KARNALYTE RESOURCES INC. ANNOUNCES FIRST QUARTER 2022 RESULTS

/NOT FOR DISTRIBUTION TO UNITED STATES NEWS SERVICES OR FOR DISTRIBUTION IN UNITED STATES/

SASKATOON, Sask., May 12, 2022 /CNW/ – Karnalyte Resources Inc. (“Karnalyte“or the”Company“) (TSX: KRN) today announced its financial results and business highlights for the first quarter ended March 31, 2022.

During the first quarter of 2022, the Company focused on updating its NI 43-101 technical report. As previously announced, Wood PLC, a leading global consulting and engineering firm, has been engaged as the independent lead author for the update. More recently, the Company engaged industry-leading solution engineering and mining company ERCOSPLAN ingenieurgesellschaft Geotechnik und Bergbau mbH (“ERCOSPLAN“) to assist with the project, including updating the mineral resource estimate and mining plan for the brine field development as the basis for the mineral reserve estimate.

The Company also continued to review and discuss with investment bankers and other options to raise capital. Options considered include: a private placement, a short form prospectus offering and/or a rights offering. Updates on the Company’s efforts to raise capital will be made as appropriate.

2022 OUTLOOK

During the second quarter of 2022, the Company expects to complete the update of its NI 43-101 technical report and complete the preliminary capital raising.

FIRST QUARTER 2022 RESULTS

To March 31, 2022the Company had a cash position of $1.1 million and a positive net working capital of $1 million and no debt. Karnalyte’s first quarter 2022 financial statements and MD&A are available at www.sedar.com and on Karnalyte’s website at www.karnalyte.com.

The following information has been summarized from the company’s condensed unaudited interim financial statements.

March 31, 2022

March 31, 2021

Total revenue

Net and comprehensive loss

(419)

(577)

Basic and diluted per share

(0.01)

(0.01)

Total current assets

1,934

4,177

Total assets

7,826

10 110

Total responsibilities

2,468

2,748

Total equity

5,358

7,362

ABOUT KARNALYTE RESOURCES INC.

Karnalyte Resources Inc. is a development-stage company focused on two fertilizer products, potash and nitrogen, which will be produced and manufactured in Saskatchewan. Karnalyte owns the construction-ready Wynyard potash project, with planned Phase 1 production of 625,000 tonnes per annum (“TYP“) of high quality granular potash, and two subsequent phases of 750,000 TPY each, bringing the total production to 2.125 million TPY. Karnalyte is also exploring the development of the Proteos Nitrogen project, which is a proposed nitrogen fertilizer plant on a small scale with a nominal production capacity of approximately 700 metric tons per day (“MTPD“) of ammonia and approximately 1,200 MTJ of urea, and a target customer base of independent fertilizer wholesalers in Central Saskatchewan.

ABOUT WYNYARD POTASH PROJECT

The Wynyard Potash Project is a construction-ready solution-based potash project located in Wynyard, Saskatchewan, with a planned phase 1 production of 625,000 TPY of high quality granular potash, and two subsequent phases of 750,000 TPY each, bringing total production to 2.125 million TPY. All environmental permits remain valid, preliminary detailed engineering has been completed and the existing offtake agreement with Gujarat State Fertilizers & Chemicals Limited remains in force. Further development is dependent on continued strength in potash prices and obtaining financing.

ABOUT THE PROTEOS AZOTE PROJECT

The Proteos Nitrogen Project is an advanced stage development project consisting of a proposed small-scale nitrogen fertilizer plant to be located at Central Saskatchewan, having a design 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 main target market is the independent local market Saskatchewan fertilizer wholesalers within 400 kilometers Saskatoon, Saskatchewan. A secondary target market is the U.S. Midwest fertilizer wholesalers close to the Canadian market – United States frontier. The proposed plant would be the first new nitrogen fertilizer plant built in Canada over the past 26 years.

ABOUT GUJARAT STATE FERTILIZERS AND CHEMICALS LIMITED

Gujarat State Fertilizers & Chemicals Limited (“GSFC“) is one of India’s leading Fortune 500 chemical and fertilizer companies which has been in business for over 50 years. GSFC currently operates an ammonia plant which was commissioned in 2000 and two urea which were established in 1969, at its fertilizer production complex in Vadodara, Gujarat State, India.

As the company’s strategic partner and sole major shareholder, GSFC remains committed to the company and the Wynyard Potash project, and fully supports the company’s continued development of the Proteos Nitrogen project. GSFC has also confirmed to the Company that it will continue to support the structuring of the most profitable financial package for the development of the Wynyard Potash project, as GSFC has always proposed to the Company since it became a shareholder in 2013.

FORWARD-LOOKING STATEMENTS

Certain information contained 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”, “have the intention”, “plan”, “future”, “direction”, “may”, “predict”, “plan”, “should”, “strategy”, “target”, “will” or similar words or expressions suggesting future results or language suggesting a perspective.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Karnalyte, including, without limitation, assumptions regarding: the economic forecasts of the company’s planned potash production facility, confirmation in an independent feasibility study of the assumptions regarding the technical and economic viability of the Proteos Nitrogen Project, Karnalyte’s ability to obtain financing on terms favorable to the Company, and Karnalyte’s ability to receive, in a timely manner , the necessary approvals of the Board of Directors of the Company, shareholders, regulatory authorities and other third parties.

Karnalyte believes that the expectations and assumptions on 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 advised that the Company has not received a feasibility study prepared by a third party regarding the Proteos Nitrogen project.

Actual results may differ 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 differ from the forward-looking information contained in this press release. Additional information about forward-looking statements and other factors that could affect Karnalyte’s operations and financial results are included in filings with Canadian securities regulators and can be viewed through the company’s profile at 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 undertakes no obligation to update or revise them to reflect new events or circumstances.

SOURCE Karnalyte Resources Inc.

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