Allana Potash Corp.
TSX : AAA
OTCQX : ALLRF

Allana Potash Corp.

October 16, 2012 07:30 ET

Allana Potash Drills More Water Wells, Provides Feasibility Study Update and Exploration Drilling Results

TORONTO, ONTARIO--(Marketwire - Oct. 16, 2012) - Allana Potash Corp. (TSX:AAA)(OTCQX:ALLRF) ("Allana" or the "Company") is pleased to announce that all facets of its Feasibility Study led by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergau ("ERCOSPLAN") are progressing. Trial solution mining, hydrogeological studies, rock mechanic testwork, processing optimization and the Environmental Social Impact Assessment (ESIA) at Allana's potash project in Ethiopia are moving ahead well.

Following the memorandum of understanding signed last month with the Djibouti Port and Free Zone Authority of the Djibouti government, work is proceeding on the integration of design and planning for the new Tadjourah port and for Allana's potash terminal. Within and in parallel to the Feasibility Study, operations planning and optimization is continuing with detailed route surveys for siting of transport operations support facilities and with development of project services contracting. The Company anticipates that work on the Feasibility Study will be completed by late Q4 2012. Discussions to define and conclude project funding and related offtake arrangements continue with current and prospective strategic counterparties.

In addition to the ongoing Feasibility Study, Allana is pleased to announce the drill results from its remaining exploration holes. Drilling continues to intersect strong potash mineralization on its Dallol potash project located in Ethiopia (the "Property"). Holes DK-12-50 to DK-12-59 are located throughout the western part of the Property and were designed to test the presence of potash in gaps in the current sylvinite mineral resource estimate released in April, 2012. Hole 59 marks the end of current exploration drilling on the project, as efforts are now focused on numerous pilot test operations in support of the ongoing Feasibility Study.

Farhad Abasov, President and CEO, commented: "Allana is pleased by the progress on its Feasibility Study. Technical work on site is advancing well and solution mining is now occurring at Allana's test well fed by water from Allana's license area. Processing studies, rock mechanic testwork, and the ESIA are all on schedule and being completed by our technical consultants at ERCOSPLAN. Allana is pleased with the results of the final exploration drill holes. The most recent drill results continue to show continuity of the potash mineralization and management believes this may allow Allana to continue to upgrade mineral resources from Inferred to Measured and Indicated categories, while adding to all mineral resource categories. We are also very pleased with the ongoing efforts to secure construction financing and long-term supply agreements for our future production. Allana is now advancing talks with large buyers of potash as it works toward finalizing the structure for construction financing."

Feasibility Study Update

Technical studies in support of the Feasibility Study are in progress including rock mechanic testwork, processing optimization, solution mining pilot operations, environmental baseline studies, and hydrogeological studies.

Rock mechanic testwork to optimize cavern spacing is being conducted by ERCOSPLAN and is approaching completion. Processing optimization, including multi-stage flotation testwork, is in progress and is also being conducted by ERCOSPLAN in Germany.

A trial solution well has been in operation since early September 2012. The sump leaching is complete and the sump is estimated to be 200 m3 in size, providing a suitable base for the undercut leaching. The undercut leach involves increased brine injection to 10 m3 per hour and has been in operation for the past week. The undercut leach will be followed by production leaching, which is estimated to begin in mid-November. The solution mining operation is utilizing water from a production well situated approximately 5 km west in alluvial fan material.

Hydrogeological studies are continuing on the western alluvial fan area. Fifteen holes have been drilled, all encountering water. Pump tests and drawn-down tests are underway and should be completed in the next 4-6 weeks. Preliminary pump tests at the main production well indicate approximate flow rates averaging almost 70 m3 but with intermittent rates of up to 150 m3. This work continues to confirm the presence of a fresh water aquifer 30-35 metres thick in the alluvial fans along the western boundary of the Allana license area.

The Company's ESIA continues to focus on data compilation generated by baseline studies on flora, fauna, noise, dust, local water resources and stakeholder engagement meetings. Preparation of the final document is scheduled for the end of November.

Infrastructure and Financing Update

Allana continues its programs with the Djibouti Port and Free Zone Authority, the Ethiopian Roads Authority and Ethiopian Railway Corporation as well as the relevant ministries of government in Ethiopia and Djibouti, to maintain or accelerate schedules of availability for the infrastructure needed for both initial production and for longer term transportation efficiency improvements and expansions. All elements are progressing well toward Allana's expected construction start in the second half of 2013 and planned first production shipments after construction completion in late 2014.

In parallel with the Feasibility Study and infrastructure development programs, Allana continues work with prospective offtakers, current and prospective strategic investors and international development financing institutions and export credits agencies to optimize the structure for project financing and conclude conditional commitments for offtake and financing. Allana will provide further information on specific arrangements when such arrangements are formalized.

Exploration Drilling Results

Holes DK-12-50 to DK-12-59 are located throughout the western part of the Property and were designed to test the presence of potash in gaps in the current sylvinite mineral resource estimate released in April, 2012.

Holes 50, 53, 55 and 57 were designed to test the extension of the potash horizons in the northwestern part of the property. All holes intersected potash mineralization, highlighted by Hole 55 which returned 3.9 metres of Sylvinite Zone with 39.7% KCl. Hole 55 terminated early for mechanical reasons but nearby holes 50 and 53 both intersected strong Kainitite Zones (see Table 1). The potash mineralization remains open to the north; Hole 57, Allana's northern most hole, intersected 5.7 metres of Sylvinite Zone which returned 16.9% KCl as well as 6.0 metres of Kainitite Zone which yielded 20 % KCl.

