Concerned Shareholders of Karnalyte Resources Inc. announce director nominees and reasons for requisition

CALGARY, Dec. 23, 2014 /CNW/ - Robin L. Phinney, a significant shareholder and the designated representative of a group of concerned shareholders (collectively, together with Mr. Phinney, the "Concerned Shareholder Group") of Karnalyte Resources Inc. ("Karnalyte" or the "Company"), today outlined certain of the pressing reasons for requisitioning a special meeting of shareholders of Karnalyte to be held on or before February 13, 2015 (the "Requisition") and announced the director nominees of the Concerned Shareholder Group.

Reasons for the Requisition

The Requisition was made by Mr. Phinney on his own behalf and on behalf of the other members of the Concerned Shareholder Group to remove four incumbent directors:

Stephen Goodman
Martin Hall
Jay Sujir
Bruce Townsend

and to elect four new directors (collectively, the "Concerned Shareholder Nominees"):

Henry Kerkhoven 
Sokuen Sue Ng
Joseph Novecosky
Robin L. Phinney

because of their shared concerns over the lack of leadership, lack of strategic oversight and direction and lack of alignment in interests between the board and shareholders, and their shared desire to preserve and enhance long term shareholder value at Karnalyte by re-constituting the board of directors with individuals qualified to advance the Company's business. In particular, the Concerned Shareholder Group is dismayed and concerned about the following:

• Lack of leadership – Since the last shareholders' meeting in May 2014, the Company has appointed three successive CEOs, resulting in disruptions to the Company's business and unnecessary recruitment and severance expenses, contrary to the Company's stated plan of 'aggressively cutting costs to conserve as much capital as possible'. The current President and CEO, Stephen Goodman, has no operational experience in the exploration and development of potash or magnesium projects or as a chief executive of a publicly listed company.
• Lack of strategic oversight and direction – The incumbent board has failed to take steps to mitigate losses suffered by shareholders as a result of continuing depressed potash prices. It was only after the Concerned Shareholder Group announced its formation and aggregate shareholdings that the Company announced, on December 12, 2014, the initiation of a strategic review process.
• Lack of alignment in interests between the board and shareholders – At the last shareholders' meeting in May 2014, shareholders elected five directors to provide oversight to the management and to make decisions that are in the best interests of the Company. Since then, two of those elected directors have resigned and the board size has been increased by one director to result in an incumbent board of six directors, three of whom were not elected by shareholders. The Concerned Shareholder Group also questions the incumbent board's alignment of interests with that of shareholders as, according to public filings, the incumbent board collectively holds in aggregate less than 1% of the outstanding common shares, in sharp contrast to the ownership of the Concerned Shareholder Nominees. Moreover, based on publicly available information, Jay Sujir, an incumbent director, is a director of more than ten boards of publicly-listed companies, which begs the question of whose interests are being served as well as his commitment to Karnalyte and whether he is able to provide the Company with the attention that is needed.

Mr. Phinney stated: "The revolving-door in the CEO's office signals internal strife within the Company's leadership and a failure of strategic oversight at the board level. Shareholders should rightly feel concerned about who is in charge of our investment and what decision‑making processes are being used to determine the future of our Company.  As shareholders, we should have a say on the constitution of the board of directors and the strategic direction of our Company.

"Since announcing the formation and aggregate shareholdings of the Concerned Shareholder Group on December 10, 2014, I have reached out to the incumbent board with a view to working together to effect the requested changes to get our Company back on track to building long term shareholder value as quickly as possible.  In response, the incumbent board requested a member of the Concerned Shareholder Group to execute a confidentiality agreement so that the parties can discuss 'important developments at Karnalyte that have not been publicly disclosed'.  As the second largest shareholder in Karnalyte, I was disturbed by this request as Karnalyte is required under securities law and the rules of the Toronto Stock Exchange to publicly disclose material changes and information.  Moreover, as shareholders, we should all be entitled to be informed in a timely manner about important developments at our Company.

"On my own behalf and as representative of the Concerned Shareholder Group, I urge fellow shareholders to support the Requisition and the election of the Concerned Shareholder Nominees in order to preserve and enhance the long-term shareholder value of our Company."

