CALGARY, March 30, 2012 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced that it has filed an "Amended and Restated Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada" effective March 30, 2012 (the "Amended and Restated Technical Report"). As previously announced, Karnalyte received comments from the securities commissions on its previously filed technical report entitled "Reserve and Resources Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada" effective October 21, 2011 (the "Original Technical Report"). Over the past few months Karnalyte has responded to the comments of the securities commissions and as a result Karnalyte is filing the Amended and Restated Technical Report.
"The changes in the Amended and Restated Technical Report have no impact on the feasibility status of the Wynyard Carnallite Project or on Karnalyte's proven and probable reserves," said Robin Phinney, President and CEO of Karnalyte. "Now that Karnalyte has filed the Amended and Restated Technical Report, we can proceed with our strategy to develop the first greenfield potash plant to be built in Saskatchewan in more than 40 years."
The following is an overview of certain changes that have been made in the Amended and Restated Technical Report:
- An increase to the value of inferred resources from 56.1 to 269.3 million tonnes due to the removal of a recovery factor that had been applied in the original report. The proven and probable reserves remain at 62.9 and 92.0 million tonnes of KCl respectively, for a total of 154.9 million tonnes of KCl.
- An increase in the accuracy range of estimated capital expenditure (CAPEX) and operating expenditure (OPEX) costs from ±25% to ±15% for the 2nd and 3rd phases of plant expansion from 625,000 tonnes per year (tpy) to 2.125 million tpy of granular product. This change increased estimated CAPEX from $1,973 million to $2,002 million for the 2.125 million tpy facility and decreased estimated OPEX from $129.20 to $125.45 per tonne. OPEX includes annual brine field expansion and contingency.
- The Corporation updated certain assumptions in the project economics to better reflect current trends.
- Our engineering firm, Foster Wheeler Canada Ltd., provided a Statement of Certification for certain sections of the Amended and Restated Technical Report.
- Clarification as to the basis for the discount rates used in the economic and sensitivity analysis.
- Clarification as to why a pilot operation is not required to obtain feasibility status.
The Amended and Restated Technical Report will be available on SEDAR at www.sedar.com in the next few days. Karnalyte anticipates the engineering and construction phase of the Wynyard Carnallite Project to commence in the second quarter of 2012.
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 impact. 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.
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the Corporation's future operations, including financings. 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 and financings. 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. 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. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
For further information:
Robin Phinney, President & Chief Executive Officer
Ron Love, Chief Financial Officer & Vice-President Finance
Julius Brinkman, Vice-President Corporate Development
Telephone: (403) 995-6560