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Press release from CNW Group

Karnalyte Resources Inc. announces second quarter 2013 results; meets condition of Environmental Impact Statement approval

Friday, August 09, 2013

Karnalyte Resources Inc. announces second quarter 2013 results; meets condition of Environmental Impact Statement approval

17:57 EDT Friday, August 09, 2013

CALGARY, Aug. 9, 2013 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2013. The Corporation also announced that the Saskatchewan Ministry of Environment ("MOE") has indicated that it is satisfied with one of the conditions of the Wynyard Carnallite Project's Environmental Impact Statement ("EIS") approval dated February 7, 2013.

"During the second quarter, Karnalyte made progress towards securing funds for the construction and commissioning of the Wynyard Carnallite Project by engaging BNP Paribas and Natixis as lead arrangers for up to US$300 million in project debt," said Robin Phinney, President and CEO of Karnalyte. "Subsequent to the end of the quarter, we received notice that the Saskatchewan MOE is satisfied with the results of the brine disposal injectivity test mentioned in the EIS approval we received earlier this year."

"Uralkali's recent announcement to withdraw from its sales partnership with Belarusian Potash may change global potash markets, however, based on global potash demand fundamentals and the barriers to entry into the North American market faced by international potash companies, we don't believe this development will have as extreme of an impact on price as predicted," added Phinney. "As such, Karnalyte will look at various strategies and alternatives while continuing to assess the implications of this development."

Karnalyte also confirms that it is not aware of any material undisclosed information that may be contributing to the recent decrease in market price and level of trading activity of its shares.

As at June 30, 2013, the Company had net working capital of $55,654,143 compared to $30,504,468 at June 30, 2012, including $56,224,956 and $31,472,099, respectively, in cash. Karnalyte's Second Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com

Key Project Development Highlights

Since April 1, 2013, Karnalyte has achieved the following key milestones in the development of the Wynyard Carnallite Project (the "Project"):

  • Engaged BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers (the "Lead Arrangers") for a senior secured project finance facility of up to US$300 million;
  • Selected Whiting Equipment Canada Inc. ("Whiting") as its major equipment supplier and worked with Whiting to advance detailed engineering activities related to major equipment component specifications;
  • Continued detailed engineering to advance the underground cavern design and planning;
  • Continued site preparation activities at the future production facility site;
  • Received notice that the Saskatchewan MOE is satisfied with a condition of EIS approval, as the results of the recently completed injection test, have confirmed there is sufficient capacity for brine disposal; and
  • Prepared to drill another groundwater source well, which will be tested to support water yield results from the existing groundwater well.







KARNALYTE RESOURCES INC.
         
STATEMENTS OF FINANCIAL POSITION
         
ASSETS        
         
As at   June 30,   December 31,
    2013   2012
Current assets        
     Cash   $     56,224,956   $   25,114,959
     Trade and other receivables               176,493               225,363
     Prepaid expenses               105,828              128,927
     Deferred financing costs            1,164,536              843,897
           57,671,813         26,313,146
Restricted cash               375,000              375,000
Capital assets         13,107,994           6,404,557
Intangible exploration and evaluation and other assets       43,710,479         43,197,551
         
ASSETS   $ 114,865,286   $    76,290,254
         
LIABILITIES        
         
Current liabilities        
     Trade and other payables   $     2,017,673   $       3,996,019
           2,017,673            3,996,019
Provisions             165,181               149,956
Total liabilities           2,182,854            4,145,975
         
SHAREHOLDERS' EQUITY        
         
Share capital     129,780,607          87,473,052
Contributed surplus            6,462,486            4,905,686
Deficit         (23,560,661)         (20,234,459)
Total shareholders' equity      112,682,432          72,144,279
         
LIABILITIES AND SHAREHOLDERS' EQUITY   $ 114,865,286   $    76,290,254
         





KARNALYTE RESOURCES INC.
         
