio USD p.a.

ADY is having a marketcap of approx 400 Mio USD.
I calculate the company needs about further 130 Mio USD capital expenditures in the next months.
I understood, thad ADY will finance these capex mainly with an off-take agreement. But I make it easy and summarize the 130 Mio USD to the current marketcap, so possible marketcap fully dilluted in 2009 could be 530 Mio USD.

Based on these figures with a price/earning ratio about 10 the possible fair value would be 1 AUD per share end 2009 (Philip Thomas in the 2007 Annual Report: “We targeting full production in 2009”).

But you should be aware that lithium peers, for example SQM, are evaluated with a P/E-Ratio of about 25.
I also hope we’ll se an increase in ADY lithium production figures when the automotive demand will rocket the lithium market…
And last not least I’m sure we are going to see a financing about off-take agreement or loan, so the yield for the current shareholder will be higher than calculated above.

Cheers
Maigret