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Karnalyte Resources Inc. announces second quarter 2012 results


News provided by

Karnalyte Resources Inc.

Aug 14, 2012, 07:00 ET

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CALGARY, Aug. 14, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2012.

"This quarter, Karnalyte began preparation for the detailed engineering and construction phase of the Wynyard Carnallite Project by securing office space in Saskatoon and hiring key personnel," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "We plan to launch detailed engineering upon the office's opening, which we expect in the third quarter of this year, with commencement of site preparation activities expected before year end. In addition to the progress made towards potash product development, we received a positive Preliminary Feasibility Study for magnesium products subsequent to quarter end that supports the opportunity to produce and market magnesium products as a second product line."

As at June 30, 2012, the Company had net working capital of $30.5 million compared to $40.7 million at June 30, 2011, including $31.5 million and $44.1 million, respectively, in cash. Karnalyte's Second Quarter 2012 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:

  • Hiring personnel to fill positions at its Saskatoon office;
  • Working with the government to obtain the environmental approvals required for construction;
  • Pursuing debt and/or equity financing to obtain the total funding required to bring the Project toward plant and mine construction;
  • Pursuing a strategic partnership for potential project financing, off-take arrangements and/or marketing assistance;
  • Determining the next steps required to pursue the magnesium compound production and marketing opportunity; and
  • Optimizing product quality in cooperation with machinery and equipment suppliers.
KARNALYTE RESOURCES INC.
         
STATEMENTS OF FINANCIAL POSITION
         
ASSETS        
         
As at   June 30,   December 31,
    2012   2011
Current assets        
     Cash $ 31,472,099 $ 34,251,529
     Trade and other receivables               188,325           711,774
     Prepaid expenses               111,162             99,807
     Deferred financing costs               500,152           102,893
           32,271,738      35,166,003
Restricted cash               375,000           375,000
Capital assets             2,967,854        3,223,921
Intangible exploration and evaluation and other assets           40,797,335      37,082,201
         
ASSETS $ 76,411,927 $ 75,847,125
         
LIABILITIES        
         
Current liabilities        
     Trade and other payables $ 1,763,818 $ 2,365,895
     Capital lease liability                    3,452                6,904
               1,767,270         2,372,799
Provisions                 194,630            185,617
Total liabilities              1,961,900          2,558,416
         
SHAREHOLDERS' EQUITY        
         
Share capital             86,547,109        82,105,674
Warrants and rights                  149,430              934,950
Contributed surplus                3,969,670           3,276,698
Deficit         (16,216,182)         (13,028,613)
Total shareholders' equity             74,450,027         73,288,709
         
LIABILITIES AND SHAREHOLDERS' EQUITY $ 76,411,927 $ 75,847,125

See accompanying notes to the interim financial statements.

KARNALYTE RESOURCES INC.
           
STATEMENTS OF COMPREHENSIVE LOSS
           
Three and six months ended June 30,
                 
        Three months
ended
      Six months
ended
    2012   2011   2012   2011
Expenses                
     General and administrative $ 782,363 $ 725,489 $ 1,580,670 $ 1,535,914
     Depreciation and amortization   222,714   149,112   416,059   205,768
     Share-based payments   564,391   434,753   694,912   892,957
     Transaction costs   -   -   108,984   -
     Restructuring expenditures   735,199   -   735,199   -
     Other income and expenses   (105,226)   (61,429)   (130,904)   (83,909)
    2,199,441   1,247,925   3,404,920   2,550,730
     Finance income   (113,808)   (120,762)   (231,583)   (158,950)
     Finance expense   11,206   45,066   14,235   65,050
Net finance income   (102,602)   (75,696)   (217,348)   (93,900)
                 
Comprehensive loss   (2,096,839)   (1,172,229)   (3,187,572)   (2,456,830)
                 
Loss per share                
     Basic and diluted $ (0.10) $ (0.06) $ (0.15) $ (0.12)

See accompanying notes to the interim financial statements.

KARNALYTE RESOURCES INC.
       
STATEMENTS OF CASH FLOWS
       
Six months ended June 30,
         
    2012   2011
Cash Flows from (used in) Operating Activities        
Net loss for the period $ (3,187,572) $ (2,456,830)
Add/deduct:        
     Depreciation and amortization   416,059   205,768
     Share-based payment expense   694,912   892,957
     Net finance and other income   (348,252)   (93,900)
     Interest and other income received   362,487   158,950
Changes in non-cash working capital:        
     Trade and other receivables   146,934   (831,840)
     Trade and other payables   (889,874)   126,016
     Prepaid expenses               (11,104)                   17,767
           (2,816,410)          (1,981,112)
         
Cash Flows from (used in) Investing Activities        
Additions to intangible assets          (2,931,604)        (14,369,955)
Additions to capital assets             (124,738)          (2,721,563)
           (3,056,342)        (17,091,518)
         
Cash Flows from (used in) Financing Activities        
Issuance of common shares                            -              5,008,117
Exercise of options and warrants              3,613,731                            -
Share issue costs                            -             (786,464)
Deferred financing costs             (508,646)                            -
               3,105,085              4,221,653
         
Effect of foreign exchange on cash               (11,763)   (63,041)
Change in cash          (2,779,430)        (14,914,018)
Cash, beginning of period           34,251,529            59,000,457
Cash and cash equivalents, end of period $ 31,472,099 $ 44,086,439

See accompanying notes to the interim financial statements.

KARNALYTE RESOURCES INC.
         
STATEMENTS OF CHANGES IN EQUITY
         
Six months ended June 30,
         
         
  2012 2011
  Number Amount Number Amount
         
Share Capital        
Balance, beginning of period 21,418,536 $ 82,105,674 20,093,740 $ 72,313,190
     Common shares issued  - - 470,000 4,042,000
     Common shares issued on exercise of share options 141,325 735,875 135,600 678,000
     Common shares issued on exercise of broker warrants 309,053 2,657,856 33,502 288,117
     Transfer from contributed surplus on options exercised - 262,184 - 230,125
     Transfer from warrants on broker warrants exercised - 785,520 - 85,158
     Share issue costs - - - (325,471)
Balance, end of period 21,868,914 86,547,109 20,732,842 77,311,119
         
Warrants and Rights        
Balance, beginning of period 368,528 934,950 585,624 1,273,605
     Broker warrants and rights issued - - 28,200 71,780
     Broker warrants and rights exercised (309,053) (785,520) (33,502) (85,158)
Balance, end of period 59,475 149,430 580,322 1,260,227
         
Contributed Surplus        
Balance, beginning of period   3,276,698   2,359,264
     Share-based payment expense   1,082,847   1,108,903
     Transfer to share capital on exercise           (262,184)          (230,125)
     Option adjustments   (127,691)    
Balance, end of period   3,969,670   3,238,042
         
Deficit        
Balance, beginning of period   (13,028,610)   (7,674,777)
     Loss for the period   (3,187,572)   (2,456,830)
Balance, end of period   (16,216,182)   (10,131,607)
         
Total Shareholders' Equity        
Balance, end of period        $ 74,450,027      $ 71,677,781

See accompanying notes to the financial statements.

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 Finance &Chief Financial Officer
Telephone: (403) 995-6560
E-mail: [email protected]
Website: www.karnalyte.com

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Organization Profile

Karnalyte Resources Inc.

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