AAA.V ALLANA POTASH UPDATE

Farhad Abasov, President & CEO of Allana Potash, will be hosting a conference call
to provide an update about the exploration program at its’ Ethiopian Potash project.

Details are as follows:

Date: Monday, June 21, 2010
Time: 2:00 p.m. EST
Number: 416-695-7806
888-789-9572
Code: 2555450

We hope you can join us on the Allana call and if you have any questions please do not hesitate to call.

Kind Regards,

Christian Scovenna

Christian B. Scovenna |
49 Front St. East | Suite #400| Toronto |Ontario M5E 1B3
Bus 416-363-9694 | Fax 416-363-7977 | cscovenna@investor3.ca | www.investor3.ca


Dundee Update:
AAA-V: C .36)
June 16, 2010 
 
BUY, High Risk*
12-month target price: C$1.00
Richard Kelertas / (514) 396-0320
rkelertas@dundeesecurities.com
Joshua Bridges / (514) 396-0332
jbridges@dundeesecurities.com

Allana announced analytical results from the first two drill holes on its Ethiopian Dallol potash project in the Danakhil Depression, early Tuesday. Both holes were drilled in the northeast portion of Allana's concession, above the Musley Deposit that was already partially delineated by Parsons in the early 1960s (Exhibit 1, note A). Below is an update on the first four drill holes of the Phase I drill program:
•
DK-10-01 returned KCl grades that were below 5% but in line with historic drilling by Parsons, which showed isolated zones of low-grade potash surrounded by higher grade zones. A mix of sand
and silt located just below the potash zone suggests the sediment impeded potash mineralization in this area and may explain the weaker grades. Management was aware of the possibility of lower grade given the Parsons data.
•
DK-10-02 is the highlight thus far, and intersected 25.8% KCl over 5.5 meters, including 34.8% KCl over 2 metres. The potash mineralization was intersected at approx. 150-156 metres deep and is believed to be the top of the Houston formation. The results effectively extend the Musley deposit 750 metres to the northeast with potential for further expansion to the north.
•
DK-10-03 has been logged and sampled and is en route to Saskatchewan for testing. DK-10-03 was drilled to 208 metres deep in the northeast region above the Musley deposit. Results are expected in approx. 2 weeks. This hole is located approx. 750m southeast of DK-10-02.
•
DK-10-04 is currently being drilled by Meridian Drilling in the middle of Allana's concession to the South of the Crescent deposit (Exhibit 1 note C). Historical core sample data suggests the pay zone to be roughly 650m-680m deep and potentially 45m thick if using Parson's data as a reference. While deeper than the potash mineralization found on the northwest bank of their property, the drill holes are still expected to be shallower than the 1,000+ metre depths needed in Saskatchewan.
Allana's Ethiopian potash deposit development program is on track and progressing well with new infrastructure improvements planned (Exhibit 2). The second drill rig being brought in should help accelerate results and bring Allana closer to its feasibility study scheduled for completion Q4/10.
The company currently has ~$8 million in cash and has spent $750,000 on Phase I. The Phase II drilling program is estimated to cost $2.5million, seismic surveys ~$1 million and another $2 million for all other expenditures for the rest of the year. The company expects to spend $6.5 million in 2010 but has budgeted $10million for contingencies.
We Continue to Believe Allana is the Best Positioned Potash Junior. We base this view on three major assumptions:
•
Fastest to Completion. We expect Allana to complete its feasibility study within 10-12 months. The company will then assess the best location to build the mine and plan to begin potash extraction by late 2013 or early 2014, making them, in our estimation, the first junior to reach production worldwide.
•
Lowest Cost Producer. The ability to use solar evaporation given the very dry, +40ºC weather and the shallow depth of its resource at 50-100m depths (and potentially as shallow as 15m) in some areas means Allana has much shorter drill holes for brine injection/extraction. Relatively cheap labour and proximity to a port should position Allana on the lower end of the global cost curve (Exhibit 3).
•
Beneficial Strategic Partnership. Allana has partnered with a Chinese firm (China Mineral United Management) which has signed an agreement to finance 35% of the mine capital expenditures in exchange for a 20% off-take agreement under very favourable terms and conditions for Allana.
We Rate Allana a BUY with a 12-month target of C$1.00. Our target price is based on a 36% discount to our DCF valuation of $1.56 using a discount rate of 19%. We believe it is also the cheapest of all the global junior potash plays on a price/NAV basis.