In
a recent Reuters report (see article here), Allana Potash Corp. (TSX: AAA) was mentioned as
one of two potash juniors that plan on opening a new mine, defying the
most bearish industry conditions in five years.
Allana’s
one-million tonne Danakhil mine in Ethiopia, which is scheduled to open in late
2016, could become the world’s first major greenfield potash mine in seven
years.
The
estimated $642 million cost of building the mine is lower than the cost of
conventional underground projects since it uses a technique that pumps water
into shallow potash beds, producing a brine that is evaporated on the surface,
leaving potash-bearing crystals, this according to Reuters.
“Allana
is a relatively modest cost cap-x project with low operating costs as well, so
they have fared better,” said Raymond James analyst Steve Hansen in the
interview. “Even in a low potash price environment, you could still argue
the project has some merit. There’s also no competition so far – unlike in the
Western Canadian province of Saskatchewan.”
Allana
Potash is perfectly positioned to supply much-needed African crops and would
also benefit from its proximity to buyers in India and Southeast Asia.
Allana
recently signed a partnership agreement Israel Chemicals Ltd., the world’s
sixth-largest potash producer, which agreed to take a 16 percent stake in
Allana and has entered into an off-take agreement with the company that
includes a take-or-pay component for 80% of Allana Potash’s production.
“Which is unheard of in junior potash circles at
present and gives us a substantial head start over all our competition,” said Richard Kelertas, Allana
Potash’s Senior Vice President of Corporate
Development.
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About Allana Potash:
Allana
Potash Corp. (TSX: AAA) is a publicly traded corporation with a focus on the acquisition and
development of potash assets internationally with its major focus on a
previously explored potash property in Ethiopia. Allana has secured financial
support from three significant strategic investors: ICL, one of the world’s
largest potash producers, IFC, a member of World Bank Group, and LMM, a member
of Liberty Mutual Group. Allana has estimated measured and indicated Sylvinite
mineral resources of 327.4 million tonnes of 28.3% KCl; and an estimated
inferred Sylvinite mineral resource of 90.8 million tonnes grading 27.8% KCl,
In addition, the Project hosts estimated measured and indicated Kainitite
mineral resources of 1,150.5 million tonnes at 19.4% KCl, an estimated inferred
Kainitite mineral resource of 481.8 million tonnes of 19.8%KCl; estimated
measured and indicated Upper Carnallitite mineral resources of 411.3 million
tonnes grading 17.3% KCl, estimated inferred Upper Carnallitite mineral
resources of 175.5 million tonnes of 16.5% KCl; estimated measured and
indicated Lower Carnallitite mineral resources of 557.2 million tonnes of 9.2% KCl,
and estimated inferred Lower Carnallitite mineral resources of 369.3 million
tonnes grading 7.7% KCl. The foregoing mineral resource estimates are as at
April 17, 2013.
Disclosure
Ubika Research has received
compensation from Allana Potashto provide analyst research
coverage.
Except for the historical
information presented herein, matters discussed in this document contain
forward-looking statements that are subject to certain risks and uncertainties
that could cause actual results to differ materially from any future results,
performance or achievements expressed or implied by such statements.
Ubika Research and www.smallcappower.com (are
both divisions of Ubika Corporation), and are not registered with any financial
or securities regulatory authority, and does not provide nor claims to provide
investment advice or recommendations to readers of this report. For making
specific investment decisions, readers should seek their own advice. For full
disclosure please visit: http://www.smallcappower.com/pages/small-cap-power-disclosure.
About Ubika Research
Ubika is an investment research
and capital market services firm based in Toronto and Vancouver with a proven
track record of identifying and launching coverage of high potential small cap
stocks at an early stage, thus offering timely market insights. Its specialty
is small-cap companies with a market capitalization of <$5 billion.
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contact:
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Email: vikas@ubikacorp.com
