Karnalyte Resources Inc. announces first quarter 2013 results

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.

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