re sprott and todays roller coaster, page-43

I've been watching the potash juniors to see how capital raises go. Allana announced today a bought deal for $20 million (over allotment option of $3 million) for the feasability study. Yesterday Allana was trading at $0.85 and the bought deal is at $0.80, so the bought deal was at a 6% discount to the stock price. There was a stock halt after hours and during today Allana is up 15.29%, this was most likely due to a leak of the stock halt and anticpation of some good news. The financing new was not anticipated since Allana has $55 million in cash for the feasability study.

During October 2011, Allana announced that they had hired the European Bank, BNP Paribas (also one of the worlds largest banks) to structure the financing for the capex raising, to locate funding and to potentially participate in the funding of the capex. Allana has indicated that they expect to announce advanced financing during this quarter. The European banks are one of the largest funders of projects in Africa and BNP Paribas is one of the most experienced banks in funding projects in Africa.

During the 2008 potash junior run, Mag Industries (TSX:MAA) had one of the most promising greenfield potash projects which was located in the Republic of Congo. They had lined up committments for financing from three European banks in the amount of $800 million before the USA financial crisis hit. A month after the crisis, the European banks declined to invest in MAA. MAA was eventually sold to another financing group for a fraction of their value.

One of the largest risks for a potash junior company is the financing risk. STB should definitely move to bring in some world class financing talent ie. Friedland and/or hire financing institutes with substantial experience in development projects in Africa ie. major European banks etc.

Sam