CALGARY, Feb. 11, 2015 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) announced today that, following careful consideration and after consultation with legal counsel, its board of directors has unanimously rejected a shareholder proposal brought forth by Mr. Robin L. Phinney (the "Dissident"). The Corporation has determined that the shareholder proposal that Mr. Phinney has brought forward is not legally valid. In that proposal, the Dissident has proposed amendments to the Corporation's by-laws which would unduly and extraordinarily restrict the ability of the Directors from fulfilling their duties to set the strategy for the Corporation, including accessing financing. The proposal brought forward would in no way assist in creating shareholder value.
The Board of Directors remains committed to evaluating all realistic alternatives for enhancing shareholder value. The Dissident's efforts to distract shareholders, the Corporation and the Board of Directors with a proposal that he should have known is legally invalid are misguided and destructive of shareholder value at a critical time for the Corporation related to the approximately $700 million financing it is working to conclude. In addition to representing very poor corporate governance, the Dissident's proposal would also unnecessarily restrict the Corporation from being able to take advantage of opportunities, and could materially harm shareholder value.
The Corporation remains open to engaging with the Dissident in constructive dialogue and notes that, to date, the Corporation has yet to receive a business plan or any other information related to a plan, never mind one that demonstrates a credible plan, from Mr. Phinney.
The Corporation also confirmed that it has not completed a Feasibility level technical review that would credibly assess the business case related to magnesium. The existing Prefeasibility study was predicated on having a high purity magnesium brine source as a starting point, which was the waste brine from the proposed potash processing facility. If magnesium were instead to be the first product produced, the conclusions contained in the Prefeasibility study would need to reflect additional considerations that would substantially increase the costs of building a magnesium production facility if they were not borne by the proposed potash facility being in operation. In addition, subsequent to publishing the Prefeasibility study and while Mr. Phinney was an employee of the Corporation, discussions were held with various potential customers/buyers of potential magnesium products. All these potential magnesium products require significant work to determine the specifications, market penetration plans and reasonable volume expectations. Also, in any scenario, other studies would also be required to secure a credible financing plan to bring the magnesium to production.
The Corporation will continue to engage with all shareholders and consider their views. In connection with the upcoming Annual and Special Meeting of Shareholders, the Corporation intends to provide a management information circular that will be mailed to shareholders and posted on the Corporation's website and SEDAR. In this circular, the Corporation intends to expand on its plans to continue to enhance shareholder value.
Finally, the Corporation announces that, effective January 31, 2015, it has changed its transfer agent from Computershare Trust Company to CST Trust Company.
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