Fig. 1 Location of Danakhil Potash Project.
Fig. 1 Location of Danakhil Potash Project.

Allana's potash project is comprised of four potash concessions (Danakil Potash Project) located in Ethiopia's northeastern Danakil Depression totaling approximately 312 square kilometers (Fig. 1). The potash mineralization in the Danakil Depression is well known with small-scale potash mining carried out intermittently from the early 1900's.

Positive Feasibility Study Released

In February 2013 Allana released a positive Feasibility Study released outlining 1 Million tonnes per year of Muriate of Potash (MOP) production via solution mining/solar evaporation from the Sylvinite Zone. Highlights include:

Total CAPEX   $US 642M
Total OPEX   $US 98.75/tonne MOP (delivered to port)
NPV@10%   $US 1.32B
IRR (after tax)   33%
Payback period   3.1 years
Potash price   $US 430/tonne

2013 Reserves and Resources

As a result of the proposed mine plan and favourable economic results developed in the FeasibilityStudy, Measured and Indicated Sylvinite Resources can be upgraded to Proven and Probable Reserves.

Updated Sylvinite Mineral Resources Estimates effective as of Feb. 2, 2013

Table 1

KCL (%) KCL (MT)
Measured 115.31 27.8 32.0
Indicated 212.11 28.6 60.7
Inferred 90.76 27.8 25.2

All Sylvinite Measured and Indicated Mineral Resources were converted to reserves and are outlined in the table below (effective date Feb. 2, 2013):

Table 2

Proven 32.97 28.0 8.2
Probable 60.81 28.8 15.5
TOTAL     23.7

In June 2013 Allana released an updated NI 43-101 compliant resource estimate based on the results of 68 drillholes on the Allana and Nova licenses. The resource was prepared by Ercosplan and is comprised of Measured and Indicated Mineral Resources totaling 2.45 B tonnes containing approximately 438 M tonnes of KCl and additional Inferred Mineral Resources of 1.12 B tonnes containing 178 M tonnes of KCl. Details of the resources are given in Tables 1 and 2. Geological studies in drill core from Allana's initial exploration programs in 2010 and 2011 identified four potash horizons rather than the two horizons identified by Parsons in the 1960s. On the Allana property potash occurs in the Sylvinite, Upper Carnallitite, Lower Carnallitite, and Kainitite Members

Table 3 (Effective date April 17, 2013)

April 2012 ESTIMATE
April 2012 ESTIMATE
MEASURED Sylvinite 115.3 27.8   32.1  
  Upper Carnallitite 121.5 17.5   21.3  
  Lower Carnallitite 235.0 9.7   22.8  
  Kainitite 552.3 19.2   105.9  
SubTotal   1,024.1 17.8 80.3 182.1 68.5
INDICATED Sylvinite 212.1 28.6   60.7  
  Upper Carnallitite 289.8 17.2   49.9  
  Lower Carnallitite 322.2 8.9   28.7  
  Kainitite 598.2 19.5   116.8  
SubTotal   1,422.3  18.0 94.8 256.1 75.7
TOTAL MEASURED+INDICATED 2,446.4 17.9 88.4 438.2 74.5

*MT=Million tonnes

Table 4 Inferred Mineral Resources. (Effective date April 17, 2013)

INFERRED Sylvinite 90.8 27.8 25.2
  Upper Carnallitite 175.5 16.5 29.0
  Lower Carnallitite 369.3 7.7 28.3
  Kainitite 481.8 19.8 95.3
TOTAL INFERRED 1,117.4 15.9 177.8
Fig. 2 Exploration drill hole locations.
Fig. 2 Exploration drill hole locations.

The 2013 resources represent a significant increase over the 2012 Mineral Resources of more than 85% for M+I categories.

The resources outlined above are located on only about 75% of the land area on Allana's property and are based on 88 drill holes on the Allana property (see Fig.2). Additional exploration drilling is underway and is scheduled to be completed in Q3, 2013.

In addition to the strong and promising technical aspects of the project, the Ethiopian government is strongly supporting mining initiatives in the country. Allana has had advanced discussions with the Minister of Transportation, Minister of Mines and the Minister of Defense regarding infrastructure improvements in the Danakil region which would greatly enhance the economics of the projects. Road construction is underway to link the Dallol area to Afdera where paved roads provide access to Djibouti. Ethiopia has also received financial commitments from China and India to construct some 5,000 km of railway in the country including access to the Danakhil potash region. Allana's relationship with the Ethiopian government is very strong and will greatly assist rapid advancement of the project. On October 9, 2013, the company was granted and received its mining license from the Ethiopian government for its solution mining project and is actively pursuing its project debt and equity funding requirements.