Karnalyte Resources Inc. Announces 20 22 Year End Results and Provides Corporate Update
KARNALYTE.COM
TSX: KRN
KARNALYTE RESOURCES INC. ANNOUNCES 20 22 YEAR END
RESULTS AND PROVIDES CORPORATE UPDATE
Not for distribution to U.S. news wire services or dissemination in the United States.
SASKATOON, SK (CNW- March 28, 2023) – Karnalyte Resources Inc. ("Karnalyte" or the "Company") (TSX:
KRN) today announced its financial results and corporate highlights for the financial year ended December
31, 2022.
2022 – YEAR IN REVIEW
In 2022, Karnalyte commenced an update to its NI 43-101 Compliant Technical Report, successfully raised
capital by way of a rights offering, and prepared an ESG Strategy Report.
POTASH – WYNYARD POTASH PROJECT
Market Update – The market conditions for potash stayed strong in 2022 although softening slightly toward
the end of the fourth quarter of 2022 and to date. Major geopolitical events including the Russian invasion of
Ukraine resulted in unprecedented supply chain disruption for many commodities and especially for potash.
It is expected that these conditions will persist into 2023 and likely beyond.
UPDATE TO THE NATIONAL INSTRUMENT 43-101 COMPLIANT TECHNICAL REPORT
In January of 2022, the Company announced the appointment of Wood PLC (“Wood”), a leading global
consulting and engineering company, as lead author of an update to its NI 43-101 compliant technical report
(“Technical Report” or “Report”). Wood was appointed after a significant improvement in the market
conditions for potash which began in 2021 and continued through 2022.
Karnalyte has made diligent progress on this important step toward construction of its Wynyard Potash
Project, despite unforeseen challenges that have resulted in delays.
Wood provided Karnalyte with preliminary capital cost and operating cost estimates using budgetary pricing
for mechanical equipment, mechanical bulks, and tanks that take into account the changes to
Saskatchewan’s tax regime, currency exchange rates and cost of labour. Karnalyte has been reviewing these
capital and operating cost quotes, along with exploring various price assumptions while Wood works toward
the finalization of a financial model and final compilation of the report, expected soon.
The recent increase in potash prices and other commodity prices has resulted in significant growth in
Western Canada’s economic activity, and this, in conjunction with supply chain constraints impacting
suppliers worldwide is, among other factors, causing delays to the update to the Technical Report. In
conjunction with the update Karnalyte is also investigating certain capital cost efficiencies, opportunities to
enhance sustainability and working towards getting more comfort on the assumptions used given the current
market and economic conditions. Karnalyte will provide a further update as appropriate once the Technical
Report is finalized.
“Karnalyte continues to focus on advancing the update to the NI 43-101 Compliant Technical Report and has
continued making steady progress, despite challenges the mining industry is facing beyond our control and
the Company’s desire to move forward in a responsible way.” said Danielle Favreau, interim Chief Executive
Officer of Karnalyte. “The Company remains committed to following best practices as we work through this
critical step, which will serve as a strong foundation for our Wynyard Potash Project.”
To date, Karnalyte has achieved a number of key milestones in relation to the update to the Report. This
includes engaging industry leading solution mining and engineering firm ERCOSPLAN ingenieurgesellschaft
Geotechnik und Bergbau mbH (“ERCOSPLAN”), which provided Karnalyte with a positive review of core
samples, and confirmation from Saskatchewan’s Ministry of Environment that Karnalyte’s previous
Environmental Impact Study approval from 2013 remains valid.
NITROGEN – THE PROTEOS NITROGEN PROJECT
The Proteos Nitrogen Project remains under consideration as part of Karnalyte’s future and may diversify our
business by adding a second fertilizer product line. The Proteos Nitrogen Project is a proposed regional-scale
nitrogen fertilizer plant to be located in central Saskatchewan, with a nameplate capacity of 700 metric
tonnes per day (“MTPD”) ammonia and 1,200 MTPD urea. Our primary target market is local, independent
wholesalers within a ~400-kilometre radius of Saskatoon, Saskatchewan, with a secondary target market of
Midwest USA wholesalers near the Canadian border. There were no significant developments to report on
this project in 2022.
