Developing potash in the Horn of Africa


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Objective Capital's Industrial Metals, Minerals & Mineable Energy Investment Summit 2011

Ironmongers' Hall, City of London
3 November 2011
Speaker: Jack Scott, Allana Potash

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  • 55 Mt/y total demand
    53Mt/y total production

    FSU, Asia, Africa significant potential to increase demand considering agricultural capacities and population bases in comparison to North America
  • Developing potash in the Horn of Africa

    1. 1. INDUSTRIAL METALS, MINERALS & MINEABLE ENERGY INVESTMENT SUMMIT IRONMONGERS’ HALL, CITY OF LONDON ● THURSDAY, 3 NOV 2011 1 Developing potash in the Horn of Africa Jack Scott – Allana Potash
    2. 2. Potash in Africa | TSX: AAA Developing Potash Success in Ethiopia Corporate Presentation November 2011
    3. 3. | TSX.V: AAA | TSX: AAA Forward Looking Statements The information presented contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995, and “forward-looking information” under similar Canadian legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production, the estimation of mineral reserves and mineral resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; permitting time lines and permitting, mining or processing issues; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; title disputes or claims; litigation liabilities; and limitations on insurance coverage. Generally, forward-looking statements and forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward- looking statements and forward-looking information are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws. Investors are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Measured, Indicated and Inferred Mineral Resource estimate was reviewed and optimized by Dr. Sebastiaan van de Klauw, Ph.D., EurGeol., who is a “qualified person” as such term is defined in National Instrument 43-101 and has supervised the preparation of the technical information and data included in this news release.. Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources The information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. 3
    4. 4. | TSX.V: AAA | TSX: AAA Investment Highlights 4 Strategic location & deposit Closest supplier to India MOP & SOP potential – increasing demand in China Shallow depth (100-300 metres) - low-cost solution mining & open pit potential Large-scale resource - NI 43-101 compliant estimate (June 2011): Measured + Indicated 673 M tonnes @ 18.7% KCl Inferred 596 M tonnes @ 20.0% KCl Solid strategic partners - support for financing: International Finance Corp (World Bank Group member) Liberty Metals and Mining (Liberty Mutual Insurance Group affiliate) $60 million cash in recent financings - ample to fund pre-construction work Market capitalization >$175 million in down market Developing potential strategic offtake arrangements Experienced, balanced management team Feasibility Study and ESIA in-progress, completion Q3-2012 Potential low cost potash producer
    5. 5. | TSX.V: AAA | TSX: AAA Potash Market Dynamics • 95% world's supply used in fertilizers • Primary products • Muriate of potash (MOP) KCl • Sulphate of potash (SOP) K2SO4 • Agricultural product demand 60% higher by 2030 (UN FAO) • Demand driven by developing, populous nations like India, China & Brazil • Upward potash price pressure remains • $490/t FOB Vancouver (August’11) • India & China term supply deals mid-2011 as high as $530/t • “spot price of potash should climb to at least $650/t by late 2012” Patricia Mohr, Scotiabank commodity specialist (Mining Weekly Online) 5
    6. 6. | TSX.V: AAA | TSX: AAA World Potash Supply & Demand 6
    7. 7. | TSX.V: AAA | TSX: AAA Allana Proximity to Key Markets 7
    8. 8. | TSX.V: AAA | TSX: AAA 8 Stable democratic government with a commitment to foreign investment Revised mining laws to promote development of natural resources Among top 5 countries in fastest GDP growth Ranks ahead of Russia, Brazil and India in World Bank’s Doing Business Survey Member of the Multilateral Investment Guarantee Agency (MIGA) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States Reasonably developed infrastructure: 18 airports, hydro, geothermal & wind power Close relationship of Allana to government Allana Potash Dallol Ethiopia Ethiopia - Emerging Mining Country
