Allana Potash Corp.
TSX : AAA
OTCQX : ALLRF

Allana Potash Corp.

April 30, 2012 17:01 ET

Allana Announces Mineral Resource Update: Measured+Indicated Mineral Resources Increase by Over 90%

TORONTO, ONTARIO--(Marketwire - April 30, 2012) - Allana Potash Corp. (TSX:AAA)(OTCQX:ALLRF) ("Allana" or the "Company") is pleased to announce that it has received an updated National Instrument 43-101 ("NI 43-101") compliant mineral resource estimate from ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergau ("ERCOSPLAN") on its Danakhil Potash Project in Ethiopia.

The measured and indicated mineral resource estimate totals 1,297,529,000 tonnes with an average grade of 19.32 % KCl, representing approximately 250 million tonnes of KCl. This is more than a 90% 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 (see news release dated June 20, 2011)(the "June 2011 report"). 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 588,150,000 tonnes grading 18.56 % KCl. A summary of the mineral resources is presented in Tables 1 and 2 below.

The increase in measured and indicated mineral resources was dominated by an increase of over 170% in the measured category with the revised measured mineral resource totaling approximately 567,815,000 tonnes containing 107,010,000 tonnes of KCl versus 207,620,000 tonnes of measured mineral resource and approximately 36,405,000 tonnes of KCl delineated in the June 2011 report.

The measured and indicated Sylvinite mineral resource specifically increased over 75% to 171,357,000 tonnes with an average grade of 30.93% KCl.

Farhad Abasov, President and CEO, commented: "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. 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% 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."

The mineral resource estimate is based on drilling conducted by Allana in 2010-2012 (45 holes) and the historic drill holes completed by the Ralph M. Parsons Company (Parsons) in the 1950s and 1960s. The top of the potash sequence is identified by the Sylvinite Member, followed by the Upper Carnallitite Member (UC), the Bischofitite Member, the Lower Carnallitite Member (LC) and the Kainitite Member.

Table 1: Estimated Measured & Indicated Resources

CATEGORY POTASH
MEMBER
IN-SITU
TONNAGE
(MT)*
KCl
(%)
RESOURCE
TONNAGE
% INCREASE
OVER
JUNE 2011
ESTIMATE
CONTAINED
KCl
TONNAGE
(MT)
KCl TONNAGE
% INCREASE
OVER
JUNE 2011
ESTIMATE
MEASURED Sylvinite 60.78 30.7 18.66
Upper Carnallitite 49.94 17.5 8.74
Lower Carnallitite 137.67 11.1 15.31
Kainitite 319.43 20.2 64.37
SubTotal 567.82 18.9 173.5 107.07 193.2
INDICATED Sylvinite 110.58 31.1 34.34
Upper Carnallitite 105.60 16.7 17.62
Lower Carnallitite 131.42 10.6 13.90
Kainitite 382.12 20.4 77.79
SubTotal 729.71 19.7 56.7 143.65 61.11
TOTAL MEASURED+INDICATED 1297.53 19.3 92.8 250.72 99.5

Table 2: Estimated Inferred Resources

CATEGORY POTASH
MEMBER
IN-SITU
TONNAGE
(MT)*
KCl
(%)
CONTAINED
KCl
(MT)
INFERRED Sylvinite 46.62 30.3 14.10
Upper Carnallitite 89.67 13.8 12.39
Lower Carnallitite 78.15 8.5 6.63
Kainitite 373.71 20.4 76.05
TOTAL INFERRED 588.15 18.6 109.2
Cautionary Notes:
1. MT=Million Tonnes, tonnage is for in-situ resource with no discount for recovery as mining method is to be determined. Potash deposits have been mined by underground, open pit and solution mining methods, a Feasibility Study is underway to determine the optimal mining method for the Danakhil Deposit.
2. The numbers for tonnage, average KCl per cent are rounded figures
3. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Due to the uncertainty of measured, indicated or inferred mineral resources, these mineral resources may never be upgraded to proven and probable mineral reserves
4. Average densities used in resource calculations are 2.14, 1.81, 1.91, and 2.10 for the Sylvinite, UC, LC and Kainitite members respectively

The measured, indicated and inferred mineral resource estimate was reviewed and optimized by Dr. Sebastiaan van de Klauw, Ph.D., EurGeol., who is a "qualified person" as such term is defined in National Instrument 43-101 and has supervised the preparation of the technical information and data included in this news release. The mineral resource estimates were generated using the parameters set out below.

