Karnalyte Resources Inc. To Review Development Strategy For Its Flagship Wynyard Project

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SASKATOON, Sept. 24, 2024 - Karnalyte Resources Inc. ("Karnalyte" or the "Company") (TSX: KRN) today announced it will begin a review of its development strategy to evaluate the economic potential of increasing magnesium chloride production at the Company's Wynyard Project by developing the magnesium assets at the same time as the development of the potash project.

"We have initiated preliminary studies to determine the economic opportunity of co-developing magnesium and potash production from the Company's underground deposits," said Danielle Favreau, Chief Executive Officer.

Carnallite, also known as hydrated potassium magnesium chloride, is abundant within the Company's mineral deposit. The studies are determining the economic balance of developing carnallite for the co-production of magnesium chloride and potassium chloride with the aim of significantly increasing magnesium chloride production, compared to previous studies, through the application of advanced solution mining technologies.

"Our goal is to create the most economically feasible operation we can while delivering value to shareholders. In light of the increasing importance of magnesium as one of the building blocks for the green and digital economy, we are reevaluating our strategy and we believe we should review the inclusion of concurrent and optimized magnesium and potash deposit development in our plans for the benefit of all stakeholders," Ms. Favreau added.

The Government of Canada lists magnesium as one of Canada's 34 critical minerals. Magnesium also appears on critical minerals lists in other jurisdictions, such as the United States of America, the European Union, Japan, South Korea and Australia. Magnesium is a key mineral in the clean technologies and advanced manufacturing value chains.

Magnesium chloride serves as a key raw material in the production of various chemicals, including magnesium metal, magnesium hydroxide, magnesium oxide, and magnesium carbonate. These chemicals are used in high-tech applications such as semiconductor manufacturing, lithium-ion battery production, and in industries such as metallurgy, pharmaceuticals, agriculture, wastewater treatment, and advanced materials synthesis, driving the demand for magnesium chloride.

See The Canadian Critical Minerals Strategy published by the Government of Canada and available at https://www.canada.ca/en/campaign/critical-minerals-in-canada/canadian-critical-minerals-strategy.html.

The Company plans to make progress on its NI 43-101 technical report through the remainder of the year, which is a key precursor to any mine construction. The company also expects to complete the study on the review of its development strategy by the first quarter of 2025.

ABOUT KARNALYTE RESOURCES INC.

Karnalyte Resources Inc. is a development stage company focused on two fertilizer products, potash and nitrogen, to be produced and manufactured in Saskatchewan. Karnalyte owns the construction ready Wynyard Potash Project, with planned phase 1 production of 625,000 tonnes per year ("TPY") of high grade granular potash, and two subsequent phases of 750,000 TPY each, taking total production up to 2.125 million TPY. Karnalyte is also exploring the development of the Proteos Nitrogen Project, which is a proposed small-scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 metric tonnes per day ("MTPD") of ammonia and approximately 1,200 MTPD of urea, and a target customer market of independent fertilizer wholesalers in Central Saskatchewan.

ABOUT THE WYNYARD POTASH PROJECT

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

ABOUT THE PROTEOS NITROGEN PROJECT

The Proteos Nitrogen Project is an advanced stage development project consisting of a proposed small-scale nitrogen fertilizer plant to be located in Central Saskatchewan, having a nameplate 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 primary target market is independent local Saskatchewan fertilizer wholesalers within a 400-kilometer radius of Saskatoon, Saskatchewan. A secondary target market is the US Midwest fertilizer wholesalers near to the Canadian - United States border. The proposed plant would be the first greenfield nitrogen fertilizer plant built in Canada in the last 26 years.

ABOUT GUJARAT STATE FERTILIZERS & CHEMICALS LIMITED

Gujarat State Fertilizers & Chemicals Limited ("GSFC") is a leading Indian Fortune 500 chemicals and fertilizer company that has been in business for more than 50 years. GSFC currently operates one ammonia plant that was commissioned in the year 2000, and two urea plants that were established in 1969, at its fertilizer production complex in Vadodara, Gujarat State, India. GSFC is the Company's strategic partner and single largest shareholder.

FORWARD-LOOKING STATEMENTS

Certain information included 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", "intend", "forecast", "future", "guidance", "may", "predict", "project", "should", "strategy", "target", "will" or similar words or phrases suggesting future outcomes or language suggesting an outlook.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Karnalyte, including, without limitation, assumptions as to: projected economics for the Company's planned potash production facility, the confirmation in an independent feasibility study of Karnalyte's assumptions regarding the technical and economic viability of the Proteos Nitrogen project, the ability of Karnalyte to obtain financing on terms favourable to the Company, and the ability of Karnalyte to receive, in a timely manner, the necessary approvals from the Company's board of directors, shareholders, regulatory authorities, and other third parties.

Karnalyte believes the expectations and assumptions upon 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 cautioned that the Company has not received a feasibility study prepared by a third party with respect to the Proteos Nitrogen project.

Actual results may vary 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 vary from the forward-looking information in this press release. Additional information on forward-looking statements and other factors that could affect Karnalyte's operations and financial results are included in documents on file with Canadian securities regulatory authorities and may be accessed through the Company's profile on 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 assumes no obligation to update or revise them to reflect new events or circumstances.

SOURCE Karnalyte Resources Inc.