Karnalyte Resources Inc. announces second quarter 2013 results; meets condition of Environmental Impact Statement approval

CALGARY, Aug. 9, 2013 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended June 30, 2013. The Corporation also announced that the Saskatchewan Ministry of Environment ("MOE") has indicated that it is satisfied with one of the conditions of the Wynyard Carnallite Project's Environmental Impact Statement ("EIS") approval dated February 7, 2013.

"During the second quarter, Karnalyte made progress towards securing funds for the construction and commissioning of the Wynyard Carnallite Project by engaging BNP Paribas and Natixis as lead arrangers for up to US$300 million in project debt," said Robin Phinney, President and CEO of Karnalyte. "Subsequent to the end of the quarter, we received notice that the Saskatchewan MOE is satisfied with the results of the brine disposal injectivity test mentioned in the EIS approval we received earlier this year."

"Uralkali's recent announcement to withdraw from its sales partnership with Belarusian Potash may change global potash markets, however, based on global potash demand fundamentals and the barriers to entry into the North American market faced by international potash companies, we don't believe this development will have as extreme of an impact on price as predicted," added Phinney. "As such, Karnalyte will look at various strategies and alternatives while continuing to assess the implications of this development."

Karnalyte also confirms that it is not aware of any material undisclosed information that may be contributing to the recent decrease in market price and level of trading activity of its shares.

As at June 30, 2013, the Company had net working capital of $55,654,143 compared to $30,504,468 at June 30, 2012, including $56,224,956 and $31,472,099, respectively, in cash. Karnalyte's Second Quarter 2013 Financial Statements and Management's Discussion and Analysis (MD&A) are available at www.sedar.com

Key Project Development Highlights

Since April 1, 2013, Karnalyte has achieved the following key milestones in the development of the Wynyard Carnallite Project (the "Project"):

• Engaged BNP Paribas and Natixis, New York Branch, on an exclusive basis, to act as lead arrangers (the "Lead Arrangers") for a senior secured project finance facility of up to US$300 million;
• Selected Whiting Equipment Canada Inc. ("Whiting") as its major equipment supplier and worked with Whiting to advance detailed engineering activities related to major equipment component specifications;
• Continued detailed engineering to advance the underground cavern design and planning;
• Continued site preparation activities at the future production facility site;
• Received notice that the Saskatchewan MOE is satisfied with a condition of EIS approval, as the results of the recently completed injection test, have confirmed there is sufficient capacity for brine disposal; and
• Prepared to drill another groundwater source well, which will be tested to support water yield results from the existing groundwater well.

Director Resignation

Karnalyte also announces that Paul Sharpe has tendered his resignation as a director of the Corporation effective today. The board of directors thanks Mr. Sharpe for his contributions to the Corporation and wishes him well in his future endeavours.

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, 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.