SYS-CON MEDIA Authors: Adrian Bridgwater, Yeshim Deniz, Elizabeth White, Sean Houghton, Glenn Rossman

News Feed Item

Allana Potash Announces Positive Feasibility Study at Its Danakhil Potash Project

Investor Conference Call planned for February 4th, 2013 at 3:00 p.m. EST

TORONTO, ONTARIO -- (Marketwire) -- 02/04/13 -- Allana Potash Corp. (TSX:AAA) (OTCQX:ALLRF)


--  After-tax Net Present Value of US $1.32 billion, based on lower price
    expectations in current potash markets 
--  After-tax Internal Rate of Return of 33% 
--  Production capital expenditures including mining and processing
    facilities ("Production CAPEX") of US$579 million 
--  Port and logistics infrastructure ("Infrastructure CAPEX") of US $63
    million 
--  Total CAPEX Contingencies of US$64 million included in the Production
    and Infrastructure CAPEX estimates 
--  Total production operating expenditures ("Production OPEX") of
    US$69.25/tonne 
--  Total transportation expenditures ("Transportation OPEX") (including
    transportation/handling, port, loading costs) FOB on Vessel of
    US$29.50/tonne 
--  Based on Annual Production of one million tonnes of MOP per year using
    solution mining from Proven and Probable Sylvinite Mineral Reserves only
--  Significant Carnallitite or Kainitite resources not included in the
    production plans in this Feasibility Study 

Allana Potash Corp. ("Allana" or the "Company") announces the results of a positive independent Feasibility Study ("FS") prepared by Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau ("ERCOSPLAN") on its Danakhil Potash Project in Ethiopia (the "Project"). Allana's Board of Directors is pleased to congratulate the people and government of the Federal Democratic Republic of Ethiopia on the receipt by Allana of the first NI 43-101-compliant feasibility study on a potash resource in Ethiopia's Danakhil potash basin that defines one of the few economically viable greenfield potash projects in the world.

The FS is based on commercial operations that produce one million tonnes per year ("MTPY") of a standard grade Muriate of Potash ("MOP") product over an initial estimated operating life of approximately 25 years from Sylvinite Reserves at Allana's Danakhil Project in Ethiopia. The FS yielded, on an unlevered basis, an after-tax Internal Rate of Return ("IRR") of 33 % and an after-tax Net Present Value ("NPV") of US$ 1.32 billion based on a 10% discount rate.

Farhad Abasov, President and CEO of Allana commented: "Allana is extremely pleased with the very positive Feasibility Study of its Danakhil Potash Project, as prepared by ERCOSPLAN. Even with current potash market realities driving the lower potash price forecast of USD $430/tonne used in the FS, the favourable total production CAPEX of about US$579 million and port and transport CAPEX of US$63 million, make this project one of the lowest cost and potentially highest return greenfield potash projects worldwide. Similarly, the very competitive production OPEX at US$69.25/tonne, within a total, loaded-on-ship, OPEX of US$98.75/tonne FOB, is one of the lowest among greenfield potash projects currently under development."

Mr. Abasov added, "ERCOSPLAN modeled the production of one million tonnes of MOP from just the Sylvinite Zone on the project, excluding future potential production from the extensive Carnallite and sulphate-based Kainite resources. The FS's extremely positive results give Allana great confidence in advancing its project to development and securing project finance and offtake."

The key economic highlights of the FS are outlined in the table below (all dollar amounts are stated in US$):


----------------------------------------------------------------------------
After-tax NPV@10%                                               $1.32billion
----------------------------------------------------------------------------
After-tax IRR (based on 35% income tax rate)                             33%
----------------------------------------------------------------------------
Estimated Total Capital Expenditures (including                             
 production, port and logistics and contingency)                $642 million
----------------------------------------------------------------------------
Estimated Total Operating Expenditures (Production,                         
 transportation, port, FOB on vessel)                       $98.75/tonne MOP
----------------------------------------------------------------------------
Payback period                                                     3.1 years
----------------------------------------------------------------------------
Total MOP product from Proven and Probable Sylvinite                        
 Reserves,                                               23.7 million tonnes
----------------------------------------------------------------------------

For the purpose of the FS, capital expenditures (CAPEX) were estimated for three main categories: Production using solution mining, solar evaporation and flotation (Production); Transportation and handling of product between the production site and the port (Transportation/Handling); and Port facilities in Djibouti (Port).

The Production CAPEX includes costs associated with cavern development, the solar evaporation ponds, brine processing, and infrastructure including power. Solar evaporation of the saturated brine solution is possible at the Danakhil Project due to the year-round hot temperatures averaging 34 degrees C daylong with very little rainfall. Salts harvested from the ponds will be processed by standard flotation to create an MOP product of a standard grade sufficient for direct application as fertilizer or as feedstock for processed or blended fertilizers.

Transportation CAPEX costs are based on a company owned fleet of trucks and all support, such as maintenance. Port CAPEX costs are based on Allana constructing its own storage facility and conveyor system at the new port of Tadjourah in Djibouti. The main portion of the port, primarily the quay, ship loader and associated infrastructure, is commencing construction and will be completed by the Djibouti Port Authority. The table below outlines the estimated capital expenditures in US$ (2013$) for all categories, including indirects and allocated contingencies.


