Ubika Research first highlighted the investment potential in Allana Potash in its initiation report published on February 26 2009. All research reports, analyst commentaries and CEO vide interview for Allana Potash (TSXV: AAA) are available for free download HERE.
On Jan 10, 2011 Allana Potash (TSXV: AAA) (CVE: AAA) announced that drill hole DK-10-07 located in the northern section of Allana’s property intersected two significant zones of potash mineralization including the highest grade intersection to date. Hole DK-10-07 intersected 37.8% KCI over 2 metres, and 22.0% KCI over 6.7 metres in two distinct intersections at shallow depths beginning at 136 metres. The upper interval occurs within a thick potash sequence that returned 23.4% KCI over 9.2 metres.
These high grade results were obtained at shallow depths, 700 metres to the east of the Musley deposit - the current resource envelope used in Allana’s resource estimate. This is significant as having high grade zones identified at shallow depths 700 metres away from the current resource envelope improves the potential to further extend the resource deposit and in finding a significantly larger economically viable deposit than the current resource estimate.
Hole DK-10-07 was drilled vertically near the newly acquired Haro concession giving some evidence that the current Musley deposit may extend into this newly acquired Haro concession. Allana is planning additonal drilling in Haro concession to define further possible extensions from the Musley deposit.
We believe that successive drill holes are finding rich potash mineralization at Allana’s potash project. The drilling so far also confirms that Potash is found near surface and the deposit remains open in all direction, which is a strong positive. More drilling will likely provide more evidence supporting this assertion and will help in discovering new potash bearing zones.
Ubika Research believes that all drilling results so far are moving in the right direction to conclusively confirm the existing NI 43-101 compliant inferred resource base of 105 million tonnes. A strong evidence of deposit extension can also mean that there exists a strong potential to expand the resource base significantly, potentially by several times, as new potash bearing zones are discovered.
The company also recently announced (on November 30, 2010) the closing of a non-brokered private placement of C12.4 million with Liberty Metals & Mining Holdings, LLC ("LMM"), a subsidiary of Liberty Mutual Group. This financing will greatly facilitate and expedite the drilling program and feasibility study for the Company's main asset, its Ethiopian potash property in the Danakhil evaporate basin.
Ubika Research believes that this financing provides strongly validates the investment potential in Allana Potash and confirms its exploration potential. A financing of this size from a reputed group like Liberty Metals & Mining Holdings generally involves extensive due diligence by the investor. We believe that this type of investment is a strong endorsement of Allana’s plans and provides further proof that the company is attracting serious attention in the market.
Allana Potash is one of the few junior potash exploration companies with real potential to move towards production. We understand that its main short-term goal is to finish the initial stage of exploration program and hopefully produce an updated NI 43-101 report by the end of the first quarter of 2011. The company is in the midst of an active drilling session at its Ethiopian property and there could be potential short term catalysts as the drilling program continues.
We believe that the demand for fertilizer is expected to continue its secular uptrend. This is bringing attention to potash deposits for large mining companies including BHP Billiton (NYSE: BHP) and VALE (NYSE:VALE) as these mining conglomerates scout for high quality potash assets worldwide. We believe that companies like Allana Potash will continue to attract attention due to its exploration potential, its current potash resource deposit and its proximity to the land holdings owned by BHP Billiton in the evaporite basin of the Danakhil Depression. As it moves its project through the exploration and development phases, it can become an attractive target for major mining companies and investment groups looking for high potential potash assets.
Disclosure
Ubika Research has received compensation from Allana Potash to provide analyst research coverage.
Except for the historical information presented herein, matters discussed in this document contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements.
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