PROJECT UPDATE: Allana Potash Files NI 43-101 Report for Danakhil Potash Project Feasibility Study

In a follow up to its Feasibility Study announced in February, Allana Potash (TSX:AAA) has filed its NI 43-101 technical report for the Danakhil potash project. The report is based on production of 1 million tonnes of muriate of potash per year via solution mining.

According to the company’s Feasibility Study, Allana Potash has an after-tax Net Present Value (NPV) of US $1.32 billion at a discount rate of 10% (based on a price of $430/tonne), including an IRR of 33%. The study estimated the project’s operating mine life at 25 years from Sylvinite reserves.

Farhad Abasov, President and CEO of Allana commented that “Even with current potash market realities driving the lower potash price forecast of USD $430/tonne used in the FS, the favourable total production CAPEX of about US$579 million and port and transport CAPEX of US$63 million, make this project one of the lowest cost and potentially highest return greenfield potash projects worldwide. Similarly, the very competitive production OPEX at US$69.25/tonne, within a total, loaded-on-ship, OPEX of US$98.75/tonne FOB, is one of the lowest among greenfield potash projects currently under development.”

While Allana does not have a final sales destination for its potash, the project’s position in Ethiopia places it geographically close to both the Indian and Chinese markets, Peter MacLean, Allana’s senior VP of Exploration, told Mining Weekly Online. As Allana works on further developing their project, the Ethiopian government is lending its support with regards to infrastructure.

According to Ethiopia’s Minister of Mines, Sinkinesh Ejigu, the country is hoping for the mining sector to be the backbone of Ethiopian industry.

Allana Potash is hoping to secure a financing for the project in the next few months, and start construction in the second half of 2013. The company is aiming to start production by late 2015, early 2016.

Securities Disclosure: I, Vivien Diniz, hold no investment interest in the company mentioned.