Allana Potash shares go on a tear Allana Potash shares go on a tear
Allana Potash gets a big boost following an analyst report initiating coverage.
Author: Kip Keen
Posted: Monday , 27 May 2013
HALIFAX, NS (MINEWEB) -
Since hitting a 52-week low in mid April at C$0.37 Allana Potash shares are up 62 percent to C$0.60 at presstime.
At first it was modest gains. Allana had been falling for most of 2013 but started to turn tide last month after it released an update in which it noted, among other things, it was in talks for potential debt and offtake agreements to fund its Danakhil potash project in Ethiopia.
That news arrested its bumpy shareprice decline and pushed it over C$0.40 during the ensuing month.
Then, fueling more gains, early last week Allana announced the Ethiopian government had approved its environmental assessment. This puts it a step away from getting a mining license.
But it wasn't until late last week that its shares really popped, jumping 19 percent to close at C$0.56 on heavy trading volume last Friday. (It continued to climb Monday as well.)
Notably, however, there was no news from Allana, or otherwise, to explain the rise.
Credit this time goes to a glowing analyst report from Paradigm Capital, which on Thursday initiated coverage of Allana.
In the report entitled “A Potash Oasis” Paradigm Capital analyst Spencer Churchill argues Danakhil stands out as one of the cheapest potash projects to build and operate among junior potash developer. He notes Danakhil's projected operating costs - $100 per tonne FOB to port - are well below the a group average of $155 per tonne and also on par with existing low cost potash producers.
Meantime, projected capital costs, around $642 million per a recent feasibility study out earlier this year, are relatively low thanks in part to the shallow nature of the Danakhil potash deposit.
Thus Churchill suggests Allana - largely given its projected low cost to build and operate - will be rerated by markets once it secures potash buyers and funding, either through debt or a strategic partner and gives Allana shares a $1.35 target.
Clearly some speculators agree.
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