    9. 9. | TSX.V: AAA | TSX: AAA Regional Infrastructure 160 km² land package staked in Danakil Depression Road access from Mek’ele and new road north from Addis Ababa - Djibouti highway under construction Government completed feasibility study for railway construction • Addis Ababa - Djibouti existing line upgrades and second track under construction in $1.2 billion, 3-year project • Design & engineering of southern route from Mek’ele to Djibouti underway in $78 million contract Fresh water sources available – ~600 gal/min in drilled water test wells Electricity from diesel generators. Access to transmission grid 100km No sensitive environmental issues 9
    10. 10. | TSX.V: AAA | TSX: AAA Infrastructure Improvements 10 Road rehabilitations & upgrades from Djibouti to Dallol government priority Paved highway extended to Afdera from main Addis - Djibouti highway; northward extension in progress Paved road Mekele - Birhale - Dallol under construction International rail infrastructure co-funding committed (India, China) Railway contracts issued by Government
    11. 11. | TSX.V: AAA | TSX: AAA Djibouti Deep Water Port 11 Deep water port capable of handling Panamax-sized vessels (18m draught) Bulk handling facilities on site Road & rail access Facilities mostly under-utilizedPhotos courtesy ERCOSPLAN 2008
    12. 12. | TSX.V: AAA | TSX: AAA Resource Definition – 2010-2011 Drilling 12 HOLE FROM (m) TO (m) DRILLED WIDTH (m)* KCl (%) DK-10-02 150.10 155.65 5.50 25.80 including 150.10 152.10 2.00 34.80 DK-10-07 136.00 145.20 9.20 23.41 including 142.00 144.00 2.00 37.75 214.14 220.80 6.66 22.04 DK-10-08 164.30 168.40 4.10 24.60 Including 165.40 167.40 2.00 31.58 172.70 180.20 7.50 22.08 DK-10-10 257.00 269.40 12.40 23.71 Including 263.40 266.20 2.80 37.64 350.70 357.20 6.50 21.30 DK-11-11 115.85 119.20 3.35 33.77 Including 117.25 119.20 1.95 38.85 125.20 132.50 7.30 17.62 DK-11-13 224.40 227.20 2.80 45.86 342.00 350.70 8.70 22.91 DK-11-16 125.20 129.20 4.00 29.80 168.20 173.20 5.00 20.29 DK-11-19 263.50 270.80 7.30 37.74 547.35 550.40 3.05 30.85 625.47 632.70 7.23 22.09 DK-11-27 159.90 163.35 3.45 37.70 259.23 266.90 7.67 23.05 DK-11-28 Sylvinite 198.74 201.30 2.56 40.27 Kainitite 266.43 274.82 8.39 21.95
    13. 13. | TSX.V: AAA | TSX: AAA Potash Stratigraphy Potash mineralogy - 4 potash units • Sylvinite ~ 4 m KCl • Upper Carnalitite ~ 6 m K, Mg compounds • Lower Carnalitite ~10 m K, Mg compounds • Kainitite ~ 7 m K, SO4 compounds All units can be used to produce MOP, kainite can produce premium SOP Distinct layer structure appears consistent across deposit • Some downward displacement from faulting in centre of license area 13 POTASH RESOURCES
    14. 14. | TSX.V: AAA | TSX: AAA Technical De-Risking 2010/2011 Program Highlights Modern camp and roads established in 2010 to support ongoing drilling and geophysical survey program 48 km of 2D seismic survey completed as well as down-hole seismic profiling Two drill rigs completed over 14,000 metres - all holes intersecting potash mineralization Feasibility Study and Environmental and Social Impact Study underway Water test drilling ongoing – six holes completed – initial pump test results indicate at least 600 gal./min. per well 14
    15. 15. | TSX.V: AAA | TSX: AAA Financial De-Risking 2010/2011 Highlights Allana secured support from two strong strategic investors $10 million strategic equity investment from International Finance Corp. (IFC) – stamp of approval from one of the world’s largest multi-lateral financing organizations  Intent to support Allana through construction stage (IFC invested $18 billion in private enterprises worldwide in 2010) $20 million equity investment from Liberty Mining and Metals, LLC, a subsidiary of Liberty Mutual Group  Liberty holds approximately 17% of Allana  Long-term investor committed to assisting Allana with financing at mine construction stage 15
    16. 16. | TSX.V: AAA | TSX: AAA Capital Structure 16 Stock symbol AAA – TSX Share price(27/10/11) $1.02 Shares issued (Basic) 197 million 52-week High/Low $2.43 - 0.40 Market cap C$ 198 million Cash C$ 58 million
    17. 17. | TSX.V: AAA | TSX: AAA Analyst Coverage 17 Analyst 12 Month Target Price Wellington West $2.50 Loewen, Ondaatje, McCutcheon $2.00 Ubika Research $2.51 Dundee Capital Markets $3.05 Cormark Securities $1.80 Mackie $1.65 Fraser Mackenzie $1.50 Union Securities $2.40 Salman Partners $1.65
