Karnalyte Resources Inc. Announces Third Quarter 2012 Results
FOR IMMEDIATE RELEASE
KARNALYTE RESOURCES INC. ANNOUNCES THIRD QUARTER 2012 RESULTS
Calgary, Alberta (November 13, 2012) - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended September 30, 2012.
“This quarter, Karnalyte entered into an engineering, procurement and construction management agreement with Foster Wheeler, and has since launched detailed engineering for the equipment component of our proposed potash plant,” said Robin Phinney, President and CEO of Karnalyte Resources Inc. “Our Saskatoon office had its grand opening last month and the engineering team has started preparing the site for construction. We expect to initiate site construction upon securing additional financing.”
As at September 30, 2012, the Company had net working capital of $28.1 million compared to $34.7 million at September 30, 2011, including $28.9 million and $37.3 million, respectively, in cash. Karnalyte’s Third Quarter 2012 Financial Statements and Management’s Discussion and Analysis (MD&A) are available at www.sedar.com.
Outlook
Over the short term, the Corporation will continue to focus on the following key initiatives:
- Hiring personnel as required to fill positions at its Saskatoon office;
- Working with the government to obtain the environmental approvals required for construction;
- Pursuing debt and/or equity financing to obtain the total funding required to bring the Project forward to plant and mine construction;
- Pursuing a strategic partnership for potential project financing, off-take arrangements and/or marketing assistance;
- Determining the next steps required to pursue the magnesium compound production and marketing opportunity; and
- Optimizing product quality in cooperation with machinery and equipment suppliers.
STATEMENTS OF FINANCIAL POSITION
ASSETS
| As at Current assets Cash Trade and other receivables Prepaid expenses Deferred financing costs | Sept 30, | December 31, 2011 $ 34,251,529 711,774 99,807 102,893 |
|---|---|---|
| 2012 | ||
| $ 28,853,216 | ||
| 301,910 | ||
| 103,295 | ||
| 444,710 | ||
| Restricted cash Capital assets Intangible exploration and evaluation and other assets | 29,703,131 | 35,166,003 375,000 3,223,921 37,082,201 |
| 375,000 | ||
| 2,900,634 | ||
| 42,379,809 | ||
| ASSETS | $ 75,847,125 | |
| $ 75,358,574 | ||
| LIABILITIES Current liabilities Trade and other payables Capital lease liability | $ 2,365,895 6,904 | |
| $ 1,649,501 | ||
| 1,726 | ||
| Provisions | 1,651,227 | 2,372,799 185,617 |
| 193,598 | ||
| Total liabilities | 1,844,825 | 2,558,416 |
| SHAREHOLDERS' EQUITY Share capital Warrants and rights Contributed surplus Deficit | 82,105,674 934,950 3,276,698 (13,028,613) | |
| 86,547,109 | ||
| - | ||
| 5,171,427 | ||
| (18,204,787) | ||
| Total shareholders' equity | 73,513,749 | 73,288,709 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | $ 75,847,125 | |
| $ 75,358,574 |
STATEMENTS OF COMPREHENSIVE LOSS
Three and nine months ended Sept 30,
| Expenses General and administrative Depreciation and amortization Share-based payments Transaction costs Restructuring expenditures Other income and expenses | Three months | Nine months ended 2012 2011 $ 2,675,106 $ 2,331,061 603,477 360,487 1,446,583 1,138,040 108,984 - 869,597 - (181,018) (533,868) | |||
|---|---|---|---|---|---|
| ended | |||||
| 2012 | 2011 | ||||
| $ 1,094,436 | $ 795,147 | ||||
| 187,417 | 154,719 | ||||
| 187,417 | 154,719 | ||||
