Farhad Abasov, President and CEO of Allana Potash Corp ('Allana', TSX: AAA | OTCQX: ALLRF) in an interview with Tracy Weslosky, Editor-in-Chief and Publisher of InvestorIntel about the USD$ 84 million milestone deal between Allana and Israel Chemicals (ICL, TASE: ICL), one of the largest mineral fertilizer companies in the world. Allana is at an advanced stage in the Danakil Potash Project in Ethiopia; it has completed the definitive feasibility study (FS) and secured the necessary mining license needed to start construction of the mine itself.
Commenting on the ICL deal, Farhad said "this is the first time in many years in the sector where a real potash producer has become a strategic partner with the junior potash developer like Allana and it is a very important deal for Allana because it is comprehensive and includes three major components: cash investment, equity investment, a solid off-take agreement for 80% of our production and a full technical assistance from organization like ICL." It should be noted that ICL is the world's sixth largest potash producer; it sold about five million tons of potash in 2013 and has mines in Spain and Great Britain as well. In addition, Allana and Ethiopia are strategically located to serve the rapidly growing African demand for potash, where typically potash consumption has been low. Ethiopia, one of the world's fastest growing economies, will guarantee significant sales for Allana. The country has ambitious plans and agriculture is its highest priority: "so we are really fortunate to be in a country that is not only grown fast economically but is that its government is fully supportive on this project and they're also fully supportive of this new strategic partnership with ICL."
Allana has met all its benchmarks and commitments to shareholders and while 2013 was an eventful year, 2014 could be even more interesting. In fact, Allana is at an advanced stage in the project, having already completed the definitive feasibility study (FS) in 2013, securing the necessary mining license needed to start construction of the mine itself. In 2014, apart from the ICL partnership, Farhad expects Allana will be "working on further financing most the debt financing on this project; it will do further optimization works on the project again technically, and mostly on the aquifer testing and some more solution mining work. Ultimately the goal for this year is to actually finalize full funding for the project so that we can start construction."
One of Allana's main advantages compared to other mining juniors -- and not just in the potash sector -- is that it is several steps ahead of the game in a market where most all are talking -- usually complaining - about money. Allana has already secured two internationally well-known strategic partners such as the International Finance Corporation (IFC) and Liberty Metals and Mining. Farhad adds "and now we have another large industry player such as ICL". In addition, Farhad says that "it is very important to emphasize here that besides the fact that they're putting a lot of capital into the company and that they're giving us a very strong and solid off-take, the technical assistance has to be stressed. ICL's production profile in the Dead Sea in Israel is very similar to what we envision for our project in Ethiopia in terms of solar evaporation, processing and even transportation modes such as trucking. There aren't too many companies that are similar in their production plans to what where planning to accomplish in Ethiopia so it's a big coup for us to have such a partner as ICL".
Farhad then speaks about the potash price and market in general, suggesting that the market situation will be tight for the next few years but that Allana welcomes this as a chance to restore some discipline in the sector as many new potash projects do not make much economic sense. As less supply than expected comes on line, prices should start to increase.
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