CALGARY, March 6, 2015 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) noted the documents issued yesterday from dissident shareholder Robin L. Phinney. Based on a preliminary review of the documents, Karnalyte notes a number of distortions, mischaracterizations and confusing statements. For example, Mr. Phinney promotes "an aggressive capital conservation strategy" on the first page of his letter and then proposes significant capital spends in the form of "proof of concept" studies, construction of production wells and further engineering work, on the following page.
In addition, at the time the Board of Directors of Karnalyte terminated Mr. Phinney, he argued that the Corporation should focus on the development of magnesium. Also, Mr. Phinney spent shareholder capital on this strategy, yet (at least in the documents distributed) he is silent on this now.
The Corporation will address these and other concerns when it files its management information circular in due course. Further, the Corporation believes that Mr. Phinney may be breaching his agreements with the Corporation, including his Termination Agreement. The Corporation reserves the right to seek associated damages.
The Board of Directors remains committed to evaluating all realistic alternatives for enhancing shareholder value. As Karnalyte noted in its press release of February 11, 2015, it also remains open to engaging with the dissident in constructive dialogue regarding credible value-creation plans. To date, Mr. Phinney has not accepted this offer.
The Corporation does not believe that the dissident's hollow rhetoric, rainbows (as they appear on the cover of the dissident circular and website) and suggestions of significant capital expenditures – in lieu of a budget and clear strategy – constitute a credible plan to create value for shareholders. Rather, Mr. Phinney has created a sideshow distraction to management's efforts to enhance shareholder value already underway.
There is no action for shareholders to take at this time.
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. Once financing is obtained 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. 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 its ability to secure additional financing. 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, failure to obtain necessary financing, 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 may be 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: Investors: Ron Love, Executive Vice-President Finance & Chief Financial Officer, Telephone: (403) 995-6560, E-mail: [email protected], Website: www.karnalyte.com; Media: Joel Shaffer, Longview Communications, 416-649-8006