Karnalyte Resources Inc. announces third quarter 2013 results; appointment of new Director

CALGARY, Nov. 14, 2013 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended September 30, 2013.

"During the third quarter, Karnalyte drilled and successfully tested full-production disposal and source water wells, satisfying two conditions of EIS approval," said Robin Phinney, President and CEO of Karnalyte. "As a result, Karnalyte met a major development milestone by receiving the main Wynyard Carnallite Project development permit, clear of all conditions, from the Saskatchewan MOE."

Karnalyte also announced that it has appointed Martin Hall to serve as Director of the Corporation. Mr. Hall is a Chartered Accountant who first qualified in the U.K in 1975. He spent eight years with PricewaterhouseCoopers in London and then Calgary prior to joining a group of small oil and gas and mineral exploration companies where he held various financial positions latterly as CFO. Between 1994 and 2003, Mr. Hall served as CFO of Tesco Corporation, an oilfield service company. Since his retirement from full time employment in 2003, Mr. Hall has been active as a financial consultant and company director for a number public and private Canadian companies.

As at September 30, 2013, the Company had net working capital of $49,319,380 compared to $28,051,904 at September 30, 2012, including $51,512,033 and $28,853,216, respectively, in cash. Karnalyte's Third Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com.

Key Project Development Highlights

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

• Drilled and successfully tested a full-production capacity disposal well;
• Drilled and successfully tested a second production-size source water well;
• Received the main Wynyard Carnallite Project development permit, clear of all conditions, from the Saskatchewan MOE;
• Continued detailed engineering on the potash plant and underground development; and
• Continued preparing the plant site for construction upon further financing.

Achievement of these milestones constitutes the majority of capital spending related to preparing for plant construction.  Expenditures related to these activities occurred throughout the third quarter and extended into the first half of the fourth quarter.  As of the date of this press release, the Company does not expect to spend further material amounts on Capital or Intangible Assets until further financing is available.

KARNALYTE RESOURCES INC.
STATEMENTS OF FINANCIAL POSITION
ASSETS
As at							September 30,					December 31,
							2013					2012
Current assets
Cash						$	51,512,033				$	25,114,959
Trade and other receivables							150,485					225,363
Prepaid expenses							109,324					128,927
							51,771,842					25,469,249
Deferred financing costs							1,536,168					843,897
Restricted cash							375,000					375,000
Capital assets							16,490,876					6,404,557
Intangible exploration and evaluation and other assets							43,925,697					43,197,551
ASSETS						$	114,099,583				$	76,290,254
LIABILITIES
Current liabilities
Trade and other payables						$	2,452,012				$	3,996,019
							2,452,012					3,996,019
Provisions							169,626					149,956
Total liabilities							2,621,638					4,145,975
SHAREHOLDERS' EQUITY
Share capital							129,774,229					87,473,052
Contributed surplus							7,270,158					4,905,686
Deficit							(25,566,442)					(20,234,459)
Total shareholders' equity							111,477,945					72,144,279
LIABILITIES AND SHAREHOLDERS' EQUITY						$	114,099,583				$	76,290,254

KARNALYTE RESOURCES INC.
STATEMENTS OF COMPREHENSIVE LOSS
For the three and nine months ended September 30,
					Three months ended								Nine months ended
					2013				2012				2013				2012
Expenses
General and administrative				$	1,349,865			$	1,094,436			$	3,735,725			$	2,675,106
Depreciation and amortization					226,961				187,417				631,019				603,477
Share-based payments					583,759				751,671				1,692,441				1,446,583
Transaction costs					-				-				-				108,984
Restructuring expenditures					67,628				134,398				67,628				869,597
Other income and expenses					(17,682)				(50,114)				(21,314)				(181,018)
					2,210,531				2,117,808				6,105,499				5,522,729
Finance income					(205,985)				(130,209)				(803,575)				(361,792)
Finance expense					1,235				1,006				30,059				15,240
Net finance income					(204,750)				(129,203)				(773,516)				(346,552)
Comprehensive loss					(2,005,781)				(1,988,605)				(5,331,983)				(5,176,177)
Loss per share
Basic and diluted				$	(0.07)			$	(0.09)			$	(0.20)			$	(0.24)

KARNALYTE RESOURCES INC.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30,
										2013							2012
Cash Flows from (used in) Operating Activities
Net loss for the period							$			(5,331,983)			$				(5,176,177)
Add/deduct:
	Depreciation and amortization									631,019							603,476
	Share-based payment expense									1,692,441							1,446,583
	Net finance and other income									(794,830)							(527,569)
	Interest and other income received									365,674							542,810
Changes in non-cash working capital:
	Trade and other receivables									117,149							31,804
	Trade and other payables									(639,832)							(1,019,286)
	Prepaid expenses									28,803							13,463
Purchase of shares pursuant to compensation plans										(12,319)							-
										(3,943,878)							(4,084,896)
Cash Flows from (used in) Investing Activities
Additions to intangible assets										(754,904)							(4,306,408)
Additions to capital assets										(10,845,469)							(217,138)
										(11,600,373)							(4,523,546)
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										(796,098)							(403,599)
										41,517,404							3,210,132
Effect of foreign exchange on cash										423,921							(3)
Change in cash										26,397,074							(5,398,313)
Cash, beginning of period										25,114,959							34,251,529
Cash and cash equivalents, end of period							$			51,512,033			$				28,853,216

KARNALYTE RESOURCES INC.
STATEMENTS OF CHANGES IN EQUITY
For the nine months ended September 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				(2,049)				(12,319)				-				-
	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					27,476,961				129,774,229				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)
	Broker warrants and rights expired				-				-				(59,475)				(149,430)
Balance, end of period					-				-				-				-
Contributed Surplus
Balance, beginning of period									4,905,686								3,276,698
	Share-based payment expense								2,364,472								2,139,983
	Transfer to share capital on exercise								-								(262,184)
	Option adjustments								-								(132,500)
	Option adjustments								-								149,430
Balance, end of period									7,270,158								5,171,427
Deficit
Balance, beginning of period									(20,234,459)								(13,028,610)
	Loss for the period								(5,331,983)								(5,176,177)
Balance, end of period									(25,566,442)								(18,204,787)
Total Shareholders' Equity
Balance, end of period								$	111,477,945							$	73,513,749

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.

For further information:

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