Although Allana not in production...this may have a small effect on sp
By Leia Michele Toovey-Exclusive to Potash Investing News
The potash market has beenmaking a definite rebound over the past few months; but stalling grain prices have analysts concerned that the rallywill flat line. So far in 2010, grain prices have been adisappointment. Corn has stayed below US$4.00 per bushel, and wheat hasfloated around the US$5.00 range.
Corn prices of US$4.00 a bushel mark an important line in the sand.When prices rise above this mark, farmers can justify the extra cost ofapplying potash by raking in higher profits from the grain prices. Onceprices collapse below that line, many farmers will skip fertilizerapplications. With the price hovering right at they key price manyfarmers are still procrastinating when it comes to fertilizerapplications. If corn can edge up just a little bit, more farmers willcome to market. The next major event that could impact grain prices isthe U.S. Department of Agriculture’s crop production report, which isdue out at the end of March.
Potash prices have been gradually climbing with the current goingrate peaking at around US $430 per tonne. The government ofSaskatchewan, however, is behaving more modestly in its expectations forthis year’s potash prices. “We’ve used cautious revenue estimates,especially with regards to non-renewable resources,” Finance Minister Rod Gantefoer told reporters. The province hasforecast potash prices at an average US$308 per tonne for 2010-11,rising slowly, but steadily to US$324 per tonne by 2013-14.
Last year, the government of Saskatchewan made a costly error when itcame to projected potash earnings. They predicted that potash wouldaverage US $556 per tonne, whereas the actual price capped out at US$413 per tonne. That lower-than-expected potash price, combined with acrippling 63 percent drop in potash production, resulted in a completecollapse in potash revenues. The province was then faced with the hugeburden of repaying potash companies more than $200 million in prepaid royalties.
Company news
Allana Potash Corp (TSX-V: AAA) has completed itspreviously announced private placement. In total, 14,422,500 units ofthe company were sold for C
.40 each, to generate proceeds ofapproximately $5.8 million. Each unit provides the holder with onecommon share of the Company and one-half of one Common Share purchasewarrant of the Company. Each Warrant entitles the holder to acquire oneadditional Common Share at a purchase price of
.50 until September 25,2011. Allana intends to use the proceeds of the Offering to fundexploration and development efforts on the Company’s potash property inEthiopia and for general working capital purposes.
After dropping its bid for Terra, there is speculation that Yara International(OSE: YAR) will bid on Denver-based Intrepid Potash (NYSE:IPI). Rumoursspread on Tuesday, spiking Intrepid Potash’s stock value by 4.4percent. Without any concrete sign that a deal was in the works, manyanalysts shrugged off the rumours. Neither Intrepid Potash, norNorway-based Yara would confirm or deny speculations.
Western Potash Corp. (TSX VENTURE: WPX) (FRANKFURT:AHE) has receivedthe results from two wells of its five-well drill program. The companyhas set aside C$8.5 million to expand the resource definition of itsmilestone property in Saskatchewan. The objective of the program is todefine the grade, thickness and extent of the higher grade potash zonearound well 003, which reported a composite thickness of 24.4 meters ofpotash mineralization with a grade of 18.2 wt K2O within the PatienceLake, Belle Plaine and Esterhazy members.
The information obtained from the program will be used to update thecompany’s national instrument compliant resource estimation. The initialresource estimate contains 32 million tons of indicated potash resourceplus 230 million tons of inferred potash resource. The wells reportedin the release are the 8th and 9th wells drilledon the property. The Milestone-007 well reported an 18.45m compositeintersection of potash mineralization with a weighted average grade of19.09 wt % K2O across three potash members, while theMilestone-008 well reported a 21.45m composite intersection of potashmineralization with a weighted average grade of 19.88 wt % K2Oacross three potash members.