Karnalyte Resources Inc. · TSX:KRN
Karnalyte Resources — Investor Presentation (May 2013)
24 slides from Karnalyte Resources's investor presentation, May 10, 2013
Slide 1: The leading developer of premium quality potash
The leading developer of premium quality potash
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation, or industry results, to be materia
Slide 3: Investment Highlights
Investment Highlights • Bankable feasibility study complete De-risked project • Environmental Impact Statement approved to initiate construction profile • Strategic investor with off-take agreement (GSFC) Near-term plans to • 3 Phase staged approach: 625Ktpa, 1.375Mtpa and 2.125Mtpa initiate Phase I
Slide 4: Mineral Resource: Carnallite
Mineral Resource: Carnallite What is Carnallite? (KCl + MgCl2 + 6H2O) • A potassium salt-bearing mineral • Dissolves faster than Sylvinite, making a solution mining process more efficient • The first mineral that was mined to produce potash (mid 1800’s in Germany) • Contains magnesium • Used as a tr
Slide 5: The World's Largest Potash-Producing Region
The World’s Largest Potash-Producing Region Property comprises a total of ~86,126 acres • Located 0.5 km south of Highway 16 near Wynyard, SK Existing infrastructure • Rail and roadways • Natural gas, power and water in close proximity SASKATCHEWAN Opportunity for resource expansion Canada Potash Co
Slide 6: Karnalyte's Competitive Advantage
Karnalyte’s Competitive Advantage Mineral Resource Characteristics Dissolves faster than other salts Lower solution mining OPEX than other potassium salts Amenable to solution mining Lower CAPEX, shorter construction timeline than conventional mining Contains magnesium Opportunity for product expans
Slide 7: KRN's High Quality Potash Product
KRN’s High Quality Potash Product Granular Product • Minimum Grade 97% • Minimum Grade 95% • Less than 1% sodium • Sodium content 3.5% - 4% • Spherical shape – granulated • Irregular shape – compactor formulation formulation • Superior flowing characteristics • Rough, unsmooth • Reduced caking and s
Slide 8: Strategic Investor with Off-Take Agreement
Strategic Investor with Off-Take Agreement Gujarat State Fertilizers & Chemicals (GSFC) and Karnalyte entered into a strategic partnership in January 2013* • $45MM investment for 19.98% ownership stake • Commitment for additional $15MM in future equity rounds • 20 year committed take-or-pay off-take
Slide 9: Attractive Project Economics
Attractive Project Economics* Bankable Feasibility Study (BFS) • Production targeted in early 2015 • Initial production of 625Ktpa with ramp-up to 2.125Mtpa in 5 to 6 years • Potash price of $480/tonne BFS Summary • Total Reserves and Resources (155Mt Proven and Probable reserves) support a 70 year
Slide 10: Key Milestones and Near-Term Catalysts
Key Milestones and Near-Term Catalysts Finalize debt financing by engaging lead arrangers Pursue equity financing to launch full plan and mine construction Pursuing additional strategic partner for • Project financing; • Off-take arrangements; and/or • Marketing assistance Working towards acquiring
Slide 11: Timeline to Production = Cashflow
Timeline to Production = Cashflow 2011 2012 2013 2014 2015 2016 2017 2018 2019 Bankable Study Feasibility Magnesium Pre-Feasibility Saskatoon Operations Office Strategic Partner(s) (Q1, 2013) EIS (Q1 2013) - Groundbreaking for Mine & Plant Construction (2013) - Phase I Construction Complet
Slide 12: Global Marketing Strategy
Global Marketing Strategy Overseas North America • GSFC off-take agreement • Remaining production into N.A. market • Potential for another strategic partner • Central North American distribution location • Port locations • Among highest global pricing environments • Additional off-take • Premium pro
Slide 13: Transportation & Distribution Strategy
