Allana Potash fka ALLRF

[SPARK]

Potential Low-Cost Producer
A near-surface deposit, inexpensive labour, proximity to deep-water ports, and the prospects of solar evaporation could allow Allana to be a low-cost potash producer with a relatively low capex project. Due to the shallow nature of the Allana deposit in Ethiopia, which we believe makes the project amenable to open-pit and/or solution mining, we estimate total capex is less than US$800/tonne of KCl for a 1 million tpa mine. This compares favorably to proposed 2 million tpa Canadian and Brazilian conventional underground potash mines that we estimate will cost US$1,000/tonne to develop. The Ethiopian project is also located only ~100 km from the nearest port and local labor costs are well below those of more developed nations, suggesting low transportation and operating costs. The prospect of using solar evaporation (i.e. modest external energy consumption) is also apt to keep solution mining costs relatively low. If and as the Ethiopian potash project unfolds to confirm the above characteristics, we submit Allana could be one of the lowest cost potash producers in the world.

Prospects to be Quick to Production
We believe Allana could have a producing Ethiopian potash mine by early 2013, approximately 6 to 18 months sooner than most proposed greenfield Saskatchewan mines. Presuming Allana is able to secure sufficient investment capital and is able to identify an economic potash resource, we submit the project could begin to produce potash by early 2013. We contend that the shallow resource, Ethiopia’s desire to stimulate the economy, and ChinaCo’s presumed ability to “get things done” would allow for project development at a quicker pace than one might expect in a more developed, yet perhaps more bureaucratic, economy such as Canada’s. Incidentally, Potash One (KCL-T), which we believe will be the quickest to production of the Canadian greenfield potash companies, proposes to build a potash solution mine in Saskatchewan with first production planned for mid-to-late 2013