SASKATOON, SK , July 15, 2016 /CNW/ – Karnalyte Resources Inc. (“Karnalyte” or the “Company”) (KRN.TO) today released an updated NI 43-101 compliant technical report (the “Technical Report”) for the Company’s planned potash and magnesium mine at Wynyard, Saskatchewan (the “Project”). The Technical Report was prepared for Karnalyte by industry leading solution mining and engineering firms, ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (“ERCOSPLAN”), Amec Foster Wheeler Canada Ltd.(“AFW”), and North Rim Exploration Ltd. (“North Rim”). The Technical Report independently confirms the size and unique composition of Karnalyte’s deposit which support the Project’s economic viability.
Since 2007, Karnalyte has worked diligently to independently confirm the size and grade of Karnalyte’s potash deposit and complete the required engineering for development of the Project. As a result, Karnalyte attracted India’s Gujarat State Fertilizers and Chemicals Limited (“GSFC”) as a strategic partner and secured an offtake agreement for sales of approximately 56% of the Company’s potash production from the first phase of Karnalyte’s 625,000 tonnes per year (tpy) potash mine at Wynyard, Saskatchewan (“Phase 1”).
With the release of the Technical Report, the Company will now focus on securing sales for the remainder of the production from Phase 1. Karnalyte has commissioned extensive market research and retained top-tier expertise to develop a value optimizing sales strategy which is driven by Karnalyte’s unique potash deposit. The Company has considered how to best align itself with the two primary drivers of demand in the potash market: 1. Price, and 2. Grade.
“We have developed a strategy to leverage the Company’s unique high-grade, low-sodium products to successfully compete in the North American potash marketplace by placing more emphasis on grade,” said Mr. Phinney, Karnalyte’s President. “We are confident that the end users of fertilizer, the farmers, will choose the highest grade product with the lowest sodium content.”
The Company is targeting market demand for high-purity potash by producing a superior grade (99% purity) compacted agricultural granular product, KCl 99TM, at a competitive price compared to typical compacted granular potash which averages 95.5% purity and 4 – 4.5% sodium. “We believe providing agricultural producers with a superior grade product – at or near the same price point as the industry’s granular products – will ensure the Company can secure sales for the remaining 44% of production from Phase 1,” said Mr. Phinney.
High Grade Potash
The unique composition of the Wynyard carnallitite deposit allows the Company to produce high-purity potash products with low sodium content. In addition to serving the 97% purity granular agricultural potash market through GSFC in India , Karnalyte has identified an opportunity for a new market entrant that can produce high-grade potash products at a competitive cost in North America . These are the:
The Company intends to produce KCl 97TM to serve the 97% purity granular agricultural market through GSFC in India , and KCl 99TM to serve the North American high-grade markets. Karnalyte plans to employ a known solution mining method and has secured several patents for the extraction and formulation of these high-grade products. The Company has been in contact with potential buyers who have expressed interest and confirmed these new products are well suited to their requirements.
In addition, the Company is exploring multiple options for the sale of its potash products including entering into a strategic partnership with an existing potash producer in Saskatchewan . This includes the sale and distribution of Karnalyte’s proprietary KCl 99TM granular product to the North American market and the application of Karnalyte’s 99% purity crystals as a ‘grade sweetener’ to other producers’ lower grade (95.5% purity) potash products. Mr. Phinney stated:
“The unique purity of Karnalyte’s product line could provide an existing Saskatchewan potash producer with a competitive edge in sales by blending its current production with Karnalyte’s high-purity crystals. By upgrading their existing production, a high-grade blended product could become the fertilizer of choice for farmers,” said Mr. Phinney. “This value added strategy could provide an existing potash producer in Saskatchewan with a significant advantage by providing their customers with a superior, higher-grade fertilizer product in an otherwise undifferentiated, price driven global market.”