Karnalyte Resources Inc. Announces Third Quarter 2011 Results

CALGARY, Nov. 11, 2011 /CNW/ - Karnalyte Resources Inc. ("Karnalyte" or the "Corporation") (TSX: KRN) today announced its financial results and operational highlights for the quarter ended September 30, 2011. Karnalyte intends to construct a potash facility near Wynyard, Saskatchewan which is expected to initially produce 625,000 tonnes of potash per year and ultimately increase to 2.125 million tonnes of potash per year.

"The most significant development for Karnalyte this quarter was the receipt of a bankable feasibility study, which confirmed the Project's economic viability, as well as our staged approach to facility construction. In addition, the associated technical report identified considerably greater potash resources than originally estimated, most of which were reclassified as reserves, with approximately 80% of Karnalyte's lease and permit holdings yet to be explored," said Robin Phinney, President and CEO of Karnalyte Resources Inc. "Karnalyte is currently focused on performing detailed engineering activities and obtaining government approval to advance the Project towards the construction phase."

Karnalyte's Third Quarter 2011 Financial Statements and Management's Discussion and Analysis (MD&A) will be available at www.sedar.com.

Selected Highlights

• Announced that it will conduct a pre-feasibility study for the production of magnesium compounds in consideration of producing magnesium products as a second product line. The study will delineate magnesium chloride production process flow, determine equipment requirements and provide a capital and operating cost estimate for the production stream. The technical report entitled "Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada", effective August 30, 2011, included updated resources of net indicated MgCl₂ tonnage of 167.9 million metric tonnes.
• Subsequent to the end of the quarter, received a positive feasibility study and associated technical report for the Wynyard Carnallite Project (the "Project"), which suggested a project life of 68 years at a production rate of 2.125 million tonnes per year. The feasibility study and associated technical report estimated an after-tax internal rate of return of the Project at approximately 22%, and the estimated after-tax net present value of the Project (using a 10% discount rate) of $1,866 million for the 2.125 million tonne per year operation.
• Subsequent to the end of the quarter, received an updated technical report entitled "Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada", effective October 21, 2011, that quantified the Project's proven and probable KCl reserves at 62.9 and 92.0 million tonnes, respectively
• Subsequent to the end of the quarter, submitted an Environmental Impact Statement for the Project to the Saskatchewan Ministry of Environment

Outlook

Over the short term, the Corporation will focus on the following key initiatives:

• Continue working with the government to obtain the environmental approvals required for the next phase of the Project;
• Continue exploration and development of its mineral holdings through additional 3D seismic analysis;
• Obtain independent assays of product samples recovered from the pilot test facility;
• Complete a pre-feasibility level study on potential production and marketing of magnesium compounds;
• Optimize product quality in cooperation with machinery and equipment suppliers; and
• Raise adequate funding to move the Project forward to the plant and cavern construction phase;

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 impact.  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. 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.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.