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Press release from CNW Group

Karnalyte Resources Inc. Announces Third Quarter 2012 Results

Tuesday, November 13, 2012

Karnalyte Resources Inc. Announces Third Quarter 2012 Results17:00 EST Tuesday, November 13, 2012CALGARY, Nov. 13, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended September 30, 2012."This quarter, Karnalyte entered into an engineering, procurement and construction management agreement with Foster Wheeler, and has since launched detailed engineering for the equipment component of our proposed potash plant," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "Our Saskatoon office had its grand opening last month and the engineering team has started preparing the site for construction. We expect to initiate site construction upon securing additional financing."As at September 30, 2012, the Company had net working capital of $28.1 million compared to $34.7 million at September 30, 2011, including $28.9 million and $37.3 million, respectively, in cash. Karnalyte's Third 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 as required 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 forward to 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 Sept 30, December 31,  2012 2011Current assets         Cash $     28,853,216 $       34,251,529     Trade and other receivables              301,910                711,774     Prepaid expenses              103,295                  99,807     Deferred financing costs              444,710               102,893         29,703,131           35,166,003Restricted cash             375,000                375,000Capital assets           2,900,634             3,223,921Intangible exploration and evaluation and other assets        42,379,809           37,082,201     ASSETS $     75,358,574 $      75,847,125     LIABILITIES         Current liabilities         Trade and other payables $      1,649,501 $        2,365,895     Capital lease liability                  1,726                    6,904           1,651,227             2,372,799Provisions              193,598                185,617Total liabilities           1,844,825             2,558,416     SHAREHOLDERS' EQUITY         Share capital         86,547,109          82,105,674Warrants and rights                           -                 934,950Contributed surplus            5,171,427            3,276,698Deficit      (18,204,787)       (13,028,613)Total shareholders' equity         73,513,749           73,288,709     LIABILITIES AND SHAREHOLDERS' EQUITY $     75,358,574 $      75,847,125          KARNALYTE RESOURCES INC.      STATEMENTS OF COMPREHENSIVE LOSS      Three and nine months ended Sept 30,         Three monthsended   Nine monthsended 20122011 20122011Expenses          General and administrative$     1,094,436$        795,147 $     2,675,106$     2,331,061     Depreciation and amortization           187,417           154,719            603,477           360,487     Share-based payments           751,671           245,083         1,446,583        1,138,040     Transaction costs                       -                         -              108,984                       -       Restructuring expenditures           134,398                       -              869,597                       -       Other income and expenses            (50,114)          (449,959)           (181,018)          (533,868)         2,117,808           744,990         5,522,729        3,295,720     Finance income          (130,209)          (196,712)           (361,792)          (355,662)     Finance expense               1,006               1,497              15,240             66,547Net finance income          (129,203)          (195,215)          (346,552)          (289,115)      Comprehensive loss       (1,988,605)          (549,775)        (5,176,177)       (3,006,605)      Loss per share          Basic and diluted$             (0.09)$             (0.03) $             (0.24)$             (0.15)            KARNALYTE RESOURCES INC.    STATEMENTS OF CASH FLOWS    Nine months ended Sept 30,      20122011Cash Flows from (used in) Operating Activities   Net loss for the period $    (5,176,177)$    (3,006,605)Add/deduct:        Depreciation and amortization            603,476                360,487     Share-based payment expense         1,446,583            1,138,040     Net finance and other income           (527,569)          (289,115)     Interest and other income received            542,810                282,523Changes in non-cash working capital:        Trade and other receivables              31,804          (644,562)     Trade and other payables        (1,019,286)              107,086     Prepaid expenses              13,463                22,154         (4,084,896)       (2,029,992)    Cash Flows from (used in) Investing Activities   Additions to intangible assets        (4,306,408)     (20,916,332)Additions to capital assets           (217,138)       (3,274,116)         (4,523,546)     (24,190,448)    Cash Flows from (used in) Financing Activities   Issuance of common shares                        -               5,392,279Exercise of options and warrants         3,613,731                          -  Share issue costs                        -            (786,464)Deferred financing costs           (403,599)                           -            3,210,132           4,605,815    Effect of foreign exchange on cash                      (3)            (70,245)Change in cash        (5,398,313)     (21,684,870)Cash, beginning of period       34,251,529          59,000,457Cash and cash equivalents, end of period $   28,853,216$       37,315,587        KARNALYTE RESOURCES INC.      STATEMENTS OF CHANGES IN EQUITY      Nine months ended Sept 30,              20122011  NumberAmountNumberAmount      Share Capital      Balance, beginning of period 21,418,536$ 82,105,674   20,093,740$   72,313,190     Common shares issued                  -                     -          470,000        4,042,000     Common shares issued on exercise of share options      141,325          735,875        135,600           678,000     Common shares issued on exercise of broker warrants      309,053      2,657,856          78,172           672,279     Transfer from contributed surplus on options exercised                 -         262,184                   -              230,125     Transfer from warrants on broker warrants exercised                 -         785,520                   -             198,703     Share issue costs                 -                     -                    -         (325,471)Balance, end of period 21,868,914     86,547,109  20,777,512       77,808,826      Warrants and Rights     Balance, beginning of period      368,528        934,950      585,624        1,273,605     Broker warrants and rights issued                 --          28,200              71,780     Broker warrants and rights exercised     (309,053)(785,520)(78,172)       (198,703)     Broker warrants and rights expired       (59,475)(149,430)                -                         -  Balance, end of period                -                    -         535,652        1,146,682      Contributed Surplus     Balance, beginning of period       3,276,698         2,359,264     Share-based payment expense (note 10)       2,139,983         1,414,098     Transfer to share capital on exercise          (262,184)        (230,125)     Option adjustments          (132,500)                         -       Broker warrants expired           149,430                         -  Balance, end of period        5,171,427          3,543,237      Deficit     Balance, beginning of period     (13,028,610)     (7,674,777)     Loss for the period       (5,176,177)     (3,006,605)Balance, end of period     (18,204,787)   (10,681,382)      Total Shareholders' Equity     Balance, end of period  $ 73,513,749 $    71,817,363      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