RIGHTS OFFERING
On June 22, 2022, the Company announced the launch of a rights offering (the “Rights Offering”) as part of
its capital raise strategy in order to provide a viable and attractive investment opportunity for existing
shareholders. On August 3rd, the Company announced the successful completion of this Rights Offering,
following its expiry on July 29, 2022, raising a total of $3,862,000 in proceeds as additional capital for,
among other things, the development of the Potash Project.
Karnalyte was pleased to announce the participation of Gujarat State Fertilizers and Chemicals Limited
(“GSFC”) in the Rights Offering, a major agriculture sector business in India, providing additional investment
in Karnalyte and further demonstrating its ongoing commitment and support for the Company and the Potash
Project.
ESG STRATEGY DEVELOPMENT
In line with Karnalyte’s environmental advantages and governance advancements, the Company engaged
with Karri Howlett Consulting Inc. (“Karri Howlett Consulting” or “KHCI”) in the year to prepare an
Environmental, Social and Governance (“ESG”) strategy report. In October 2022, Karnalyte received a first
draft of the report analyzing key focus areas per Karnalyte stakeholders, with practical recommendations
under each of the Environmental, Social and Governance categories.
Karnalyte is in the process of reviewing the recommendations as it seeks to enhance its existing policies and
practices, ensuring the Company is up to date and in line with current and peer ESG trends. Karnalyte
maintains its ultimate goal of operating the business in the best interests of shareholders and relevant
stakeholders to further strengthen its strategic position in the potash sector.
OUTLOOK FOR 2023
In 2023, the Company plans to complete the update to its NI 43-101 technical report, to continue to work on
identifying cost efficiencies, optimizing construction and operation plans, and enhancing project
sustainability, and to increase business development activities to seek out and attract investment and
strategic partners to move one or both of the Company’s projects forward to development.
2022 YEAR END RESULTS AND SELECTED ANNUAL INFORMATION
During the year ended December 31, 2022, the Company’s focus was on updating its NI 43-101 Compliant
Technical Report, the successful raising of capital by way of a rights offering, and the preparation of an ESG
Strategy Report. On December 31, 2022, the Company had cash of $3.7 million, a positive working capital of
$3.6 million, and no debt.
The following information has been summarised from the Company's audited financial statements.
Karnalyte's 2022-year end financial statements, management's discussion and analysis, and annual
information form are available at www.sedar.com or on the Company’s website at www.karnalyte.com.
Selected annual results
(CAD $ thousands)
Year ended December 31
2022 2021 2020
Total revenue - - -
Interest and other income 62 19 65
Net and comprehensive loss (1,728) (2,193) (3,429)
Basic and diluted per share (0.04) (0.05) (0.08)
Total current assets 4,209 2,498 5,291
Total assets 9,883 8,393 11,241
Total current liabilities 628 884 1,499
Total liabilities 2,006 2,630 3,311
Total shareholders’ equity 7,877 5,763 7,930
ABOUT KARNALYTE RESOURCES INC.
Karnalyte Resources Inc. is a development stage company focused on two fertilizer products, potash and
nitrogen, to be produced and manufactured in Saskatchewan. Karnalyte owns the construction ready
Wynyard Potash Project, with planned phase 1 production of 625,000 tonnes per year (“TPY”) of high grade
granular potash, and two subsequent phases of 750,000 TPY each, taking total production up to 2.125 million
TPY. Karnalyte is also exploring the development of the Proteos Nitrogen Project, which is a proposed small-
scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 metric tonnes per
day (“MTPD”) of ammonia and approximately 1,200 MTPD of urea, and a target customer market of
independent fertilizer wholesalers in Central Saskatchewan.
