Allana Resources Inc.
TSX VENTURE : AAA

Allana Resources Inc.

September 17, 2008 17:04 ET

Allana Resources Acquires Potash Deposit With 100 Million Tonne Inferred Resource

- Inferred mineral resource of 105,200,000 tonnes of potash mineralization (Sylvite and Kainite), with a composite grade of 20.8 % KCl, that Allana believes is open for kilometers down dip and along strike - The 73,900,000 tonnes (tonnage included in above inferred resource) of Kainite mineralization also provides the option of producing Sulphate of Potash (SOP) products which can provide added value to any future production - Near-surface potash mineralization (within 50 metres of surface at the Musley Deposit) - Unique geological and environmental scenario provides potential for low cost solution or open-pit mining

TORONTO, ONTARIO--(Marketwire - Sept. 17, 2008) - Allana Resources Inc. (TSX VENTURE:AAA) ("Allana"), is pleased to announce the acquisition of three mineral concessions in Ethiopia's northeastern Danakil Depression totaling approximately 150 square kilometers. The project area is approximately 100 km from the Red Sea coast and 600 km via good roads from the deep water port of Djibouti (Fig. 1). The potash mineralization in the Danakil Depression is well known with mining having been carried out intermittently from the early 1900s. Mining companies currently working in the basin include BHP Billiton and Sainik Coal Mining (Sainik), a leading Indian-based coal mining company (Fig. 2), the latter of which is planning to initiate mining at the Musley deposit.

Allana and the property vendors have completed NI 43-101 compliant technical reports for the three concessions. These studies were carried out by ERCOSPLAN Ingenieurgesellschaft and North Rim Exploration Ltd, internationally recognized experts in potash exploration. The Qualified Persons for the reports are Dr. Henry Rauche and Dr. Sebastiaan van der Klauw of ERCOSPLAN, and Stephen P. Halabura, P.Geo, of North Rim Exploration Ltd. Modern exploration on the property has been limited; however extensive historic exploration by the Ralph M. Parsons Company (Parsons) provides a valuable database to target further drilling and exploration studies. Parsons has completed over 300 exploration drill holes on the project. Drill log data, with analyses, were acquired from the Geological Survey of Ethiopia and have been compiled into a project database. Excellent support and advice was provided by staff from the Geological Survey of Ethiopia through the entire compilation and review process.

Highlights from the technical report outline several significant features of these properties, the following:

- An inferred mineral resource of 105,200,000 tonnes of potash mineralization (Sylvite and Kainite) with a composite grade of 20.8% KCl.

- Near-surface potash mineralization (within 50 metres of surface for the Musley Deposit).

- Potential for solution or open-pit mining.

- Unique environment provides potential to use low-cost geothermal and solar power. Saline brines in a nearby thermal spring returned a super-heated temperature of 125 degrees C. Days are often hot and clear to aid use of solar evaporation of brines or to use solar power.

- Down-hole radiometric logs from two holes, the closest of which is located approximately 5 km west of the nearest hole on the Musley Deposit, reportedly indicates 45 metres of K mineralization in holes 5 and 7 at a depth 680 metres and another potential zone at 930 metres. These two holes demonstrate significant potential to expand the inferred potash resource on Allana concessions.

- Previous work indicates potential for a deeper horizon of potash mineralization which has only been intersected by the occasional hole.

- MOP (muriate of potash) and SOP production is feasible.

Allana's concessions cover part of the previously defined Musley potash deposit located on the edge of a 1,000 square kilometer, salt-filled topographic low that lies along northern Ethiopia's portion of the East African Rift. Previous drilling by Parsons from 1958-1967 resulted in the discovery and partial delineation of the Musley Deposit which was reported to contain a resource of 171.27 million tonnes grading 32.48% KCl (ERCOSPLAN). This resource estimate is historical in nature and does not comply with National Instrument 43-101. This estimate should not be relied upon. The smaller Crescent deposit was the initial site of Parsons' exploration activity in the 1950s however its small size, approximately 10,000,000 tonnes of secondary carnallite, prompted Parsons to focus on the Musley Deposit. The majority of the historic resource at the Musley Deposit is located on ground held by Sainik with portions of the resource extending onto the Allana concessions.