Drill hole intersections must meet the following criteria for inclusion in the mineral resource estimate:

  • Sylvinite Member > 20% KCl, the combined minimum width of Sylvinite and UC Members over 4 metres
  • UC Member > 40% Carnallite, the combined minimum width of Sylvinite and UC Members over 4 metres
  • LC Member > 60% Carnallite+Kieserite, minimum width of 5 metres
  • Kainitite Member > 50% Kainite, minimum width of 5 metres

Allana has drilled 45 holes, all of which provided geological information for the report, but several holes (22, 21, 14, 18, 4) did not meet these criteria and consequently were not included in the resource estimate.

The resource estimates were calculated by extrapolating grades and widths using the Radius of Influence (ROI) from each Allana drill hole and historical drill holes based on industry standards for potash exploration. This process starts with the interpretation of the Radius of Influence of each exploration hole. The following ROIs were used for the calculation of the area of mineralized material in each of the resource categories:

  • Sylvinite, Upper Carnallitite Members
    • Measured Resource 350 metres
    • Indicated Resource 750 metres
    • Inferred Resource 1500 metres
  • Lower Carnallitite, Kainitite Members
    • Measured Resource 500 metres
    • Indicated Resource 1000 metres
    • Inferred Resource 2000 metres

For historical drill holes a ROI of 750 metres was used for inferred mineral resources in the different members.

The difference in ROI between the two groups is directly related to the geology of the evaporite mineralization. The Sylvinite and UC members are interpreted to be secondary deposits formed from carnallite and therefore not as uniform as a primary evaporite deposit. The Kainitite and LC members are formed by primary evaporite deposition and are relatively consistent throughout the Allana property. Due to this consistency there is a greater degree of confidence in the lateral extent of the mineralization of the Kainitite and LC members and the ROI can be increased.

A copy of the NI 43-101 Technical Report will be available under the Company's profile on SEDAR (www.sedar.com) within 45 days of this news release. The mineral resources were estimated by Dr. Henry Rauche, Ph.D., EurGeol, Managing Director, CEO ERCOSPLAN and Dr. Sebastiaan van de Klauw, Ph.D., EurGeol., Consulting Geologist, ERCOSPLAN. Dr. van de Klauw is the Qualified Person for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, and has reviewed and verified the data disclosed in this news release.

Activity Update

Exploration drilling continues in the northern part of the property (Holes 50, 51) 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 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. Mobilization of drilling equipment is ongoing and water well drilling is expected to commence shortly. Procurement of equipment for installation of pilot solution wells in well underway and updated photographs of evaporation pond construction are available to be seen on the company's web-site.

About Allana Potash Corp.

Allana is a publicly traded corporation with a focus on the acquisition and development of potash assets internationally with its major focus on a previously explored potash property in Ethiopia. Allana has secured financial support from two significant strategic investors: IFC, a member of World Bank Group, and Liberty Metals and Mining, a member of Liberty Mutual Group. Allana has measured and indicated Sylvinite resources of 171.36 Million Tonnes of 30.9% KCl; inferred Sylvinite resource of 46.62 million tonnes grading 30.25% KCl; measured and indicated Kainitite resources of 701.55 million tonnes at 20.26% KCl, inferred Kainitite resource of 373.71 million tonnes of 20.35% KCl; measured and indicated Upper Carnallitite resources of 78.5 million tonnes grading 18.4% KCl, inferred Upper Carnallitite resource of 155.53 million tonnes of 16.95% KCl; measured and indicated Lower Carnallitite resources of 269.10 million tonnes of 10.86% KCl, inferred Lower Carnallitite resource of 130.7 million tonnes grading 11.7% KCl. The foregoing mineral resource estimates are as at April 27, 2012. Allana has approximately 228.5 million shares outstanding and trades on the Toronto Stock Exchange under the symbol "AAA".

Peter J. MacLean, Ph.D., P. Geo., Allana's Senior VP Exploration, is a Qualified Person as defined under National Instrument 43-101 and has reviewed and approved the technical information presented in this release.

Forward-Looking Statement

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the effect and estimated timelineof the drilling and assay results on the Company, the estimation of mineral reserves and mineral resources; the timing and amount of estimated future exploration; the anticipated timing with respect to the preparation of the Feasibility Study; costs of exploration; capital expenditures; success of exploration activities; permitting time lines and permitting, ; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; and title disputes or claims; Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws. The reader is cautioned that quantity and grade of the results from Holes 35, 36 and 37 are conceptual in nature and that there is insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Contact Information

  • Investor Cubed
    647 258 3311
    info@investor3.ca

    Allana Potash Corp.
    Farhad Abasov
    President & CEO
    1-416-309-2691