Allana Potash Corp (‘Allana’, TSX: AAA) has announced that its Feasibility Study, performed by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergau (“ERCOSPLAN” – which includes trial solution mining, hydro-geological studies, rock mechanic testwork, processing optimization and the Environmental Social Impact Assessment – ESIA) is proceeding on schedule. The construction of Allana’s potash terminal at the port of Tadjourah in Djibouti and talks to improve the roads and railways are also advancing. The final feasibility study is expected to be completed by December 2012 while the Company continues to negotiate off-take agreements with prospective, and large scale, end users. Allana is also continuing the drilling campaign, intersecting more sylvinite at the Property as the Company tests the presence of the mineral to support the Feasibility study; Allana management believes that the most recent drill results will allow for an upgrade from Inferred to Indicated and Measured categories. Allana’s Dallol project will use solution mining and the test well, using water from a well located about five kilometers away in the western alluvial fan area, has been operational since last September. The preliminary pump tests have already shown an average 70 cubic meter flow rate, sometimes reaching 150 cubic meters, confirming the presence of a fresh water aquifer in the alluvial fans along the western boundary of the Allana license area. Essentially, the Dallol project is rolling on schedule toward the planned mine construction stage in mid-2013 and first production in late 2014.
Allana latest NI 43-101 mineral resource estimate for the Dallol Potash Project projects a capacity of 1.3 billion tons at an average grade of 19.32% KCI (potassium chloride). The Dallol deposit has a strong record of historical exploration. A combination of growing demand for food and mineral soil nutrients, especially in Africa, and increased political stability in Ethiopia over the past decade have helped to boost interest in the country’s strong potential for potash production. One of the main advantages of the Dallol resource and most of the potash available in the Danakil region (which extends into Eritrea with similar mineralization) is that there is an extensive sylvinite mineralization at very shallow levels. Allana will continue to focus the development of the shallow region, though it has already drilled in the deeper areas to establish the presence of potash there as well. Ethiopia has become more stable in the past few years and the government has adopted business friendly policies to attract investment, helping it register one of the highest economic growth rates in the world (11%, expected to continue until 2014). In 2010, Ethiopia adopted new laws for the mining sector, exempting companies from custom duties and accelerated depreciation among other incentives. Allana is well poised to take advantage of projected continued high demand for fertilizer as farmers around the world want to take advantage of higher crop prices though higher yields and as farmers in developing countries start to adopt more advanced agricultural techniques, requiring the use of potash based fertilizers.