EmergingGrowth.com Focus on Allana Potash Corp. an EmergingGrowth.com Focus on Allana Potash Corp. and it's Normal Course Issuer Bid
Vale SA
VALE | 5/6/2013 7:36:08 AM
EmergingGrowth.com Focus on Allana Potash Corp. and it’s Normal Course Issuer Bid
Miami, FL - A normal course issuer bid (NCIB) is a type of buyback strategy used by publicly traded companies. In this strategy, corporations buy their outstanding shares. Once the shares are purchased, they are cancelled and removed from the market. To acquire the shares, issuers may be willing to pay more than the actual worth of the share. By purchasing outstanding shares and limiting the total circulated number, the worth of the remaining shares is inclined to rise. There are laws that govern how many shares an issuer can buy from investors, depending upon on how large the company is and the number of shares outstanding. While some shareholders may not want to sell because they are long-term investors or want to cash in on the higher prices from the issuer bid, others will sell their shares for instant cash-in-hand. If an issuer feels that its value is not reflected in its share price, it may use this strategy to reduce the number of issued and outstanding shares in the capital of the issuer, thus raising the company’s value.
An issuer may pursue this strategy where it believes it to be in the best interests of both the investors and the company. Such is the case with Allana Potash Corp. (TSX: AAA) (OTCQX: ALLRF).
The company announced this week that it intends to make an NCIB subject to TSX approval. Allana’s Board of Directors feels that the underlying value of the company is not reflected in the present market price of its common shares. Allana believes that this strategy, pursuant to which it may purchase and cancela number of its common shares, is in the best interest of shareholders and the company. The ceiling on the quantity of common shares that may be purchased for cancellation (pursuant to the NCIB) represents 10 percent of the shares in the public float. Based on 235,725,648 common shares in the public float as of April 26, 2013, the highest number of shares that could conceivably be cancelled during a twelve month periodis 23,572,564. Daily purchases are limited to 77,591 common shares, however there is a block purchase exception. The amount of common shares that could be purchased will be determined by Allana with consideration given to a number of factors, including the stock price, market conditions, its cash position, as well as other pertinent factors. Purchases under the NCIB were permitted to begin May 1, 2013 and will end on April 30, 2014. Of note, the company recently completed a normal course issuer that ended on April 17, 2013, pursuant to which Allana purchased an aggregate of 1,719,400 securities at a weighted average price per security of $0.51.
Allana is a publically traded Canadian company that is focused on the acquisition and development of potash assetswith its major focus on a previously explored potash property in Ethiopia. Allana Potash boasts substantial assets of potash and is actively involved in investigations to further find and establish the size and purity of additional mineral reserves. The company is currently developing its flagship project in Ethiopia; the Danakil Potash Project. The two potash concessions, located in Ethiopia’s northeastern Danakil Depression, total approximately 312 square kilometers. Earlier this month, Allana filed its complete Feasibility Study with the Ministry of Mines in Ethiopia as the final condition for the application of a mining license. Additionally, the Environmental, Social and Health Impact Assessment (ESHIA) report (which forms part of the mining license application) is in the final stages of approval with a definitive decision expected shortly. The company plans to start construction by the end of this year. Allana also has licenses under application (in Argentina) for 1,540 km2 in potash-rich Neuquen province, next to Vale’s (NYSE: VALE) Rio Colorado development. Allana has effectively garnered financing from two significant strategic investors: International Finance Corp., a member of the World Bank Group, and Liberty Metals and Mining Holdings LLC, a subsidiary of Liberty Mutual Group. The company is also involved in ongoing talks on potential strategic partnership and off take agreements.
Prospective investors should note that Allana Potash has a market cap of $117 million and is trading at an optimal entry point. As of January 31, 2013, the company had $28.5 million cash-on-hand and no debt. An added incentive is that Allana enjoys a strong, proactive management team focused on the acquisition of potash assets in order to enhance its already solid revenue streams within the sector. Additionally, the NCIB should boost the value of this extremely undervalued corporation.
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May 6, 2013 - 7:36 AM EDT