----------------------------------------------------------
Total Estimated CAPEX                         $642 million
----------------------------------------------------------
  Estimated Production CAPEX                  $579 million
----------------------------------------------------------
  Estimated Transportation/Handling CAPEX      $29 million
----------------------------------------------------------
  Estimated Port CAPEX                         $34 million
----------------------------------------------------------

Estimated operating expenditures (OPEX) were also calculated for Production, Transportation/Handling, and Port. The OPEX costs in US$ per tonne (2013$), including G&A and contingencies, are outlined in the table below:


-----------------------------------------------------------
Total Estimated OPEX                           $98.75/tonne
-----------------------------------------------------------
  Estimated Production OPEX                    $69.25/tonne
-----------------------------------------------------------
  Estimated Transportation/Handling/Port OPEX  $29.50/tonne
-----------------------------------------------------------

Estimated sustaining capital during operations is estimated at US$ 24.3 million (2013$) per year once operations reach steady state full production at 1 MTPY.

The economic analysis performed in the FS was based on the following assumptions:


Production:      One million tonnes MOP per year from Sylvinite, with first 
                 product in 2015, and bulk shipments ramping up from 2016 to
                 full 1 MTPY production rate by the end of 2017             
                                                                            
Mine life:       25 years, based on currently defined reserves of Sylvinite 
                 only                                                       
                                                                            
Mining method:   Solution mining                                            
                                                                            
Processing:      Solar evaporation and flotation                            
                                                                            
Transport:       Trucking to Djibouti                                       
                                                                            
Power:           Power generation with fuel oil shipped to site             
                                                                            
Potash Price:    US$430 per tonne (2013$)                                   
                                                                            
Underlying NSR:  1.5% (after partial buyout of royalty)                     

The economic analysis also included government tax and levies based on current Ethiopian published legislation and regulation, assuming:


Government Royalties:              4% on revenue
Government free carried interest:             5%
Corporate taxes:                             35%

The FS estimates include all infrastructure required to operate a potash solution mine and to bring the product to market including cavern and wellfield installation, three stage processing plant, product storage facilities, load out, trucking fleet and port storage facilities with all necessary infrastructure.

Summary of Mineral Reserve and Resource Estimates Update

The Company also announces that as a result of the proposed mine plan and favourable economic results developed in the FS, portions of the previously reported measured and indicated sylvinite mineral resource estimates have been upgraded to proven and probable sylvinite mineral reserves. Estimates of the updated mineral reserves and mineral resources were completed by ERCOSPLAN based on a Radius of Influence (ROI) as per industry standards. The following Tables outline the current estimated sylvinite mineral resources and proven and probable sylvinite mineral reserves. All Measured and Indicated Sylvinite Resources were converted to Reserves.

Summary of Mineral Resource Estimates effective as of February 2, 2013


-----------------------------------------------
RESOURCES   TONNES (MT)     KCL (%)    KCL (MT)
              (in-situ)                        
-----------------------------------------------
Measured         115.31        27.8        32.0
-----------------------------------------------
Indicated        212.11        28.6        60.7
-----------------------------------------------
Inferred          90.76        27.8        25.2
-----------------------------------------------

(i)ROI for measured, indicated and inferred Sylvinite mineral resource estimates are 350 metres, 750 metres and 1500 metres respectively. Cut-off grade is 15% KCl, minimum width is 1.5 metres, density average 2.15

Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimates of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category

Summary of Mineral Reserve Estimates effective as of February 2, 2013.


----------------------------------------------------------
           MINEABLE TONNES                                
RESERVES          (MT)(ii)         KCL (%)  MOP (M TONNES)
----------------------------------------------------------
Proven               32.97            28.0             8.2
----------------------------------------------------------
Probable             60.81            28.8            15.5
----------------------------------------------------------
TOTAL                                                 23.7
----------------------------------------------------------

(ii) Accounts for losses in the caverns as well as in pillar material between caverns.

(i)ROI for Proven and Probable Sylvinite Mineral Reserves are 350 metres and 750 respectively. Cut-off grade is 15% KCl, minimum width is 1.5 metres, density average 2.15, potash price of $430/tonne and other key assumptions listed above. The estimates of mineral reserves may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

The Proven and Probable Reserves from Sylvinite zone alone are adequate to support production of 1 million tonnes per year of MOP for approximately 25 years. Pilot testwork continues on site as a second solution mining well is currently leaching the Upper Carnallitite unit to provide data on the production of MOP from a Carnallite-rich brine. The results of this study will be used for potential increase in production tonnage in the future.

The FS, with a cost estimate accuracy of +/- 15%, was completed by ERCOSPLAN, a widely recognized world leader in potash exploration techniques and potash mining and processing. In addition to Allana, ERCOSPLAN's clients include some of the largest potash exploration companies and potash producers in the world. An NI 43-101 technical report with respect to the FS (the "FS Technical Report") and the mineral resource and reserve estimates forming the basis of the FS report will be available under the Company's profile on SEDAR and Allana's website within 45 days of this news release.

