Karnalyte Resources Inc. Announces Second Quarter 2011 Results
FOR IMMEDIATE RELEASE
KARNALYTE RESOURCES INC. ANNOUNCES SECOND QUARTER 2011 RESULTS
Calgary, Alberta (August 12, 2011) - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2011. Karnalyte intends to construct a potash facility near Wynyard, Saskatchewan which is expected to initially produce 500,000 tonnes of potash per year and ultimately increase to 2 million tonnes of potash per year.
“This quarter, we made significant progress on the feasibility study for our proposed potash facility and we remain on track to have that study completed before year end. In addition, we completed drilling of seven new wells for the purpose of identifying additional resources outside of the current development area,” said Robin Phinney, President and CEO of Karnalyte Resources Inc. “The data gathered from these cores will be used to generate an updated NI 43-101 resource estimate that we expect to receive before the end of the third quarter.”
Karnalyte’s Second Quarter 2011 Financial Statements and Management’s Discussion and Analysis (MD&A) are available at www.sedar.com.
Selected Highlights
- Completed a seven hole drilling program to further characterize its land holdings and potential potash resources.
- Subsequent to the end of the quarter, announced that it had selected Lyntek Incorporated to perform a NI 43-101 compliant pre-feasibility study on magnesium chloride compounds that can be produced from the potash feedstock for potential by-products.
- The Company remains very well funded with current working capital of approximately $40.7 million as at June 30, 2011.
Outlook
Over the short term, the Corporation will focus on the following key initiatives:
- Complete the feasibility study and file the Environmental Impact Statement;
- Finalize the analysis and interpretation of the recent drilling program to produce an updated NI 43- 101 resource estimate;
Continue exploration and development of its mineral holdings through additional 3D seismic analysis;
- Obtain independent assays of product samples recovered from the pilot test facility;
- Complete a pre-feasibility level study on potential production and marketing of magnesium compounds; and
- Optimize product quality in cooperation with machinery and equipment suppliers.
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
ASSETS
| As at Current assets Cash Trade and other receivables Prepaid expenses | June 30, | December 31, 2010 $ 59,000,457 43,276 312,865 |
|---|---|---|
| 2011 | ||
| $ 44,086,439 | ||
| 973,942 | ||
| 70,710 | ||
| Restricted cash Capital assets Intangible exploration and evaluation and other assets | 45,131,091 | 59,356,598 125,000 459,376 10,748,278 |
| 125,000 | ||
| 2,997,116 | ||
| 28,003,608 | ||
| TOTAL ASSETS | $ 70,689,252 | |
| $ 76,256,815 | ||
| LIABILITIES Current liabilities Trade and other payables Current portion of capital lease liability | $ 2,288,123 6,904 | |
| $ 4,417,080 | ||
| 6,904 | ||
| Capital lease liability Provisions | 4,423,984 | 2,295,027 6,904 116,039 |
| 3,453 | ||
| 151,599 | ||
| Total liabilities | 4,579,036 | 2,417,970 |
| SHAREHOLDERS' EQUITY Share capital Warrants and rights Contributed surplus Deficit | 72,313,190 1,273,605 2,359,264 (7,674,777) | |
| 77,311,117 | ||
| 1,260,227 | ||
| 3,238,042 | ||
| (10,131,607) | ||
| Total shareholders' equity | 71,677,779 | 68,271,282 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | $ 70,689,252 | |
| $ 76,256,815 |
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
Three and six months ended June 30, 2011 and 2010 (Unaudited)
| Expenses General and administrative Depreciation and amortization Share-based payment expense Other income | Three months ended | Six months ended June 30, 2011 2010 $ 1,535,914 $ 1,450,183 205,768 22,309 892,957 2,397,620 (83,909) (19,458) | |
|---|---|---|---|
| June 30, | |||
| 2011 | 2010 | ||
| $ 725,489 | $ 839,387 | ||
| 149,112 | 12,088 | ||
| 434,753 | 1,023,339 | ||
| (61,429) | (8,530) | ||
| Finance (income) and expense Finance income Finance expense | 1,247,925 | 1,866,284 | 2,550,730 3,850,654 (158,950) (12,188) 65,050 2,165 |
| (120,762) | (7,252) | ||
| 45,066 | - | ||
| Net finance income | (75,696) | (7,252) | (93,900) (10,023) |