    18. 18. | TSX.V: AAA | TSX: AAA Strong Management Team Farhad Abasov, MBA, President, CEO & Director Over 15 years of business management experience; Executive Chairman Rodinia Lithium; Most recently served as Senior Vice President at Potash One and Vice President, Portfolio Management and Vertical Integration for Uranium One. Former member of Energy Metals management team (Energy Metals was sold to Uranium One for $1.8 Billion in 2007) Peter MacLean, Ph.D., P.Geo, Senior Vice President, Exploration Over 20 years experience in the mining & exploration industry with junior and senior mining companies including Monarch Resources, Aur Resources and Newmont Mining. Nejib Abba Biya, Senior Vice President, Corporate Development, Ethiopia Originally from Ethiopia, over 20 years of experience conducting business in Ethiopia, excellent working relations with the federal and regional governments Jack Scott, MBA, P. Eng., Senior Vice President, Strategic Projects Over 25 years experience worldwide with resource, energy, infrastructure and technology industries in project development and financing, engineering and construction, risk valuation, strategic planning, acquisitions and divestments. Jason Wilkinson, M.Sc, Project Manager, Ethiopia Over 15 years of exploration and development experience in Africa, Asia and Europe. Most recently head of exploration for Lydian and Aur Resources Deborah Battiston, Chief Financial Officer C.G.A. with over 20 years of accounting and financial management experience. . 18
    19. 19. | TSX.V: AAA | TSX: AAA Strong Board & Advisory Team 19 BOARD OF DIRECTORS Dr. Mark Stauffer - Chairman Former President of Potash and Phosphate Institute of Canada, over 30 years of experience in potash and fertilizer business Richard Lacroix Former Senior Vice President, Potash Corp of Saskatchewan (PCS), former Board Member of Canpotex & former Chairman of Canpotex Bulk Terminals, 30 years with PCS Maj.-Gen. (Ret.) Lewis MacKenzie Former General - Canadian Armed Forces; lead UN Peacekeeping force in Balkans Diana Walters Current President/CEO of Liberty Mining and Metals, over 20 years in management positions with energy and mining companies. Farhad Abasov - President & CEO TECHNICAL ADIVSORY BOARD Stephen P. Halabura, Senior Advisor President and CEO of North Rim Exploration, the premiere potash expert company - over 25 years experience consulting to BHP Billiton, Athabasca Potash and Potash One. Robert G. Connochie, Senior Advisor President, Behre Dolbear Capital, Inc. and Chartwell Ventures Inc., Formerly President and Chairman of the Potash Company of America & Chair at Canpotex Limited, The Potash and Phosphate Institute, the Foundation for Agronomic Research and the Saskatchewan Potash Producers Association.
    20. 20. | TSX.V: AAA | TSX: AAA Roadmap to Production 20 ACTIVITY 1Q2011 2Q2011 3/4Q 2011 1H 2012 2H 2012 Seismic 2D-48 km completed Ongoing analysis Drilling >14,000 metres Delineation Completed ongoing in-fill, geotech, hydro Resource Estimate NI43-101 compliant ERCOSPLAN Completed Update on in-fill drilling Technical & Economic Feasibility Study ERCOSPLAN In Progress Environmental & Social Assessment ERM In Progress Project Financing BNP Paribas In Progress Production Decision
    21. 21. | TSX.V: AAA | TSX: AAA Other Ongoing Development Activity Road – Monitor completion of industrial-specification roads construction now underway Rail – Support governments, international development banks and contractors in accelerated completion of strategic rail routes Port – Develop/access port bulk handling facilities • Cooperative or Contracted Arrange truck fleet operations • Cooperative or Contracted 21
    22. 22. | TSX.V: AAA | TSX: AAA ALLANA’S ETHIOPIAN POTASH PROJECT POTASH PROJECTS IN OTHER REGIONS Potash deposit 100 - 300 metres deep Comparably-sized deposits 500 - 2,000 metres deep Amenable to open pit and solution mining at shallow depths Not amenable to open pit; High cost deep well solution or underground shaft mining Average temperature over 40°C - Solar evaporation ponds offer significant energy cost savings Conventional solution mining uses natural gas fired evaporators (>40% of opex) Significantly lower labor costs Higher labor costs (in Canada especially - developed world salaries; compete with majors for workers) Fast track to production (shorter permitting) Long permitting process (18-24+ months) Not in Canpotex or Ural areas No port capacity constraints in Canada, juniors have to compete with or buy-in to Canpotex for logistics Potentially among lowest CapEx and OpEx Potash Mine 22
    23. 23. | TSX.V: AAA | TSX: AAA Allana – Best positioned potash play in the world World class deposit Potential low cost producer Reduced financing risk Strategic partners in place Fast Track to Production 23 | TSX: AAA
    24. 24. Potash in Africa | TSX: AAA Contact Information: Jack Scott Senior Vice President – Strategic Projects TELEPHONE: +1 778 887-8430 EMAIL: | TSX: AAA
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