Allana Potash Corp. (TSX: AAA) stock price finished strong in 2013 and that momentum has continued into the New Year. Shares of Allana have climbed 38% so far in 2014 to its recent price of 51 cents.
On February 12, 2014, the company announced that it has secured a strategic alliance with Israel Chemicals (ICL), one of the world’s largest fertilizer producers. ICL will invest $25 million into Allana via a private placement at $0.47 per unit with the potential for a total investment of up to $84 million upon full exercise of the warrants comprising part of the units.
Following its initial investment, ICL will hold 16% of Allana’s regular shares and it may increase its holding in Allana to 37% upon its exercise of warrants that are part of the units, this according to a Reuters report. Proceeds of the investment will be used by Allana to develop the Danakhil potash mine project in in Ethiopia.
Both parties have also entered into an offtake agreement pursuant to which ICL has agreed to purchase the entire production of the Danakhil project up to 1Mtpa with a take-or-pay commitment of ICL on a minimum of 80% of the project’s output. ICL has also agreed to provide technical assistance to Allana for the development and operation of the project.
“ICL has broad experience in, and knowledge of, the global potash market, and in developing large scale potash projects. With ICL as our partner, Allana will benefit from ICL’s proven potash production ability to accelerate our development and operational plans. At the same time, with ICL’s purchase of our product, Allana will benefit from ICL’s existing global and regional marketing and distribution networks. This wide-ranging alliance is transformative for Ethiopia and for East Africa. Both Allana and ICL are committed to expanding fertilizer supply within Africa in support of the farming renaissance that is occurring on the continent,” said Allana Potash President and CEO Farhad Abasov.
“Once in production, Danakhil is expected to be one of the world’s lowest cash cost potash projects, and I am confident that the alliance with ICL will allow Allana to successfully achieve the operational and commercial targets of the project,” he added.
In a recent interview with SmallCapPower.com (read the article here), Allana Potash’s Senior Vice President of Corporate DevelopmentRichard Kelertas noted that his company is well funded, with $15.3 million cash in the bank as of the end of July 2013, and said that Allana has brought its cash burn rate down “significantly.”
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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 Potash to provide analyst research coverage.
For additional information contact:
Vikas Ranjan, Managing Director
Email: vikas@ubikacorp.com
