Karnalyte Resources Inc T.KRN

Q3 Financials out on SEDAR

[mdjbrown]

Speechless!

MD&A -   For the nine months ended September 30, 2021
 
“The Company also expects to provide funding to settle the decommissioning liability.”
 
KARNALYTE RESOURCES INC. Notes to Condensed Interim Financial Statements (unaudited)
 
6. Decommissioning liability September 30, 2021  
 
The undiscounted amount of estimated costs required to settle the obligations at September 30, 2021 is $2,341,000 (December 31 2020 - $2,220,000) which are expected to be incurred in 2038.
 
 
12. Comparative figures Certain prior year balances have been reclassified to conform to the current financial statement presentation.

[Trade33right]

MDJ For those of us who are not as legal literate as you please explain what we are reading here. 

[mdjbrown]

TR33, that riddle will have to be solved by folks much smarter and higher on the food chain than I.   It is no secret shareholders have questioned the out of the blue $2.3 million dollar Rights Offering in Q4 2018 in which GSFC took complete control of Karnalyte at the same time the unexplained Q4 2018  $2 million dollar increase to a Decommissioning Liability occured in that for 7 years

[patospower]

The decommissioning provision or its 2018 increase are not an issue in themselves, in my opinion - $200k is virtually nothing to decomission an asset like Wynyard. I think somebody saw the amount on the books and just said "hey look at this dusty amount on the BS, we need to have support for this" and actually tried to estimate it. The amount is expected to change slightly year to year

[mdjbrown]

Thank you pp

[patospower]

Hi Dan,apologies, I made a couple errors. First, I had a misunderstanding. I thought Karnalyte was using the price they'd pay now as a proxy for the PV of decommissioning the asset, which appears was incorrect. The accounting standard (IAS 37 if you are curious) asks for the present value of that estimated cost, which appears is what Karnalyte did, they did not use a proxy. Then it gets

[mdjbrown]

No worries pp, and thank you very much for taking the time to respond to this head scratcher. The most confusing part of this unexpected decommissioning liability increase is 8 months earlier the company reported that "Karnalyte largely decommissioned the test cavern site in accordance with the operating permit from the Government of Saskatchewan." From an accounting perspective

[yixter]

Sure looks like this wants to go again it's held most of its gains from the recent run and looking strong here.

[mdjbrown]

yix, this appears to be a coordinated effort by a market maker to transfer shares from one hand to the other. This many shares (5 million)  trading in this tight range with no news is not retail transactions. Krn only has 40 million shares o/s Not sure if its related to tax writeoffs,or liquidation of holdings, court settlements, or even related to the "settling of decommissioning

[patospower]

There is nothing related to the rights offering that could trigger a decommissioning liability. The only two possible scenarios that I can see are that 1. Both items are similar in amount by mere coincidence, and KRN reviewed and updated the support for the provision in the same period by mere happenstance (entirely plausible, HOWEVER there would be no cash outflow for decades by the very nature