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Allana boosts measured and indicated resources at Danakhil project by over 90%

Allana Potash Corp. (TSE:AAA)(OTCQX:ALLRF) said Tuesday it has received an updated NI 43-101-compliant mineral resource estimate from ERCOSPLAN on its Danakhil potash project in Ethiopia, increasing measured and indicated resources by more than 90 percent.

The measured and indicated mineral resource estimate now totals 1.3 billion tonnes with an average grade of 19.32% potassium chloride (KCl), representing approximately 250 million tonnes of KCl.

Allana Potash said that this is more than a 90 percent increase over the June 2011 measured and indicated mineral resource estimate of 673 million tonnes at an average grade 18.65% KCl, and close to a doubling of the KCl tonnes in these resource categories.

In addition to the strong increase in measured and indicated mineral resources, the inferred mineral resource estimate for all four potash units is an additional 588 million tonnes grading 18.56% KCl.

"We are excited to see the large increase in total resources on the project and the significant conversion of inferred mineral resources into measured and indicated mineral resources," Allana Potash's president and CEO Farhad Abasov said.

"The exploration drill campaign over the past 11 months accomplished its twin goals of converting inferred mineral resources to measured and indicated mineral resources and adding significantly to the total project resource base.

"An over 90 percent increase in the measured and indicated mineral resource estimate supports management's belief that the Danakhil Depression has the potential to become a world class potash basin.

"This new expanded resource will form the basis for the company's Feasibility Study going forward. Exploration drilling will continue on the project to expand the resources and better define the distribution of potash in the basin."

Allana Potash said that the boost in measured and indicated mineral resources was dominated by an increase of over 170 percent in the measured category, with the revised measured mineral resource totaling approximately 567.8 million tonnes containing 107 million tonnes of KCl.

This compares with 207.6 million tonnes of measured mineral resource containing 36.4 million tonnes of KCl outlined in a June 2011 report.

The measured and indicated Sylvinite mineral resource, specifically, increased more than 75 percent to 171.4 million tonnes with an average grade of 30.93 percent KCl.

Looking ahead, Allana Potash said that exploration drilling continues in the northern part of the property as part of the program to expand the mineral resources and in-fill gaps in the drilling pattern.

Samples from Holes 44-49 are undergoing analysis, or are en route to the laboratory in Saskatoon, Canada.

Technical studies in support of the feasibility study are also in progress, including solution mining cavern preparation, solar evaporation pond construction, environmental baseline studies, and hydrogeological studies.

Ground geophysical surveys to identify aquifers in the alluvial fans have been completed and data is under evaluation, the company said.

In addition, mobilization of drilling equipment is ongoing and water well drilling is expected to commence shortly.

Procurement of equipment for installation of pilot solution wells is well underway and updated photographs of evaporation pond construction are available at http://www.allanapotash.com.

Allana Potash is a junior mineral exploration company focused on developing potash mineral properties in Ethiopia and Argentina.

In March, Allana Potash was one of Dundee Securities' top picks, while in April, capital markets firm Raymond James assigned a "Market Perform" rating on the stock.

Last November, the company announced the results of the preliminary economic assessment for its Dallol potash project. The economic study, conducted by Ercosplan, yielded, on an after-tax basis, an internal rate of return (NYSE:IRR) of 36.8 percent and a net present value (NYSE:NPV) of US$1.85 billion, based on a 12 percent discount rate.

The results exceeded management's expectations, with the project having "one of the lowest capex and opex in the world" in the potash industry, especially when compared to Saskatchewan players in Canada.

Solar evaporation of the saturated brine solution is possible at the Dallol project due to the year-round hot temperatures and very little rainfall, in contrast to Saskatchewan.