- NO BREACHES FOUND IN THOROUGH INVESTIGATION LED BY LEADING LAW
FIRM
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE UNITED
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SASKATOON, SK, Oct. 26, 2020 /CNW/ - Karnalyte Resources Inc.
("Karnalyte" or the "Company") (TSX: KRN) announces
the completion of an investigation of allegations made by a small
group of dissident shareholders (the "Dissidents"). A
leading law firm completed the extensive review, which included
interviews with a number of parties. The 77-page investigation
report (the "Investigation Report") and the almost 300-page
compendium of materials to the Investigation Report highlight,
among other things, the following:
- The Interim CEO and the Board of Directors of the Company (the
"Board") are in compliance with the Company's Code of
Conduct contrary to the allegations made by the Dissidents.
- There is no evidence of selective disclosure of material,
non-public information by the Interim CEO.
- The Interim CEO has acted appropriately to avoid all conflicts
of interest.
- Mr. Vishvesh Nanavaty, a current
director, and Mr. Sanjeev Varma, a
former director, each nominated to the Board by Gujarat State
Fertilizers and Chemicals Ltd. ("GSFC"), have acted
appropriately to disclose and avoid conflicts of interest.
- The Company is not in breach of contractual or other
obligations with respect to the designation of the number of GSFC
nominees on the Board.
- The Company has provided full and accurate disclosure of
material transactions and related party transactions in its
financial communications.
- The Company is in compliance with Canadian securities laws and
Toronto Stock Exchange rules and regulations including as it
relates to the independence of the Company's board of
directors.
- The Company is not in breach of the Lobbying Act
(Canada).
As previously announced by the Company on July 27, 2020, the Board believed that certain
allegations the Dissidents publicly released, despite being
unproven at that time, required a careful and fair review, which
Karnalyte has now concluded. At that time, the Company also noted
that its shareholders should expect financial costs associated with
the conduct of the review and the engagement of professional
advisors to ensure the impartiality and independence of the
process. After carefully reviewing the Investigation Report,
the Board concluded that the Company need not pursue any further
actions, or incur any further costs, in relation to the Dissidents'
allegations which have now been thoroughly investigated. It is
clear that the Dissidents are engaging in an active campaign to
discredit management and the Board through the presentation of
disingenuous and incomplete facts that do not support, justify or
warrant the Dissidents' allegations and demands.
To ensure the thoroughness and fairness of the process, the
Dissidents were invited to participate in the investigation and
provide any information to substantiate their allegations. One of
the Dissidents declined to participate. The remaining Dissidents
voluntarily submitted to the process and attended hours of
interviews, at all times accompanied by their legal counsel. The
investigation process was identical to the process used in
January 2019, when a similar review
was conducted of allegations raised by a shareholder against the
Dissidents, then directors of Karnalyte. In that case, the
Dissidents were found to have breached the Company's Code of
Conduct and their fiduciary obligations. As a result, the
Dissidents subsequently resigned.
Since the Dissidents filed their meeting requisition, shortly
after each current director received over 80% support at the most
recent meeting of shareholders, the Dissidents have issued a stream
of news releases rife with, among other things, spurious
allegations, theories, and personal attacks on the Interim CEO and
the Directors. The Dissidents, as the Investigation Report findings
indicate, lack credibility. Karnalyte will have more to say about
this and the Dissidents' apparent personal grievances with the
Company and others as the Special Meeting of Shareholders
approaches. Despite the ongoing Dissident attempts to distract and
disparage the Board and management, Karnalyte's leadership and
efforts remain focused on moving the Company forward and prudently
managing expenditures in the best interests of all
shareholders.
ABOUT KARNALYTE RESOURCES INC.
Karnalyte Resources Inc. is a development stage company focused
on two fertilizer products, potash and nitrogen, to be produced and
manufactured in Saskatchewan.
Karnalyte owns the construction ready Wynyard Potash Project, with
planned phase 1 production of 625,000 tonnes per year
("TPY") of high grade granular potash, and two subsequent
phases of 750,000 TPY each, taking total production up to 2.125
million TPY. Karnalyte is also exploring the development of the
Proteos Nitrogen Project, which is a proposed small-scale nitrogen
fertilizer plant with a nameplate production capacity of
approximately 700 metric tonnes per day ("MTPD") of ammonia
and approximately 1,200 MTPD of urea, and a target customer market
of independent fertilizer wholesalers in Central Saskatchewan.
FORWARD-LOOKING STATEMENTS
Certain information included in this press release is
forward-looking, within the meaning of applicable Canadian
securities laws. Forward-looking information is often, but not
always, identified by the use of words such as "anticipate",
"believe", "could", "estimate", "expect", "plan", "intend",
"forecast", "future", "guidance", "may", "predict", "project",
"should", "strategy", "target", "will" or similar words or phrases
suggesting future outcomes or language suggesting an outlook.
The forward-looking statements contained in this press release
are based on certain key expectations and assumptions made by
Karnalyte, including, without limitation, assumptions as to:
projected economics for the Company's planned potash
production facility, the confirmation in an independent
feasibility study of Karnalyte's assumptions regarding the
technical and economic viability of the Proteos Nitrogen Project,
the ability of Karnalyte to obtain financing on terms favourable to
the Company, and the ability of Karnalyte to receive, in a
timely manner, the necessary approvals from
the Company's board of directors, shareholders,
regulatory authorities, and other third parties.
Karnalyte believes the expectations and assumptions upon which
the forward-looking information is based are reasonable. However,
no assurance can be given that these assumptions and expectations
will prove to be correct. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this press release. Without limiting the generality of
the foregoing, readers are cautioned that the Company has not
received a feasibility study prepared by a third party
with respect to the Proteos Nitrogen Project.
Actual results may vary from the forward-looking information
presented in this press release, and such variations could be
material. Risk factors and uncertainties could cause actual results
to vary from the forward-looking information in this press release.
Additional information on forward-looking statements 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 Company's profile on the SEDAR website
(www.sedar.com).
These forward-looking statements are made as of the date hereof
and are expressly qualified in their entirety by this cautionary
statement. Subject to applicable securities laws,
the Company assumes no obligation to update or revise
them to reflect new events or circumstances.
SOURCE Karnalyte Resources Inc.
