Karnalyte Resources Inc. Provides Corporate Update and Outlines Plans FOR 2019
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KARNALYTE RESOURCES INC. PROVIDES CORPORATE UPDATE
AND OUTLINES PLANS FOR 2019
Not for distribution to U.S. news wire services or dissemination in the United States.
SASKATOON, SK (CNW - January 16, 2019) – Karnalyte Resources Inc. (" Karnalyte " or the
"Company ") (TSX: KRN) today provided a corporate update and outlined its plans for 2019.
2019 – The Year Ahead
We anticipate that 2019 will be a busy time for Kar nalyte as we continue to take steps to advance our
strategy to build an independent Saskatchewan-based fertilizer company through the production of potash
and the manufacture of nitrogen. Our plans for 2019 include:
• advancing the development of the Proteos Nitrogen Project (“ Proteos Nitrogen ”) towards an
investment decision; and
• continuing discussions with Gujarat State Fertilize r & Chemicals Limited (“GSFC”) as to the
appropriate time to advance the development of the Wynyard Potash Project (“ Wynyard Potash ”),
given the improving potash price environment.
Wynyard Potash
Wynyard Potash is a well advanced conventional solution mining potash project. We have completed a NI
43-101 final feasibility study, basic engineering, obtained all necessary environmental approvals, and
entered into an offtake agreement with GSFC for app roximately 50% of Phase 1 production. The only
ingredient lacking is a potash price that makes Wynyard Potash economically viable.
We continue to be encouraged by the improvement in potash prices, and in particular by the recent contracts
entered into by China and India in the fourth quart er of 2018. However, while potash prices continue to
improve, they have not yet reached the level where Wynyard Potash is an economically viable and
financeable mining project. Global economic uncert ainty continues to negatively impact international
financial markets and debt markets remain tight, restrictive and unpredictable due to such uncertainty. We
continue to take a prudent and disciplined approach to the development of Wynyard Potash, and we will
closely monitor potash prices and financial markets in determining when to advance the development of
Wynyard Potash.
The Company's strategic partner, GSFC, remains comm itted to both the Company and Wynyard Potash.
GSFC continues to confirm to the Company that it wi ll support the structuring of the most cost-effecti ve
financing package for the development of Wynyard Po tash, similar to the support GSFC offered to the
Company in 2016.
Proteos Nitrogen
Proteos Nitrogen is a compelling part of Karnalyte’ s future. Moving into the manufacturing of nitroge n
will provide valuable diversification away from a r eliance on potash alone and give us another market in
which to do business. Proteos Nitrogen also has the potential to provide a source of free cash flow to assist
in funding the development of Wynyard Potash.
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We expect to complete our investigation of the tech nical and economic viability of Proteos Nitrogen,
including the acquisition of an appropriate project site, during the first half of 2019, in order to a llow the
Board of Directors to make an investment decision. We continue to have productive discussions with local
agricultural industry partners regarding their potential participation in Proteos Nitrogen.
Corporate Matters
Karnalyte is strongly committed to the implementati on and maintenance of best governance practices. I n
this regard, a number of allegations attacking the Company, its Board of Directors and management, and
Karnalyte’s governance, have been made by two of th e respondents in court proceedings brought by
Karnalyte in the Alberta Court of Queen’s Bench in connection with the Company’s 2018 annual and
special meeting of shareholders. The Company belie ves that these allegations, which are disputed and
unproven, have no relevance to the matters at issue in the court proceedings and were made for the collateral
purpose of damaging its Board of Directors and management. In preparing to respond as appropriate in the
court proceedings, the Company is conducting an internal investigation into the allegations.
Notwithstanding the collateral nature of these allegations, the Company has embarked on a detailed internal
review of its governance practices. As part of this review, the Company is evaluating current and historical
governance practices, its corporate governance guidelines, code of conduct and ethics, committee charters
and position descriptions and intends to update them with a view to meeting or exceeding current standards
for best practices in corporate governance. This review has not yet been completed. The Company expects
to complete the update of its governance policies and practices prior to the end of the first quarter of 2019.
Upon completion, copies will be available on the Company’s website.
In addition, in furtherance of best corporate gover nance standards, and having regard to Karnalyte’s
strategic plan transition to a multi-product indepe ndent fertilizer company, the Company is currently
reviewing the composition of its Board of Directors. In this connection, Karnalyte has determined to seek
new Board members in order to augment its experience and expertise and to enhance the Company’s ability
to effectively execute its strategic plan to develop Wynyard Potash and Proteos Nitrogen. In doing so, the
Board must determine, in light of the opportunities and risks facing the Company, the competencies, skills
and personal qualities it should seek in new Board members in order to provide it with the best opportunity
to advance the Company’s projects in a timely manne r to the next stage of their development. Based on
this framework, a skills matrix is being developed outlining the Company’s desired complement of
directors’ competencies, skills and characteristics. The specific make-up of the matrix includes such items
as experience in the agriculture industry, leading growth-oriented Canadian public companies, development
of major capital projects, raising equity and proje ct debt financing, corporate governance expertise,
financial literacy, and meeting all legal and regul atory requirements applicable to Canadian public
companies. The Board will utilize the matrix to det ermine its own strengths and weaknesses and identif y
gaps that need to be filled to assist in approachin g qualified new nominees for election to the Board, and
for assessing directors on an ongoing basis. In its consideration of potential director nominees, candidates
will be sought that meet all standards of independe nce applicable to the Company and have no direct or
indirect material relationships with the Company or its shareholders.
In light of the foregoing, three current directors, Messrs. Peter Matson, Gregory Szabo and Mark
Zachanowich, have agreed to resign their positions, effective immediately. The Company is greatly
appreciative of their service, and wishes them well in their future endeavours.
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About Karnalyte Resources Inc.
Karnalyte Resources Inc. is an advanced 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 tonnes per year (Mtpy). Karnalyte is also exploring the development of the Proteos Nitrogen
Project, which is a proposed small-scale nitrogen f ertilizer plant with a nameplate production capacit y 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 62 5,000 tpy of high grade granular potash, and two
subsequent phases of 750,000 tpy each, taking total production up to 2.125 Mtpy. All environmental
permits remain valid, preliminary detailed engineering is complete, and the existing offtake agreement with
Gujarat State Fertilizers & Chemicals Limited remai ns in effect. Further development is dependent on
improved potash prices.
About the Proteos Nitrogen Project
The Proteos Nitrogen Project is an advanced stage d evelopment project consisting of a proposed small-
scale nitrogen fertilizer plant to be located in Ce ntral Saskatchewan, having a nameplate production
capacity of approximately 700 mtpd of ammonia and a pproximately 1,200 mtpd of urea, and designed to
produce two products – anhydrous ammonia (82-0-0) a nd granular urea (46-0-0). Karnalyte’s primary
target market is independent local Saskatchewan fer tilizer wholesalers within a 400-kilometer radius o f
Saskatoon, Saskatchewan. A secondary target market is the US Midwest fertilizer wholesalers near to the
Canadian – United States border. The proposed plan t 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 (“GSF C”) 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 of 445,000 Mtpy nameplate capacity, which was commissioned in the year 2000 based on Linde’s
technology (after the two old ammonia plants establ ished in 1969 were retired due to higher energy
consumption), and two urea plants, with a total of 370,590 Mtpy nameplate capacity which were established
in 1969, at its fertilizer production complex in Va dodara, Gujarat State, India. GSFC’s urea plants h ave
consistently operated at optimum capacity over the past five decades.
As t he Company’s strategic partner and single largest s hareholder, 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.
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For further information, please contact:
Frank D. Wheatley
President
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 applicabl e
Canadian securities laws. Forward-looking informati on is often, but not always, identified by the use of
words such as “anticipate”, “believe”, “could”, “es timate”, “expect”, “plan”, “intend”, “forecast”, “f uture”,
“guidance”, “may”, “predict”, “project”, “should”, “strategy”, “target”, “will” or similar words or ph rases
suggesting future outcomes or language suggesting an outlook.
The forward-looking statements contained in this pr ess release are based on certain key expectations a nd
assumptions made by Karnalyte, including, without limitation, assumptions as to: projected economics for
the Company’s planned potash production facility, t he 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 appro vals 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 u ndue reliance on the forward-looking statements and
information contained in this press release. Withou t limiting the generality of the foregoing, readers are
cautioned that the Company has not received a feasi bility study prepared by a third party with respect to
the Proteos Nitrogen Project.
Actual results may vary from the forward-looking in formation presented in this press release, and such
variations could be material. Risk factors and unce rtainties could cause actual results to vary from t he
forward-looking information in this press release. Additional information on forward-looking statement s
and other factors that could affect Karnalyte’s ope rations and financial results are included in docum ents
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.