Karnalyte Resources Inc. Announces 2019 Year End Results and Provides Corporate Update
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KARNALYTE.COM
TSX: KRN
KARNALYTE RESOURCES INC. ANNOUNCES 2019 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 23, 2020) – Karnalyte Resources Inc. ("Karnalyte" or the "Company")
(TSX: KRN) today announced its financial results and corporate highlights for the financial year ended
December 31, 2019.
2019 – THE YEAR IN REVIEW
In 2019, Karnalyte continued to make progress in investigating the economic and technical viability of
its proposed nitrogen project (the “Proteos Nitrogen Project”). Karnalyte also continued to prepare its
potash project (the “Wynyard Potash Project”) for improvement in market conditions such that when
the Wynyard Potash Project becomes economically viable, it could be advanced to the next
development stage.
POTASH – THE WYNYARD POTASH PROJECT
In 2019, the Company continued its process of optimizing capital costs for the Wynyard Potash Project
in order to position the Company to advance the development of this project when it becomes
economically feasible to do so. The Company is optimistic about the long-term outlook for potash and
this was supported by increases in potash prices through the first three quarters of 2019. Furthermore,
global potash demand continues to grow and is projected to rebound in 2020 to around 66.6 million
metric tonnes with projections to grow to 80 million metric tonnes by 2030. However, the Company is
maintaining caution as the industry continues to face headwinds with major potash mines in
Saskatchewan shuttering production during the third and fourth quarters of 2019 and some into the
first quarter of 2020 in order to bolster prices after forecasted North American demand in the fourth
quarter of 2019 didn’t materialize due to a delayed harvest season. More recently, the uncertainty
around the impact of the global coronavirus pandemic on the economy and capital markets has
deepened the Company’s sense of caution. The Company continues to monitor potash prices, the state
of the capital markets and the economy generally and continues to discuss with its strategic partner
Gujarat State Fertilizers & Chemicals Limited the optimal path forward to develop the Wynyard Potash
Project.
NITROGEN – THE PROTEOS NITROGEN PROJECT
In 2019, progress on investigating the viability of the Proteos Nitrogen Project included the preparation
of a pre-feasibility study for the Proteos Nitrogen Project. At the end of 2019, the Company received the
first draft of the study. The study includes investigation and analysis of project location and site
selection, an evaluation of the production process and technology options, a project description, analysis
of process selection for both the ammonia and urea plants, an analysis of raw material, utility and
product specifications, an analysis of environmental implications, a financial analysis, and identification
and analysis of the risks inherent in the project. The study also contemplates a project implementation
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plan and time schedule. The report is still in a draft stage and the Company is preparing to finalize the
report in 2020.
OUTLOOK
The Company continues to move towards the development of the Wynyard Potash project as well as
conclude some preliminary investigation of the viability of the Proteos Nitrogen Project. For the
Wynyard Potash Project, the Company plans to continue to optimize the project costs with a view to
re-activating the development of the project if an improving potash price environment results in the
Wynyard Potash Project becoming economically viable and financeable.
For the Proteos Nitrogen Project, the Company plans to complete the pre-feasibility study for the
project with a view towards making a decision on how to take the project forward including exploring
and securing an offtake partner. The Company continues to have discussions with a number of
agricultural industry participants who have shown interest in the project.
2019 YEAR END RESULTS AND SELECTED ANNUAL INFORMATION
The Company exercised fiscal restraint in 2019 as it continued to wait for the potash price environment
to improve before proceeding with further development of the Wynyard Potash Project. The costs
incurred by the Company in 2019 related to further cost optimization of the Wynyard project and
revalidation of certain technical aspects of the project as well as further investigation and evaluation
of the Proteos Nitrogen Project. As a result, at December 31, 2019, the Company had cash of $7.5
million, a positive working capital of $7.2 million, and no debt. The Company had adequate cash to
fund all existing commitments in 2019. Furthermore, the Company has sufficient cash to meet short
term operating and capital requirements.
The following information has been summarised from the Company's audited financial statements.
Karnalyte's 2019 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
2019 2018 2017
Total revenue - - -
Interest and other income 183 122 114
Net and comprehensive loss (3,090) (6,018) (3,395)
Basic and diluted per share (0.07) (0.21) (0.12)
Total current assets 8,064 11,136 12,757
Total assets 13,875 16,921 18,602
Total current liabilities 870 901 691
KARNALYTE RESOURCES MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 31, 2019 3
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Total liabilities 2,548 2,608 846
Total shareholders’ equity 11,327 14,313 17,756
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
KARNALYTE RESOURCES MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 31, 2019 4
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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
CFO & Interim CEO
Karnalyte Resources Inc.
1(306) 986-1486
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.