STATEMENTS OF COMPREHENSIVE LOSS
         
For the three and six months ended June 30,
         
    Three months
ended
  Six months
ended
  2013 2012 2013 2012
Expenses        
     General and administrative $    1,304,189 $           782,363 $       2,385,860 $     1,580,670
     Depreciation and amortization            197,442              222,714             404,058           416,059
     Share-based payments            684,396              564,391          1,108,682            694,912
     Transaction costs                       -                         -                        -            108,984
     Restructuring expenditures                       -              735,199                        -            735,199
     Other income and expenses                8,563           (105,226)               (3,632)           (130,904)
          2,194,590           2,199,441           3,894,968          3,404,920
     Finance income           (520,587)           (113,808)           (597,590)           (231,583)
     Finance expense                1,960                11,206               28,824              14,235
Net finance income           (518,627)           (102,602)           (568,766)           (217,348)
         
Comprehensive loss        (1,675,963)        (2,096,839)        (3,326,202)        (3,187,572)
         
Loss per share        
     Basic and diluted $             (0.06) $             (0.10) $             (0.13) $             (0.15)
         


KARNALYTE RESOURCES INC.
       
STATEMENTS OF CASH FLOWS
       
For the six months ended June 30,
       
    2013 2012
Cash Flows from (used in) Operating Activities    
Net loss for the period $ (3,326,202) $ (3,187,572)
Add/deduct:        
  Depreciation and amortization   404,058   416,059
  Share-based payment expense   1,108,682   694,912
  Net finance and other income    (572,400)   (348,252)
  Interest and other income received   219,417   362,487
Changes in non-cash working capital:        
  Trade and other receivables   48,871   146,934
  Trade and other payables   (409,492)   (889,874)
  Prepaid expenses   7,269   (11,104)
Purchase of shares pursuant to compensation plans   (5,947)   -
      (2,525,744)   (2,816,410)
           
Cash Flows from (used in) Investing Activities        
Additions to intangible assets   (521,332)   (2,931,604)
Additions to capital assets   (8,061,886)   (124,738)
      (8,583,218)   (3,056,342)
           
Cash Flows from (used in) Financing Activities        
Issuance of common shares   44,745,994   -
Exercise of options and warrants   -   3,613,731
Share issue costs   (2,432,492)   -
Deferred financing costs   (443,479)   (508,646)
      41,870,023   3,105,085
           
Effect of foreign exchange on cash   348,936   (11,763)
Change in cash   31,109,997   (2,779,430)
Cash, beginning of period   25,114,959   34,251,529
Cash and cash equivalents, end of period $ 56,224,956 $ 31,472,099
         

 

KARNALYTE RESOURCES INC.
         
STATEMENTS OF CHANGES IN EQUITY
         
For the six months ended June 30,
         
         
         
  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                 -                         -      141,325        735,875
     Common shares issued on exercise of broker warrants                 -                         -      309,053     2,657,856
     Treasury shares purchased          (928)                (5,941)                 -                   -
     Transfer from contributed surplus on options exercised                -                       -                 -        262,184
     Transfer from contributed surplus on broker warrants                -                       -                 -         785,520
     Share issue costs                -         (2,432,498)                 -                    -
Balance, end of period 27,478,082     129,780,607 21,868,914    86,547,109
         
Warrants and Rights        
Balance, beginning of period                -                       -        368,528           934,950
     Broker warrants and rights exercised                -                       -       (309,053)           (785,520)
Balance, end of period                -                       -           59,475           149,430
         
Contributed Surplus        
Balance, beginning of period           4,905,686           3,276,698
     Share-based payment expense           1,556,800           1,082,847
     Transfer to share capital on exercise                         -             (262,184)
     Option adjustments                         -             (127,691)
Balance, end of period          6,462,486          3,969,670
         
Deficit        
Balance, beginning of period         (20,234,459)        (13,028,610)
     Loss for the period           (3,326,202)          (3,187,572)
Balance, end of period         (23,560,661)        (16,216,182)
         
Total Shareholders' Equity        
Balance, end of period   $   112,682,432   $   74,450,027
         

Director Resignation

Karnalyte also announces that Paul Sharpe has tendered his resignation as a director of the Corporation effective today.  The board of directors thanks Mr. Sharpe for his contributions to the Corporation and wishes him well in his future endeavours.

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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