Allana Resources Inc. Should be on Your Radar
AAA - TSXv : Looking Good this Week for a Move Higher
The stock has found a base here in the .13 to .14 range.
The recent financing indicates that work is about to begin on the project in Ethiopia.
We think a short term target should be .20 with a long term target of $1.00+
- Straddling a quality asset: Allana Resources (AAA: TSX-VEN) is a pure play on potash as it currently has a high-potential property in Ethiopia that can generate significant potash resource. Its Dallol potash property in the evaporite basin of Danakhil Depression, Ethiopia holds significant potential as seen from the historical data and the current interest in the region. The company has current NI 43-101 compliant resource estimates of 105.2 million tonnes with a composite grade of 20.8 % KCl.
- Potential for low cost production: Allana’s potash deposit at Dallol is near surface and amenable to solution or open pit mining. Both these methods require less Capex. Possible use of solar evaporation and geothermal power, lower local wages and absence of known environmental and permitting issues can result in significantly lower operating cost.
- Potential for Strategic Partnerships: The management is actively pursuing strategic partnership options to develop the potash property and has received strong interest from some large mining groups.
- Allana offers near-term return and long-term potential: The long-term potential of the stock is embedded in the substantial drilling program that Allana is planning during 2009 to increase the current NI 43-101 resource estimates.
- Upside potential: We expect Allana to commence a drilling program in 2009, to expand its sizable NI 43-101 resource significantly by at least 2 times from the current levels. We therefore rate Allana Resources a SPECULATIVE BUY, with a 12-month target price of $1.02 per share (a 580% return).
Please remember to do your own due diligence on AAA