Karnalyte Resources Inc has reported its financial results and operational and corporate highlights for the third quarter ended September 30, 2018, provided an update on the status of its Wynyard potash project and Proteos nitrogen project. Highlights:
•Actively executing strategic plan to diversify into two fertilizer product lines – potash and nitrogen
•Potash price environment continues to improve, moving Wynyard Potash closer to economic viability
•Proteos Nitrogen continues to systematically advance through development
•Rights offering provides existing shareholders equal opportunity to invest in Karnalyte at an attractive entry price and provides additional working capital to fund its business
•Gujarat State Fertilizer and Chemicals Ltd’s (“GSFC”) additional investment in Karnalyte, by way of a backstop of the rights offering, demonstrates GSFC’s ongoing commitment and support of Karnalyte’s Wynyard Potash and Proteos Nitrogen
Frank Wheatley, President of Karnalyte, commented: “During the third quarter of 2018, we continued to execute on our strategic plan to diversify our business into two fertilizer product lines – potash and nitrogen. We are encouraged by the improving potash price environment, which brings our flagship Wynyard Potash closer to being an economically viable project.”
“We are also extremely pleased with the response to our request for expressions of interest for the development of Proteos Nitrogen” Wheatley continued, “as well as for GSFC’s vote of confidence in Karnalyte through its additional investment through the rights offering.”
There have been some encouraging signs regarding the potash price environment as some contracts in key markets reported price increases between 20% and 30% from prices reported in the third quarter of 2017. Karnalyte believes that the price outlook is firm as strong global demand continues to increase while new capacity is slow to ramp up.
Despite these positive signs, prices have not yet recovered to the point where Wynyard Potash is economically viable and financeable. Karnalyte continues to monitor potash prices and continues to discuss with its strategic partner GSFC the appropriate timing to re-activate development of Wynyard.
Proteos Nitrogen achieved a number of project development milestones during the third quarter, including receipt of the first phase independent marketing study prepared by Integer Research Inc, which confirmed Karnalyte’s market thesis of a viable, local market for nitrogen fertilizer in Central Saskatchewan. Karnalyte also received numerous responses to its request for expressions of interest for the development of Proteos Nitrogen on an EPC basis.
Karnalyte continues to narrow its list of potential project sites located in Central Saskatchewan that match Karnalyte’s project site selection criteria, which include adequate space for the initial development, as well as for potential future expansion, together with proximity to all requisite infrastructure, including natural gas, power, water, rail and highway.
Karnalyte continues to receive interest in Proteos Nitrogen from a number of agriculture industry participants and Karnalyte is currently engaged in discussions with such industry participants. Those discussions confirm Karnalyte’s market thesis that there is both a desire and a demand for an independent, alternate source of supply of nitrogen fertilizer in central Saskatchewan, however, such discussions remain preliminary in nature and no agreements or arrangements have yet been concluded.
At September 30, 2018, the Company had cash of C$9.4 million, a positive working capital of C$9 million and no debt. The company has adequate cash to fund any existing commitments in 2018 and through the third quarter of 2019.
Karnalyte owns the construction ready solution mining Wynyard project, with planned phase 1 production of 625,000 t/y of high grade granular potash, and two subsequent phases of 750,000 t/y leach, taking total production up to 2.125 Mt/y. Karnalyte is also exploring the development of the Proteos project, which is a proposed small-scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 t/d of ammonia and approximately 1,200 t/d of urea, and a target customer market of independent fertilizer wholesalers in Central Saskatchewan.