Karnalyte Resources Inc. Completes Nitrogen Prefeasibility Study
KARNALYTE.COM
TSX: KRN
KARNALYTE RESOURCES INC. COMPLETES NITROGEN
PREFEASIBILITY STUDY
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SASKATOON, SK (CNW- July 21, 2020) – Karnalyte Resources Inc. (“Karnalyte” or the “Company”)
(TSX: KRN) announces that it has completed its previously-announced nitrogen prefeasibility study and
that it will continue its disciplined consideration of the Proteos Nitrogen Project. The nitrogen
prefeasibility study is part of the ongoing strategic planning process of the Board and management in
charting the future for the Company.
With input from local advisors in Canada, including Wood Canada, the prefeasibility study was initially
prepared by Karnalyte’s strategic partner and largest investor, Gujarat State Fertilizers and Chemicals
Limited (“GSFC”), and ultimately updated and completed by Karnalyte . GSFC is India’s premier
fertilizer and chemical manufacturing company and has over five decades of relevant experience in the
production, sale and distribution of nitrogen fertilizer.
The prefeasibility study provided a review of key elements of the project, including site location,
production process and technology options, process selection for both the ammonia and urea plants,
and an analysis of raw material, utility and product specifications. The study also considered the
environmental implications and risks inherent in the project, provided financial analysis and laid out a
project implementation plan and schedule. While the prefeasibility study is not sufficient to
conclusively arrive at a project execution decision, it allows the Company to determine whether the
Proteos Nitrogen Project should remain in consideration as part of the Company’s future business
strategy.
The prefeasibility study’s key conclusions included:
the preliminary economic viability of the Proteos Nitrogen Project, with an internal rate of
return and equity rate of return that approaches Company benchmarks, based on the average
pricing over the past four years for bulk urea and ammonia;
potential market growth of urea in Saskatchewan to approximately 2.64 million tonnes, up
from current demand estimates of approximately 1.2 million tonnes, based on Government of
Saskatchewan information; and
the project’s implementation is expected to require three years following the preparation of a
detailed project report and assuming a positive investment decision and commencement of
construction by Karnalyte.
While Karnalyte is encouraged by the results of the prefeasibility study, Karnalyte will continue to
consider the Proteos Nitrogen Project with discipline and caution. As previously announced, Karnalyte
intends to engage an independent strategic consultant. Karnalyte will now include the consideration of
the Proteos Nitrogen Project in the scope of work required from the strategic consultant who, in the
course of its full review of Karnalyte’s strategic options, will independently review the prefeasibility
study.
Readers should not place undue reliance on the above-noted preliminary conclusions of the
prefeasibility study.
BACKGROUND TO THE PREFEASIBILITY STUDY
The idea for the Proteos Nitrogen Project was first announced in the spring of 2018. At that time the
Company announced that with the help of its strategic partner, GSFC, it would invite expressions of
interest to help the Company understand the capital required to develop the project in Saskatchewan
and explore the viability of the Proteos Nitrogen Project. The various expressions of interest the
Company received provided a wide range of estimation of capital required to develop the project
where the difference between the lowest and highest estimated capital costs equalled approximately
$1 billion. The Company also considered engaging an independent third party to prepare a feasibility
study of the Proteos Nitrogen Project. The cost estimates received for the requisite work, however,
were between $2 and $5 million.
After a change in management in the fall of 2019, and recognizing that stakeholders had not received a
meaningful update on the Proteos Nitrogen Project until that time, the current Board and management
concluded that it would be in the best interest of Karnalyte and its shareholders to find a less costly
alternative to spending between $2 million and $5 million on a feasibility study, given the Company’s
cash resources at the time. Current management and the Board worked with GSFC to prepare the
prefeasibility study at a cost of $65,000, which now allows Karnalyte to continue considering the
Proteos Nitrogen Project with discipline and with a focus on preserving value and the interests of all
shareholders, and as part of the Company’s ongoing strategic planning.
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.
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.