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Press release from CNW Group

Karnalyte Resources Inc. announces first quarter 2013 results

Monday, May 13, 2013

Karnalyte Resources Inc. announces first quarter 2013 results

07:00 EDT Monday, May 13, 2013

CALGARY, May 13, 2013 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended March 31, 2013.

"Karnalyte executed on two key elements of its growth strategy in the first quarter by receiving Environmental Impact Statement approval for the Wynyard Carnallite Project, as well as entering into a strategic investment and off-take agreement with Gujarat State Fertilizers & Chemicals," said Robin Phinney, President and CEO of Karnalyte. "We are currently recruiting the remainder of the engineering team and preparing the Project site for construction, as well as continuing to pursue other strategic partnerships and funding to support the first phase of the Project."

As at March 31, 2013, the Company had net working capital of $59,529,560 compared to $31,390,734 at March 31, 2012, including $61,909,274 and $32,032,143, respectively, in cash. Karnalyte's First Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com.

Key Project Development Highlights

Karnalyte has achieved the following key milestones in the development of the Wynyard Carnallite Project (the "Project"):

  • Received a positive bankable feasibility study confirming economic viability of the Project, with the estimated development capital expenditure ("CAPEX") for the initial 625,000 tonnes per year plant
  • Entered into a strategic investment and off-take agreement with Gujarat State Fertilizers & Chemicals ("GSFC") where the Corporation issued GSFC approximately 5,490,000 common shares of Karnalyte at a price of $8.15 per common share for total gross proceeds of approximately $44.7 million
  • Received approval from the Saskatchewan Ministry of Environment for the Environmental Impact Statement to initiate construction of the Project
  • Completed drilling a disposal well for the construction site, which it plans to test in Q2 2013
  • Hired the majority of engineering staff required for construction

Outlook

Over the short term, the Corporation will continue to focus on the following key initiatives:

  • Finalize the Project's debt financing by engaging lead syndicate arrangers
  • Pursue equity financing to help fund the launch of full plant and mine construction
  • Further discussions with other potential strategic partners complementary to GSFC
  • Continue to advance detailed engineering and site preparation to enable the Corporation to begin full site construction activities
  • Drill a water well at the construction site, with testing to coincide with disposal well testing
  • Continue to hire key personnel required to construct the plant and mine

KARNALYTE RESOURCES INC.
         
STATEMENTS OF FINANCIAL POSITION
         
ASSETS        
         
As at March 31, December 31,
  2013 2012
Current assets        
  Cash $  61,909,274 $  25,114,959
  Trade and other receivables   221,828   225,363
  Prepaid expenses   109,175   128,927
  Deferred financing costs   922,251   843,897
    63,162,528   26,313,146
Restricted cash   375,000   375,000
Capital assets   7,557,308   6,404,557
Intangible exploration and evaluation and other assets   46,089,978   43,197,551
         
ASSETS $ 117,184,814 $ 76,290,254
         
LIABILITIES        
         
Current liabilities        
  Trade and other payables $ 3,632,968 $ 3,996,019
    3,632,968   3,996,019
Provisions   150,304   149,956
Total liabilities   3,783,272   4,145,975
         
SHAREHOLDERS' EQUITY        
         
Share capital   129,786,554   87,473,052
Contributed surplus    5,499,685   4,905,686
Deficit   (21,884,697)   (20,234,459)
Total shareholders' equity   113,401,542   72,144,279
         
LIABILITIES AND SHAREHOLDERS' EQUITY $ 117,184,814 $ 76,290,254

 

KARNALYTE RESOURCES INC.
           
STATEMENTS OF COMPREHENSIVE LOSS
           
For the three months ended March 31,
           
  2013   2012
Expenses          
  General and administrative $ 1,081,671   $ 798,307
  Depreciation and amortization   206,616     193,345
  Share-based payments   424,286     130,521
  Transaction costs   -       108,984
  Other income and expenses   (12,195)     (25,678)
    1,700,378     1,205,479
  Finance income   (77,004)     (117,775)
  Finance expense   26,864     3,029
Net finance income   (50,140)     (114,746)
           
Comprehensive loss   (1,650,238)     (1,090,733)
           
Loss per share          
  Basic and diluted $ (0.07)   $ (0.05)

 

KARNALYTE RESOURCES INC.
         
STATEMENTS OF CASH FLOWS
           
For the three months ended March 31,
         
    2013 2012
Cash Flows from (used in) Operating Activities        
Net loss for the period $ (1,650,238) $ (1,090,733)
Add/deduct:        
  Depreciation and amortization   206,616   193,345
  Share-based payment expense   424,286   130,521
  Net finance and other income   (62,335)   (140,424)
  Interest and other income received   89,199   143,453
Changes in non-cash working capital:        
  Trade and other receivables   2,823   231,153
  Trade and other payables   14,842   (928,463)
  Prepaid expenses   (491,990)   13,920
    (1,466,797)   (1,447,228)
         
Cash Flows from (used in) Investing Activities        
Additions to intangible assets   (2,721,995)   (1,284,257)
Additions to capital assets   (1,175,040)   (79,539)
    (3,897,035)   (1,363,796)
         
Cash Flows from (used in) Financing Activities        
Issuance of common shares   44,745,994   -
Exercise of options and warrants   -   886,000
Share issue costs   (2,344,384)   -
Deferred financing costs   (217,311)   (292,234)
    42,184,299   593,766
         
Effect of foreign exchange on cash   (26,152)   (2,128)
Change in cash   36,794,315   (2,219,386)
Cash, beginning of period   25,114,959   34,251,529
Cash and cash equivalents, end of period $ 61,909,274 $ 32,032,143

 

KARNALYTE RESOURCES INC.
             
STATEMENTS OF CHANGES IN EQUITY
             
Three months ended March 31,
             
             
  2013 2012
  Number Amount Number Amount
             
Share Capital            
Balance, beginning of period 21,988,704 $ 87,473,052 21,418,536 $ 82,105,674
  Common shares issued  5,490,306   44,745,994 -   -
  Common shares issued on exercise of share options -   - 133,200   666,000
  Transfer from contributed surplus on options exercised -   - -   276,964
  Share issue costs -   (2,432,492) -   -
Balance, end of period 27,479,010   129,786,554 21,551,736   83,048,638
             
Warrants and Rights            
Balance, beginning of period -   - 368,528   934,950
Balance, end of period -   - 368,528   934,950
             
Contributed Surplus            
Balance, beginning of period     4,905,686     3,276,698
  Share-based payment expense     593,999     162,828
  Transfer to share capital on exercise     -     (276,964)
Balance, end of period     5,499,685     3,162,562
             
Deficit            
Balance, beginning of period     (20,234,459)     (13,028,613)
  Loss for the period     (1,650,238)     (1,090,733)
Balance, end of period     (21,884,697)     (14,119,346)
             
Total Shareholders' Equity            
Balance, end of period   $ 113,401,542   $ 73,026,804

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 Statements

This 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 & Chief Financial Officer
Telephone: (403) 995-6560
E-mail: info@karnalyte.com
Website: www.karnalyte.com

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