ICL, a global manufacturer of products based on specialty minerals that fulfill humanity's essential needs in the agriculture, food and engineered materials markets, today announced that it has entered into a strategic alliance with Allana Potash, a potash mining company whose shares are traded on the Toronto Stock Exchange.
ICL will support Allana in its development of the Danakhil potash project located in the Dallol region of the Afar province of northeast Ethiopia. The feasibility study for the proposed mine indicates that it will produce approximately one million tons of potash annually within a period of five years from now.
ICL's strategic alliance with Allana comprises an investment by ICL in the amount of approximately US$23 million in units of Allana ("Units") at a price of approximately US$0.43 per Unit. Following the completion of its initial investment in Allana, ICL will hold approximately 16% of Allana's regular shares on a non-diluted basis, and the Company may increase its holding in Allana to approximately 37% upon its exercise of warrants that are part of the Units. Proceeds of the investment will be used by Allana to develop and advance the Danakhil mine project.
The alliance also includes a offtake agreement between the parties with respect to the Danakhil mine in which ICL will purchase and market the output of the mine. ICL will also provide technical assistance to Allana to develop and operate the Danakhil mine.
The alliance with Allana is in line with ICL's "Next Step Forward" strategy to broaden its sources of raw materials globally while reducing its production costs and focusing on growth-generating emerging markets which will lead the Company to significant growth over the next decade. ICL is a global producer and marketer of potash with potash mines in Israel, Spain and the UK. In 2013, the Company sold over 5 million tons of potash worldwide.
ICL views its investment in the development of attractive sources of raw materials worldwide as an important strategic objective, especially in light of its need to ensure additional alternatives when the time comes to extend the franchise to produce potash from the Dead Sea, which expires in 2030, and in light of the uncertainty regarding the business and regulatory environment in Israel. The planning and development process for industry, in general, and the potash industry, in particular, requires around 10 years and therefore ICL has begun to evaluate and develop alternatives.