Transportation & Distribution Strategy Transload Rail Product will be transported by truck Canadian Pacific (CP) main rail line ~3 km ~3 km to CP rail line from plant site • Evaluating car supply, movement and rail options Port Other initiatives Significant progress made with various Evaluating Cana
Slide 14: Management Team Experienced in Building Potash Mines
Management Team Experienced in Building Potash Mines Robin L. Phinney, P.Eng., President, CEO and Ronald Love, CA, Executive VP, CFO and Director Director • More than 16 years of experience in progressively senior • Held various engineering positions with Potash Corp of financial roles Saskatchewan
Slide 15: Board of Directors
Board of Directors Bruce Townsend, Director and Chairman of the Paul Sharpe, B. Sc., Chemistry Director Board* • Partner with the law firm Perley – Robertson, Hill & McDougall • Director, Financial Analysis Nitrogen Operations with PCS LLP and practices primarily in the chemical, and biochemical fro
Slide 16: TSX:KRN Key Metrics
TSX:KRN Key Metrics* Recent share price (4/30/2013) $6.47 Shares O/S 27.4MM Fully diluted shares O/S 28.7MM Cash (31/03/2013) $62.0MM Ownership (% of basic shares O/S) Top Institutions 18.4 Management & Directors 16.2 GSFC 20.0 Analyst Coverage BMO Capital Markets Canaccord Genuity Clarus Securities
Slide 17: Near-Term, De-Risked Development of High Quality Potash
Near-Term, De-Risked Development of High Quality Potash • Highest grade agriculture product • Minimal environmental impact • De-risked project • Experienced management team and board: industry-specific expertise • Production expected in 2 years • After-tax Net Present Value (NPV) of $1.7bn at a disc
Slide 18: Appendix
a Karnalyte RESOURCES
Slide 19: Solution Mining Overview
Solution Mining Overview Surface Facility Brinefield Brine Processing Ground Surface Cavern Patience Lake Member (Predominantly Carnallitite) Cavern Belle Plaine Member (Predominantly Carnallitite) Esterhazy Member (Sylvinite) Cavern Source: Bankable Feasibility Study 18
Slide 20: Brine Processing Overview
Brine Processing Overview Brine Processing Overview Simplified Flow Diagram Brine processing removes impurities from Cooling Proces Heat Brinefield the extracted mineral in order to obtain Water s Water Source saleable potassium chloride (KCl) • Evaporators remove water from production Brine Storage
Slide 21: BFS Capital Cost Specifics
BFS Capital Cost Specifics 625Ktpa Operation (Phase I) C$626mm (C$1,002/tonne) US$mm US$ per tonne % of Total 5% Process Equipment and Facility $234 $374 36% 9% Process Equipment and Facility Solution Mining Facilities $118 $189 18% Solution Mining Facilities Other Direct Costs $94 $150 14% 36% Indi
Slide 22: BFS Operating Cost Specifics
BFS Operating Cost Specifics 625Ktpa Operation (Phase I) C$81mm (C$129/tonne) C$mm C$ per tonne % of Total 6% 8% Personnel $7 $11 8% 5% Personnel Natural Gas $27 $43 34% 10% Natural Gas Electricity $10 $16 12% Electricity Brine Field Expansion $21 $33 26% Maintenance & Spare Parts $8 $13 10% 34% Bri
Slide 23: Bankable Feasibility Study Economics
Bankable Feasibility Study Economics Economic Model Assumptions BFS Reserves & Resources BFS Assumptions Mineralized Average KCl Net KCl Reserves & Resources 2.125Mtpa Operation Tonnage (Mt) Grade (%) Tonnage (Mt) Production Start Up (year) 2015 Total Average Carnallitite 677.6 18.6% 126.0 Mine Prod
Slide 24: Magnesium Upside Potential
Magnesium Upside Potential • Positive Pre-Feasibility Study completed for Magnesium Pre-Feasibility Study Assumptions Production Facility in 2012 Magnesium PFS 191Ktpa Operation • 147Mt of probable MgCl2 reserves with a mine life 70 years Production Start Up (year) na Reserve can increase when add
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