Karnalyte Resources Inc. Announces Third Quarter 2013 Results; Appointment of New Director
FOR IMMEDIATE RELEASE
KARNALYTE RESOURCES INC. ANNOUNCES THIRD QUARTER 2013 RESULTS; APPOINTMENT OF NEW DIRECTOR
Calgary, Alberta (November 14, 2013) - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended September 30, 2013.
“During the third quarter, Karnalyte drilled and successfully tested full-production disposal and source water wells, satisfying two conditions of EIS approval,” said Robin Phinney, President and CEO of Karnalyte. “As a result, Karnalyte met a major development milestone by receiving the main Wynyard Carnallite Project development permit, clear of all conditions, from the Saskatchewan MOE.”
Karnalyte also announced that it has appointed Martin Hall to serve as Director of the Corporation. Mr. Hall is a Chartered Accountant who first qualified in the U.K in 1975. He spent eight years with PricewaterhouseCoopers in London and then Calgary prior to joining a group of small oil and gas and mineral exploration companies where he held various financial positions latterly as CFO. Between 1994 and 2003, Mr. Hall served as CFO of Tesco Corporation, an oilfield service company. Since his retirement from full time employment in 2003, Mr. Hall has been active as a financial consultant and company director for a number public and private Canadian companies.
As at September 30, 2013, the Company had net working capital of $49,319,380 compared to $28,051,904 at September 30, 2012, including $51,512,033 and $28,853,216, respectively, in cash. Karnalyte's Third Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com.
Key Project Development Highlights
Since July 1, 2013, Karnalyte has achieved the following key milestones in the development of the Wynyard Carnallite Project (the “Project”):
- Drilled and successfully tested a full-production capacity disposal well;
- Drilled and successfully tested a second production-size source water well;
- Received the main Wynyard Carnallite Project development permit, clear of all conditions, from the Saskatchewan MOE;
- Continued detailed engineering on the potash plant and underground development; and
- Continued preparing the plant site for construction upon further financing.
Achievement of these milestones constitutes the majority of capital spending related to preparing for plant construction. Expenditures related to these activities occurred throughout the third quarter and extended into the first half of the fourth quarter. As of the date of this press release, the Company does not expect to spend further material amounts on Capital or Intangible Assets until further financing is available.
STATEMENTS OF FINANCIAL POSITION
ASSETS
| As at Current assets Cash Trade and other receivables Prepaid expenses | September 30, | December 31, 2012 $ 25,114,959 225,363 128,927 |
|---|---|---|
| 2013 | ||
| $ 51,512,033 | ||
| 150,485 | ||
| 109,324 | ||
| Deferred financing costs Restricted cash Capital assets Intangible exploration and evaluation and other assets | 51,771,842 | 25,469,249 843,897 375,000 6,404,557 43,197,551 |
| 1,536,168 | ||
| 375,000 | ||
| 16,490,876 | ||
| 43,925,697 | ||
| ASSETS | $ 76,290,254 | |
| $ 114,099,583 | ||
| LIABILITIES Current liabilities Trade and other payables | $ 3,996,019 | |
| $ 2,452,012 | ||
| Provisions | 2,452,012 | 3,996,019 149,956 |
| 169,626 | ||
| Total liabilities | 2,621,638 | 4,145,975 |
| SHAREHOLDERS' EQUITY Share capital Contributed surplus Deficit | 87,473,052 4,905,686 (20,234,459) | |
| 129,774,229 | ||
| 7,270,158 | ||
| (25,566,442) | ||
| Total shareholders' equity | 111,477,945 | 72,144,279 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | $ 76,290,254 | |
| $ 114,099,583 |
STATEMENTS OF COMPREHENSIVE LOSS
For the three and nine months ended September 30,
| Three months | |
|---|---|
| ended | |
| 2013 | 2012 |
| $ 1,349,865 | $ 1,094,436 |
| 226,961 | 187,417 |
| 583,759 | 751,671 |
| - | - |
| 67,628 | 134,398 |
| (17,682) | (50,114) |
| 2,210,531 | 2,117,808 |
| (205,985) | (130,209) |
| 1,235 | 1,006 |
| (204,750) | (129,203) |
| (2,005,781) | (1,988,605) |
| $ (0.07) | $ (0.09) |
Nine months ended 2013 2012 Expenses
| General and administrative | $ 3,735,725 | $ 2,675,106 |
| Depreciation and amortization | 631,019 | 603,477 |
| Share-based payments | 1,692,441 | 1,446,583 |
Transaction costs - 108,984 Restructuring expenditures 67,628 869,597 Other income and expenses (21,314) (181,018) 6,105,499 5,522,729 Finance income (803,575) (361,792) Finance expense 30,059 15,240 Net finance income (773,516) (346,552)
Comprehensive loss (5,331,983) (5,176,177)
Loss per share Basic and diluted $ (0.20) $ (0.24)
STATEMENTS OF CASH FLOWS