Previous work has identified one potash-bearing horizon, designated the Houston Formation, which is characterized by three members (Sylvinite, Intermediate and Kainitite members) that extends onto the Allana concessions. The Intermediate Member lies between the Sylvinite and Kainitite members, is commonly thick and contains carnallite mineralization. In the Houston Formation potash mineralization varies from 7 to 48 metres in width and has been traced for approximately 10 km along strike and Allana expects that it extends to the southern part of the property. The evaporate basin extends onto the Allana concessions and comprises an area of approximately 150 square kilometres. This portion of the basin has the potential to host all three potash-bearing horizons. This potential is supported by the indicated K mineralization in the two deep holes located approximately 5 km from the Musley Deposit (Fig. 3).

Preliminary modelling of 16 historic drill holes on the Allana concessions and 22 nearby drill holes (ERCOSPLAN Technical Report, July 13, 2008) indicates an inferred mineral resource of 31,300,000 tonnes grading 25.4 % KCl from the Sylvinite Member and 73,900,000 tonnes grading 61.7 % Kainite (KMg(SO4)Clx2.75H2O) from the Kainitite Member (18.8% KCl equivalent). In the resource area, the average width of the Sylvinite Member is 2.78 metres and the Kainitite Member is typically thicker averaging 5.79 metres. The resource is open in several directions and down dip with much of the Allana ground having seen little to no exploration. Significant results from past drilling on, and adjacent to, Allana's land package are shown in Fig. 3. Note that widths reported are drilled widths; however given the shallow dip of the potash horizons these are estimated to be close to true widths.

The pertinent parameters utilized by ERCOSPLAN in their resource calculation are as follows:

- Cut-off grade of 15 % KCl and a minimum width of 2 metres in the Sylvinite Member

- Cut-off grade of 30 % Kainite and a minimum width of 3 metres in the Kainitite Member

- An Area of Influence surrounding each drill hole of a maximum of 750 metres

- A specific gravity of 2.2 grams/cm3

- Dr. Henry Rauche and Dr. Sebastiaan van der Klauw of ERCOSPLAN, and Stephen P. Halabura, P.Geo, of North Rim Exploration Ltd., all of whom are independent of Allana, prepared the resource estimate.

- The resource estimate was prepared in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council.

Allana intends to immediately commence further exploration work on the property. Allana's evaluation of the property will comprise mapping, initial drill holes to verify the grade of the members of the potash-bearing horizon, down-hole seismic to document the geophysical characteristics of the potash-bearing mineralization and 2D seismic lines to trace the target horizon, if present, to the south and eastern portions of the concessions. Should this first phase program demonstrate success then additional wide-spaced drilling will be carried out to document the grades and widths of the prospective potash-bearing horizon(s).

Allana has agreed to acquire the properties from three private companies in consideration for an aggregate of $2.5 million in cash payments over 3 years and the issuance of 4 million shares. The property will also be subject to a 3% NSR of which 50% can be purchased for CDN $ 5,000,000. The completion of the acquisition is subject to the receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange.

Potash prices have been very strong in the last few years rising from approximately $100 to over $1,000 per tonne of KCl this year. There has been strong and steady KCl production growth since the end of World War II. Two economic crises, 1973 and 1981, followed by 1980s recession have restrained production. The global economic growth of the 1990s, a rapidly growing population, and significant increases in agricultural requirements, particularly in emerging developing nations, is forcing industrial production to meet the rising potash demand. As a result, prices are forecast to remain very strong.

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

About Allana Resources Inc.

Allana is a publicly traded corporation with a focus on the acquisition and development of potash assets internationally and recently completed the acquisition of Latin American Potash in Argentina. Allana has approximately 45 million shares outstanding and trades on the TSX-Venture Exchange under the symbol "AAA".

Forward-Looking Statement

The information presented contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995, and "forward-looking information" under similar Canadian legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to the estimation of mineral resources; the realization of mineral resource estimates; the timing and amount of estimated future exploration; costs of exploration; capital expenditures; success of exploration activities; permitting time lines and permitting; technical and scientific issues; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; title disputes or claims; litigation liabilities; and limitations on insurance coverage. Generally, forward-looking statements and 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 state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements and forward-looking information 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.

Investors are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources

The information presented uses the terms "measured", "indicated" and "inferred" mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

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