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Press release from CNW Group

Karnalyte Resources Inc. announces first quarter 2012 results

Monday, May 14, 2012

Karnalyte Resources Inc. announces first quarter 2012 results07:00 EDT Monday, May 14, 2012CALGARY, May 14, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended March 31, 2012."Karnalyte's near-term plan is to establish an office in Saskatchewan and assemble an engineering team to commence detailed engineering activities," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "As detailed engineering work advances, we intend on initiating site preparation activities before the end of the year."As at March 31, 2012, the Company had net working capital of $31,390,734 compared to $55,133,689 at March 31, 2011, including $32,032,143 and $56,384,392, respectively, in cash. Karnalyte's First Quarter 2012 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com.OutlookOver the short term, the Corporation will continue to focus on the following key initiatives:Pursuing a strategic partnership for potential project financing, off-take arrangements and/or marketing assistance;Completing its pre-feasibility level study on production and marketing of magnesium compounds;Hiring of internal engineering staff for detailed engineering activities and commencement of operations at its Saskatoon office;Working with the Government of Saskatchewan 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; andOptimizing product quality in cooperation with machinery and equipment suppliers.KARNALYTE RESOURCES INC.     STATEMENTS OF FINANCIAL POSITION       ASSETS             As at  March 31,  December 31,   2012  2011       Current assets          Cash $32,032,143 $34,251,529    Trade and other receivables             104,106              711,774    Prepaid expenses             103,087                99,807    Deferred financing expenses              405,201              102,893          32,644,537        35,166,003Restricted cash              375,000              375,000Capital assets           3,135,400          3,223,921Intangible exploration and evaluation and other assets        38,307,124         37,082,201       ASSETS $74,462,061 $75,847,125       LIABILITIES             Current liabilities          Trade and other payables $1,248,625 $2,365,895    Capital lease liability                5,178                  6,904          1,253,803          2,372,799Provisions             181,454              185,617Total liabilities           1,435,257           2,558,416       SHAREHOLDERS' EQUITY             Share capital        83,048,638        82,105,674Warrants and rights             934,950              934,950Contributed surplus           3,162,562           3,276,698Deficit        (14,119,346)        (13,028,613)Total shareholders' equity         73,026,804         73,288,709       LIABILITIES AND SHAREHOLDERS' EQUITY $74,462,061 $75,847,125       See accompanying notes to the financial statements.      KARNALYTE RESOURCES INC.    STATEMENTS OF COMPREHENSIVE LOSS    For the three months ended March 31,        2012  2011      Expenses         General and administrative$798,307 $ 810,425    Depreciation and amortization           193,345               56,656    Share-based payments           130,521             458,204    Other income            (25,678)              (22,480)    Transaction costs           108,984                         -           1,205,479          1,302,805    Finance income          (117,775)              (38,188)    Finance expense               3,029               19,984Net finance income          (114,746)              (18,204)      Comprehensive loss       (1,090,733)         (1,284,601)      Loss per share         Basic and diluted$(0.05) $(0.06)      See accompanying notes to the financial statements.       KARNALYTE RESOURCES INC.       STATEMENTS OF CASH FLOWS       For the three months ended March 31,        2012  2011Cash Flows from (used in) Operating Activities     Loss for the period$(1,090,733) $(1,284,601)Add/deduct:         Depreciation and amortization           193,345               56,656    Share-based payment expense           130,521             458,204    Net finance and other income           (140,424)              (40,684)    Interest and other income received            143,453               60,668Changes in non-cash working capital:         Trade and other receivables           231,153            (286,206)    Trade and other payables           (928,463)               51,210    Prepaid expenses             13,920               13,179         (1,447,228)            (971,574)      Cash Flows from (used in) Investing Activities     Additions to intangible assets        (1,284,257)         (4,372,419)Additions to capital assets             (79,539)            (959,736)         (1,363,796)         (5,332,155)      Cash Flows from (used in) Financing Activities     Issuance of common shares                        -            4,564,897Exercise of options            886,000                         -  Share issue costs                        -              (858,244)Deferred financing costs           (292,234)                        -              593,766          3,706,653      Effect of foreign exchange on cash               (2,128)              (18,989)Change in cash        (2,219,386)         (2,616,065)Cash, beginning of period       34,251,529        59,000,457Cash, end of period$32,032,143 $56,384,392      See accompanying notes to the financial statements.  KARNALYTE RESOURCES INC.     STATEMENTS OF CHANGES IN EQUITY     Three months ended March 31,           20122011 Number AmountNumber Amount       Share Capital       Balance, beginning of period21,418,536$82,105,67420,093,740$72,313,190    Common shares issued -   -  470,000 4,042,000    Common shares issued on exercise of share options133,200 666,00032,600 163,000    Common shares issued on exercise of broker warrants-   -  33,502 288,117    Transfer of contributed surplus-   276,964-   55,325    Transfer on broker warrants exercised-   -  -   85,158    Share issue costs-   -  -   (325,473)Balance, end of period21,551,736 83,048,63820,629,842 76,621,317       Warrants and Rights      Balance, beginning of period368,528 934,950585,624 1,273,605    Broker warrants and rights issued-   -  28,200 71,780    Broker warrants and rights exercised-   -  (33,502) (85,158)Balance, end of period368,528 934,950580,322 1,260,227       Contributed Surplus      Balance, beginning of period  3,276,698  2,359,264    Share-based payment expense  162,828  568,723    Transfer to share capital on exercise  (276,964)  (55,325)Balance, end of period  3,162,562  2,872,662       Deficit      Balance, beginning of period  (13,028,613)  (7,674,777)    Loss for the period  (1,090,733)  (1,284,601)Balance, end of period       (14,119,346)  (8,959,378)       Total Shareholders' Equity      Balance, end of period $73,026,804 $71,794,828      See accompanying notes to the financial statements.     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 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. 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: Robin Phinney, President & Chief Executive Officer Ron Love, Chief Financial Officer & Vice-President Finance Telephone: (403) 995-6560 E-mail: info@karnalyte.com Website: www.karnalyte.com