Karnalyte Resources Inc. Annouces Thomas Drolet as Permanent CEO; Second Quarter 2014 Results
FOR IMMEDIATE RELEASE
KARNALYTE RESOURCES INC. ANNOUCES THOMAS DROLET AS PERMANENT CEO; SECOND QUARTER 2014 RESULTS
CALGARY, ALBERTA (August 14, 2014) – Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN), has previously announced on 13 May 2014 Mr. Thomas Drolet’s appointment as acting President and Chief Executive Officer (“CEO”) for an initial period of six months to a year.
The Board of Directors are pleased to announce today the appointment of Mr. Thomas Drolet as the permanent President and CEO of Karnalyte Resources Inc.
“Mr. Drolet has made significant advances with the Corporation’s strategic plan and positioning the company to begin construction,” stated Bruce Townsend, Chairman of the Board. “Mr. Drolet has the responsibility of aggressively pursuing financing to build the 625,000 tonnes per year (“tpy”) Wynyard Carnallite Project potash facility (the “Project”).”
Highlights of the Strategic Plan include:
- Aggressively pursue additional strategic partners and finance components
- Continuing to advance the detailed engineering for full construction
- Developing, progressing and pursuing markets and product development for magnesium coproducts
Karnalyte Resources Inc. is poised to be the next junior potash company to build a Project with our strategic partner, Gujarat State Fertilizers & Chemicals (“GSFC”). Competitive advantages for the Project include:
- Receiving a positive bankable feasibility study confirming economic viability of the Project, with:
- Development capital expenditure ("CAPEX") for the initial 625,000 tpy plant estimated at $593 million with annual operating expenses ("OPEX") of $133 per tonne KCl
- Development CAPEX for the full 2.125 million tonne per year operation estimated at $2,002 million (inclusive of the initial $593 million), with OPEX of $125.45 per tonne KCl
- Receiving Environmental Impact Statement (“EIS”) approval from the Saskatchewan Ministry of Environment (“MOE”) to initiate construction of the Project
- Entering into a strategic investment and off-take agreement with GSFC, where GSFC has agreed to purchase approximately 350,000 tpy of potash from Phase 1 of the Project, increasing to 600,000 tpy with the commencement of Phase 2, at prevailing market prices
- Engaging BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers for a senior secured project finance facility of up to US$300 million
- Selecting Whiting Equipment Canada Inc. as its major equipment supplier
- Receiving notice that the Saskatchewan MOE is satisfied with the injection testing
- Received water right licence and approval to operate ground water works
As at June 30, 2014, the Company had net working capital of $44.2 million compared to $44.4 million at June 30, 2013, including $44.4 million and $56.2 million, respectively, in cash. Karnalyte's Second Quarter 2014 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com .
STATEMENTS OF FINANCIAL POSITION
ASSETS
| (CAD thousands, unaudited) | June 30, | December 31, 2013 | |
|---|---|---|---|
| 2014 | |||
| Current assets Cash Trade and other receivables Prepaid expenses | $ 46,161 1,480 139 | ||
| $ 44,409 | |||
| $ 44,409 | |||
| 329 | |||
| 89 | |||
| Restricted cash Deferred financing costs Capital assets (note 4) Intangible exploration and evaluation and other assets (note 5) | 44,827 | 47,780 375 1,606 18,745 42,951 | |
| 375 | |||
| 1,672 | |||
| 19,226 | |||
| 43,009 | |||
| 43,009 | |||
| ASSETS | $ 111,457 | ||
| $ 109,109 | |||
| LIABILITIES Current liabilities Trade and other payables | $ 746 | ||
| $ 615 | |||
| Provisions | 615 | 746 135 | |
| 148 | |||
| Total liabilities | 763 | 881 | |
| SHAREHOLDERS' EQUITY Share capital (note 6(a)) Contributed surplus Deficit | 129,774 7,778 (26,976) | ||
| 129,780 | |||
| 8,143 | |||
| (29,577) | |||
| Total shareholders' equity | 108,346 | 110,576 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | $ 111,457 | ||
| $ 109,109 |
KARNALYTE RESOURCES INC.
