Allana Potash Corp.

TSX : AAA
OTCQX : ALLRF


Allana Potash Corp.

December 11, 2012 07:30 ET

Allana Potash Provides Nova Potash Drill Results and Feasibility Study Update

TORONTO, ONTARIO--(Marketwire - Dec. 11, 2012) - Allana Potash Corp. (TSX:AAA)(OTCQX:ALLRF)("Allana" or the "Company") announces drill results from holes completed by Nova Ethio-Potash Corporation ("Nova") on its exploration license adjacent to Allana's potash license in the Danakhil Depression of Ethiopia. Nova drilling intersected similar geology delineated by exploration studies on Allana's ground highlighted by hole DM-12-10 which intersected 5.50 metres of 33.7% KCl in the Sylvinite Zone and a strong Kainitite Zone which returned 7.0 metres grading 17.4% KCl. Prior to Allana's acquisition of Nova on November 1, 2012 (See Allana news release, November 1, 2012), Nova completed 21 holes in 2011-2012 totaling 2122 metres, including DM-12-10.

Allana also announces that its Feasibility Study (FS) led by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau ("ERCOSPLAN") is progressing to completion. Pilot evaporation ponds, pilot solution mining, rock mechanic testwork, hydrogeological studies, processing design and optimization and the Environmental, Social, and Health Impact Assessment ("ESHIA") study by Environmental Resources Management ("ERM") are providing data for the finalization of the FS and submission of the ESHIA for government approval.

Farhad Abasov, President and CEO, commented: "Allana is pleased by the completion of various aspects of the Feasibility Study and progress in all areas. Technical work on site is approaching completion and pilot solution mining of the Sylvinite Zone is underway, fed by water from Allana's license. Processing studies, rock mechanic testwork, and the ESHIA are all on schedule and being completed by our technical consultants ERCOSPLAN and ERM. It is important to note that the hydrogeological studies have yielded positive preliminary results having found water in all drill wells. We expect to release the preliminary results shortly. Allana is pleased with the results of the preliminary drilling completed by Nova on its license. These drill results show extension of the potash mineralization to the west and management believes this represents potential for Allana to expand mineral resources beyond the core Allana license. We are also very pleased with the significant progress in our ongoing work to secure construction financing and long-term supply agreements for our future production."

Nova Drilling Results

Prior to Allana's acquisition of Nova, Nova completed 21 drill holes on its exploration license totaling 2122 metres (see Figure 1). Nova drilling was concentrated on the western portion of its license and the program was designed to delineate extensions of the Musley Deposit as well as outline the limits of the evaporite basin. Generally, Nova intersected similar stratigraphy to drilling on the Allana license and intersected potash in most holes (see Table 1). All holes were drilled vertically and 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.

Table 1 Summary of Nova drill hole results.
DRILLHOLE FROM (m) TO (m) WIDTH (m)* KCl (%) ZONE
DM-11-01 95.30 99.87 4.57 0.00 NSV
DM-11-02 84.85 93.90 9.05 13.40 KAIN
DM-11-03 86.50 89.45 1.95 0.00 NSV
DM-11-04 61.65 62.60 0.95 14.47 SYL
67.75 73.95 6.20 19.40 KAIN
DM-11-05 62.89 69.65 6.76 18.30 KAIN
DM-11-06 52.04 57.91 5.87 23.00 SYL
67.40 77.10 9.70 15.50 KAIN
DM-11-07 76.16 78.68 2.52 14.70 SYL
DM-11-08 61.20 68.96 7.76 25.00 SYL
68.96 70.89 1.93 17.90 UC
77.45 81.70 4.25 13.20 LC
81.70 90.22 8.52 16.20 KAIN
DM-12-09 76.40 78.60 2.20 27.00 SYL
86.20 98.80 12.60 15.20 KAIN
DM-12-10 60.15 65.65 5.50 33.70 SYL
65.65 72.25 6.60 21.00 UC
73.90 80.90 7.00 17.40 KAIN
DM-12-11 NSV
DM-12-12 54.72 56.42 1.68 28.47 SYL
56.82 64.82 8.00 17.38 KAIN
DM-12-13 NSV
DM-12-14 33.70 35.20 1.50 21.80 SYL
41.20 50.20 9.00 15.90 KAIN
DM-12-15 69.25 102.95 33.70 7.60 UC
104.12 108.12 4.00 18.30 KAIN
DM-12-16 57.60 58.60 1.00 27.70 SYL
61.90 69.40 7.50 18.30 KAIN
DM-12-17 65.28 66.60 1.32 9.90 KAIN
DM-12-18 77.32 78.42 1.10 6.50 KAIN
DM-12-19 NSV
DM-12-20 NSV
DM-12-21 NSV
*Drilled width, NSV=No Significant Values

