O.K let me go through a specific example to help me understand it better
Suppose the following is my ltm file
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@"utf-8"
#VERSION "1.3"
#BASEURI "http://neurorganon.org/"
[WNDR  = "Wandora class" @"http://www.wandora.org/core/wandoraclass"]
[NULO:WNDR = "Neurorganon Upper Level Ontology"  @"http://neurorganon.org/nulo.html"]
[createdBy:WNDR ="created By" @"http://neurorganon.org/createdBy"]
[narrower:WNDR = "Narrower"   @"http://www.w3.org/2004/02/skos/core#narrower" 
                                     @"http://www.topicmaps.org/xtm/1.0/core.xtm#subclass"]
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After importing LTM I get extra subject identifiers for all my topics except createdBy
http://neurorganon.org/narrowerhttp://neurorganon.org/WNDRhttp://neurorganon.org/NULOBut 
http://www.ontopia.net/download/ltm.html#N565 says
This directive is used to change the base URI against which relative URIs in the document are resolved
Questions are : 
1) Why Wandora ADDS baseuri subject identifiers ? 
I noticed also some inconsistent behaviour, it has not added SI for createdBy???
2) 
http://neurorganon.org/nulo.html and 
http://neurorganon.org/createdBy are absolute URIs
how one can replace them with relative URIs using the BASEURI so that they are resolved according to the definition. 
For the PREFIX directive 
http://www.ontopia.net/download/ltm.html#N619it says that is used to refer to the topic directly using its subject indicator, but this not what I want in this case as I am giving new ids e.g. narrower.