RE: myliar ...post for you buddy from bergieboy Thanks Sbergie! Here the full article:
Allana Potash (TSX: AAA) well poised to benefit from a resurgent interest in potash juniors
Published May 16, 2013
After struggling for the last 2 years, potash prices seem to have stabilized and demand is perking up again. Many experts believe that potash prices, which are currently ranging from $400/tonne to $450/tonne, are probably at the bottom and will enliven again as demand picks up in emerging countries such as Brazil, China and India. During the first quarter of 2013, Potash Corp (TSX:POT) (CVE:POT) (NYSE:POT), the global leader in potash production, sharply increased its shipment of potash. With interest in Potash coming back, we believe that well-funded juniors with near term production projects will once again attract the interest from investors. Allana Potash (TSX:AAA) (CVE:AAA) (OTC:ALLRF) stands out as an emerging potash prospect. AAA has a sufficiently advanced potash project in Ethiopia, that can get into production by early 2015 and hence can attract considerable attention in the next 6-12 months.
In February this year, Canpotex, the offshore marketing company owned by the three Saskatchewan potash producing companies (PotashCorp, Agrium Inc.(TSX:AGU) (TSE:AGU) (NYSE:AGU) and Mosaic Canada Crop), announced that it reached an agreement to supply 1.1 million tonnes of potash with government and private sector customers in India at a price of US$427 per tonne. At the end of December 2012, Canpotex had signed a deal with China's Sinofert Holdings Limited to supply one million tonnes of potash in the first half of 2013 at a reported price of approximately $400 per tonne.
These deals clearly signalled that key buyer countries like India and China are willing to buy potash if the price was right. Hence our optimism that potash(a key nutrient for plants with no substitute) certainly does not face a demand problem. Rather, the issue for the last few years was that potash prices were running too high (at its peak, over $1000/tonne) for major buyers to make long-term commitment.With this backdrop, investors are likely to put their attention back to those juniors who have advanced their projects significantly to be considered near-term producer and can attract the attention of major or intermediate miners. Therefore,a company in Allana Potash’s position that has right characteristics could be a potential takeover target or attract interest from prominent investors from countries like India and China.
In February this year, Allana Potash announced its positive feasibility study on the Dallol project, reporting proven reserves of 8.2 million tonnes of Muriate of Potash (MOP) and probable reserves of 15.5 million tonnes of MOP in the Sylvinite zone. Other technical studies such as rock mechanic testwork, processing optimization, solution mining pilot operations, environmental baseline studies (ESIA), and hydrogeological studies are in progress. The company is also working with prospective off-takers, current and prospective strategic investors and international development financing institutions and export credits agencies to create a fully funded project finance plan to take the project into production.
Once in production, Allana’spotash project has the potential to be one of the lowest cost productions. It is strategically located in Ethiopia and once complete, will be the closest source of key potash supply for India, one of the largest importer of potash and a country that is clearly looking to secure stable sources of potash. A recent deal by Gujarat State Fertilizers & Chemicals Limited (NSE:GSFC), a publicly-traded Indian agribusiness company focused on the production and sale of fertilizers,to buya 19.98% ownership stake in Karnalyte Resources (TSX:KRN) (TSE:KRN) for approximately 45 million is the first major step by an India company to take equity position in emerging potash producers.
We believe that this trend will likely continue and a company like Allana will be well positioned to attract attention from prospective buyers from countries like India and China.
The Company recently filed its complete Feasibility Study with the Ministry of Mines in Ethiopia as the final condition for the application of a Mining License. In addition, the Environmental, Social and Health Impact Assessment (ESHIA) report, which forms part of the Mining License application, is in the final approval stages. In an interview Madame Sinkinesh Ejigu, Minister of Mines for Ethiopia with smallcappower.com, the minister of mines for Ethiopia, Madame SinkineshEjigu, stated the importance of Allana’s potash project in Ethiopia and expressed confidence in Company’s ability to advance the project towards production.
Allana’s current market value is not fully reflecting the resource in the ground. As per the results of an independent feasibility study prepared by "ERCOSPLAN" on its Danakhil Potash Project in Ethiopia, the project has an after-tax net present value of US$1.32 billion and after-tax internal rate of return (IRR) of 33%. We believe that the market value will likely move significantly upward as the project inches closer to production.
In an apparent recognition to the undervaluation in the market, Alllana announced a normal course issuer bid, subject to the approval of the TSX, to buy back its common shares through the facilities of the Exchange. The company can buy back can cancel maximum 23.57 million shares, representing 10% of the common shares in the public float. In announcing this decision, the Board of Directors of Allanastated-the board believes that the underlying value of the Company is not reflected in the current market price of its common shares, and may not be so reflected at certain times during the course of the NCIB, and has thus concluded that the repurchase of common shares pursuant to the proposed NCIB presently constitutes an appropriate use of financial resources and would be in the best interest of Allana shareholders.
About Allana Potash Corp. (TSX: AAA)
Allana Potash Corp. (TSX: AAA), (OTCQX: ALLRF) is mining company with a focus on the acquisition and development of potash assets internationally. The Company is currently developing its previously explored, flagship property, in Ethiopia, the Dallol Potash Project, 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.
About SmallCapPower: SmallCapPower.com (SCP) is the industry’s most trusted resource for small cap stocks, offering unprecedented access to the research and tools you need to help uncover the next big thing. Smallcappower.com and Ubika Research (are both divisions of Ubika Corporation), and are not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this report. For making specific investment decisions, readers should seek their own advice. For full disclosure please visit HERE.
Ubika Research has received compensation from Allana Potash Corp. to provide analyst research coverage.
https://www.smallcappower.com/posts/article-allana-potash-tsx-aaa-16-5-2013