ABOUT THE WYNYARD POTASH PROJECT
The Wynyard Potash Project is a construction ready solution mining potash project located in Wynyard,
Saskatchewan, with planned phase 1 production of 625,000 TPY of high grade granular potash, and two
subsequent phases of 750,000 TPY each, taking total production up to 2.125 million TPY. All environmental
permits remain valid, preliminary detailed engineering is complete, and the existing offtake agreement with
Gujarat State Fertilizers & Chemicals Limited remains in effect. Further development is dependent on
improved potash prices and obtaining financing.
ABOUT THE PROTEOS NITROGEN PROJECT
The Proteos Nitrogen Project is an advanced stage development project consisting of a proposed small-scale
nitrogen fertilizer plant to be located in Central Saskatchewan, having a nameplate production capacity of
approximately 700 MTPD of ammonia and approximately 1,200 MTPD of urea, and designed to produce two
products – anhydrous ammonia (82-0-0) and granular urea (46-0-0). Karnalyte’s primary target market is
independent local Saskatchewan fertilizer wholesalers within a 400-kilometer radius of Saskatoon,
Saskatchewan. A secondary target market is the US Midwest fertilizer wholesalers near to the Canadian –
United States border. The proposed plant would be the first greenfield nitrogen fertilizer plant built in
Canada in the last 26 years.
ABOUT GUJARAT STATE FERTILIZERS & CHEMICALS LIMITED
Gujarat State Fertilizers & Chemicals Limited (“GSFC”) is a leading Indian Fortune 500 chemicals and
fertilizer company that has been in business for more than 50 years. GSFC currently operates one ammonia
plant that was commissioned in the year 2000, and two urea plants that were established in 1969, at its
fertilizer production complex in Vadodara, Gujarat State, India.
As the Company’s strategic partner and single largest shareholder, GSFC remains committed to the Company
and the Wynyard Potash Project and is fully supportive of the Company pursuing the development of the
Proteos Nitrogen Project. GSFC has also confirmed to the Company that it will continue to support the
structuring of the most cost-effective financing package for the development of the Wynyard Potash Project,
as GSFC has consistently offered to the Company since becoming a shareholder in 2013.
For further information, please contact:
Danielle Favreau
Interim CEO
Karnalyte Resources Inc.
1(639) 398-6478
www.karnalyte.com
FORWARD-LOOKING STATEMENTS
Certain information included in this press release is forward-looking, within the meaning of applicable
Canadian securities laws. Forward-looking information is often, but not always, identified by the use of
words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “plan”, “intend”, “forecast”,
“future”, “guidance”, “may”, “predict”, “project”, “should”, “strategy”, “target”, “will” or similar words
or phrases suggesting future outcomes or language suggesting an outlook.
The forward-looking statements contained in this press release are based on certain key expectations and
assumptions made by Karnalyte, including, without limitation, assumptions as to: projected economics for
the Company’s planned potash production facility, the confirmation in an independent feasibility study of
Karnalyte’s assumptions regarding the technical and economic viability of the Proteos Nitrogen project, the
ability of Karnalyte to obtain financing on terms favourable to the Company, and the ability of Karnalyte to
receive, in a timely manner, the necessary approvals from the Company’s board of directors, shareholders,
regulatory authorities, and other third parties.
Karnalyte believes the expectations and assumptions upon which the forward-looking information is based
are reasonable. However, no assurance can be given that these assumptions and expectations will prove to
be correct. Accordingly, readers should not place undue reliance on the forward-looking statements and
information contained in this press release. Without limiting the generality of the foregoing, readers are
cautioned that the Company has not received a feasibility study prepared by a third party with respect to
the Proteos Nitrogen project.
Actual results may vary from the forward-looking information presented in this press release, and such
variations could be material. Risk factors and uncertainties could cause actual results to vary from the
forward-looking information in this press release. Additional information on forward-looking statements and
other factors that could affect Karnalyte’s operations and financial results are included in documents on file
with Canadian securities regulatory authorities and may be accessed through the Company’s profile on the
SEDAR website (www.sedar.com).
These forward-looking statements are made as of the date hereof and are expressly qualified in their
entirety by this cautionary statement. Subject to applicable securities laws, the Company assumes no
obligation to update or revise them to reflect new events or circumstances.