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Monday, March 07, 2011 2:42:11 PM
DD Summary - AAA.v/ALLRF.pk
Allana Resources - Danakhil Evaporite Basin Project, Ethiopia
Allana Resources is a potash exploration and development firm with assets in Northeast Ethiopia. Located in a basin with similar geology to that of Saskatchewan and Russia’s potash deposits (the Danakhil evaporite basin), the company is moving towards a full feasibility study.
STRATEGIC INVESTMENT
$12.3 million strategic investment by Liberty Metals and Mining Holdings, a subsidiary of Liberty Mutual Group, closed on Nov 30 2010 giving Liberty 17 % ownership of Allana and making them the largest single shareholder. Liberty is a long-term investor and has committed to assisting Allana with financing when the mine construction stage is reached
About Liberty Mutual Group:
Liberty Mutual Group, more commonly known by the name of its primary line of business Liberty Mutual, is a diversified global insurer and the fifth largest property and casualty insurer in the United States based on 2009 direct written premium. They are the 71st company on the Fortune 500 list for 2010. Based in Boston, Massachusetts, they employ over 45,000 people in more than 900 locations throughout the world. As of December 31, 2008 Liberty Mutual Group had $104.3 billion in consolidated assets, $94.2 billion in consolidated liabilities, and $28.9 billion in annual consolidated revenue. The company, founded in 1912, offers a wide range of insurance products and services, including personal automobile, homeowners, workers compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, fire and surety.
CHINESE STRATEGIC INVESTMENT / OFF-TAKE
$2 million strategic investment by China Minerals United Management Ltd., a Chinese mining investment group closely associated with one of the largest fertilizer companies in China. Also entered into off-take/financing agreement talks with the same group to cover 35% of the construction costs.
INFERRED HISTORICAL RESOURCE
105 million tones (20.8% composite grade KCl)
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 specializesin 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. 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.
* National Instrument 43-101 (NI 43-101) is a mineral resource classification scheme used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities administrators.
POTENTIAL TO BECOME ONE OF THE LOWEST COST POTASH PRODUCERS IN THE WORLD
Advantages of Allana’s Mine:
Process - Solution mines have a much lower capital cost and can be built in significantly less time than a conventional potash mine. Generally the drawback to solution mines is higher operating expenses, however due to several of the factors listed below, Allana will likely be one of the lowest cost potash mines in the world.
Allana is also considering pursuing open pit mining due to the shallowness of the resource (less than 150m deep in some areas). At these depths, open pit would be extremely suitable.
Labor - Because Allana operates in Ethiopia, wages are significantly lower. Furthermore, the labor market is less tight than in Saskatchewan where the potash and uranium boom currently occupy a significant portion of the labor pool. Ethiopia maintains one of the highest literacy rates in Africa.
Permitting - Securing potash concessions is relatively easy in most jurisdictions. In Saskatchewan, the environmental permitting process is significantly longer than in Ethiopia. Furthermore, the Danakhil evaporite basin is in a barren dessert and salt plain with very little fauna or flora to disturb.
Location - Sailing time from Ethiopia is ~10 days to India and ~24 days to China. This compares to ~30 days to India and ~17 days to China from Vancouver.
Climate - The region which contains the evaporate basin has a desert climate and is known as “the hottest place on earth”. This allows for the use of solar evaporation, considerably less expensive than operations in cooler climates which use natural gas. It is estimated that natural gas or thermal coal makes up to 40% of potash production costs in solution mining operations.
Infrastructure - The closest deep sea port to Allana’s deposit is in Djibouti, 600 km away (there is also a port 92 km away but the company does not foresee using it). This compares to the ~1,500 km potash travels to the Vancouver port from Saskatchewan. Furthermore, Canpotex has all but monopolized spare capacity in Vancouver and is expanding at the Prince Rupert port. The port of Djibouti has ample spare capacity.
MANAGEMENT
Farhad Abasov, MBA, President, CEO & Director
Over 15 years of business management experience; Most recently served as Senior Vice President at Potash One and Vice President, Portfolio Management and Vertical Integration for Uranium One. Former member of Energy Metals management team (Energy Metals was sold to Uranium One for $1.8 Billion in 2007)
Peter MacLean, Ph.D., P.Geo, Senior Vice President, Exploration
Over 20 years experience in the mining & exploration industry with junior and senior mining companies including Monarch Resources, Aur Resources and Newmont Mining.
Nejib Abba Biya, Senior Vice President, Corporate Development, Ethiopia
Originally from Ethiopia, over 20 years of experience conducting business in Ethiopia, excellent working relations with the federal and regional governments
Jason Wilkinson, Project Manager, Ethiopia
Over 15 years of exploration and development experience in Africa, Asia and Europe. Most recently head of exploration for Lydian and AurResources
Deborah Battiston, Chief Financial Officer
C.G.A. with over 20 years of accounting and financial management experience.
BOARD OF DIRECTORS
Farhad Abasov - President and CEO, Director
Maj.-Gen. (Ret.) Lewis MacKenzie - Director
Former Canadian Armed Forces General, who led the U.N. Peacekeeping effort in Sarajevo.