| Cash Flows from (used in) Operating Activities Net loss for the period Add/deduct: Depreciation and amortization Share-based payment expense Net finance and other income Interest and other income received Changes in non-cash working capital: Trade and other receivables Trade and other payables Prepaid expenses Purchase of shares pursuant to compensation plans | 2013 | 2012 $ (5,176,177) 603,476 1,446,583 (527,569) 542,810 31,804 (1,019,286) 13,463 - |
| $ (5,331,983) | ||
| 631,019 | ||
| 1,692,441 | ||
| (794,830) | ||
| 365,674 | ||
| 117,149 | ||
| (639,832) | ||
| 28,803 | ||
| (12,319) | ||
| (3,943,878) | (4,084,896) | |
| Cash Flows from (used in) Investing Activities Additions to intangible assets Additions to capital assets | (4,306,408) (217,138) | |
| (754,904) | ||
| (10,845,469) | ||
| (11,600,373) | (4,523,546) | |
| Cash Flows from (used in) Financing Activities Issuance of common shares Exercise of options and warrants Share issue costs Deferred financing costs | - 3,613,731 - (403,599) | |
| 44,745,994 | ||
| - | ||
| (2,432,492) | ||
| (796,098) | ||
| 41,517,404 | 3,210,132 | |
| Effect of foreign exchange on cash Change in cash Cash, beginning of period | (3) (5,398,313) 34,251,529 | |
| 423,921 | ||
| 26,397,074 | ||
| 25,114,959 | ||
| Cash and cash equivalents, end of period | $ 51,512,033 | $ 28,853,216 |
KARNALYTE RESOURCES INC.
STATEMENTS OF CHANGES IN EQUITY
| Share Capital Balance, beginning of period Common shares issued Common shares issued on exercise of share options Common shares issued on exercise of broker warrants Treasury shares purchased Transfer from contributed surplus on options exercised Transfer from contributed surplus on broker warrants Share issue costs | 2013 | 2012 Number Amount 21,418,536 $ 82,105,674 - - 141,325 735,875 309,053 2,657,856 - - - 262,184 - 785,520 - - | |
| Number | Amount | ||
| 21,988,704 | $ 87,473,052 | ||
| 5,490,306 | 44,745,994 | ||
| - | - | ||
| - | - | ||
| (2,049) | (12,319) | ||
| - | - | ||
| - | - | ||
| - | (2,432,498) | ||
| Balance, end of period | 27,476,961 | 129,774,229 | 21,868,914 86,547,109 |
| Warrants and Rights Balance, beginning of period Broker warrants and rights exercised Broker warrants and rights expired | 368,528 934,950 (309,053) (785,520) (59,475) (149,430) | ||
| - | - | ||
| - | - | ||
| - | - | ||
| Balance, end of period | - | - | - - |
| Contributed Surplus Balance, beginning of period Share-based payment expense Transfer to share capital on exercise Option adjustments Option adjustments | 3,276,698 2,139,983 (262,184) (132,500) 149,430 | ||
| 4,905,686 | |||
| 2,364,472 | |||
| - | |||
| - | |||
| - | |||
| Balance, end of period | 7,270,158 | 5,171,427 | |
| Deficit Balance, beginning of period Loss for the period | (13,028,610) (5,176,177) | ||
| (20,234,459) | |||
| (5,331,983) | |||
| Balance, end of period | (25,566,442) | (18,204,787) | |
| Total Shareholders' Equity | |||
| Balance, end of period | $ 111,477,945 | $ 73,513,749 |
About Karnalyte Resources Inc.
Karnalyte is engaged in the business of exploration and development of high quality agricultural and industrial potash and magnesium products. Karnalyte intends to develop and extract a carnallite - sylvite mineral deposit through a known solution mining process at competitive costs and with minimal environmental impacts. Using a staged approached to potash plant construction, the Corporation plans to operate a solution mining facility that will initially produce 625,000 tonnes of potash per year, increasing to 2.125 million tonnes of potash per year. Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan, comprising a total of 85,126 acres.
Forward-Looking Statements
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the Corporation's future operations. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Karnalyte, including with respect to the Corporation's future operations. Although Karnalyte believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Karnalyte can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals, risks associated with the mining industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Karnalyte’s operations and financial results are included in documents on file with Canadian Securities regulatory authorities and maybe accessed through the SEDAR website (www.sedar.com). The forward-looking statements contained in this document are made as of the date hereof and Karnalyte undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
For further information, please contact:
Robin Phinney, President & Chief Executive Officer Ron Love, Executive Vice-President &Chief Financial Officer Telephone: (403) 995-6560 E-mail: [email protected] Website: www.karnalyte.com
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