Salman Partners Raises Target on AAA

JARET ANDERSON, Salman Partners (10/13/2010)
"We had the opportunity to visit Allana's property at the Danakhil Depression in Northern Ethiopia last week and to meet with a number of government officials, including His Excellency President Girma Wolde-Giorgis, Minister of Mines, Sinknesh Ejigu and the Minister of Transport, Diriba Kuma.

As a result of the site visit and after incorporating new parameters regarding taxation into our model, we are increasing our 12-month target price to CAD$0.90/share from CAD$0.60/share. The key driver of our increased target is a better understanding of the tax holiday offered to such projects by the Government of Ethiopia (partially offset by a higher assumed corporate tax rate and a 5% free carried interest for the government that we had previously not incorporated).

Allana's project at Danakhil offers the potential for a large potash resource with very attractive operating costs due to the possibility of utilizing low-cost solar evaporation. The key challenge for this (and many) greenfield potash projects is infrastructure/transportation. The Government of Ethiopia is very aware of these challenges and has indicated a willingness to work with the company to overcome them."

 PRINT THIS PAGE   EMAIL THIS PAGE

Under SEC rules, analysts are required to disclose their interest in securities that they cover. We strongly encourage you to contact them to understand any potential conflicts of interest they may have.

Related Quotes: