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Press release from CNW Group


Wednesday, March 09, 2011

KARNALYTE RESOURCES INC. ANNOUNCES 2010 YEAR END RESULTS19:13 EST Wednesday, March 09, 2011CALGARY, March 9 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the year ended December 31, 2010."2010 was marked with significant company milestones including a successful initial public offering and the conversion of a portion of our property to a lease, which enables us to proceed with commercial potash development," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "Karnalyte continues to execute on its development strategy by advancing the feasibility study and Environmental Impact Statement, and by further expanding our exploration program."Karnalyte's 2010 Year End Financial Statements and Management's Discussion and Analysis (MD&A) are available at HighlightsReceived the Preliminary Assessment which includes NI 43-101 Resource Estimate estimating the Indicated Mineral Resource and Inferred Mineral Resource for the Wynyard Carnallite Project to equal approximately 56.2 and 186.3 million tonnes of potash, respectively;Completed IPO in December 2010, with exercise of over-allotment option in January 2011, raising gross proceeds of more than $64 million;Selected world-renowned engineering firm, Foster Wheeler, to lead the feasibility study, in conjunction with GeoEngineers Inc. and ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH; andReceived approval from the Government of Saskatchewan's Ministry of Energy and Resources to convert 16,825 acres of Karnalyte's Permit KP 360 area to a Subsurface Mineral Lease (KLSA-010).OutlookOver the short term, the Corporation will continue to focus on the following key initiatives:Pursuing independent third party reports, including the feasibility study and the Environmental Impact Statement by the end of fiscal 2011;Analyzing the potential to enhance its resource base through additional drilling of high-potential targets;Characterizing its mineral holdings through additional 3D seismic analysis;Obtaining independent assays of product samples recovered from the pilot test facility; andOptimizing product quality in cooperation with machinery and equipment suppliers.KARNALYTE RESOURCES INC.     BALANCE SHEETS     ASSETSAs at December 31, December 31,  2010 2009Current assets         Cash $     59,000,457 $      2,490,823     Restricted cash              125,000                          -       Investments -          6,147,759     Accounts receivable                43,276             279,283     Prepaid expenses              312,865             216,949          59,481,598         9,134,814Mineral property and deferred exploration and development costs        10,572,459          6,791,804Capital assets              459,376              396,938Intangible assets                97,026                75,215     TOTAL ASSETS $     70,610,459 $      16,398,771     LIABILITIES     Current liabilities         Accounts payable and accrued liabilities $      2,288,123 $           680,795     Current portion of capital lease liability                  6,904                          -              2,295,027              680,795Capital lease liability                 6,904                           -  Asset retirement obligations                37,129                           -  Total liabilities           2,339,060              680,795     SHAREHOLDERS' EQUITY     Share capital         71,705,231         18,331,857Warrants and rights           1,273,605             293,494Contributed surplus              306,978                  6,161Deficit         (5,014,415)         (2,913,536)Total shareholders' equity         68,271,399         15,717,976     LIABILITIES AND SHAREHOLDERS' EQUITY $      70,610,459 $      16,398,771     KARNALYTE RESOURCES INC.    STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT    For the Years Ended December 31,         2010 2009Expenses        General and administrative$     2,840,196 $       1,805,852     Depreciation and accretion             52,371               20,618     Loss on investments                  277                 4,844     Loss on foreign exchange               3,076                32,747     Stock-based compensation           318,672                         -     Interest and other income            (38,750)                (48,729)    Loss before income taxes      (3,175,842)        (1,815,332)Income taxes        Future income tax reduction        1,074,963                           -  Net and comprehensive loss$   (2,100,879) $    (1,815,332)Deficit, beginning of year     (2,913,536)        (1,098,204)Deficit, end of year$    (5,014,415) $    (2,913,536)    Loss per share        Basic and diluted$            (0.16) $             (0.17)KARNALYTE RESOURCES INC.     STATEMENTS OF CASH FLOWS     For the years ended December 31,            2010 2009Cash Flows from (used in) Operating Activities    Net loss $    (2,100,879) $    (1,815,332)Items not involving cash:         Depreciation and accretion              52,371               20,618     Stock-based compensation            318,672                         -     Loss on temporary investments                    277               13,305     Loss on foreign exchange                3,076              16,884     Future income tax reduction        (1,074,963)                         -  Change in non-cash working capital            233,405           (101,798)         (2,568,041)        (1,866,323)     Cash Flows from (used in) Investing Activities    Increase in restricted cash (125,000)                         -  Decrease (increase) in temporary investments           6,147,482        (4,050,009)Additions to intangible assets             (35,524)             (64,511)Additions to capital assets             (85,979)           (129,718)Additions to mineral property        (3,744,835)        (5,324,994)Change in non-cash working capital             981,241            270,511           3,137,385        (9,298,721)     Cash Flows from (used in) Financing Activities    Issuance of common shares        60,380,600        14,627,850Share issue costs        (4,970,007)        (1,121,956)Change in non-cash working capital            532,773                         -           55,943,366       13,505,894     Effect of foreign exchange on cash               (3,076)             (16,884)Change in cash and cash equivalents       56,509,634         2,323,966Cash and cash equivalents, beginning of year          2,490,823            166,857Cash and cash equivalents, end of year $    59,000,457 $     2,490,823About 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 impact. The Corporation plans to construct and operate a solution mining facility capable of producing 2 million tonnes of potash per year. Karnalyte owns a 100% interest in Permit KP 360 and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan, comprising a total of 85,126 acres.Forward-Looking StatementsThis 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. 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: Robin Phinney, President & Chief Executive Officer Ron Love, Chief Financial Officer & Vice-President Finance Julius Brinkman, Vice-President Corporate Development Telephone: (403) 995-6560 E-mail: Website: