Slide 1: Construction Ready Potash Company
INVESTOR PRESENTATION OCTOBER 27, 2015 CONSTRUCTION READY POTASH COMPANY TSX : KRN SASKATCHEWAN, CANADA STRATEGIC PARTNER:
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS TSX : KRN Certain statements in this presentation may constitute "forward-looking" statements which involve known and unknown risks, uncertainties STRATEGIC PARTNER: and other factors which may cause the actual results, performance or achievements of the Corporation, or in
Slide 3: Potash: Why Now?
POTASH: WHY NOW? TSX : KRN • Recent takeover activity and capital funding for potash mines STRATEGIC PARTNER: November 2014 • IC Potash Corp. announces that Cartesian Capital Group, LLC has made a strategic investment of USD $10 million in ICP’s wholly owned subsidiary, Intercontinental Potash Corp.
Slide 4: Potash: Why Now? Projected demand growth
POTASH: WHY NOW? TSX : KRN STRATEGIC • Projected annual demand growth of 2.9% per year1 PARTNER: Million Tonnes KCI or Equivalent 100 90 +20% +2.9% 80 70 60 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Rest of World China Brazil USA India Indonesia Malaysia
Slide 5: Potash: Why Now?
POTASH: WHY NOW? TSX : KRN STRATEGIC • Nutrient deficiencies in soils require increased fertilization to PARTNER: maintain productivity • Strategic partnerships are funding construction-ready projects in order to secure future potash production off-take • Potash prices have stabilized since the pric
Slide 6: Potash Solution Mining Facility
POTASH SOLUTION MINING FACILITY TSX : KRN STRATEGIC • There are 3 potash bearing zones that Karnalyte Resources can solution PARTNER: mine: • Patience Lake Member • Belle Plaine Member • Esterhazy Member • Produced brine is processed in an evaporation-crystallization process Brinefield Brine Process
Slide 7: Karnalyte's Premium Potash Product
KARNALYTE’S PREMIUM POTASH PRODUCT TSX : KRN STRATEGIC PARTNER: Minimum Grade 97% purity 95% purity Sodium Chloride Content • Less than 1% • 3.5% – 4% Less sodium increases crop yields • Uniform size • Irregular shape – Shape • Spherical shape – compaction process granulation process • Lower caking
Slide 8: Catalysts for Karnalyte
CATALYSTS FOR KARNALYTE TSX : KRN STRATEGIC • Takeover activity and capital funding has increased in Saskatchewan PARTNER: • Strategic investment and off-take partnership with Gujarat State Fertilizers & Chemicals (GSFC), one of India’s largest fertilizer companies • 100% granular product with premi
Slide 9: Catalysts for Karnalyte
CATALYSTS FOR KARNALYTE TSX : KRN STRATEGIC • Scalable modular plant design and construction PARTNER: • Bankable feasibility study completed • Environmentally friendly with an approved environmental impact study • Low capital expenditures (approximately 50% lower than conventional mines) • Low opera
Slide 10: Strategic Partnership
STRATEGIC PARTNERSHIP TSX : KRN STRATEGIC Gujarat State Fertilizers & Chemicals (GSFC) PARTNER: • Karnalyte entered into a strategic partnership with GSFC in January 2013 • GSFC is committed to developing Karnalyte’s potash project • GSFC invested $45 million in Karnalyte at $8.15 a share, for a 19.
