Allana Potash Provides Update on Hydrogeological Survey and Water Resources at Its Potash Project in Ethiopia

TORONTO, ONTARIO -- (Marketwire) -- 01/07/13 -- Allana Potash Corp. (TSX: AAA)(OTCQX: ALLRF) ("Allana" or the "Company") provides an update on its hydrogeological study being completed by Fugro Consult GmbH ("Fugro") on its Dallol Potash Project in Ethiopia. The study, consisting primarily of ground geophysics and water well drilling, has delineated a significant water reservoir, estimated at 160 million cubic metres, in the alluvial sand and gravel on the Allana and newly acquired Nova license. In addition, based on pump tests and drawdown tests, Fugro has estimated the annual recharge into the alluvial material at 35.7 million to 55.2 million cubic metres of water per year.

To date, Fugro has completed ground geophysics (EM) as well as 18 observation wells, 3 pumping wells and 2 solution wells on Allana's Dallol Potash Project with several wells at each location (see attached figure). Ground geophysical surveys measuring resistivity were completed on the Allana and newly acquired Nova properties. The ground geophysics outlined aquifers in the alluvial fans extending from the Ethiopia Highlands into the Danakhil Depression. The surveys identified a surface zone approximately 20 metres thick predominantly underlain by a fresh water aquifer which is underlain by a slightly brackish aquifer. The two aquifers have a combined thickness of 30-40 metres. Fugro has estimated that the water reservoir contained within the aquifer on the Allana licenses to be approximately 160 Million cubic metres.

Pump tests on the large diameter pumping wells yielded flows of up to 150 cubic metres per hour from the production wells. Long term pump tests of 168 hours drawing 100 cubic metres per hour down to a depth of a few metres. The pumping tests show that the groundwater table recovers rapidly and completely at the end of a test indicating it is suitable for well field development.

Basin analysis and investigation of rates of precipitation in the catchment areas of the Ethiopian Highlands west of the project area allows for estimation of the annual recharge rate in the Dallol region and more specifically in the alluvial fans located on the Allana license area. In addition, by monitoring water levels in observation wells, as initiated in March, 2012, the recharge rate can be estimated. This work is ongoing, however, Fugro has calculated, based on a conceptual geohydraulic model, a recharge rate of between 35.7 million cubic metres and 55.2 million cubic metres of water annually for the combined Allana license areas.

Farhad Abasov, President and CEO, commented: "Allana is extremely pleased that the hydrogeological studies in the alluvial fan area have outlined a significant water reservoir and significant yearly recharge. With annual consumption estimated at 16 million cubic metres of water per year for a 1 million tonnes per year MOP operation, the recharge rate alone is adequate to expand future production to 2-3 million tonnes per year of MOP. Delineation of these water resources marks an important milestone for Allana's potash project and has further de-risked the project as sufficient water has now been identified for operations."

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 171.36 Million Tonnes of 30.9% KCl; inferred Sylvinite resource of 46.62 million tonnes grading 30.25% KCl; measured and indicated Kainitite resources of 701.55 million tonnes at 20.26% KCl, inferred Kainitite resource of 373.71 million tonnes of 20.35% KCl; measured and indicated Upper Carnallitite resources of 78.5 million tonnes grading 18.4% KCl, inferred Upper Carnallitite resource of 155.53 million tonnes of 16.95% KCl; measured and indicated Lower Carnallitite resources of 269.10 million tonnes of 10.86% KCl, inferred Lower Carnallitite resource of 130.7 million tonnes grading 11.7% KCl. The foregoing mineral resource estimates are as at April 27, 2012. For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the foregoing estimates refer to Allana's Technical Report entitled "Updated Resource Report for the Danakhil Potash Deposit, Afar State/Ethiopia" dated June 13, 2012, effective April 30, 2012 filed at www.sedar.com., Allana has approximately 275.7 million shares outstanding. Allana trades on the Toronto Stock Exchange under the symbol "AAA".

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 of the hydrogeological survey, drilling and assay results on the Company, the estimation of mineral reserves and mineral resources; the timing and amount of estimated future exploration; the anticipated timing with respect to the preparation of the Feasibility Study; 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.

To view the figure associated with this release, please visit the following link: http://media3.marketwire.com/docs/waterwells.pdf

Contacts:

Allana Potash Corp.

Richard Kelertas

Senior Vice President, Corporate Development

514 717 6256
rkelertas@allanapotash.com
www.allanapotash.com