Concerned Shareholder Nominees

Details and biographies of the Concerned Shareholder Nominees are set forth further below.  The Concerned Shareholder Group believes that the Concerned Shareholder Nominees, individually and collectively, possess the relevant skills, technical expertise and operational experience necessary to provide the necessary strategic oversight and direction and to execute and advance the Company's projects.

• Henry Kerkhoven (B. Sc., B.Comm, MBA) – Mr. Kerkhoven was the former VP Administration and Chief Financial Officer of Karnalyte, as well as a former Karnalyte director, holding executive positions at Karnalyte from 2008 until 2012. Mr. Kerkhoven has acted as an independent Project Management consultant for more than 10 years and, prior thereto for more than 20 years at CP Railway. Mr. Kerkhoven holds a Bachelor of Science (1971), Bachelor of Commerce (1972) and Masters of Business Administration (1984) from Concordia University in Quebec and is a certified Project Management Professional by the Project Management Institute (1999).
• Sokuen Sue Ng (FSA, FCIA) – Ms. Ng is a consulting actuary with over 30 years of Canadian and international experience in the financial industry, possessing a track record in directing and managing major business projects to maximize returns and control risks. Since 2006 Ms. Ng has consulted on actuarial processes based on the US Sarbanes-Oxley rules, valuation of employee benefits and setting up financial models to project capital needs for a variety of business strategies. From 2006 until 2008, Ms. Ng acted as Chief Actuary at John Hancock Tianan in Shanghai, China, a joint venture established by Manulife Financial and Tian An Ltd. Prior thereto, Ms. Ng was the Assistant VP, Corporate and Group Actuary of Manulife Financial from 1999 until 2004 in Hong Kong and in Canada from 1996 until 1998. From 1987 to 1995 Ms. Ng held various positions in Manulife before being promoted to Director of US Division Financial. Since 1984, Ms. Ng has been a Fellow of the Society of Actuaries (FSA) and Fellow of the Canadian Institute of Actuaries (FCIA). In 1979 Ms. Ng obtained a Bachelor of Mathematics from the University of Waterloo in Ontario with a joint honours in Actuarial Science and Computer Science.
• Joseph M. Novecosky (CMA) – Mr. Novecosky is a Certified Management Accountant & Financial Advisor. Mr. Novecosky studied Commerce at the University of Saskatchewan, and has nearly 40 years of experience providing financial management and accounting services to commercial enterprises. Mr. Novecosky is President of Burrcan Holdings Ltd., and has made investments in the oil and gas industry as well as real estate, power generation and others. Previously, Mr. Novecosky was employed for eight years as Vice President, Corporate Banking at Barclays Bank of Canada, and before that was Treasurer for 10 years at The Potash Corporation of Saskatchewan Inc., one of the world's largest mining companies. He is also a member of the Alberta Society of Management Accountants and holds a CMA designation.
• Robin L. Phinney (P. Eng) – Mr. Phinney founded Karnalyte Resources Inc. in November 2007 and served as its President, Chief Executive Officer and was a director from 2007 until 2014. Mr. Phinney also co-founded Whitemud Resources Inc. in 2002 and served as its Vice President of Engineering from 2005 until 2007. After graduating with a degree in Chemical Engineering from Lakehead University in 1976, Mr. Phinney spent years applying his skills in chemical engineering in the processing of nickel, copper and zinc at Inco Mines and Kidd Creek. Mr. Phinney worked as an industry insider for 15 years in plant engineering process development, product development and sales and marketing for new product lines. Mr. Phinney previously worked for three years at Colt Engineering, and then for five years at Airborne Technologies as Director of Technology. Mr. Phinney also previously worked at Agronomic Growth Industries from 2001 until 2003. In addition, Mr. Phinney spent 15 years at The Potash Corporation of Saskatchewan Inc., where he was instrumental in developing ways to effectively mine and process potash.

The table below sets out, in respect of each Concerned Shareholder Nominee, his or her name, municipality and province of residence, principal occupation, business or employment within the five preceding years, and the number of common shares of Karnalyte beneficially owned, or controlled or directed, directly or indirectly, by such nominee.

