Canada’s Allana Potash Corp. has reached an agreement with Israel’s ICL, a global producer and supplier of products based on specialty minerals, to invest in the Danakhil potash mine under development in the Dallol region of Northeast Ethiopia.

Under the deal, announced by Allana and ICL late last week, the Israeli group will invest US$23 million in units of Allana at about US$0.43 per unit. Following the completion of the initial investment, ICL will hold approximately 16 percent of the Canadian junior resource company’s regular shares on a non-diluted basis. ICL has an option to increase its holding in Allana to approximately 37 percent upon exercise of warrants that are part of the units, the Israeli group said in a press release. The second phase of the investment is subject to the approval by Allana’s shareholders and other standard closing conditions, but is expected to close on or before March 31.

Allana said it will use the proceeds of the investment to develop and advance the Danakhil mine project, which is expected to produce around 1 million tonnes of potash annually. The company is targeting a late-2015 or early-2016 startup and aims to ramp up to full production by late 2017, said Allana Senior Vice President Richard Kelertas.

The Israeli group will purchase and market the entire output of the mine, a spokesperson for ICL said. The agreement is for up to 1 million tonnes per year, with a ‘take-or-pay’ commitment of ICL on a minimum of 80 percent of the output, Allana said in a press release.

The Israeli group has potash production operations in Israel, Spain and the U.K. and sold more than 5 million tonnes of potash worldwide in 2013. It will provide technical assistance to Allana to develop and operate the mine.

Allana secured environmental approvals in May 2013, and a mining license in October 2013 for the project from Ethiopia’s Ministry of Mines, marking the receipt of the final regulatory approvals needed to complete the development phase of the project, according to an earlier AFKI report.

The total capital expenditure for the potash mine is $642 million and Allana has been working to secure a strategic investor to help finance the development.

The company already has financial backing from two investors — Liberty Metals and Mining Holdings, a subsidiary of Liberty Mutual Group, which holds a 14.23-percent interest in Allana; and IFC, a member of the World Bank Group, which owns a 2.8-percent interest in the company.

“The Danakhil mine will provide potash for Ethiopia and Africa and, combined with ICL’s agronomics fertilization knowhow, will enable local farmers to increase agricultural output and food for the region,” ICL president and CEO, Stefan Borgas, said in the company press release.

The cooperation with Allana delivers a step in the company’s strategy to broaden its sources of raw materials worldwide, as well as its intention to deepen and significantly increase activities in emerging markets such as the African continent, Borgas said.

“The agricultural fertilizers market in Africa is evolving into one with the highest growth potential in the world,” said Borgas.

Farhad Abasov president and CEO of Allana Potash in the company statement said both Allana and ICL are committed to expanding fertilizer supply within Africa to support the farming renaissance that is occurring on the continent.

The location of the Danakhil mine will also provide ICL with “fast and easy” access to the Indian Ocean which the company said will enable it to better serve its customers in India and South East Asia.