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SASKATOON, SK, Nov. 11, 2021 /CNW/ - Karnalyte Resources Inc.
("Karnalyte" or the "Company") (TSX: KRN) today
announced its financial results and corporate highlights for the
third quarter ended September 30,
During the third quarter of 2021, the Company continued to
assess the recommendations of the strategic review that was
prepared by MNP LLP (the "Strategic Review Report" or
"Report") and continued efforts to seek out and attract
investment and strategic partners to produce and deliver this
high-quality potash project to North American and global markets.
Discussions continued with potential partners for both Potash and
Nitrogen projects. And management continued to take steps to
improve the Company's financial position and continued to
investigate alternative sources of funding.
POTASH – WYNYARD POTASH
The market conditions for potash have continued to improve over
the course of the third quarter with prices up over 20% since last
quarter and up over 150% since the prior year. Price increases are
in part the result of the continued tightening of global potash
supplies experienced as a result of sanctions imposed on
Belarus in June and August 2021, production curtailments by some
major producers and new project delays. This along with strong
fertilizer affordability amongst growers has driven prices up.
Saskatchewan potash marketer
Canpotex has already announced that they are sold out for the
remainder of 2021 and there are reports that China, who typically maintain minimum potash
reserves are drawing on these to maintain supplies.
These positive developments in market conditions for potash
along with the recommendations in the Strategic Review Report and
in support of continuing efforts to seek out and attract investment
and strategic partners to the Wynyard Potash Project have led the
Company to a decision to update its 43-101 technical report to
update, amongst other things, the following:
- Update of capital cost summaries;
- Update of operating cost summaries;
- Review and apply Karnalyte's internal cost saving studies,
- Update market and economic analysis.
The Company is in the process of soliciting proposals for this
In addition to the above technical work, the Company plans to
engage in specific marketing support in its effort to attract
investment and strategic partners.
There have been no developments for the nitrogen project during
the quarter. Management continues to assess interest in an offtake
agreement and capital investment.
IMPROVING KARNALYTE'S FINANCIAL POSITION
During the quarter, Management continued to transition Karnalyte
to a low-cost operation by downsizing its corporate headquarters
resulting in a move to a virtual corporate office model. Management
also began the divestment of certain assets not essential to the
Potash Project and implementing other measures to cut general and
administration expenses. Management also took steps to investigate
alternative sources of funding. This investigation continues.
OUTLOOK FOR 2021
During the balance of 2021, the Company will continue
discussions with potential strategic partners and investigate
alternative sources of funding. The Company will also continue to
assess whether the further divestment of assets is appropriate in
order to extend the operational runway. The Company plans to engage
and begin work on the update to its technical report and engage in
a focused marketing campaign to attract investment and strategic
investors. The Company will also continue to implement cost saving
measures in order to preserve the Company's available cash.
2021 THIRD QUARTER RESULTS
At September 30, 2021, the Company
had cash and cash equivalents of $2.2
million and positive net working capital (current assets
less current liabilities) of $2
million and no debt. The Company expects to have adequate
cash to meet its existing commitments as well as to meet short-term
operating and capital requirements but does not currently have
adequate funds to proceed with full-scale development of the
solution mining facility. The Company is pursuing the sale of
non-strategic assets and considering strategic alternatives as the
ability of the Company to continue as a going concern will require
further equity issuances or other forms of
financings. Karnalyte's Third Quarter 2021 Financial
Statements and Managements' Discussion and Analysis are available
at www.sedar.com and on Karnalyte's website at
The following information has been summarised from the Company's
Condensed Interim Unaudited Financial Statements.
Net and comprehensive
Basic and diluted per
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.
ABOUT THE WYNYARD POTASH
The Wynyard Potash Project is a construction ready solution
mining potash project located in Wynyard,
Saskatchewan, with planned phase 1 production of 625,000 TPY
of high grade granular potash, and two subsequent phases of 750,000
TPY each, taking total production up to 2.125 million TPY. All
environmental permits remain valid, preliminary detailed
engineering is complete, and the existing offtake agreement with
Gujarat State Fertilizers & Chemicals Limited remains in
effect. Further development is dependent on improved potash prices
and obtaining financing.
ABOUT THE PROTEOS NITROGEN PROJECT
The Proteos Nitrogen Project is an advanced stage development
project consisting of a proposed small-scale nitrogen fertilizer
plant to be located in Central
Saskatchewan, having a nameplate production capacity of
approximately 700 MTPD of ammonia and approximately 1,200 MTPD of
urea, and designed to produce two products – anhydrous ammonia
(82-0-0) and granular urea (46-0-0). Karnalyte's primary target
market is independent local Saskatchewan fertilizer wholesalers within a
400-kilometer radius of Saskatoon,
Saskatchewan. A secondary target market is the US Midwest
fertilizer wholesalers near to the Canadian – United States border. The proposed plant would
be the first greenfield nitrogen fertilizer plant built in
Canada in the last 26 years.
ABOUT GUJARAT STATE FERTILIZERS & CHEMICALS
Gujarat State Fertilizers & Chemicals Limited
("GSFC") is a leading Indian Fortune 500 chemicals and
fertilizer company that has been in business for more than 50
years. GSFC currently operates one ammonia plant that was
commissioned in the year 2000, and two urea plants that were
established in 1969, at its fertilizer production complex in
Vadodara, Gujarat State, India.
As the Company's strategic partner and single largest
shareholder, GSFC remains committed to the Company and the Wynyard
Potash Project, and is fully supportive of the Company pursuing the
development of the Proteos Nitrogen Project. GSFC has also
confirmed to the Company that it will continue to support the
structuring of the most cost-effective financing package for the
development of the Wynyard Potash Project, as GSFC has consistently
offered to the Company since becoming a shareholder in 2013.
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.