Allana Potash Danakhil
Launch of the SW3 solution mining cavern at Allana's Danakhil solution mining project.

Allana Potash Corp. has announced positive results from an independent preliminary economic assessment (PEA) of production of sulphate of potash (SOP) at its Danakhil potash project in Ethiopia. The PEA evaluated SOP production as a separate mining operation, independent of a potential muriate of potash (MOP) operation that was the focus of a feasibility study completed in early 2013.

SOP is a premium potash product widely used on chloride sensitive crops such as tobacco, fruits and vegetables, as well as nuts. China is the largest consumer.

The SOP PEA evaluates production of 1 million metric tons per year (mt/y) of a standard SOP product over an estimated 77-year operating life through solution mining of brine followed by solar evaporation. Solar evaporation is possible at Danakhil due to year-round hot temperatures, averaging 40°C, with very little rainfall. Salts harvested from the solar evaporation ponds would be cleaned of halite by reverse flotation, and the product would be reacted with potassium-rich brine to create the SOP product.

The PEA estimates total capital expenditures of $787 million to develop SOP production at Danakhil. Transportation capital expenditures are based on a company-owned fleet of trucks to transport SOP product to port and all necessary support for the fleet, including maintenance. Port capital expenditures are based on Allana constructing its own terminal at Tadjoura Port in Djibouti, Ethiopia, including product unloading and storage, shipping facilities, and supporting infrastructure such as power and minor road construction.

Total operating costs, including production, transportation, port storage and loading, and sustaining capital expenditures, are estimated at $130/mt of SOP. The payback period from the start of production is estimated at four years.

The kainite mineral resource estimates used for the SOP PEA included in-situ measured resources of 552.3 million mt at 19.4% KCl; indicated resources of 598.2 million mt at 19.5% KCl; and inferred resources of 481.8 million mt at 19.8% KCl. Factoring in mining, pond and processing losses, these resources translate to approximately 77 million mt of recoverable SOP product.

Allana President and CEO Farhad Abasov said, “Allana is very excited with the positive preliminary economic assessment of an independent SOP operation at Danakhil. The potential for SOP operations, coupled with the feasibility study previously completed on MOP operations, demonstrates the uniqueness of Allana’s project, which through its sylvinite and kainite resources has the potential to produce MOP and SOP with industry-leading capital-expenditure and operating-cost profiles.”

The Danakhil PEA was prepared by Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau, a specialist potash engineering company headquartered in Erfurt, Germany.

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