Allana Potash Corp. provided an update on optimization studies currently underway on its Danakhil Potash Project in Ethiopia and on additional project infrastructure activities. Optimization studies include additional solution mining at Well SW3 and an aquifer stress test (AST) on one of the alluvial fan complexes to assess the potential optimum production flowrates to supply water for future mining operations. In addition, significant progress has been made on port infrastructure construction at Tadjoura and road access to the port in Djibouti.
Farhad Abasov, president and CEO of Allana, commented, "Our optimization studies continue to progress and will provide additional important information on the mining methodology as well as long term water supply parameters for operations. Well SW3 is currently undercut leaching the Kainitite horizon and brine will be pumped to the ponds for crystal crop generation to assist in the ongoing SOP studies. Initial indications from the observation wells and the pumping wells point to high flow rates of greater than 100 cubic metres per hour as well as very low dissolved solids, indicating the water is likely suitable for solution mining and processing. Allana also continues to be encouraged by the progress at the port of Tadjoura and we encourage shareholders to visit the Allana website (www.allanapotash.com) to view new photos of all these activities. We are also pleased that despite challenging conditions in the fertilizer sector a number of large European and U.S.-based banks have started working with Allana to complement the debt financing mandate letters that have previously been signed with large international development financing institutions."
Solution mining at Well SW3 has begun with part of the undercut leaching operation in the Kainitite horizon below the Sylvinite horizon. Well SW3 will employ a hydrocarbon blanket and a double leach string to optimize solution mining, leaching and recoveries. The KCl-rich brine will be pumped into evaporation ponds to generate a crystal crop which will be utilized in process optimization work. In addition, a crystal crop will also be generated from the Kainitite-rich brine which will utilized to confirm the process testing and design in the Sulfate of Potash (SOP) Preliminary Economic Assessment (PEA) currently underway (see news release dated September 8, 2014). Brine production from leaching of the Sylvinite horizon is expected to commence in February, 2015.
The Aquifer Stress Test (AST) will be carried out on the western portion of the project area on one planned well field within an alluvial fan. In this program, nine additional observation wells have been drilled to monitor the reaction of the aquifer and three additional pumping wells have been completed. In total, five pumping wells will be drawing 100 cubic metres of water per hour from each well for a total production of 500 cubic metres per hour. This quantity of water matches the amount of water required from this well field for solution mining operations. The AST pumping will be run for 30-60 days and then recharge rates will be monitored in the observation wells to confirm regional recharge of 35 million to 55 million cubic metres of water per year (see news release dated January 7, 2013)). The long term pumping tests are scheduled to commence in mid-November 2014.
Port construction continues at Tadjoura and a recent tour given by the Djibouti Port Authority and the Owner's Engineer (Technital) last week indicates work is on schedule. Delivery of the piling materials has been completed with quay wall construction proceeding, buildings and structures to house port operations & administration and site utilities are well advanced, and perimeter fencing, road and water control structure construction are all well underway. Schedule for completion remains late 2016. Road infrastructure work within Djibouti between the new port site and the Ethiopian border is also progressing and this roadway is on schedule to be completed by the end of 2015.
The financing activity for the project construction is proceeding, with technical evaluation work under the lenders' due diligence program well-advanced and additional lender interest being confirmed. Potential commercial bank debt capacity is being developed to complement participation from development financing institution / export credit agency lenders under current mandate agreements. A number of major European and US-based banks have been working with Allana to complement the debt from the current development financing institutions. The project economics remain attractive and all lender mandates and indications of debt capacity have been sustained and supportive.