Slide 11: Financing Plan
FINANCING PLAN TSX : KRN STRATEGIC Gujarat State Fertilizers & Chemicals (GSFC) PARTNER: • GSFC is AA+ rated and has indicated its willingness to support Karnalyte by arranging project financing based on its own financial strength through Indian banks which may be available on significantly more att
Slide 12: The Saskatchewan Potash Picture
THE SASKATCHEWAN POTASH PICTURE TSX : KRN STRATEGIC • “The Potash Belt of Saskatchewan” has exceptionally large, PARTNER: high quality deposits of potash • Favourable regulatory regime and taxes, politically stable, strong corporate governance practices • Approximately 45% of Saskatchewan potash exp
Slide 13: Karnalyte Potash Project - Location
KARNALYTE POTASH PROJECT - LOCATION TSX : KRN • Located in the heart of “The Potash Belt of Saskatchewan” STRATEGIC PARTNER: • The Karnalyte Potash Project encompasses 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 (Karnalyte has 85,126 acres, or 344 km2 of mineral
Slide 14: Construction Ready - Phase 1 Schematic
CONSTRUCTION READY – PHASE 1 SCHEMATIC TSX : KRN • Modular approach STRATEGIC PARTNER: Phase 1 Initial 625Ktpy Phase 2 Expansion 750Ktpy Phase 3 Expansion 750Ktpy Total 2.125Mtpy • Dry processing portion of Phase 1 surface facility 14
Slide 15: Construction Ready
CONSTRUCTION READY TSX : KRN STRATEGIC PARTNER: • Completed feasibility study • Detailed engineering designs in progress • Conceptual layouts for underground and surface facilities have been completed • Environmental Impact Statement approved • Plant site surface has been stripped and ready for cons
Slide 16: Karnalyte's Potash Project - Environmental Milestone
KARNALYTE’S POTASH PROJECT – TSX : KRN ENVIRONMENTAL MILESTONE STRATEGIC PARTNER: • Industry leading environmental program • Karnalyte will have the only potash mine in Saskatchewan that does not produce surface salt tail piles or tailings ponds • Minimal surface impact from plant and mining • Saska
Slide 17: Capex comparison: Karnalyte vs industry
CAPEX TSX : KRN KARNALYTE FACILITY INDUSTRY FACILITY3,4 STRATEGIC PARTNER: 625Ktpy1 2.125Mtpy2 2.125Mtpy Cost per tonne of Cost per tonne of Cost per tonne of installed capacity installed capacity installed capacity $1,002 CDN $942 CDN $1,950-2,600 CDN To build To build To build $626M $2.0B $4.1-5.5
Slide 18: Opex in USD - Industry vs. Karnalyte
OPEX in USD – INDUSTRY1 vs. KARNALYTE2 TSX : KRN STRATEGIC PARTNER: INDUSTRY COST OF APPROXIMATE 2014 % OF 2014 PRODUCTION POTASH CONSUMPTION CONSUMPTION $200 – $270/tonne 5 million tonnes 8% $150 – $200/tonne 31 million tonnes 49% $ 95 – $150/tonne 27 million tonnes 43% Total 63 million tonnes 100%
Slide 19: Project Economics
PROJECT ECONOMICS TSX : KRN STRATEGIC PARTNER: 625Ktpy 2.125Mtpy Capital Expenditure1 Capital Expenditure2 $626M CDN $2.0B CDN Operating Cost/tonne1 Operating Cost/tonne2 $129.12 CDN $125.45 CDN Estimated Annual Net Income3,4 Estimated Annual Net Income3,4 $145.8M $607.9M CDN CDN 1 Karnalyte Resourc
Slide 20: Management Team
MANAGEMENT TEAM TSX : KRN Karnalyte’s team has decades of experience in designing, constructing and optimizing potash facilities in Saskatchewan, as well as a wealth of knowledge within the capital STRATEGIC PARTNER: markets and in raising project financing Robin L. Phinney, P.Eng Julius Brinkman Fo
Slide 21: Capital and Financial Highlights
CAPITAL AND FINANCIAL HIGHLIGHTS TSX : KRN STRATEGIC PARTNER: Share Price Close on October 27, 2015: $0.92 Share Price (52 Week Range): $0.52 – $1.33 Shares Outstanding: 27.5 million Fully Diluted Shares Outstanding: 28.7 million GSFC Ownership: 19.98% Management & Directors Ownership: 16.53% Cash P
Slide 22: Why Karnalyte?
WHY KARNALYTE? TSX : KRN STRATEGIC • Karnalyte is a “game-changer” PARTNER: • Located in the heart of Potash Country • 100% granular product with premium qualities and a higher purity (97%+) • Has lowest CAPEX in the industry • Low cost potash producer • Environmentally responsible • Strong strategi
Slide 23: Karnalyte Resources Inc.
TSX : KRN STRATEGIC PARTNER: Karnalyte Resources Inc. 3150B Faithfull Avenue Saskatoon, SK S7K 8H3 investors@karnalyte.com Tel: 403.630.6755 www.karnalyte.com