Karnalyte

Karnalyte Resources Inc. was founded in 2007 and had its Initial Public Offering on December 14, 2010 on the Toronto Stock Exchange under the symbol TSX:KRN. The company is an advanced potash development company focused on financing and building its construction ready Wynyard Potash Project, Phase One. Karnalyte owns 100% interest in Subsurface Mineral Leases KLSA 010, KL 247A, and KL 246 totaling 367 km2 (90,766 acres) of mineral rights, and around 4,100 acres of surface lands.

The company intends to construct a 2.125 million tonnes per year potash solution mining facility using a three phase modular approach. Phase One will produce 625,000 tonnes per year followed by two 750,000 tonne expansions. Karnalyte will produce a premium white granular potash product (KCl 97) with low sodium content and minimal environmental impact. The Wynyard Potash Project is a Carnallite/Sylvinite solution mining project in central Saskatchewan, located approximately 190 km east of Saskatoon, SK, or 176 km north of Regina, SK. The plant site is located on primary Provincial Grid No. 640, just 2.5 km south of the town of Wynyard.

The mineralized zone contains 3 potash bearing horizons located approximately 1000 meters beneath the surface. The Patience Lake Formation and Belle Plaine Formation are predominantly Carnallite and are on average 9.4 and 15.3 meters thick respectively. The Esterhazy Formation is predominantly Sylvinite and averages 17.2 meters thick. Karnalyte’s mineral leases contain 147 million tonnes of KCl in the Proven and Probable categories, and 153 million tonnes of minable MgCl2 of which 7.9 million tonnes has been assigned as Probable Reserves. The project will use a proven solution mining process with directionally drilled dual well pairs ultimately joined at the bottom to form oblong caverns.

The surface facility removes water from the brine using evaporators, precipitating both salt and potash and separating them from the remaining magnesium chloride brine. The salt and potash are then separated in a conventional potash crystallizer circuit to produce 99% white potash. The 99% potash is then pan-granulated into KCl 97 product. Process water for solution mining and disposal uses will be produced on site from the Blairmore Formation, approximately 500 meters beneath the surface. Blairmore water is similar to seawater, with a slightly higher salt content. Two Blairmore water wells have both produced in excess of 650 us gpm (2.5 m3/min). Tailings from the surface facility are either used to backfill spent caverns or injected into deep disposal wells in the Deadwood and Winnipeg formations, approximately 1500 meters deep. Karnalyte’s Wynyard plant will be the first potash mine in Saskatchewan without a tailings pile or tailings ponds.

Karnalyte has obtained a bankable feasibility study, EIS approval from the Saskatchewan Ministry of the Environment, a magnesium co-product preliminary feasibility study for the production of 99% Hydromagnesite and 32% MgCl2 brine, and recently updated its 43-101 compliant technical report. Karnalyte’s vision is to become a low-cost producer of high quality, low sodium granular potash. The company has partnered with Gujarat State Fertilizers and Chemicals (GSFC), one of India’s largest fertilizer and industrial chemicals manufacturing companies. GSFC holds a 47.73% ownership stake in Karnalyte. Karnalyte and GSFC executed an off-take agreement for GSFC’s purchase of approximately 350,000 tpy from Phase 1, with the offtake commencing with commercial production. The Agreement provides GSFC with the option to increase its off-take to 600,000 tpy when Phase 2 goes into commercial production, and potentially up to 1,000,000 tpy when Phase 3 is completed. Karnalyte has secured sales for approximately 56% of its potash production from Phase 1 for approximately 20 years through this strategic partnership.