Richard Lacroix - Director
Former Senior Vice President , Potash Corp of Saskatchewan, former Board Member of Canpotex, and former Chairman of Canpotex Bulk Terminals, 30 years with PCS
Dr Mark Stauffer - Director
Former President of Potash and Phosphate Institute of Canada, over 30 years of experience in potash and fertilizer business.
Diana Walters - Director
Current President/CEO of Liberty Mining and Metals, over 20 years in management positions with energy and mining companies. Ms. Diana Walters is President and CEO of Liberty Metals & Mining, LLC (LMM.) LMM is the investment arm of Liberty Mutual Insurance which will be identifying and investing in opportunities in mining and metals projects. Ms. Walters graduated from the University of Texas at Austin with a BA and an MA in Energy and Mineral Resources.
ANALYST COVERAGE
Allana is currently covered by (6) Analysts with targets that range up to C$2.56. These targets are based on the current NI resource which was calculated from historic drill holes only and will likely be raised after the resource calculations are updated with recent assay results in Apr 2011.
•Dundee Securities Corp.
•Ubika Research
•Fraser MacKenzie LTD
•Wellington West Capital Markets
•Salman Partners
•Cormark Securities
RECENT DEVELOPMENTS
• With the completion of recent financing the company currently has +$50 million in cash to fund continued exploration and development work, including a definitive feasibility study at the Company's Ethiopian potash project as well as future potential strategic land acquisitions.
• 12 Holes Drilled to Date
• Hole #11 contained the highest grade yet published in the Dallol region.
• Acquisition of Strategic Haro Concession
• Currently Drilling #13 & #14
• BHP has neighboring claims and are sharing our camp
• BHP has conducted (and financed) a multi-million dollar Falcon Survey Fly Over and shared their data with Allana
• The government has spent $30 million so far improving and upgrading local road infrastructure. 60km of road asphalt will be laid, which will help support the heavy equipment rolling in and out of the camp.
UPCOMING DEVELOPMENTS
• Plans for 3rd heavy-duty drill rig (possibly borrowed from BHP) to focus on the center of the property
• 2D Seismic Report due shortly
• New 43-101 report on target for April-May 2011 expected to drastically increase the property’s resource
• Construction will begin in 2011 on Ethiopia's extensive rail. The 5,000km of new rail lines will be able to transport 6 million tonnes of freight and link the capital Addis Ababa to multiple regions of the country, including north towards Allana's concessions and to the east linking the port of Dijibouti.
• Pre-feasibility scheduled to be completed April-May 2012
2010-2011 ASSAY RESULTS
••••
Allana Resources - Danakhil Evaporite Basin Project, Ethiopia
Allana Resources is a potash exploration and development firm with assets in Northeast Ethiopia. Located in a basin with similar geology to that of Saskatchewan and Russia’s potash deposits (the Danakhil evaporite basin), the company is moving towards a full feasibility study.
STRATEGIC INVESTMENT
$12.3 million strategic investment by Liberty Metals and Mining Holdings, a subsidiary of Liberty Mutual Group, closed on Nov 30 2010 giving Liberty 17 % ownership of Allana and making them the largest single shareholder. Liberty is a long-term investor and has committed to assisting Allana with financing when the mine construction stage is reached
About Liberty Mutual Group:
Liberty Mutual Group, more commonly known by the name of its primary line of business Liberty Mutual, is a diversified global insurer and the fifth largest property and casualty insurer in the United States based on 2009 direct written premium. They are the 71st company on the Fortune 500 list for 2010. Based in Boston, Massachusetts, they employ over 45,000 people in more than 900 locations throughout the world. As of December 31, 2008 Liberty Mutual Group had $104.3 billion in consolidated assets, $94.2 billion in consolidated liabilities, and $28.9 billion in annual consolidated revenue. The company, founded in 1912, offers a wide range of insurance products and services, including personal automobile, homeowners, workers compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, fire and surety.
CHINESE STRATEGIC INVESTMENT / OFF-TAKE
$2 million strategic investment by China Minerals United Management Ltd., a Chinese mining investment group closely associated with one of the largest fertilizer companies in China. Also entered into off-take/financing agreement talks with the same group to cover 35% of the construction costs.
INFERRED HISTORICAL RESOURCE
105 million tones (20.8% composite grade KCl)
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 specializesin 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. 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.
* National Instrument 43-101 (NI 43-101) is a mineral resource classification scheme used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities administrators.
POTENTIAL TO BECOME ONE OF THE LOWEST COST POTASH PRODUCERS IN THE WORLD
Advantages of Allana’s Mine:
Process - Solution mines have a much lower capital cost and can be built in significantly less time than a conventional potash mine. Generally the drawback to solution mines is higher operating expenses, however due to several of the factors listed below, Allana will likely be one of the lowest cost potash mines in the world.
Allana is also considering pursuing open pit mining due to the shallowness of the resource (less than 150m deep in some areas). At these depths, open pit would be extremely suitable.
