Since Ubika Research launched coverage of Allana Potash Corp. (TSX VENTURE: AAA) on February 27, 2009, with a Ubika Model Price of $1.02 (See our note here/URL on www.smallcappower.com), Allana stock has gained 1033%. This has been fuelled by the exploration activities that have shown the significant potential in their Ethiopian project, which we had identified back in 2009 and due to the strength in the Potash sector. Allana has also announced important tie-ups for future financing and off-take contracts solidifying the story further on the path to becoming an eventual potash miner. We believe 2011 will continue to be another stellar year for Allana and its shareholders, as we expect further discovery of strong potash bearing zones, ultimately leading to a significant increase in an expansion of resource estimate before the year-end. We expect these positive news flows to keep the momentum on the stock. Catalysts for Allana in 2011 to include:
•Additional drilling and positive drilling results: Drill results from Hole #9, 10 and 11 are expected to be released shortly. Drilling is currently underway on Holes #12 and #13 to further define the continuity of potash mineralization between Holes #4 and #8.
•Significantly higher revised NI 43-101 resource estimate possible: The results from drill hole #4 have shown that zone hosting for the potash mineralization remains open in all directions. Encouraged by the results, Allana has commissioned two drills that are now exploring the strike extensions south and updip extensions southwest of this hole. One of the key objectives of the company is to significantly expand the current inferred resource of ~105 million tonnes of potash ore with an average grade 20.8% KCl. The first 3 drill holes confirmed the historical results. Other holes have shown high grade potash bearing zones extend to areas which were hitherto unexplored. In 2011, Ubika Research believes that Allana will have an opportunity to announce at least a 4-fold increase in its current resource estimate. Beyond 2011, AAA’s resource estimate could potentially increase by 5-10x.
•Potash and Agri industry to remain in focus: In last couple of years, positive focus has come to the potash industry as there is an emerging consensus that the world will need lots of potash to meet the growing needs of fast developing world population. This has lead to several merger and acquisitions announcements (both successful and unsuccessful) in the industry. We believe this trend will continue in 2011 and will bring specific focus to Allana.
We have re-run our model to include the above catalysts and updated our valuation. Based on the recent valuation multiples offered in the industry for the resource, we have increased our Model Price to $2.56, on a fully diluted basis after taking into account the recently announced but still to be closed financing. This represents 51% increase from the previous close. We maintain our Undervalued Rating on Allana Potash Corp.
News 
Market Data 
Discover 