The Feasibility Study and the mineral resource and reserve estimates were completed by ERCOSPLAN under the supervision of Dr. Henry Rauche, Ph.D., EurGeol, Managing Director, CEO ERCOSPLAN and Dr. Sebastiaan van der Klauw, Ph.D., EurGeol., Consulting Geologist, ERCOSPLAN who are both independent Qualified Persons for the purposes of National Instrument 43-101. Peter J. MacLean, Ph.D., P. Geo., Allana's Senior VP Exploration, is the Company's designated Qualified Person for the purposes of the Feasibility Study and has reviewed and approved the technical information presented in this release.

An Investor conference call and webcast to review the FS results will be held at 3:00 p.m. (EST) today, Monday, February 4, 2013. To participate on the call please dial:


Participant Dial-In Numbers:                  
TOLL-FREE (North America)   1-888-395-3227    
TOLL-FREE INTERNATIONAL     1-719-325-2484    
                                              
Replay Dial-In Numbers:                       
TOLL-FREE (North America)   1-877-870-5176    
TOLL-FREE INTERNATIONAL     1-858-384-5517    
                                              
Replay Pin Number:          3946278           

(The replay will be available starting at 6:00 p.m. EST today, and archived on www.allanapotash.com for ninety days thereafter).

To view the slide deck during the webcast, please register at:

Webcast Presentation Link:https://viavid.webcasts.com/starthere.jsp?ei=1013058

Please register at least 10 minutes prior to the 3:00 p.m. start. A Q&A session will follow the presentation.

About Allana Potash Corp.

Allana 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 two significant strategic investors: IFC, a member of World Bank Group, and Liberty Metals and Mining, a member of Liberty Mutual Group. Allana has measured and indicated Sylvinite resources as at February 2, 2013 of 327.42 million tonnes of 28.31% KCl; and inferred Sylvinite resource of 90.76 million tonnes grading 27.80% KCl, as outlined in this press release. In addition, the Danakhil Projects hosts measured and indicated Kainitite resources of 701.55 million tonnes at 20.26% KCl, inferred Kainitite resource of 373.71 million tonnes of 20.35% KCl; measured and indicated Upper Carnallitite resources of 78.5 million tonnes grading 18.4% KCl, inferred Upper Carnallitite resource of 155.53 million tonnes of 16.95% KCl; measured and indicated Lower Carnallitite resources of 269.10 million tonnes of 10.86% KCl, inferred Lower Carnallitite resource of 130.7 million tonnes grading 11.7% KCl. The foregoing mineral resource estimates with respect to Kainitite and Carnallitite are as at April 27, 2012. For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the foregoing estimates refer to Allana's Technical Report entitled "Updated Resource Report for the Danakhil Potash Deposit, Afar State/Ethiopia" dated June 13, 2012, effective April 30, 2012 filed at www.sedar.com. And the FS Technical Report to be filed on SEDAR within 45 days from the date of this release. Allana has approximately 275.9 million shares outstanding. Allana trades on the Toronto Stock Exchange under the symbol "AAA".

Cautionary Notes

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the results of the feasibility study, next steps for the property, progress in development of the property, projected capital and operating expenses, anticipated production schedule, the size and quality of the company's mineral resources and reserves, progress in development of mineral properties, future capital and operating expenses, capital and operating production costs, future potash prices and treatment charges, the financial results of the company the future financial or operating performance of the Company, the prospective mineralization of the properties and planned exploration programs., the issue of permits, future production and sales volumes, capital and production costs, demand and market outlook for potash, planned exploration programs, anticipated production schedule and terms and the availability and likelihood of future acquisitions; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; and title disputes or claims; Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Estimates underlying the results of the feasibility study arise from engineering, geological and costing work of Ercosplan and the Company.

See the FS Technical Report, to be filed within 45 days of this news release, for a description of all relevant estimates, assumptions and parameters. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the ...
This builds on Puppet Labs' first class Windows support, including native .MSI packages for x32 and x64 operating systems, modules to extend common Windows server management tools, including Powershell, and integrations with Microsoft Azure and Visual Studio. By automating common Windows administration tasks, Puppet Labs is enabling users to adopt DevOps practices, thereby reducing the time needed to deploy applications from weeks to hours.
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
There's Big Data, then there's really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at Big Data Expo®, Hannah Smalltree, Director at Treasure Data, discussed how IoT, Big D...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...
The term culture has had a polarizing effect among DevOps supporters. Some propose that culture change is critical for success with DevOps, but are remiss to define culture. Some talk about a DevOps culture but then reference activities that could lead to culture change and there are those that talk about culture change as a set of behaviors that need to be adopted by those in IT. There is no question that businesses successful in adopting a DevOps mindset have seen departmental culture change, ...
SYS-CON Media announced today that Skytap blog on "DevOps Journal" exceeded 84,000 story reads. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Noel Wurst is the managing content editor at Skytap. Skytap provides SaaS-based dev/test environments to the enterprise. Skytap solution removes the inefficiencies and constraints that comp...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...