Clarus keeps rating, target on Krn
Clarus Securities has released an analyst report on Karnalyte Resources, reiterating its "Buy" rating and target price at $20. It said:
Key Milestone Reached With Environmental Approval. "Karnalyte has received approval for the Environmental Impact Statement for its Wynyard project, which solidifies KRN's recent strategic partnership and take-or-pay off-take agreement with GSFC of India. This will now help KRN secure debt financing, taking the company one step closer to being under development. KRN plans to start construction in Q2 2013. We have long singled out KRN as the best potash (MOP) junior and we believe the market will begin to recognize and reward this as well."
Wynyard's Commercialization Timeline and Partnership with GSFC solidified. "The Saskatchewan Ministry of Environment has approved the Environmental Impact Statement for Karnalyte's Wynyard project, and is satisfied that any adverse environmental effects can be eliminated or minimized. Recall, Karnalyte's plans are to inject its tailings solution back into its solution mine caverns, thus reducing the environmental impact from its operations and also limiting the surface land occupied by tailings that can otherwise be employed for more
valuable agricultural purposes. Obtaining this approval represents a significant milestone to pave the way for construction, and was also a key covenant to the recent strategic investment and off-take partnership with GSFC of India. Closing of the investment is expected around February 22, 2013."
Next Milestones: Financing and Construction. "KRN is now in good stead to further progress debt financing arrangements for mine construction. The company will also be looking to obtain mine construction permits and will continue with detailed engineering and site preparation. Karnalyte expects Phase I of construction to begin in Q2 2013. Additional partnerships are being sought and we believe this environmental approval improves the attractiveness of a partnership with KRN."
Reiterate BUY. "We believe that Karnalyte's shares will benefit from the achievement of this milestone, and we see this as an opportune time to invest. Karnalyte continues to be a best-in-class developer with a proven management team and a potash project that possesses various differentiating strengths."