Karnalyte Resources Inc. announces second quarter 2013 results; meets condition of Environmental Impact Statement approval

CALGARY, Aug. 9, 2013 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2013. The Corporation also announced that the Saskatchewan Ministry of Environment ("MOE") has indicated that it is satisfied with one of the conditions of the Wynyard Carnallite Project's Environmental Impact Statement ("EIS") approval dated February 7, 2013.

"During the second quarter, Karnalyte made progress towards securing funds for the construction and commissioning of the Wynyard Carnallite Project by engaging BNP Paribas and Natixis as lead arrangers for up to US$300 million in project debt," said Robin Phinney, President and CEO of Karnalyte. "Subsequent to the end of the quarter, we received notice that the Saskatchewan MOE is satisfied with the results of the brine disposal injectivity test mentioned in the EIS approval we received earlier this year."

"Uralkali's recent announcement to withdraw from its sales partnership with Belarusian Potash may change global potash markets, however, based on global potash demand fundamentals and the barriers to entry into the North American market faced by international potash companies, we don't believe this development will have as extreme of an impact on price as predicted," added Phinney. "As such, Karnalyte will look at various strategies and alternatives while continuing to assess the implications of this development."

Karnalyte also confirms that it is not aware of any material undisclosed information that may be contributing to the recent decrease in market price and level of trading activity of its shares.

As at June 30, 2013, the Company had net working capital of $55,654,143 compared to $30,504,468 at June 30, 2012, including $56,224,956 and $31,472,099, respectively, in cash. Karnalyte's Second Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com

Key Project Development Highlights

Since April 1, 2013, Karnalyte has achieved the following key milestones in the development of the Wynyard Carnallite Project (the "Project"):

• Engaged BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers (the "Lead Arrangers") for a senior secured project finance facility of up to US$300 million;
• Selected Whiting Equipment Canada Inc. ("Whiting") as its major equipment supplier and worked with Whiting to advance detailed engineering activities related to major equipment component specifications;
• Continued detailed engineering to advance the underground cavern design and planning;
• Continued site preparation activities at the future production facility site;
• Received notice that the Saskatchewan MOE is satisfied with a condition of EIS approval, as the results of the recently completed injection test, have confirmed there is sufficient capacity for brine disposal; and
• Prepared to drill another groundwater source well, which will be tested to support water yield results from the existing groundwater well.

KARNALYTE RESOURCES INC.
STATEMENTS OF FINANCIAL POSITION
ASSETS
As at		June 30,		December 31,
		2013		2012
Current assets
Cash		$     56,224,956		$   25,114,959
Trade and other receivables		176,493		225,363
Prepaid expenses		105,828		128,927
Deferred financing costs		1,164,536		843,897
		57,671,813		26,313,146
Restricted cash		375,000		375,000
Capital assets		13,107,994		6,404,557
Intangible exploration and evaluation and other assets		43,710,479		43,197,551
ASSETS		$ 114,865,286		$    76,290,254
LIABILITIES
Current liabilities
Trade and other payables		$     2,017,673		$       3,996,019
		2,017,673		3,996,019
Provisions		165,181		149,956
Total liabilities		2,182,854		4,145,975
SHAREHOLDERS' EQUITY
Share capital		129,780,607		87,473,052
Contributed surplus		6,462,486		4,905,686
Deficit		(23,560,661)		(20,234,459)
Total shareholders' equity		112,682,432		72,144,279
LIABILITIES AND SHAREHOLDERS' EQUITY		$ 114,865,286		$    76,290,254

KARNALYTE RESOURCES INC.
STATEMENTS OF COMPREHENSIVE LOSS
For the three and six months ended June 30,
		Three months ended		Six months ended
	2013	2012	2013	2012
Expenses
General and administrative	$    1,304,189	$           782,363	$       2,385,860	$     1,580,670
Depreciation and amortization	197,442	222,714	404,058	416,059
Share-based payments	684,396	564,391	1,108,682	694,912
Transaction costs	-	-	-	108,984
Restructuring expenditures	-	735,199	-	735,199
Other income and expenses	8,563	(105,226)	(3,632)	(130,904)
	2,194,590	2,199,441	3,894,968	3,404,920
Finance income	(520,587)	(113,808)	(597,590)	(231,583)
Finance expense	1,960	11,206	28,824	14,235
Net finance income	(518,627)	(102,602)	(568,766)	(217,348)
Comprehensive loss	(1,675,963)	(2,096,839)	(3,326,202)	(3,187,572)
Loss per share
Basic and diluted	$             (0.06)	$             (0.10)	$             (0.13)	$             (0.15)

KARNALYTE RESOURCES INC.
STATEMENTS OF CASH FLOWS
For the six months ended June 30,
				2013	2012
Cash Flows from (used in) Operating Activities
Net loss for the period			$	(3,326,202)	$	(3,187,572)
Add/deduct:
		Depreciation and amortization		404,058		416,059
		Share-based payment expense		1,108,682		694,912
		Net finance and other income		(572,400)		(348,252)
		Interest and other income received		219,417		362,487
Changes in non-cash working capital:
		Trade and other receivables		48,871		146,934
		Trade and other payables		(409,492)		(889,874)
		Prepaid expenses		7,269		(11,104)
Purchase of shares pursuant to compensation plans				(5,947)		-
				(2,525,744)		(2,816,410)
Cash Flows from (used in) Investing Activities
Additions to intangible assets				(521,332)		(2,931,604)
Additions to capital assets				(8,061,886)		(124,738)
				(8,583,218)		(3,056,342)
Cash Flows from (used in) Financing Activities
Issuance of common shares				44,745,994		-
Exercise of options and warrants				-		3,613,731
Share issue costs				(2,432,492)		-
Deferred financing costs				(443,479)		(508,646)
				41,870,023		3,105,085
Effect of foreign exchange on cash				348,936		(11,763)
Change in cash				31,109,997		(2,779,430)
Cash, beginning of period				25,114,959		34,251,529
Cash and cash equivalents, end of period			$	56,224,956	$	31,472,099

 

KARNALYTE RESOURCES INC.
STATEMENTS OF CHANGES IN EQUITY
For the six months ended June 30,
		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		-		-		141,325	735,875
Common shares issued on exercise of broker warrants		-		-		309,053	2,657,856
Treasury shares purchased		(928)		(5,941)		-	-
Transfer from contributed surplus on options exercised		-		-		-	262,184
Transfer from contributed surplus on broker warrants		-		-		-	785,520
Share issue costs		-		(2,432,498)		-	-
Balance, end of period		27,478,082		129,780,607		21,868,914	86,547,109
Warrants and Rights
Balance, beginning of period		-		-		368,528	934,950
Broker warrants and rights exercised		-		-		(309,053)	(785,520)
Balance, end of period		-		-		59,475	149,430
Contributed Surplus
Balance, beginning of period				4,905,686			3,276,698
Share-based payment expense				1,556,800			1,082,847
Transfer to share capital on exercise				-			(262,184)
Option adjustments				-			(127,691)
Balance, end of period				6,462,486			3,969,670
Deficit
Balance, beginning of period				(20,234,459)			(13,028,610)
Loss for the period				(3,326,202)			(3,187,572)
Balance, end of period				(23,560,661)			(16,216,182)
Total Shareholders' Equity
Balance, end of period				$   112,682,432			$   74,450,027

Director Resignation

Karnalyte also announces that Paul Sharpe has tendered his resignation as a director of the Corporation effective today.  The board of directors thanks Mr. Sharpe for his contributions to the Corporation and wishes him well in his future endeavours.

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