Allana Potash Corp (TSE:AAA) (PINK:ALLRF) has attracted a lot of attention after publishing a preliminary economic assessment of their Ethiopian potash project.
AAA share price slipped down 3.4% on Wednesday and remains in consolidation phase despite increasing market activity.
What attracts attention to this stock is the heavy trading volume which was near 9.6 million for the day, more than four times heavier than the average of 2.16 million. This continued the fight between bears and bull which initially occurred last Friday, presenting a very similar trading volume. Such heavy trading put Allana among the most actively traded stock on the Toronto Stock Exchange.
The increase in market activity pairs with the preliminary economic assessment of Danakhil Potash project which was announced on November 22. The project was given a net present value of $1.85 billion based on a 12% discount rate and an internal rate of return of 36.8%. The total development costs should be no more than $796 million, which is comparatively low. This economic assessment was done on assumption of 1 million tons per year production for an estimated mine life of 30 years, although the management seeks to double the production rate later on.
The total operating expenditures are calculated to reach $90 per ton and were named by the CEO to be among the lowest currently possible on greenfield potash projects.
The mineral resource estimate was done in June 2011 and showed measured and indicated resources of 126 million tons and inferred resources of 119 million.