| 751,671 | 245,083 | ||||
| - | - | ||||
| 134,398 | - | ||||
| (50,114) | (449,959) | ||||
| Finance income Finance expense | 2,117,808 | 744,990 | 5,522,729 3,295,720 (361,792) (355,662) 15,240 66,547 | ||
| (130,209) | (196,712) | ||||
| 1,006 | 1,497 | ||||
| Net finance income | (129,203) | (195,215) | (346,552) (289,115) | ||
| Comprehensive loss | (1,988,605) | (549,775) | (5,176,177) (3,006,605) | ||
| Loss per share Basic and diluted | $ (0.24) $ (0.15) | ||||
| $ (0.09) | $ (0.03) |
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 | 2012 | 2011 $ (3,006,605) 360,487 1,138,040 (289,115) 282,523 (644,562) 107,086 22,154 |
| $ (5,176,177) | ||
| 603,476 | ||
| 1,446,583 | ||
| (527,569) | ||
| 542,810 | ||
| 31,804 | ||
| (1,019,286) | ||
| 13,463 | ||
| (4,084,896) | (2,029,992) | |
| Cash Flows from (used in) Investing Activities Additions to intangible assets Additions to capital assets | (20,916,332) (3,274,116) | |
| (4,306,408) | ||
| (217,138) | ||
| (4,523,546) | (24,190,448) | |
| Cash Flows from (used in) Financing Activities Issuance of common shares Exercise of options and warrants Share issue costs Deferred financing costs | 5,392,279 - (786,464) - | |
| - | ||
| 3,613,731 | ||
| - | ||
| (403,599) | ||
| 3,210,132 | 4,605,815 | |
| Effect of foreign exchange on cash Change in cash Cash, beginning of period | (70,245) (21,684,870) 59,000,457 | |
| (3) | ||
| (5,398,313) | ||
| 34,251,529 | ||
| Cash and cash equivalents, end of period | $ 28,853,216 | $ 37,315,587 |
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 Transfer from contributed surplus on options exercised Transfer from warrants on broker warrants exercised Share issue costs | 2012 | 2011 Number Amount 20,093,740 $ 72,313,190 470,000 4,042,000 135,600 678,000 78,172 672,279 - 230,125 - 198,703 - (325,471) | |||
| Number | Amount | ||||
| 21,418,536 | $ 82,105,674 | ||||
| 21,418,536 | $ 82,105,674 | ||||
| - | - | ||||
| 141,325 | 735,875 | ||||
| 309,053 | 2,657,856 | ||||
| - | 262,184 | ||||
| - | 785,520 | ||||
| - | - | ||||
| Balance, end of period | 21,868,914 | 86,547,109 | 20,777,512 77,808,826 | ||
| Warrants and Rights Balance, beginning of period Broker warrants and rights issued Broker warrants and rights exercised Broker warrants and rights expired | 585,624 1,273,605 28,200 71,780 (78,172) (198,703) - - | ||||
| 368,528 | 934,950 | ||||
| 368,528 | 934,950 | ||||
| - | - | ||||
| (309,053) | (785,520) | ||||
| (59,475) | (149,430) | ||||
| Balance, end of period | - | - | 535,652 1,146,682 | ||
| Contributed Surplus Balance, beginning of period Share-based payment expense (note 10) Transfer to share capital on exercise Option adjustments Broker warrants expired | 2,359,264 1,414,098 (230,125) - - | ||||
| 3,276,698 | |||||
| 3,276,698 | |||||
| 2,139,983 | |||||
| (262,184) | |||||
| (132,500) | |||||
| 149,430 | |||||
| Balance, end of period | 5,171,427 | 3,543,237 | |||
| Deficit Balance, beginning of period Loss for the period | (7,674,777) (3,006,605) | ||||
| (13,028,610) | |||||
| (13,028,610) | |||||
| (5,176,177) | |||||
| Balance, end of period | (18,204,787) | (10,681,382) | |||
| Total Shareholders' Equity | |||||
| Balance, end of period | $ 73,513,749 | $ 71,817,363 |
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 Finance &Chief Financial Officer Telephone: (403) 995-6560 E-mail: [email protected] Website: www.karnalyte.com
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