Karnalyte Resources Inc. Announces Thomas Drolet as Permanent CEO; Second Quarter 2014 Results

CALGARY, Aug. 14, 2014 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN), has previously announced on 13 May 2014 Mr. Thomas Drolet's appointment as acting  President and Chief Executive Officer ("CEO") for an initial period of six months to a year.

The Board of Directors are pleased to announce today the appointment of Mr. Thomas Drolet as the permanent President and CEO of Karnalyte Resources Inc.

"Mr. Drolet has made significant advances with the Corporation's strategic plan and positioning the company to begin construction," stated Bruce Townsend, Chairman of the Board.  "Mr. Drolet has the responsibility of aggressively pursuing financing to build the 625,000 tonnes per year ("tpy") Wynyard Carnallite Project potash facility (the "Project")."  

Highlights of the Strategic Plan include:

  • Aggressively pursue additional strategic partners and finance components
  • Continuing to advance the detailed engineering for full construction
  • Developing, progressing and pursuing markets and product development for magnesium co-products

Karnalyte Resources Inc. is poised to be the next junior potash company to build a Project with our strategic partner, Gujarat State Fertilizers & Chemicals ("GSFC").  Competitive advantages for the Project include:

  • Receiving a positive bankable feasibility study confirming economic viability of the Project, with:
    • Development capital expenditure ("CAPEX") for the initial 625,000 tpy plant estimated at $593 million with annual operating expenses ("OPEX") of $133 per tonne KCl
    • Development CAPEX for the full 2.125 million tonne per year  operation estimated at $2,002 million (inclusive of the initial $593 million), with OPEX of $125.45 per tonne KCl
  • Receiving Environmental Impact Statement ("EIS") approval from the Saskatchewan Ministry of Environment ("MOE") to initiate construction of the Project
  • Entering into a strategic investment and off-take agreement with GSFC, where GSFC has agreed to purchase approximately 350,000 tpy of potash from Phase 1 of the Project, increasing to 600,000 tpy with the commencement of Phase 2, at prevailing market prices
  • Engaging BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers for a senior secured project finance facility of up to US$300 million
  • Selecting Whiting Equipment Canada Inc. as its major equipment supplier
  • Receiving notice that the Saskatchewan MOE is satisfied with the injection testing
  • Received water right licence and approval to operate ground water works

As at June 30, 2014, the Company had net working capital of $44.2 million compared to $44.4 million at June 30, 2013, including $44.4 million and $56.2 million, respectively, in cash. Karnalyte's Second Quarter 2014 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com .

 



KARNALYTE RESOURCES INC.


STATEMENTS OF FINANCIAL POSITION






ASSETS







June 30,
2014


December 31,
2013

(CAD thousands, unaudited)



Current assets












     Cash


$

44,409


$

46,161

     Trade and other receivables


329


1,480

     Prepaid expenses


89


139



44,827


47,780

Restricted cash


375


375

Deferred financing costs


1,672


1,606

Capital assets (note 4)


19,226


18,745

Intangible exploration and evaluation and other assets

(note 5)

43,009


42,951






ASSETS


$

109,109


$

111,457






LIABILITIES










Current liabilities





     Trade and other payables


$

615


$

746



615


746

Provisions


148


135

Total liabilities


763


881






SHAREHOLDERS' EQUITY










Share capital (note 6(a))


129,780


129,774

Contributed surplus 


8,143


7,778

Deficit


(29,577)


(26,976)

Total shareholders' equity


108,346


110,576






LIABILITIES AND SHAREHOLDERS' EQUITY


$

109,109


$

111,457






                                                                                                                 

 



KARNALYTE RESOURCES INC.


STATEMENTS OF COMPREHENSIVE LOSS


For the three and six months ended June 30,








 

Three months ended


Six months ended

(CAD thousands except per share amounts,
unaudited)

2014

2013


2014

2013

Expenses






     General and administrative

$

1,459

$

1,304


$

2,403

$

2,386







     Depreciation and amortization

192

197


409

404







     Share-based compensation expense (note 7)

(128)

684


184

1,109







     Other (income) and expenses

(14)

9


(45)

(4)








1,509

2,194


2,951

3,895







     Finance income

(168)

(521)


(360)

(598)







     Finance expense

6

2


10

29







Net finance income

(162)

(519)


(350)

(569)







Comprehensive loss

(1,347)

(1,675)


(2,601)

(3,326)







Loss per share (note 6(b))






     Basic and diluted

$

(0.05)

$

(0.06)


$

(0.09)

$

(0.13)







 

 



KARNALYTE RESOURCES INC.


STATEMENTS OF CASH FLOWS


For the six months ended June 30,





(CAD thousands, unaudited)


2014

2013

Cash Flows from (used in) Operating Activities




Net loss for the period


$

(2,601)

$

(3,326)

Add/deduct:




     Depreciation and amortization


409

404

     Stock-based compensation expense


184

1,109

     Net finance income


(350)

(572)

     Interest income received


360

219

Changes in non-cash working capital:




     Trade and other receivables


(163)

49

     Trade and other payables


501

(409)

     Prepaid expenses


43

7

Purchase of shares pursuant to compensation plans


-

(6)



(1,617)

(2,525)





Cash Flows from (used in) Investing Activities




Additions to intangible assets


(145)

(521)

Proceeds on sale of intangible assets


1,244

-

Additions to capital assets


(1,199)

(8,062)

Proceeds on disposition of capital assets


25

-



(75)

(8,583)





Cash Flows from (used in) Financing Activities




Issuance of common shares


-

44,745

Share issue costs


-

(2,432)

Deferred financing costs


(66)

(443)



(66)

41,870





Effect of foreign exchange on cash


6

348

Change in cash


(1,752)

31,110

Cash, beginning of period


46,161

25,115

Cash and cash equivalents, end of period


$

44,409

$

56,225





 

 



KARNALYTE RESOURCES INC.


STATEMENTS OF CHANGES IN EQUITY


For the six months ended June 30,

(Expressed in CAD thousands, unaudited)







2014

2013


Number

Amount

Number

Amount






Share Capital





Balance, beginning of period

27,477

$

129,774

21,989

$

87,473

     Common shares issued  (note 6(b))

-

-

5,490

44,746

     Treasury shares purchased

-

-

(1)

(6)

     Vesting of employee share ownership plan

1

6

-

-

     Share issue costs

-

-

-

(2,432)

Balance, end of period

27,478

129,780

27,478

129,781






Contributed Surplus





Balance, beginning of period


7,778


4,906

     Share-based payment expense (note 7)


371


1,557

     Vesting of employee share ownership plan


(6)


-






Balance, end of period


8,143


6,463






Deficit





Balance, beginning of period


(26,976)


(20,234)

     Loss for the period


(2,601)


(3,326)

Balance, end of period


(29,577)


(23,560)






Total Shareholders' Equity





Balance, end of period


$

108,346


$

112,684

 

 

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. Once financing is obtained 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 and Cautionary Statements

Some of the statements in this announcement may be forward-looking including statements relating to future business plans of Karnalyte. When used in this announcement, the words, "estimate", "approximate", potential and similar expressions are intended to identify forward-looking statements. Forward-looking statements include statements regarding the intent, belief and current expectations of Karnalyte Resources Inc. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Karnalyte's control. Please refer to Karnalyte's Annual Information Form for the year ended December 31, 2013 and dated March 26, 2014 and available for viewing at www.sedar.com, for a list of risk factors. Karnalyte's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Karnalyte will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to Karnalyte or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release.

SOURCE: Karnalyte Resources Inc.

For further information: Thomas Drolet, 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


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