| Net and comprehensive loss | (1,172,229) | (1,859,032) | (2,456,830) (3,840,631) |
| Loss per share Basic and diluted | $ (0.12) $ (0.30) | ||
| $ (0.06) | $ (0.15) |
STATEMENTS OF CASH FLOWS
Three and six months ended June 30, 2011 and 2010 (Unaudited)
| Cash Flows from (used in) Operating Activities Net loss for the period Add/deduct: Depreciation and amortization Share-based payment expense Net finance income Interest income received Changes in non-cash working capital: Trade and other receivables Trade and other payables Prepaid expenses | Three months | Six months ended June 30, 2011 2010 $ (2,456,830) $ (3,840,631) 205,768 22,309 892,957 2,397,620 (93,900) (10,023) 158,950 1,795 (831,840) 181,157 126,016 (42,440) 17,767 4,566 | |||
|---|---|---|---|---|---|
| ended | |||||
| June 30, | |||||
| 2011 | 2010 | ||||
| $ (1,172,229) | $ (1,859,032) | ||||
| 149,112 | 12,088 | ||||
| 434,753 | 1,023,339 | ||||
| (75,696) | (7,252) | ||||
| 120,762 | 987 | ||||
| (545,634) | 198,145 | ||||
| 74,806 | 54,812 | ||||
| 4,588 | 1,936 | ||||
| (1,009,538) | (574,977) | (1,981,112) (1,285,647) | |||
| Cash Flows from (used in) Investing Activities Additions to intangible assets Additions to capital assets Decrease in temporary investments | (14,369,955) (2,029,520) (2,721,563) (95,743) - 1,493,560 | ||||
| (9,997,536) | (938,522) | ||||
| (1,761,827) | (40,307) | ||||
| - | 1,354,019 | ||||
| (11,759,363) | 375,190 | (17,091,518) (631,703) | |||
| Cash Flows from (used in) Financing Activities Issuance of common shares Share issue costs | 5,008,117 52,300 (786,464) - | ||||
| 515,000 | 40,800 | ||||
| - | - | ||||
| 515,000 | 40,800 | 4,221,653 52,300 | |||
| Effect of foreign exchange on cash Change in cash Cash, beginning of period | (63,041) 890 (14,914,018) (1,864,160) 59,000,457 2,490,823 | ||||
| (44,052) | 3,055 | ||||
| (12,297,953) | (155,932) | ||||
| 56,384,392 | 782,595 | ||||
| Cash and cash equivalents, end of period | $ 44,086,439 | $ 626,663 | $ 44,086,439 $ 626,663 |
STATEMENTS OF CHANGES IN EQUITY Six months ended June 30, (Unaudited)
| Common Shares Balance, beginning of period Common shares issued Common shares issued on exercise of share options Common shares issued on exercise of broker warrants Transfer on share options exercised Transfer on broker warrants exercised Share issue costs | 2011 | 2010 Number Amount 12,663,800 $ 17,771,007 - - 52,300 52,300 - - - 2,650 - - - - | |||
| Number | Amount | ||||
| 20,093,740 | $ 72,313,190 | ||||
| 470,000 | 4,042,000 | ||||
| 135,600 | 678,000 | ||||
| 33,502 | 288,117 | ||||
| 33,502 | 288,117 | ||||
| - | 230,125 | ||||
| - | 85,158 | ||||
| - | (325,471) | ||||
| Balance, end of period | 20,732,842 | 77,311,119 | 12,716,100 17,825,957 | ||
| Warrants and Rights Balance, beginning of period Broker warrants issued Broker warrants exercised | 2,952,524 293,494 - - - - | ||||
| 585,624 | 1,273,605 | ||||
| 28,200 | 71,780 | ||||
| (33,502) | (85,158) | ||||
| Balance, end of period | 580,322 | 1,260,227 | 2,952,524 293,494 | ||
| Contributed Surplus Balance, beginning of period Share-based payment expense Transfer to share capital on exercise | 6,161 2,397,620 (2,650) | ||||
| 2,359,264 | |||||
| 1,108,903 | |||||
| (230,125) | |||||
| Balance, end of period | 3,238,042 | 2,401,131 | |||
| Deficit Balance, beginning of period Loss for the period | (2,352,686) (3,840,631) | ||||
| (7,674,777) | |||||
| (2,456,830) | |||||
| Balance, end of period | (10,131,607) | (6,193,317) | |||
| Total Shareholders' Equity | |||||
| Balance, end of period | 71,677,781 | 14,327,265 |
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 impact. Using a staged approached to potash plant construction, the Corporation plans to operate a solution mining facility that will initially produce 500,000 tonnes of potash per year, increasing to 2 million tonnes of potash per year. Karnalyte owns a 100% interest in Permit KP 360 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. 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 forwardlooking 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, Chief Financial Officer & Vice-President Finance Julius Brinkman, Vice-President Corporate Development Telephone: (403) 995-6560 E-mail: [email protected] Website: www.karnalyte.com
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