Inspired by ledenfrog's post about AAA's massive risks.

Major Risks:

- Financing risk. Sounds like additional dilution will come eventually. But from the AGM report it sounds like there is no concern about a lack of funding.

- Construction risk. Something can always go wrong during construction, mostly in the form of cost overruns. Fortunately, the ICL warrants represent a potential contingency on top of the contingency - if costs overrun beyond existing contingencies the company can always ask ICL to cash some warrants in early for additional cash. Of course, costs could overrun well beyond what ICL has outstanding in warrants. We've all seen construction projects double in cost by the time they're done.

Minor Risks:

- Labour cost pressures. Seems unlikely given the isolation of the region, but certainly possible. Allana's costs are already very low, so I don't see this as being a major risk. Saskatchewan will get comparitively killed here far before a remote region in Ethiopia, so at least there's that. The Russians/Belorussians not so much given their high levels of unemployment.

- Inflation risk. Ethiopia has high inflation, meaning Allana's in-country costs will inflate, but potash trades in USD. High inflation weakens the BIR against the USD and offsets most of the inflationary pressure on in-country costs.

http://www.exchangerates.org.uk/graphs/USD-ETB-730-day-exchange-rate-history-graph-large.png

- Forex risk. Birr/USD and USD/CAD (to book profits back home). In a semi-plausible Fed money printing hyper inflation scenario, the USD weakens against everything. So BIR+ (costs go up) and CAD+ (profits booked from USD to CAD go down). But honestly, if this happens in a massive way it means global financial armaggedon is upon us and we're all hooped anyways. I do have significant exposure to a junior gold miner in my portfolio as my armaggedon hedge, so I guess I'll be OK assuming paper money is still being used, since I can't eat gold bars.

- Environmental. Permitting is done. Worst possible (but still within the realm of reasonable probability) case environmental issue I can think of is that solution mining contaminates the water acquifer that nobody uses for drinking, irrigation or any other purpose because it's already highly contaminated with salt. And it's in an underground water table that nobody in the area has the means to reach even if they wanted to, oh I don't know, pump the water up for a salt water swimming pool. And the project is in a desert in a remote part of a developing country that has bent over backwards to cater to business.

- Energy risk. There is the cost of running the project site on diesel generators in the middle of nowhere, so there's definitely some energy exposure. Ethiopia ended energy subsidies in 2008, so AAA can't pass part of those costs on to the government. Energy trades in USD, so no exchange rate mitigation either. A good question someone could pose to Richard (since he does not respond to me) would be what % of the opex is comprised of energy costs to run the project site, pumps, etc.

General Risks:

- Geopolitical. I think the geopolitical risk is overhyped, personally. OK - a coup or war could happen, but I'm not personally worried about a coup, even if it did occur. War, would be bad for Allana. I don't think it's lkely, but we are right next to the Eritrean border and they spend North Korean percentages of their GDP on their military.

- Act of god. No history of acts of god in the region that would be relevant to Allana.

- Market risk. Definitely there given how over-supplied the market is and the possibiilty for something like Jansen to come online sparking price wars. But the market risk is ICL's problem now as a result of the offtake. The market will affect profitability through price of potash, but as long as potash prices are high enough to cover costs + sustaining capex + debt repayments, solvency is a non-issue. I haven't done the math, but I'm guesstmating that threshold is ~$150/ton potash based on Allana's disclosed opex + sustaining capex projections.

I look over this list and personally, I'm totally comfortable. If I missed anything, please add to the list.

Bonus non-risk for Allana: strikes that shut down the port (Dijbouti's organized labour movement is not quite as sophisticated as Canada's labour movement. Bonus risk for Saskatchewan miners: strikes that shut down the port.