Allana Risk - Sylvite vs. Kainite Ore ????
I went into the Dundee report and copied and pasted the parts dealing with ore quality. One big question in my mind is how much of the resource will be identified as Sylvite and how much is Kainite? This one sentence gave me serious heartburn:
"While conventional mining and processing of kainite is a proven process, Allana will need to test for its suitability for solution mining." 2/3rds of the reserve are listed as Kainite and they are basing everything on a solution mine? They have no idea if Kainite can be recovered????
And then there is this part, but no mention of what form the ore is: "Though very little remains of these holes, Parsons record’s show that the company intersected a roughly 45m thick potash horizon at 680m below the surface (see Exhibit 7)."
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Allana’s Current Resource The Danakhil evaporite basin is one of the largest evaporite basins in the world, roughly twice the size of Russia’s Ural basin with similar geology. Allana’s NI 43-101* performed by Ercosplan (a reputable German engineering firm who specializes in potash engineering) showed an Inferred Mineral Resource of 105.2 million tonnes of potash mineralization with a composite KCL grade of 20.8% or 22 million tonnes of KCL equivalent. The Inferred Resource is broken into two sections:
• Sylvite: 31.3 million tonnes with a KCL grade of 25.4%
• Kainite: 73.9 million tonnes with a kainite grade of 61.7% (18.8% KCL grade)
In general, the assumptions used by Ercosplan are fairly conservative and only infer a resource for a radius of 750 meters from each drill hole whereas those for the potash
juniors in Saskatchewan range all the way up to 5,000 meters. The NI 43-101 only covered 10% of Allana’s property as it only used the historic drill holes from the northwest of Allana’s property (see Exhibit 5). Allana will be drilling to upgrade its inferred tonnes to measured and indicated and does expect to expand the section’s resources, the NI 43-101 suggests there could be as much as 10 times more. This would be enough to support a solutionmining operation (seeAppendix E), and is the
company’s primary focus. Allana is also targeting a much larger strike in the center of its property, discussed in the “Allana’s Potential Resource Section” on page 9.
Description of Current Inferred Resource
Potash is a general term used to describe various potassium-bearing ores. For a detailed explanation please refer toAppendix C.Allana’s current inferred resource is primarily a combination of sylvite and kainite. Ores are typically described in terms of their K2O content (a measure of the purity of the potassium contained within the ore).
Sylvite* is the most common form of potash ore and has a K2O grade of ~63%. Because of its high K2O concentration it is the most desirable potassium-bearing ore. Kainite is another form of ore with a much lower K2O concentration (~19%). It can
be found in parts of Europe and Russia. In fact, in earlier days, the German potash industry used tomine kainite due to its relatively low processing requirements.While conventional mining and processing of kainite is a proven process, Allana will need to test for its suitability for solution mining. Kainite will likely be used to produce potassium sulphate or SOP, used for the cultivation of chlorine-sensitive cash crops
(tobacco, fruits & vegetables) which can be burnt by conventional potash or MOP (muriate of potash).
Allana’s Potential Additional Resource Two previous drill holes (drilled by Parsons’ in the 60s) in the center of Allana’s
concessions are extremely promising. Though very little remains of these holes, Parsons record’s show that the company intersected a roughly 45m thick potash
horizon at 680m below the surface (see Exhibit 7). Given that potash deposits are typically found along long layers as they are the vestiges of land locked bodies of water long since evaporated, it is reasonable to assume that the deposit is a continuous layer. Allana is planning on performing seismic 2D surveys* of the potential site in 2010 and drilling thereafter to see if the deposit is a favorable alternative to their
current location.
APPENDIX E: SOLUTION MINING / SOLAR
EVAPORATION PROCESS
There are currently three solution potash mines in production (Belle Plaine [Mosaic],
Patience Lake [Potash Corp], Intrepid Moab [Intrepid Potash]) and four companies
which use solar evaporation (Israel Chemicals, Arab Potash Company, Sociedad
Quimica y Minera de Chile and Intrepid). In solution mining, water is saturated with
salt and the resulting brine is pumped through injection wells into the underground
mine workings. The injected brine dissolves potash below the surface. As the brine
dissolves the potassium, the double saturated potassium and salt brine becomes
heavier than the salt saturated brine causing it to sink to low points in mining caverns.
Extraction wells are installed at the lowpoints to pump the potash rich brine to the
surface.
This is when the solar evaporation takes places. The potash rich brine is then placed
into evaporation ponds. Blue dye, similar to food coloring, is added to the evaporation
pond brines, to aid in absorption of sunlight. The water then evaporates leaving only
potash and salt behind. The evaporation process, requiring only solar energy, is
highly environmentally friendly. Evaporation ponds are generally lined with a synthetic
rubber to prevent the valuable brine from escaping the ponds. The end result of the
evaporation process is a bed of potash and salt crystals that is harvested using
scrapers adapted from the earth-moving industry. The crystals from the ponds are
then sent to a mill where the potash is separated from the salt by a flotation process.
The potash and salt are then dried, sorted, and processed into various agricultural,
feed, and industrial products.