STATEMENTS OF COMPREHENSIVE LOSS
For the three and six months ended June 30,
| (CAD thousands except per share amounts, unaudited) | Six months ended 2014 2013 | ||||
|---|---|---|---|---|---|
| Three months ended | |||||
| 2014 | 2013 | ||||
| 2014 | 2013 | ||||
| Expenses General and administrative Depreciation and amortization Share-based compensation expense (note 7) Other (income) and expenses | $ 2,403 $ 2,386 409 404 184 1,109 (45) (4) | ||||
| $ 1,459 | $ 1,304 | ||||
| 192 | 197 | ||||
| (128) | 684 | ||||
| (14) | 9 | ||||
| Finance income Finance expense | 1,509 | 2,194 | 2,951 3,895 (360) (598) 10 29 | ||
| (168) | (521) | ||||
| 6 | 2 | ||||
| Net finance income | (162) | (519) | (350) (569) | ||
| (162) | (519) | ||||
| Comprehensive loss | (1,347) | (1,675) | (2,601) (3,326) | ||
| Loss per share (note 6(b)) Basic and diluted | $ (0.09) $ (0.13) | ||||
| $ (0.05) | $ (0.06) |
STATEMENTS OF CASH FLOWS
For the six months ended June 30,
| (CAD thousands, unaudited) | 2014 | 2013 |
| Cash Flows from (used in) Operating Activities Net loss for the period Add/deduct: Depreciation and amortization Stock-based compensation expense Net finance income Interest 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 | $ (3,326) 404 1,109 (572) 219 49 (409) 7 (6) | |
| $ (2,601) | ||
| 409 | ||
| 184 | ||
| (350) | ||
| 360 | ||
| (163) | ||
| 501 | ||
| 43 | ||
| - | ||
| (1,617) | (2,525) | |
| Cash Flows from (used in) Investing Activities Additions to intangible assets Proceeds on sale of intangible assets Additions to capital assets Proceeds on disposition of capital assets | (521) - (8,062) - | |
| (145) | ||
| 1,244 | ||
| (1,199) | ||
| 25 | ||
| (75) | (8,583) | |
| Cash Flows from (used in) Financing Activities Issuance of common shares Share issue costs Deferred financing costs | 44,745 (2,432) (443) | |
| - | ||
| - | ||
| (66) | ||
| (66) | 41,870 | |
| Effect of foreign exchange on cash Change in cash Cash, beginning of period | 348 31,110 25,115 | |
| 6 | ||
| (1,752) | ||
| 46,161 | ||
| Cash and cash equivalents, end of period | $ 44,409 | $ 56,225 |
STATEMENTS OF CHANGES IN EQUITY
For the six months ended June 30, (Expressed in CAD thousands, unaudited)
| Share Capital Balance, beginning of period Common shares issued (note 6(b)) Treasury shares purchased Vesting of employee share ownership plan Share issue costs | 2014 | 2013 Number Amount 21,989 $ 87,473 5,490 44,746 (1) (6) - - - (2,432) | ||
| Number | Amount | |||
| 27,477 | $ 129,774 | |||
| - | - | |||
| - | - | |||
| 1 | 6 | |||
| - | - | |||
| Balance, end of period | 27,478 | 129,780 | 27,478 129,781 | |
| Contributed Surplus Balance, beginning of period Share-based payment expense (note 7) Vesting of employee share ownership plan | 4,906 1,557 - | |||
| 7,778 | ||||
| 371 | ||||
| (6) | ||||
| (6) | ||||
| Balance, end of period | 6,463 | |||
| 8,143 | ||||
| Deficit Balance, beginning of period Loss for the period | (20,234) (3,326) | |||
| (26,976) | ||||
| (2,601) | ||||
| Balance, end of period | (29,577) | (23,560) | ||
| Total Shareholders' Equity | ||||
| Balance, end of period | $ 108,346 | $ 112,684 |
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. Once financing is obtained 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 and Cautionary Statements
Some of the statements in this announcement may be forward-looking including statements relating to future business plans of Karnalyte. When used in this announcement, the words, “estimate”, “approximate”, potential and similar expressions are intended to identify forward-looking statements. Forward-looking statements include statements regarding the intent, belief and current expectations of Karnalyte Resources Inc. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Karnalyte's control. Please refer to Karnalyte's Annual Information Form for the year ended December 31, 2013 and dated March 26, 2014 and available for viewing at www.sedar.com, for a list of risk factors. Karnalyte's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Karnalyte will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to Karnalyte or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.
Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release.
For further information, please contact:
Thomas Drolet, President & Chief Executive Officer Ron Love, Executive Vice-President Finance & Chief Financial Officer Telephone: (403) 995-6560 E-mail: [email protected] Website: www.karnalyte.com