Labor - Because Allana operates in Ethiopia, wages are significantly lower. Furthermore, the labor market is less tight than in Saskatchewan where the potash and uranium boom currently occupy a significant portion of the labor pool. Ethiopia maintains one of the highest literacy rates in Africa.
Permitting - Securing potash concessions is relatively easy in most jurisdictions. In Saskatchewan, the environmental permitting process is significantly longer than in Ethiopia. Furthermore, the Danakhil evaporite basin is in a barren dessert and salt plain with very little fauna or flora to disturb.
Location - Sailing time from Ethiopia is ~10 days to India and ~24 days to China. This compares to ~30 days to India and ~17 days to China from Vancouver.
Climate - The region which contains the evaporate basin has a desert climate and is known as “the hottest place on earth”. This allows for the use of solar evaporation, considerably less expensive than operations in cooler climates which use natural gas. It is estimated that natural gas or thermal coal makes up to 40% of potash production costs in solution mining operations.
Infrastructure - The closest deep sea port to Allana’s deposit is in Djibouti, 600 km away (there is also a port 92 km away but the company does not foresee using it). This compares to the ~1,500 km potash travels to the Vancouver port from Saskatchewan. Furthermore, Canpotex has all but monopolized spare capacity in Vancouver and is expanding at the Prince Rupert port. The port of Djibouti has ample spare capacity.
MANAGEMENT
Farhad Abasov, MBA, President, CEO & Director
Over 15 years of business management experience; Most recently served as Senior Vice President at Potash One and Vice President, Portfolio Management and Vertical Integration for Uranium One. Former member of Energy Metals management team (Energy Metals was sold to Uranium One for $1.8 Billion in 2007)
Peter MacLean, Ph.D., P.Geo, Senior Vice President, Exploration
Over 20 years experience in the mining & exploration industry with junior and senior mining companies including Monarch Resources, Aur Resources and Newmont Mining.
Nejib Abba Biya, Senior Vice President, Corporate Development, Ethiopia
Originally from Ethiopia, over 20 years of experience conducting business in Ethiopia, excellent working relations with the federal and regional governments
Jason Wilkinson, Project Manager, Ethiopia
Over 15 years of exploration and development experience in Africa, Asia and Europe. Most recently head of exploration for Lydian and AurResources
Deborah Battiston, Chief Financial Officer
C.G.A. with over 20 years of accounting and financial management experience.
BOARD OF DIRECTORS
Farhad Abasov - President and CEO, Director
Maj.-Gen. (Ret.) Lewis MacKenzie - Director
Former Canadian Armed Forces General, who led the U.N. Peacekeeping effort in Sarajevo.
Richard Lacroix - Director
Former Senior Vice President , Potash Corp of Saskatchewan, former Board Member of Canpotex, and former Chairman of Canpotex Bulk Terminals, 30 years with PCS
Dr Mark Stauffer - Director
Former President of Potash and Phosphate Institute of Canada, over 30 years of experience in potash and fertilizer business.
Diana Walters - Director
Current President/CEO of Liberty Mining and Metals, over 20 years in management positions with energy and mining companies. Ms. Diana Walters is President and CEO of Liberty Metals & Mining, LLC (LMM.) LMM is the investment arm of Liberty Mutual Insurance which will be identifying and investing in opportunities in mining and metals projects. Ms. Walters graduated from the University of Texas at Austin with a BA and an MA in Energy and Mineral Resources.
ANALYST COVERAGE
Allana is currently covered by (6) Analysts with targets that range up to C$2.56. These targets are based on the current NI resource which was calculated from historic drill holes only and will likely be raised after the resource calculations are updated with recent assay results in Apr 2011.
•Dundee Securities Corp.
•Ubika Research
•Fraser MacKenzie LTD
•Wellington West Capital Markets
•Salman Partners
•Cormark Securities
RECENT DEVELOPMENTS
• With the completion of recent financing the company currently has +$50 million in cash to fund continued exploration and development work, including a definitive feasibility study at the Company's Ethiopian potash project as well as future potential strategic land acquisitions.
• 12 Holes Drilled to Date
• Hole #11 contained the highest grade yet published in the Dallol region.
• Acquisition of Strategic Haro Concession
• Currently Drilling #13 & #14
• BHP has neighboring claims and are sharing our camp
• BHP has conducted (and financed) a multi-million dollar Falcon Survey Fly Over and shared their data with Allana
• The government has spent $30 million so far improving and upgrading local road infrastructure. 60km of road asphalt will be laid, which will help support the heavy equipment rolling in and out of the camp.
UPCOMING DEVELOPMENTS
• Plans for 3rd heavy-duty drill rig (possibly borrowed from BHP) to focus on the center of the property
• 2D Seismic Report due shortly
• New 43-101 report on target for April-May 2011 expected to drastically increase the property’s resource
• Construction will begin in 2011 on Ethiopia's extensive rail. The 5,000km of new rail lines will be able to transport 6 million tonnes of freight and link the capital Addis Ababa to multiple regions of the country, including north towards Allana's concessions and to the east linking the port of Dijibouti.
• Pre-feasibility scheduled to be completed April-May 2012
2010-2011 ASSAY RESULTS
••••
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