Allana drills 3.9 m of 39.7% KCl at Dallol
2012-10-16 07:52 ET - News Release
Mr. Farhad Abasov reports
ALLANA POTASH DRILLS MORE WATER WELLS, PROVIDES FEASIBILITY STUDY UPDATE AND EXPLORATION DRILLING RESULTS
All facets of Allana Potash Corp.'s feasibility study, led by Ercosplan Ingenieurgesellschaft Geotechnik und Bergau, are progressing. Trial solution mining, hydrogeological studies, rock mechanic test work, processing optimization and the environmental social impact assessment (ESIA) at Allana's potash project in Ethiopia are moving ahead well.
Following the memorandum of understanding signed last month with the Djibouti Port and Free Zone Authority of the Djibouti government, work is proceeding on the integration of design and planning for the new Tadjourah port and for Allana's potash terminal. Within and in parallel to the feasibility study, operations planning and optimization are continuing with detailed route surveys for siting of transport operations support facilities and with development of project services contracting. The company anticipates that work on the feasibility study will be completed by late fourth-quarter 2012. Discussions to define and conclude project financing and related off-take arrangements continue with current and prospective strategic counterparties.
In addition to the continuing feasibility study, Allana is pleased to announce the drill results from its remaining exploration holes. Drilling continues to intersect strong potash mineralization on its Dallol potash project located in Ethiopia. Holes DK-12-50 to DK-12-59 are located throughout the western part of the property and were designed to test the presence of potash in gaps in the current sylvinite mineral resource estimate released in April, 2012. Hole 59 marks the end of current exploration drilling on the project, as efforts are now focused on numerous pilot-test operations in support of the continuing feasibility study.
Farhad Abasov, president and chief executive officer, commented: "Allana is pleased by the progress on its feasibility study. Technical work on site is advancing well, and solution mining is now occurring at Allana's test well, fed by water from Allana's licence area. Processing studies, rock mechanic test work and the ESIA are all on schedule and being completed by our technical consultants at Ercosplan. Allana is pleased with the results of the final exploration drill holes. The most recent drill results continue to show continuity of the potash mineralization, and management believes this may allow Allana to continue to upgrade mineral resources from inferred to measured and indicated categories, while adding to all mineral resource categories. We are also very pleased with the ongoing efforts to secure construction financing and long-term supply agreements for our future production. Allana is now advancing talks with large buyers of potash as it works toward finalizing the structure for construction financing."
Feasibility study update
Technical studies in support of the feasibility study are in progress, including rock mechanic test work, processing optimization, solution mining pilot operations, environmental baseline studies and hydrogeological studies.
Rock mechanic test work to optimize cavern spacing is being conducted by Ercosplan and is approaching completion. Processing optimization, including multistage flotation test work, is in progress and is also being conducted by Ercosplan in Germany.
A trial solution well has been in operation since early September, 2012. The sump leaching is complete, and the sump is estimated to be 200 cubic metres in size, providing a suitable base for the undercut leaching. The undercut leach involves increased brine injection to 10 cubic metres per hour and has been in operation for the past week. The undercut leach will be followed by production leaching, which is estimated to begin in mid-November. The solution mining operation is utilizing water from a production well situated approximately five kilometres west in alluvial fan material.
Hydrogeological studies are continuing on the western alluvial fan area. Fifteen holes have been drilled, all encountering water. Pump tests and drawn-down tests are under way and should be completed in the next four weeks to six weeks. Preliminary pump tests at the main production well indicate approximate flow rates averaging almost 70 cubic metres but with intermittent rates of up to 150 cubic metres. This work continues to confirm the presence of a freshwater aquifer 30 metres to 35 metres thick in the alluvial fans along the western boundary of the Allana licence area.
The company's ESIA continues to focus on data compilation generated by baseline studies on flora, fauna, noise, dust, local water resources and stakeholder engagement meetings. Preparation of the final document is scheduled for the end of November.
Infrastructure and financing update
Allana continues its programs with the Djibouti Port and Free Zone Authority, the Ethiopian Roads Authority, and Ethiopian Railway Corp., as well as the relevant ministries of government in Ethiopia and Djibouti, to maintain or accelerate schedules of availability for the infrastructure needed for both initial production and for longer-term transportation efficiency improvements and expansions. All elements are progressing well toward Allana's expected construction start in the second half of 2013 and planned first-production shipments after construction completion in late 2014.
In parallel with the feasibility study and infrastructure development programs, Allana continues work with prospective off takers, current and prospective strategic investors and international development financing institutions, and export credits agencies to optimize the structure for project financing and conclude conditional commitments for off take and financing. Allana will provide further information on specific arrangements when such arrangements are formalized.
Exploration drilling results
Holes DK-12-50 to DK-12-59 are located throughout the western part of the property and were designed to test the presence of potash in gaps in the current sylvinite mineral resource estimate released in April, 2012.
Holes 50, 53, 55 and 57 were designed to test the extension of the potash horizons in the northwestern part of the property. All holes intersected potash mineralization, highlighted by hole 55, which returned 3.9 metres of sylvinite zone with 39.7 per cent KCl (potassium chloride). Hole 55 terminated early for mechanical reasons but nearby holes 50 and 53 both intersected strong kainitite zones. The potash mineralization remains open to the north; hole 57, Allana's northernmost hole, intersected 5.7 metres of sylvinite zone, which returned 16.9 per cent KCl, as well as 6.0 metres of kainitite zone, which yielded 20 per cent KCl.