Holes 51, 52, 54 and 56 are located east of the historic Musley Deposit and were targeted to test sylvinite mineralization across a fault zone outline in the most recent technical report. All holes intersected Sylvinite Zone highlighted by Hole 54 which returned 39.7% KCl over 1.85 metres indicating that potash mineralization extends to the edge of the Allana license area in this region. Hole 52 did not reach the Kainitite Zone due to mechanical problems but nearby Hole 56 returned 7.2 metres of 21.9% KCl in the Kainitite Zone.

The results for Holes 50-59, are presented below. True widths of the potash zones are estimated to be very similar to drilled widths due to the flat-lying nature of the potash horizons. The zones of potash mineralization are outlined and presented in the following table:

Table 1 Summary of analytical results, Holes 50-59.
HOLE FROM (m) TO(m) WIDTH (m) * KCl (%) ZONE
DK-12-50 385.30 386.80 1.50 37.20 SYL
386.80 392.20 5.40 19.64 UC
411.70 420.70 9.00 20.67 KAIN
DK-12-51 330.30 333.50 3.20 23.87 SYL
333.50 345.30 11.80 20.41 UC
469.30 479.30 10.00 23.45 KAIN
DK-12-52 284.20 285.20 1.00 29.60 SYL
285.20 302.20 15.00 13.71 UC
DK-12-53 151.20 156.40 5.20 18.71 SYL
156.40 162.80 6.40 11.66 UC
225.55 233.20 7.65 19.29 KAIN
DK-12-54 289.40 291.25 1.85 39.71 SYL
291.25 294.90 3.65 21.02 UC
405.80 412.40 6.60 24.85 KAIN
DK-12-55 251.53 255.47 3.94 39.65 SYL
255.47 260.55 5.08 11.20 UC
DK-12-56 233.85 237.06 4.06 10.88 SYL
INCL 237.06 237.91 0.85 35.46 SYL
237.91 243.64 5.73 19.61 UC
331.52 338.70 7.18 21.90 KAIN
DK-12-57 365.70 371.40 5.70 16.86 SYL
455.40 461.40 6.00 19.95 KAIN
DK-12-58 174.30 175.30 1.00 10.70 SYL
DK-12-59 501.30 506.30 5.00 9.41 SYL
584.30 590.30 6.00 23.76 KAIN
*Drilled width

Holes 58 and 59 are located in the southwestern part of the license. Hole 58 was an in-fill hole while Hole 59 was targeted to test the extension of potash mineralization into the centre of basin. Both holes intersected weak sylvinite mineralization due to proximity to a northwest trending fault; however Hole 59 intersected a strong Kainitite Zone which yielded 23.8% KCl over 6 metres.

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 30, 2012. For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the foregoing estimates refer to Allana's Technical Report entitled "Updated Resource Report for the Danakhil Potash Deposit, Afar State/Ethiopia" dated June 13, 2012, filed under the Company's profile at www.sedar.com. Allana has approximately 228.5 million shares outstanding and trades on the Toronto Stock Exchange under the symbol "AAA".

Quality Control and Quality Assurance

Allana employees follow standard operating and quality assurance procedures intended to ensure that all sampling techniques and sample results meet international reporting standards. Procedures for handling core samples begin with securing the potash-bearing HQ-NQ-sized core at the drill site in plastic poly-tubing which is then thermally sealed. Core is placed in plastic core boxes and transported to Allana's camp for geological logging, geotechnical logging and photographing. Significant intervals are dry cut in half using a specially modified tungsten carbide bladed band-saw. Half core samples are then double bagged and thermally sealed prior to transporting to Addis Ababa by Allana personnel. In this initial phase, halite blanks are randomly inserted into the sample stream at a rate of 1 in 20 and sent for analysis with the core samples. The remaining core is re-sealed in plastic poly-tubing and the core boxes secured at Allana's exploration camp. Upon arrival in Addis Ababa core samples are stored at Allana's small warehouse facility and then taken to the Ethiopian Ministry of Mines & Energy where permission is obtained to export the samples. The bagged samples are then carefully packed into boxes and shipped via DHL to the Saskatchewan Research Council in Saskatoon. This sampling procedure was initiated by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH, Allana's potash consulting firm, supervised by Allana's Ethiopian based Project Manager Jason Wilkinson, M.Sc., and periodically reviewed by Allana's Senior Vice President of Exploration, Peter J. MacLean, Ph.D., P. Geo.

Allana is utilizing SRC's Potash ICP Analysis package designed for multi-element analysis of potash samples. Upon arrival at SRC Geoanalytical Laboratories, core samples are jaw crushed to 60 % @ -2mm and 100 g sub sample is split out using a riffler and transferred to vials. The subsample is pulverized to 90 % @ -106 microns using a puck and ring grinding mill to create a pulp. The grinding mills are cleaned between groups using Quintus quartz. The pulp is then transferred to a labelled plastic snap top vial. An aliquot of pulp is placed in a test-tube with 15 ml of 30°C DI water. The sample is shaken. The soluble solution is then analyzed by ICP-OES. The method is suitable for the soluble analysis of commercial potash (Sylvite). The soluble solution is then analysed by ICP-MS. In addition, samples are analysed for FeO (wt%), Br and Cl by MS, plus insolubles. SRC Geoanalytical Laboratories has been certified by the Standards Council of Canada (SCC) to conform to the requirements of ISO/IEC 17025:2005 (CAN-P-4E).

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 timeline of 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.

To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/allfig1015.pdf.

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