Name, Municipality and Province of Residence	Principal Occupation, Business or Employment	Number of Common Shares of Karnalyte Beneficially Owned or Controlled
Henry Kerkhoven Calgary, Alberta	Retired since June 2012 Former VP Administration of Karnalyte from June 2010 to June 2012 Former Chief Financial Officer of Karnalyte from March 2008 to April 2010	295,525
Sokuen Sue Ng Toronto, Ontario	Consulting Actuary, TAM Financial Consulting Inc.	235,610^(1)
Joseph M. Novecosky Calgary, Alberta	President of Burrcan Holdings Ltd. (investments in oil and gas, real estate and others)	10,000
Robin L. Phinney Calgary, Alberta	Retired since May 2014 Former President, CEO and Director of Karnalyte Founder of Karnalyte	4,012,409^(2)

Notes
^(1)	Of these, 110,410 common shares of Karnalyte are beneficially owned by close relatives of Ms. Ng, for whom Ms. Ng provides voting recommendations with respect to such common shares.  Accordingly, Ms. Ng may be considered to "control or direct" such Karnalyte common shares.
^(2)	Of these, 3,250,000 common shares of Karnalyte are held through a numbered company controlled by Mr. Phinney.

If elected, each Concerned Shareholder Nominee will hold office until the next annual meeting of shareholders of Karnalyte or until his or her successor is duly elected or appointed.  Each Concerned Shareholder Nominee is qualified to act as a director under the Business Corporations Act (Alberta) and has consented to act as a director of Karnalyte.

Additional Information Relating to Public Broadcast Solicitations

The information contained in this press release is provided in accordance with Canadian securities laws applicable to public broadcast solicitations.  To the extent required by applicable law, Robin L. Phinney is relying on the exemption under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators ("NI 51-102") to make this public broadcast.  The statements made in this press release are not made by or on behalf of Karnalyte or its management and, except as otherwise stated herein, are made by Mr. Phinney.  Mr. Phinney has retained Norton Rose Fulbright Canada LLP as legal advisors.

Mr. Phinney will bear all costs and expenses associated with any solicitation of proxies, including in connection with a meeting called pursuant to the Requisition (a "meeting"), however, Mr. Phinney intends to seek reimbursement from the Company for expenses reasonably incurred in connection with the Requisition and solicitation of proxies.

Any proxies solicited, including in connection with a meeting, may be solicited by or on behalf of Mr. Phinney, acting on his own behalf and on behalf of the Concerned Shareholder Group, including by professional proxy solicitors which may be retained by Mr. Phinney from time to time, and such proxies may be solicited by public broadcast, including through press releases, speeches or publications, as well as by mail, telephone, e-mail or other electronic means or in person or by any manner permitted by law.  A proxy may be revoked by instrument in writing executed by a shareholder or by his attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized or by any other manner permitted by law.

Information relating to the number of Karnalyte common shares beneficially owned, controlled or directed (directly or indirectly) by the Concerned Shareholder Nominees, as well as information relating to the present principal occupation, business or employment of each Concerned Shareholder Nominee within the five preceding years, not being within the knowledge of Mr. Phinney, has been furnished to him by the respective Concerned Shareholder Nominees.

To the knowledge of Mr. Phinney, no Concerned Shareholder Nominee is, at the date hereof, or has been, within 10 years before the date hereof: (a) a director, chief executive officer or chief financial officer of any company (including Karnalyte) that: (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was issued while the Concerned Shareholder Nominee was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was issued after the Concerned Shareholder  Nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; (b) a director or executive officer of any company (including Karnalyte) that, while such Concerned Shareholder  Nominee was acting in that capacity, or within a year of such Concerned Shareholder Nominee easing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; or (c) a bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such Concerned Shareholder Nominee.

To the knowledge of Mr. Phinney, no Concerned Shareholder Nominee has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation, or by a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a Concerned Shareholder Nominee.

None of Mr. Phinney or his associates or affiliates (including the other members of the Concerned Shareholder Group) and, to his knowledge, none of the Concerned Shareholder Nominees or their respective associates or affiliates, has any material interest, direct or indirect, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction which has materially affected or would materially affect the Company or its subsidiaries.

The registered address of Karnalyte is located at 1600, 333 – 7^th Avenue S.W., Calgary, Alberta, T2P 2Z1. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.

SOURCE: Concerned Shareholder Group of Karnalyte Resources Inc.