"Meeting this condition of the Wynyard Carnallite Project's EIS enables Karnalyte to pursue the permits required for plant construction, and is thus a major milestone for both the Project and the Corporation," said Robin Phinney, President and CEO of Karnalyte. "Karnalyte remains committed to advancing the Project towards construction, commissioning and production. Our unique mineral deposit will produce a premium-quality potash product with an attractive economic profile, and supports the opportunity to produce and market magnesium products as a second product line."
"Gujarat State Fertilizers and Chemicals ("GSFC") is of the opinion that the current downtrend in the potash sector is a result of the combined impact of the global recession and economic uncertainty, despite the importance of this commodity in providing food supply to the developing world," said Vishvesh D. Nanavaty, General Manager of Finance of GSFC and a Director of Karnalyte. "While short-term variability will always be a reality in the commodity sector, the medium- and long-term fundamentals support strong potash demand and growth in the future. GSFC's investment in Karnalyte is a strategic one and we remain fully committed to the future potential of the Wynyard Carnallite Project, the most advanced potash greenfield project. Much progress has been made to date to move the Project forward and we are very pleased with the milestones Karnalyte has achieved."
In addition to receiving EIS approval from the Saskatchewan MOE and meeting all conditions of the EIS, Karnalyte has made significant progress in the development of the Wynyard Carnallite Project, including:
- Receiving a positive bankable feasibility study confirming economic viability of the Project, with:
- Development capital expenditure ("CAPEX") for the initial 625,000 tonne per year ("tpy") plant estimated at $593 million with annual operating expenses ("OPEX") of $129.12 per tonne KCl
- Development CAPEX for the full 2.125 million tpy operation estimated at $2,002 million (inclusive of the initial $593 million), with OPEX of $125.45 per tonne KCl
- Receiving a positive preliminary pre-feasibility study providing for a magnesium product facility (contingent upon the development of the 625,000 tpy potash facility), with an annual capacity of 100,000 tpy of Magnesium Chloride ("MgCl2") brine at 32% concentration and 104,000 tpy of Hydromagnesite at 99% purity
- Entering into a strategic investment and off-take agreement with GSFC, where GSFC has agreed to purchase approximately 350,000 tpy of potash from Phase 1 of the Project, increasing to 600,000 tpy with the commencement of Phase 2, at prevailing market prices
- Engaging BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers for a senior secured project finance facility of up to US$300 million
- Selecting Whiting Equipment Canada Inc. as its major equipment supplier
- Advancing surface and underground detailed engineering
- Progressing site preparation activities at the future production facility site
Karnalyte's Technical Report entitled "KCl and MgCl2 Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada", effective June 27, 2012 is available on SEDAR at www.sedar.com
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. 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.
Forward-Looking Statements
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the Corporation's future operations. 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. 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, the availability of capital, 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 maybe 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:
Robin Phinney, President & Chief Executive Officer
Ron Love, Executive Vice-President Finance & Chief Financial Officer
Telephone: (403) 995-6560
E-mail: info@karnalyte.com
Website: www.karnalyte.com