Analytical results from the Nova drillholes have been incorporated into the Allana database and will provide additional data for the updated 43-101 compliant mineral resource estimate that will accompany the FS.

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 (ESIA), 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.

The trial solution well, in operation since September, continues to perform as planned and cavern development has been progressing. The sump leaching and undercut leaching are complete and the production leaching process was initiated on December 10. Brine produced by the production leaching will be fed to the trial pond system and a crystal crop is anticipated in early January. The cavern currently has a volume of 3400 m3 which translates to a radius of approximately 24 metres. The solution mining operation is utilizing water from a production well situated approximately 5 km west in alluvial fan material. Updated photos of operations at site are now available on the Company's website.

Hydrogeological studies are continuing on the western alluvial fan area. Twenty-two holes have been drilled, all encountering water. Allana expects to release the findings of the hydrogeological study shortly.

The Company's ESHIA is approaching completion and a preliminary report is expected to be presented to the Ethiopian government for review in mid December.

Infrastructure and Financing Update

Allana is pleased to report continuing progress on government road construction and upgrading in both Ethiopia and Djibouti. The Company's 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, are focused on achieving further milestones in the schedules for the government infrastructure projects supporting both initial production and for longer term transportation efficiency improvements and expansions. All elements continue to progress well toward Allana's expected construction start in the second half of 2013 and projected first production shipments after construction completion in late 2014.

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

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. 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, effective April 30, 2012 filed at www.sedar.com. Allana has approximately 275.7 million shares outstanding. Allana trades on the Toronto Stock Exchange under the symbol "AAA".

Quality Control and Quality Assurance

Nova employees completed their drill program under the supervision of ERCOSPLAN and followed 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 Nova'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 Nova 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 Nova's storage 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 KUTEC Laboratories in Germany. This sampling procedure was initiated by ERCOSPLAN.

Nova used the mineralogical analysis and chemical analysis services of KUTEC laboratory. Upon arrival at the laboratory the samples are crushed to < 2 mm and a sub sample is split out using a riffler. The sub-sample is further pulverized to about 100 micrometre. In between crushing and grinding equipment is cleaned using high purity quartz. A part of the sample is used for XRD analysis to determine the mineralogy of the sample. A defined weight of the sample is dissolved in a defined volume of distilled water and shaken for a defined period to dissolve all salt minerals. The liquid is then analyzed with the "potash salt" analysis package of KUTEC consisting of analysis of K+ and Na+, DIN ISO 9964-3 1996-08 (flame emission spectrometry), Mg2+ and Ca2+, DIN 38406-E3 2003-03 (atomic absorption spectroscopy), Cl- and SO42-, DIN 38405-D 1-2 1985-12 (ionchromatography). The insoluble content is determined by weighing the dissolution residues. KUTEC laboratory has been certified according to DIN EN ISO/IEC 17025 by the Deutsche Akkreditierungssystem Prüfwesen GmbH (DAR).

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.

To view the figure associated with this release, please visit the following link: http://media3.marketwire.com/docs/Allanafigure1.pdf.

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