Dear [Creditor]

We are writing to offer you the opportunity to subscribe for shares of AmerAlia Common Stock in consideration for the cancellation of our obligations to you.  We estimate as at October 15, 2008 these obligations will be approximately:

On September 25, 2008 we entered into a Restructuring Agreement (the “Agreement”) with the Sentient Entities.  We expect the restructuring transaction pursuant to the Agreement will close late in October and anticipate AmerAlia will become substantially debt free and own 18% of its subsidiary, Natural Soda Holdings (“Holdings”).  Sentient will exchange all its existing loans to Holdings and its 53.5% ownership of Natural Soda (“NSI”) for the other 82% of Holdings.  Holdings will then own all of NSI, the operating subsidiary.

As you will see below, we are offering you the opportunity to subscribe for shares of AmerAlia Common Stock at $0.36 per share in consideration for the cancellation of any outstanding obligations that we owe to you.  This is the same price that Sentient is paying.

Restructuring

We anticipate that AmerAlia will have approximately up to 70 million shares outstanding after the closing of the restructuring transaction and that Sentient will own between 55% and 77% of our equity.  The exact amount of Sentient’s ownership will depend on the level of subscriptions for AmerAlia Common Stock by note holders and creditors.  We believe that following the restructuring transaction, we will have only one other holder of AmerAlia Common Stock that beneficially owns in excess of 5% if a trust affiliated with one of our directors accepts this offer for a sufficient amount of the obligations due to it.

Under the Agreement, in addition to converting its loans for shares of AmerAlia and Holdings, Sentient will subscribe $11,880,000 to purchase 33,000,000 shares.  This subscription will be reduced to the extent that holders of our Series A Debenture Secured Promissory Notes (the “Notes”) subscribe for AmerAlia shares for the principal and interest owed to them.

After the repayment of the Notes (whether through conversion into shares or cash repayment) we will have approximately $6.5 million in cash which we are obliged to use as follows:

Any remaining cash, subject to limitations, will be used to pay creditors.  We anticipate that after the repayment of the Notes at closing, our remaining obligations will total approximately $4.7 million.  We cannot use cash to pay all remaining creditors as that would cause us to fail to meet our obligation to reserve $3.88 million in cash.  We would not be able to close the restructuring transaction and our future would become very uncertain and perilous.

The executive officers and directors of AmerAlia are owed significant obligations for past service and loans to AmerAlia.  As part of the restructuring transaction, they will convert some of their Notes and obligations into AmerAlia shares and will have the opportunity to receive cash for at least a portion of their outstanding obligations.  They will receive AmerAlia shares on the same terms we are offering to other note holders and creditors.

We need creditors holding at least $2,100,000 of these remaining obligations to subscribe for shares of AmerAlia Common Stock so that we will have at least $1,000,000 of net working capital at closing.

Any subscriptions we receive will be accepted only if we close the restructuring transaction pursuant to the Agreement.  If there are insufficient subscriptions to enable us to close then all AmerAlia’s obligations will remain outstanding.

A full description of the Agreement is included in our Current Report on Form 8-K dated September 25, 2008 filed with the Securities and Exchange Commission.  A complete copy of the Agreement is included as an exhibit to the filing.

Description of Business

Our objective is to be a profitable natural products company through our ownership of natural sodium leases and water rights.  We currently produce various grades of sodium bicarbonate recovered from our naturally occurring nahcolite resource using solution mining.  Our efforts to improve our business performance are based on three objectives:

We believe that NSI is now the second largest supplier of sodium bicarbonate in North America.  We have invested heavily in our production capacity, particularly our cavities which are the source of both our natural sodium bicarbonate and our strategic low cash cost of production advantage over our competitors.

In addition to the development of the sodium bicarbonate business, Holdings and NSI own and have developed significant water rights.  The water rights are used in the operation of the sodium bicarbonate business.  NSI has entered into an agreement to sell up to one hundred and twenty (120) acre feet of water per year to Shell Frontier Oil & Gas, Inc. through December 31, 2011, with specific options for renewal.  Holdings and NSI intend to continue to develop the water rights and evaluate their use.

Holding’s and NSI’s sodium leases are situated in an area that is receiving extensive interest and publicity for the prospective development of its oil shale resources.  While we do not own rights to the oil shale Holdings and/or NSI intend to apply for a lease to develop the oil shale if appropriate regulations are promulgated and approved by the federal government.

Our business activities are comprehensively described in our reports to the Securities and Exchange Commission (the “SEC”).

During fiscal year ended June 30, 2008, we had the following unaudited operating revenues and expenses for the periods shown:

Benefits to AmerAlia on Completion of the Restructuring