Karnalyte Resources Inc T.KRN

Nothing like a national news story to turn the heat up

[mdjbrown]

Heard from a previous director yesterday, and was told I am looking in the wrong place for some of the answers I seek, and that the January 10, 2013 Offtake Agreement signed between Karnalyte Resources and GSFC is where I need to look.

Embarrassing, as I had forgotten this document even existed considering there has been no need for an Offtake Agreement, due to no commercial production.


Quite the document and although there are a lot of redactions in this Agreement, this certainly stood out ......


Fixed Start Date -  01 October 2016

2.6.1   Failure to Deliver  - If the Seller defaults in delivering the Contracted Annual Quantities in accordance with the Terms of this Agreement, the Buyer shall be entitled to purchase the defaulted quantity from other sources and the Seller will compensate the Buyer for any net difference in price and any additional or incremental that Buyer may incur in purchasing alternative Product, ......


2.6.4 - Unless and until the Seller pays the amounts due from it under this section 2.6, the Buyer may offset such amounts against any amounts payable by the Buyer to the Seller under this Agreement.


A contract lawyer really needs to decifer the language in this document, but does Karnalyte owe GSFC default payments as a result of contractual obligations in delivery of product after October 2016?

I recall in the fall of October 2016, GSFC recieved 555,555 shares relating to the Subscription Agreement back in 2016, so was that in lieu of future default amounts incured in the Offtake as well?

"The issue price was subject to an adjustment if commercial production had not commenced at the Company’s potash mine at Wynyard, Saskatchewan (the “Wynyard Project”) on or before October 1, 2016, which would be satisfied by the issuance of the Adjustment Shares by Karnalyte to GSFC at that time"


Maybe those questions could be answered at the AGM as well, as shareholders need to know if the meter is running with each year of non production.

[fishtruth]

Very interesting. I will have to look at the contract myself, and put it into the timeframe of Oct 2016 to see who the KRN management was at the time. This would seem to be another conflict of Interest in the Indian majority Board would  approve a contract that was this detrimental to KRN with a company that they were employeed by??? More later after I spend sometime reading this contract.

[fishtruth]

Ok I have read the OFF Take Agreement again. I focused on the termination clause. Seems both GSFC and Karnalyte after the 2 year to start of production period lapsed, their memory of the agreement did not persist. as far a terminating it for non delivery of product. It would take a better legal mind than mine to  determine if this contract is still in good standing. I can only go by what was

[mdjbrown]

fishtruth, it certainly is a bit confusing as there was the original January 2013 Subscription Agreement and Offtake Agreement, followed by a Framework Agreement in both 2015 and again March 18, 2016 If I recall, neither of the Framework Agreements survived with the exception of a couple clauses, (provided that the obligations set forth in Sections 2.2 and 3.9 shall survive the termination of

[Trade33right]

So you are saying GSFC is benefiting from a lack of performance of the GSFC board at KRN. 

[bigkagan]

Politicians must intervene is this whole affair because the gov't is missing out on the taxes they could collect from the KRN mine and jobs it would provide because of all these shady dealings going on

[Okotoksboy]

ask Mr.Brown about his shady dealings. We wouldn't be in this mess. The Friends of Karnalyte that Mr Brown recruited joined the GSFC board members and stabbed all the shareholders in the back.

[mdjbrown]

Gotta say, very impressive Okotoksboy.    You joined Stockhouse May 2019 and this is your first post. Waited 3 years to get that off your chest.........Oh the anticipation! No premeditation in that, but I should expect no different from a coward that doesnt have the internal fortitude to use their own name, when they call someone out! Good ole keyboard courage seems to be the way of

[bigkagan]

On the BOD three out of 5 directors are from Gujarat - this thing shouldn't even be allowed in Canada. They are not allowing a foreign takeover of Canadian banks, so why did they allow this takeover of an important potash mine

[mdjbrown]

bk, thats the billion dollar question. Who in the corporation initiated the Rights Offering that effectively handed over control to GSFC, and how did not only the corporation, but also all shareholders benefit from this transaction? Its one thing to complete a Rights Offering allowing all shareholders to participate or pass, but the Backstop Agreement was the real issue allowing GSFC and

[fishtruth]

Mr. Brown the only shareholder to profit from the rights offering was GSFC. Wheatley was the president at the time. The board consisted of Zachanowich, Matson, Szabo, Rowan Navanaty and Varma. 3 of the Canadian directors resigned in January 2019 right after the November 21 Rights Offering of 14,058,282 shares @ 17 cents. GSFC purchased 10,288,697 shares to increase their interest in KRN to 38.73%.

[mdjbrown]

fishtruth, dont forget that each member of the board that approved that Rights Offering also doubled their shareholdings at .17 cents as well. That is very easily verified on SEDI, and if I recall correctly it was stated in the 2020 AGM webcast that the Rights Offering recieved unanimous approval GSFC was out numbered 4 to 2 in the Boardroom at that time, so GSFCs votes alone could not have

[fishtruth]

I am not registered with SEDI. I have worked in the metal mining indusrty for 45 years. From my experience with BOD's most keep their independance by not holding any shares. If the KRN BOD members hold shares it just adds to the conflict of interest. Not much any company can do with $2.4 million when it comes to property work other than pay holding costs, and salaries. 

[mdjbrown]

fishtruth, four of the Directors were some of Karnalytes largest shareholders prior to their becoming directors of the corporation, and doubled their shareholdings through the participtation in the Rights Offering. If I am not mistaken, according to public court docs the expectation for the $2.4 million was to pay for the Nitrogen Bankable Feasibility Study as Wood was already contacted. There

[mdjbrown]

fishtruth, forgot to add these sworn statements from a couple of the affidavits, which would confirm  the reason for the dilutive Rights Offering, and the expectation from the directors for the $2.4 million dollars raised from the Rights Offering.   "As part of the new corporate strategy, ++++ proposed undertaking the Rights Offering to provide funds to advance the

[bigkagan]

Because they were too cheap to spend $2.5 mil. of the company's money on the nitrogen feasibility study they did the Rights Offering and now they have nothing to show for

[mdjbrown]

Dont know if its that they were too cheap bk, or the fact that shareholders not deemed insiders made it very clear they didnt support the direction the company was going at the 2018 AGM and some of the directors paid attention.  The Rights Offering Backstop was likely very strategic in nature as well, knowing shareholders not deemed insiders would not participate in great numbers, and they

[ohjeezuz]

mdj and Okotos, how many shares do you guys own? Whats you net worth?