Karnalyte Resources Inc. Announces 2011 Year End Results

CALGARY, March 30, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the year ended December 31, 2011.

"Karnalyte executed on key components of our growth strategy in 2011," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "Karnalyte is focused on completing initiatives that will enable us to begin construction of our planned potash facility."

Karnalyte's 2011 Year End Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com.

Outlook

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

• Continue detailed engineering leading up to ground breaking upon Environmental Impact Statement approval and establish an operations office in Saskatchewan;
• Continue working with the government to obtain the environmental approvals required for the next phase of the Project;
• Continue moving the debt financing through due diligence and establish a banking syndicate for debt financing;
• Pursue key strategic investors to play a role in the project financing and provide the Corporation with key deliverables such as off-take arrangements, marketing assistance or financial stability; and
• Complete a pre-feasibility level study on potential production and marketing of magnesium compounds.

KARNALYTE RESOURCES INC.
STATEMENTS OF FINANCIAL POSITION
ASSETS
As at			December 31,			December 31,			January 1,
			2011			2010			2010
Current assets
Cash		$	34,251,529		$	59,000,457		$	2,490,823
Investments			-			-			6,147,759
Trade and other receivables			711,774			43,276			279,283
Prepaid expenses			99,807			312,865			216,949
Deferred financing expenses			102,893			-			-
			35,166,003			59,356,598			9,134,814
Restricted cash			375,000			125,000			-
Capital assets			3,223,921			459,376			396,938
Intangible exploration and evaluation and other assets			37,082,201			10,748,278			6,867,019
ASSETS		$	75,847,125		$	70,689,252		$	16,398,771
LIABILITIES
Current liabilities
Trade and other payables		$	2,365,895		$	2,288,123		$	680,795
Current portion of capital lease liability			6,904			6,904			-
			2,372,799			2,295,027			680,795
Capital lease liability			-			6,904			-
Provisions			185,617			116,039			-
Total liabilities			2,558,416			2,417,970			680,795
SHAREHOLDERS' EQUITY
Share capital			82,105,674			72,313,190			17,771,007
Warrants and rights			934,950			1,273,605			293,494
Contributed surplus			3,276,698			2,359,264			6,161
Deficit			(13,028,613)			(7,674,777)			(2,352,686)
Total shareholders' equity			73,288,709			68,271,282			15,717,976
LIABILITIES AND SHAREHOLDERS' EQUITY		$	75,847,125		$	70,689,252		$	16,398,771

KARNALYTE RESOURCES INC.
STATEMENTS OF COMPREHENSIVE LOSS
For the years ended December 31,
		2011			2010
Expenses
General and administrative	$	3,312,688		$	2,840,196
Depreciation and amortization		535,444			51,062
Share-based payments		1,722,291			2,464,804
Loss on disposition of assets		25,997			-
Other income		(562,481)			(12,120)
Transaction costs		696,408			-
		5,730,347			5,343,942
Finance income		(401,245)			(26,630)
Finance expense		24,734			4,779
Net finance income		(376,511)			(21,851)
Comprehensive loss		(5,353,836)			(5,322,091)
Loss per share
Basic and diluted	$	(0.26)		$	(0.41)

KARNALYTE RESOURCES INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
		2011	2010
Cash Flows from (used in) Operating Activities
Loss for the period		$    (5,353,836)	$    (5,322,091)
Add/deduct:
Depreciation and amortization		535,444	51,062
Share-based payment expense		1,722,291	2,464,804
Net finance income		(376,511)	(21,851)
Interest income received		365,064	26,630
Loss on disposition of assets		25,997	-
Changes in non-cash working capital:
Trade and other receivables		(255,113)	238,544
Trade and other payables		1,118,733	21,458
Prepaid expenses		(12,253)	(26,597)
		(2,230,184)	(2,568,041)
Cash Flows from (used in) Investing Activities
Additions to intangible assets		(26,589,103)	(2,822,659)
Additions to capital assets		(3,278,718)	(62,438)
Change in restricted cash		(250,000)	(125,000)
Decrease in temporary investments		-	6,147,482
		(30,117,821)	3,137,385
Cash Flows from (used in) Financing Activities
Issuance of common shares		4,042,000	59,985,000
Exercise of options		2,840,100	395,600
Exercise of warrants		1,507,899	-
Share issue costs		(775,078)	(4,437,234)
Deferred financing costs		(2,893)	-
		7,612,028	55,943,366
Effect of foreign exchange on cash		(12,951)	(3,076)
Change in cash		(24,748,928)	56,509,634
Cash, beginning of year		59,000,457	2,490,823
Cash, end of year		$               34,251,529	$           59,000,457

KARNALYTE RESOURCES INC.
STATEMENTS OF CHANGES IN EQUITY
Years ended December 31,
	2011					2010
	Number				Amount	Number		Amount
Share Capital
Balance, beginning of year	20,093,740				$      72,313,190	12,663,800		$       17,771,007
Common shares issued	470,000				4,042,000	6,975,000		59,985,000
Common shares issued on exercise of share options	609,500				3,060,100	176,400		395,600
Common shares issued on exercise of broker warrants	245,296				1,507,899	278,540		83,562
Transfer of contributed surplus	-				1,097,522	-		111,701
Transfer on broker warrants exercised	-				410,435	-		-
Share issue costs	-				(325,472)	-		(6,033,680)
Balance, end of year	21,418,536				82,105,674	20,093,740		72,313,190
Warrants and Rights
Balance, beginning of year	585,624				1,273,605	2,952,524		293,494
Broker warrants and rights issued	28,200				71,780	418,500		1,063,673
Broker warrants and rights exercised	(245,296)				(410,435)	(2,785,400)		(83,562)
Balance, end of year	368,528				934,950	585,624		1,273,605
Contributed Surplus
Balance, beginning of year					2,359,264			6,161
Share-based payment expense					2,014,956			2,464,804
Transfer to share capital on exercise					(1,097,522)			(111,701)
Balance, end of year					3,276,698			2,359,264
Deficit
Balance, beginning of year					(7,674,777)			(2,352,686)
Loss for the year					(5,203,467)			(5,322,091)
Balance, end of year					(12,878,244)			(7,674,777)
Total Shareholders' Equity
Balance, end of year					$      73,439,078			$       68,271,282

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. 

For further information:

Robin Phinney, President & Chief Executive Officer
Ron Love, Chief Financial Officer & Vice-President Finance
Julius Brinkman, Vice-President Corporate Development
Telephone: [phone]
E-mail: [email protected]
Website: www.karnalyte.com