The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

Karnalyte Resources Inc. announces second quarter 2012 results

Tuesday, August 14, 2012

Karnalyte Resources Inc. announces second quarter 2012 results07:00 EDT Tuesday, August 14, 2012CALGARY, Aug. 14, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2012."This quarter, Karnalyte began preparation for the detailed engineering and construction phase of the Wynyard Carnallite Project by securing office space in Saskatoon and hiring key personnel," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "We plan to launch detailed engineering upon the office's opening, which we expect in the third quarter of this year, with commencement of site preparation activities expected before year end. In addition to the progress made towards potash product development, we received a positive Preliminary Feasibility Study for magnesium products subsequent to quarter end that supports the opportunity to produce and market magnesium products as a second product line."As at June 30, 2012, the Company had net working capital of $30.5 million compared to $40.7 million at June 30, 2011, including $31.5 million and $44.1 million, respectively, in cash. Karnalyte's Second 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:Hiring personnel 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 toward 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; andOptimizing product quality in cooperation with machinery and equipment suppliers.KARNALYTE RESOURCES INC.     STATEMENTS OF FINANCIAL POSITION     ASSETS         As at June 30, December 31,  2012 2011Current assets        Cash$31,472,099$34,251,529    Trade and other receivables             188,325         711,774    Prepaid expenses             111,162           99,807    Deferred financing costs             500,152         102,893         32,271,738    35,166,003Restricted cash             375,000         375,000Capital assets           2,967,854      3,223,921Intangible exploration and evaluation and other assets         40,797,335    37,082,201     ASSETS$76,411,927$75,847,125     LIABILITIES         Current liabilities        Trade and other payables$1,763,818$2,365,895    Capital lease liability                  3,452              6,904             1,767,270       2,372,799Provisions               194,630          185,617Total liabilities            1,961,900        2,558,416     SHAREHOLDERS' EQUITY         Share capital           86,547,109      82,105,674Warrants and rights                149,430            934,950Contributed surplus              3,969,670         3,276,698Deficit       (16,216,182)       (13,028,613)Total shareholders' equity           74,450,027       73,288,709     LIABILITIES AND SHAREHOLDERS' EQUITY$76,411,927$75,847,125See accompanying notes to the interim financial statements.KARNALYTE RESOURCES INC.      STATEMENTS OF COMPREHENSIVE LOSS      Three and six months ended June 30,             Three monthsended   Six monthsended  2012 2011 2012 2011Expenses            General and administrative$782,363$725,489$1,580,670$1,535,914    Depreciation and amortization 222,714 149,112 416,059 205,768    Share-based payments 564,391 434,753 694,912 892,957    Transaction costs - - 108,984 -    Restructuring expenditures 735,199 - 735,199 -    Other income and expenses (105,226) (61,429) (130,904) (83,909)  2,199,441 1,247,925 3,404,920 2,550,730    Finance income (113,808) (120,762) (231,583) (158,950)    Finance expense 11,206 45,066 14,235 65,050Net finance income (102,602) (75,696) (217,348) (93,900)         Comprehensive loss (2,096,839) (1,172,229) (3,187,572) (2,456,830)         Loss per share            Basic and diluted$(0.10)$(0.06)$(0.15)$(0.12)See accompanying notes to the interim financial statements.KARNALYTE RESOURCES INC.    STATEMENTS OF CASH FLOWS    Six months ended June 30,       2012 2011Cash Flows from (used in) Operating Activities    Net loss for the period$(3,187,572)$(2,456,830)Add/deduct:        Depreciation and amortization 416,059 205,768    Share-based payment expense 694,912 892,957    Net finance and other income (348,252) (93,900)    Interest and other income received 362,487 158,950Changes in non-cash working capital:        Trade and other receivables 146,934 (831,840)    Trade and other payables (889,874) 126,016    Prepaid expenses             (11,104)                 17,767         (2,816,410)        (1,981,112)     Cash Flows from (used in) Investing Activities    Additions to intangible assets        (2,931,604)      (14,369,955)Additions to capital assets           (124,738)        (2,721,563)         (3,056,342)      (17,091,518)     Cash Flows from (used in) Financing Activities    Issuance of common shares                          -            5,008,117Exercise of options and warrants            3,613,731                          -Share issue costs                          -           (786,464)Deferred financing costs           (508,646)                          -             3,105,085            4,221,653     Effect of foreign exchange on cash             (11,763) (63,041)Change in cash        (2,779,430)      (14,914,018)Cash, beginning of period         34,251,529          59,000,457Cash and cash equivalents, end of period$31,472,099$44,086,439See accompanying notes to the interim financial statements.KARNALYTE RESOURCES INC.     STATEMENTS OF CHANGES IN EQUITY     Six months ended June 30,           20122011 NumberAmountNumberAmount     Share Capital     Balance, beginning of period21,418,536$ 82,105,67420,093,740$ 72,313,190    Common shares issued --470,0004,042,000    Common shares issued on exercise of share options141,325735,875135,600678,000    Common shares issued on exercise of broker warrants309,0532,657,85633,502288,117    Transfer from contributed surplus on options exercised-262,184-230,125    Transfer from warrants on broker warrants exercised-785,520-85,158    Share issue costs---(325,471)Balance, end of period21,868,91486,547,10920,732,84277,311,119     Warrants and Rights    Balance, beginning of period368,528934,950585,6241,273,605    Broker warrants and rights issued--28,20071,780    Broker warrants and rights exercised(309,053)(785,520)(33,502)(85,158)Balance, end of period59,475149,430580,3221,260,227     Contributed Surplus    Balance, beginning of period 3,276,698 2,359,264    Share-based payment expense 1,082,847 1,108,903    Transfer to share capital on exercise         (262,184)        (230,125)    Option adjustments (127,691)  Balance, end of period 3,969,670 3,238,042     Deficit    Balance, beginning of period (13,028,610) (7,674,777)    Loss for the period (3,187,572) (2,456,830)Balance, end of period (16,216,182) (10,131,607)     Total Shareholders' Equity    Balance, end of period      $ 74,450,027    $ 71,677,781See 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. SOURCE: Karnalyte Resources Inc.For further information: Robin Phinney, President & Chief Executive Officer Ron Love, Executive Vice-President Finance &Chief Financial Officer Telephone: (403) 995-6560 E-mail: info@karnalyte.com Website: www.karnalyte.com