Allana Potash intersects high-grade potash at 38% KCl over 3.5 metres and provides project update

TORONTO, ONTARIO–(Marketwire – Sept. 22, 2011) – Allana Potash Corp. (TSX:AAA)(OTCQX:ALLRF) (“Allana” or the “Company”) is pleased to announce that it has intersected three zones of strong potash mineralization in Hole DK-11-27 (“Hole 27”). Hole 27 is located in the northern portion of the concession block and was targeted to test potash mineralization west of Hole 13. Hole 27 intersected a strong Sylvinite Zone at a depth of 159.9 metres which yielded 37.70% KCl over 3.45 metres. This hole also displayed a prominent Upper Carnallitite Zone which returned 13.00 metres grading 17.41% KCl. A robust Kainitite Zone was also intersected deeper in the hole at a depth of 259 metres and returned 23.05 % KCl over 7.67 metres.

Feasibility Study Progress

Allana is completing an infill drilling program to upgrade elements of its resource estimate in its target initial production zones as part of the company’s Feasibility Study (“FS”) activity. The FS is contracted to ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau (“ERCOSPLAN”) (See news release dated September 6, 2011). Allana’s infill and some related extension drilling is intended to upgrade previously assessed Inferred Resources to the Measured and Indicated categories in support of the reserve estimate component of the FS. An update to the Company’s June 2011 National Instrument 43-101 (“NI 43-101”) compliant resource estimate is expected by the end of 2011.

Logistics Progress

Assessment and development of key infrastructure is proceeding with on-the-ground assessments of the road routes from the project site through to port. The western road toward Mekele has been rehabilitated by the Ethiopian government. The southern road linking Allana’s project to the port of Djibouti is substantially completed, and it is expected that it will be fully completed before the construction stage. The Company is also continuing discussions with government departments and potential operators on plans and specifications for road, rail, port and power facilities. Water infrastructure planning is integrated across the FS and the Environmental and Social Impact Assessment Study (“ESIA”), contracted to Environmental Resources Management (“ERM”) (See news release dated August 24, 2011), is proceeding, supported by the hydrogeological evaluation drilling program.

Ongoing formal project status updates with ERCOSPLAN and ERM continue to support the scheduled Q3 2012 completion for FS and ESIA work, as well as the continued expectation that technical and economic parameters of open pit and solution mining methods will be determined by the end of 2011 to assess the optimal mining method and product output at the initial production stage.

Project Finance and Strategic Partnership Development

Supported by the graduation of Allana to the Toronto Stock Exchange (TSX) on September 9, 2011, the Company has commenced formal processes for the development of project financing, with a focus on engaging debt financing advisory support and on securing long-term product sales and project support arrangements with strategic potash processors and users. Allana has received project finance advisory proposals from several large international banks and is currently finalizing work in this regard. The Company has also been advancing talks with large fertilizer and industrial organizations on off-take and strategic investment.

Farhad Abasov, President and CEO, commented: “Allana is extremely encouraged by the three zones of strong potash mineralization intersected in Hole 27 and that we were able to confirm the extension of the potash west of Hole 13. This area continues to yield high grade potash in the Sylvinite Zone and we believe drilling in this area will allow Allana to upgrade resources from Inferred to Measured and Indicated categories as well as add to the Inferred category. We are also very excited about the progress made by the company in the development of the financing aspect of the project. We expect to provide further information on our plans and advisors for the project in the next few weeks, which will allow Allana to stay on track with our development plans.”

Drill Hole 27

Hole 27 is part of a drilling program in the north, designed to test extensions of potash mineralization and allow more material to be included in the Measured and Indicated Resource categories. The results for Hole 27 are presented in the table below. 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 in the following table:

DK-11-27 159.90 163.35 3.45 37.70 Sylvinite
163.35 176.35 13.00 17.41 Upper Carn.
259.23 266.90 7.67 23.05 Kainitite
*Drilled width

Hole 27 was drilled vertically and was collared approximately 750 metres west of Hole 13 (see attached figure). Hole 27 is located in the northern part of the concession block west of Hole 13 and east of the historic Musley Deposit, suggesting that potash mineralization at Musley continues and is consistent at least to Hole 13. Previously released Allana drill holes in this region yielded very high sylvinite grades (see attached figure) and the results of Hole 27 suggest continuity of potash throughout the region.

Exploration drilling is continuing in the southwestern part of the property (Hole 35) as part of the infill drilling program that management has designed to add resources and increase confidence in current resources by reducing the spacing between holes allowing more material to qualify for Measured and Indicated categories. Samples from holes 28-34 are undergoing analysis or are en route to the laboratory in Saskatoon, Canada.

About Allana Potash Corp.

Allana is a publicly traded corporation with a focus on the acquisition and development of potash assets internationally with its major focus on a previously explored potash property in Ethiopia. Allana has secured financial support from two significant strategic investors: IFC, a member of World Bank Group, and Liberty Metals and Mining, a member of Liberty Mutual Group. Allana has Measured and Indicated Sylvinite Resources of 97.8 Million Tonnes of 30.0% KCl; Inferred Sylvinite Resource of 108.3 Million tonnes grading 31.3% KCl; Measured + Indicated Kainitite Resources of 284.2 Million tonnes at 19.8% KCl, Inferred Kainitite Resource of 271.2 Million Tonnes of 20.3% KCl; Measured+Indicated Upper Carnallitite Resources of 78.5 Million Tonnes grading 18.4% KCl, Inferred Upper Carnallitite Resource of 85.6 Million Tonnes of 17.1% KCl; Measured+Indicated Lower Carnallitite Resources of 212.6 Million Tonnes of 12.0% KCl, Inferred Lower Carnallitite Resource of 130.7 Million Tonnes grading 11.7% KCl. Allana has approximately 197.3 million shares outstanding and trades on the Toronto Stock Exchange under the symbol “AAA”.

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 1 in 20 and sent for analysis with the core samples. The remaining core is re-sealed 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 via 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 Ethiopian based Project Manager Jason Wilkinson, M.Sc., and periodically reviewed by Allana’s Senior Vice President of Exploration, Peter J. MacLean, Ph.D., P. Geo.

Allana is utilizing SRC’s Potash ICP Analysis package designed for multi-element analysis of potash samples. Upon arrival at SRC Geoanalytical Laboratories, core samples are jaw crushed to 60 % @ -2mm and 100 g sub sample is split out using a riffler and transferred to vials. The subsample is pulverized to 90 % @ -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 ml of 30°C 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 analysed by ICP-MS. In addition, samples are analysed for FeO (wt%), Br and Cl by MS, plus insolubles. SRC Geoanalytical Laboratories has been certified by the Standards Council of Canada (SCC) to conform to the requirements of ISO/IEC 17025:2005 (CAN-P-4E).

Peter J. MacLean, Ph.D., P. Geo., Allana’s Senior VP Exploration, is a Qualified Person as defined under National Instrument 43-101 and has reviewed and approved the technical information presented in this release.

Forward-Looking Statement

Except for statements of historical fact relating to the Company, certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the effect and estimated timeline of the drilling and assay results on the Company, the estimation of mineral reserves and mineral resources; the timing and amount of estimated future exploration; costs of exploration; capital expenditures; success of exploration activities; permitting time lines and permitting, ; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; and title disputes or claims; Generally, 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 statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements 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.

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