Financial Post | Business

Ethiopian Potash Corp. was downgraded to sell from under review at Mackie Research as a result of the company’s cash position, its burn rate, and the option agreement under which it can acquire the rights to the Danakil property.

As of Sept. 30, 2011, Ethiopian Potash had $4.1-million in cash on its balance sheet. However, Mackie analyst Jaret Anderson believes that number is now much lower, thereby posing a risk to the company’s ability to continue drilling and pursuing other development activities at an appropriate pace.

While management did not disclose the company’s current burn rate, given that it has two rigs in operation and considering the burn rate of others operating in the area, Mr. Anderson believes it is at least $500,000 per month.

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