Holes 51, 52, 54 and 56 are located east of the historic Musley deposit and were targeted to test sylvinite mineralization across a fault zone outline in the most recent technical report. All holes intersected sylvinite zone, highlighted by hole 54, which returned 39.7 per cent KCl over 1.85 metres, indicating that potash mineralization extends to the edge of the Allana licence area in this region. Hole 52 did not reach the kainitite zone due to mechanical problems but nearby hole 56 returned 7.2 metres of 21.9 per cent KCl in the kainitite zone.
The results for holes 50 to 59 are presented. True widths of the potash zones are estimated to be very similar to drilled widths due to the flat-lying nature of the potash horizons. The zones of potash mineralization are outlined and presented in the table.
SUMMARY OF ANALYTICAL RESULTS, HOLES 50 TO 59 From To Width KCl Hole (m) (m) (m) (i) (%) DK-12-50 385.30 386.80 1.50 37.20 386.80 392.20 5.40 19.64 411.70 420.70 9.00 20.67 DK-12-51 330.30 333.50 3.20 23.87 333.50 345.30 11.80 20.41 469.30 479.30 10.00 23.45 DK-12-52 284.20 285.20 1.00 29.60 285.20 302.20 15.00 13.71 DK-12-53 151.20 156.40 5.20 18.71 156.40 162.80 6.40 11.66 225.55 233.20 7.65 19.29 DK-12-54 289.40 291.25 1.85 39.71 291.25 294.90 3.65 21.02 405.80 412.40 6.60 24.85 DK-12-55 251.53 255.47 3.94 39.65 255.47 260.55 5.08 11.20 DK-12-56 233.85 237.06 4.06 10.88 INCL 237.06 237.91 0.85 35.46 237.91 243.64 5.73 19.61 331.52 338.70 7.18 21.90 DK-12-57 365.70 371.40 5.70 16.86 455.40 461.40 6.00 19.95 DK-12-58 174.30 175.30 1.00 10.70 DK-12-59 501.30 506.30 5.00 9.41 584.30 590.30 6.00 23.76 (i) Drilled width.
Holes 58 and 59 are located in the southwestern part of the licence. Hole 58 was an infill hole, while hole 59 was targeted to test the extension of potash mineralization into the centre of basin. Both holes intersected weak sylvinite mineralization due to proximity to a northwest-trending fault; however, hole 59 intersected a strong kainitite zone, which yielded 23.8 per cent KCl over six metres.
Quality control and quality assurance
Allana employees follow standard operating and quality assurance procedures intended to ensure that all sampling techniques and sample results meet international reporting standards. Procedures for handling core samples begin with securing the potash-bearing HQ-NQ-sized core at the drill site in plastic poly tubing, which is then thermally sealed. Core is placed in plastic core boxes and transported to Allana's camp for geological logging, geotechnical logging and photographing. Significant intervals are dry cut in half using a specially modified tungsten-carbide-bladed band saw. Half-core samples are then double bagged and thermally sealed prior to transporting to Addis Ababa by Allana personnel. In this initial phase, halite blanks are randomly inserted into the sample stream at a rate of one in 20 and sent for analysis with the core samples. The remaining core is resealed in plastic poly tubing, and the core boxes secured at Allana's exploration camp. Upon arrival in Addis Ababa, core samples are stored at Allana's small warehouse facility and then taken to the Ethiopian Ministry of Mines & Energy, where permission is obtained to export the samples. The bagged samples are then carefully packed into boxes and shipped by DHL to the Saskatchewan Research Council in Saskatoon. This sampling procedure was initiated by Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau mbH, Allana's potash consulting firm, supervised by Allana's project manager Jason Wilkinson, MSc, based in Ethiopia, and periodically reviewed by Allana's senior vice-president of exploration, Dr. Peter MacLean, PhD, PGeo.
Allana is utilizing SRC's potash ICP analysis package designed for multielement analysis of potash samples. Upon arrival at SRC Geoanalytical Laboratories, core samples are jaw crushed to 60 per cent at minus-two millimetres, and a 100-gram subsample is split out using a riffler and transferred to vials. The subsample is pulverized to 90 per cent at minus-106 microns using a puck-and-ring grinding mill to create a pulp. The grinding mills are cleaned between groups using quintus quartz. The pulp is then transferred to a labelled plastic snap-top vial. An aliquot of pulp is placed in a test tube with 15 millilitres of 30-degree DI water. The sample is shaken. The soluble solution is then analyzed by ICP-OES. The method is suitable for the soluble analysis of commercial potash (sylvite). The soluble solution is then analyzed by ICP-MS. In addition, samples are analyzed for iron oxide (weight per cent), bromine and chlorine by MS, plus insolubles. SRC Geoanalytical Laboratories has been certified by the Standards Council of Canada to conform to the requirements of ISO/IEC 17025:2005 (CAN-P-4E).
Dr. Peter MacLean, PhD, PGeo, Allana's senior vice-president, exploration, is a qualified person as defined under National Instrument 43-101 and has reviewed and approved the technical information presented in this release.
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