TSX : KRN Annual General Meeting Sheraton Cavalier Saskatoon, Saskatchewan August 26, 2016

Transcription

1 2016 Annual General Meeting Sheratn Cavalier Saskatn, Saskatchewan August 26, 2016

2 Frward Lking Statements Certain statements in this presentatin may cnstitute frward-lking statements which invlve knwn and unknwn risks, uncertainties and ther factrs, which may cause the actual results, perfrmance r achievements Karnalyte Resurces Inc. ( Karnalyte r the Crpratin ), r industry results, t be materially different frm any future results, perfrmance r achievements expressed r implied by such frward-lking statements. When used in this presentatin, such statements use such wrds as may, wuld, estimate and ther similar terminlgy. These statements reflect the crpratin s current expectatins regarding future event and perating perfrmance. Frward-lking statements invlve significant risks and uncertainties, shuld nt be read as guarantees f future perfrmance r results and will nt necessarily be accurate indicatins f whether r nt such results will be achieved. A number f factrs culd cause actual results t differ materially frm the results discussed in the frward-lking statements, including, but nt limited t, the factrs discussed in the Crpratin s annual infrmatin frm filed n March 30, Actual results culd differ materially frm thse currently anticipated due t a number f factrs and risks. These include, but are nt limited t, the failure t btain necessary regulatry apprvals, the failure t implement the recmmendatins set ut in the Crpratin s June 23, 2016 technical reprt entitled KCl and MgCl 2 Reserve and Resurce Estimate fr the Wynyard Carnallite Prject, Subsurface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada filed n the Cmpany s prfile at (the Technical Reprt ) the failure t secure financing t implement the recmmendatins in the Technical Reprt, risks assciated with the mining industry in general (e.g., peratinal risks in develpment, explratin and prductin; delays r changes in plans with respect t explratin r develpment prjects r capital expenditures; the uncertainty f estimates and prjectins relating t prductin, reserves and resurces, csts and expenses, and health, safety and envirnmental risks), changes in cmmdity prices and exchange rate fluctuatins. Althugh the frward-lking statements cntained in this presentatin are based upn what management f the Crpratin believes are reasnable assumptins, the Crpratin cannt assure sharehlders that actual results will be cnsistent with these frward-lking statements. Subject t applicable securities laws, the Crpratin assumes n bligatin t update r revise them t reflect new events r circumstances. This presentatin is a market update based n the Crpratin s public disclsure and des nt frm a part f any ffer f securities, r cnstitute a slicitatin f any ffer t purchase r subscribe fr securities. Any purchase f securities in the cmpany shuld be made slely n the basis f infrmatin cntained in the Crpratin s public recrd, which is available n 2

3 Karnalyte: Cmpany Prfile Well psitined next generatin ptash prducer Cst effective three phase mdular design Engineered fr shp-direct build Lw CAPEX prject Industry leading OPEX Prjected t be the lwest cst per installed tnne f capacity in the industry Wynyard Prject nw at the cnstructin-ready stage 20-year fftake agreement with India s Gujarat State Fertilizers and Chemicals (GSFC) Only 27,561,010 cmmn shares utstanding Strng balance sheet and n debt Experienced engineering team 3

4 Strategic Lcatin: Wynyard Saskatchewan mine site is lcated in clse prximity t existing ptash mines, rail, natural gas, pwer and water supply Whiteshre Lake BHP Billitn Jansen Big Quill Lake Twn f Wynyard KP 360 A, KLSA 010, KL 246 & KL 247 4

5 Key Milestnes t Date Acquired 100% interest in subsurface mineral leases KLSA 010, KL 246 and KL 247, cmprising a ttal f 91,152 acres (36,889 hectares, r km 2 ) Cnducted 3D seismic and drilling prgrams t cnfirm resurce cntinuity in psitive Feasibility Study fr the planned millin tpy ptash (KCl) prductin facility (Updated 2016) 2012 psitive Pre-Feasibility Study fr the prductin f magnesium cmpunds (Updated 2016) Secured extractin KCl prcess and prductin patents Entered int a 20-year fftake agreement with GSFC fr the purchase f apprximately 56% (350,000 tnnes) f the frecast ptash prductin frm Phase I f the 625,000 tnnes per year (tpy) Wynyard Prject, increasing t 600,000 tpy with the cmmencement f Phase II and a ptential ttal f 1,000,000 tpy with the cmmencement f Phase III. Obtained Ministry f Envirnment apprved Envirnmental Impact Statement Obtained water rights license frm the Water Security Agency Drilled and successfully tested tw cmmercial prductin capacity surce water wells frm Blairmre frmatin fr prductin use Received dispsal well permit frm the SK Ministry f Ecnmy Received develpment permit clear f all cnditins frm the SK Ministry f Ecnmy Prject site nw prepared fr Phase I cnstructin 5

6 Carnallite Resurce Verified by 3D Seismic Imaging Patience Lake Member Belle Plaine Member Esterhazy Member The carnallite depsit has a unique cmpsitin which allws KRN t precisely delineate the size and scpe f the KCl resurce t cnfirm cntinuity f the re depsit. 6

7 2016 Updated Technical Reprt: Ptash Fr the prductin f 97% purity KCl granular ptash pellets: NPV (8% discunt): CAPEX fr Phase I: Cst per installed tnne f capacity: OPEX fr Phase I: IRR (after tax): Estimated mine life: $3.39 billin fr the three phase, millin tpy prject $789 millin $1,262 fr Phase I $137 per tnne 19.1% fr the three phase, millin tpy prject Over 70 years fr the three phases Prven and Prbable Reserves fr KCl (carnallite & sylvinite) f: Carnallite: 694 millin tnnes at 18.7% KCl, equivalent t 120 millin tnnes f prduct Sylvinite: 115 millin tnnes at 26.2% KCl, equivalent t 28 millin tnnes f prduct Equivalent t 148 millin tnnes f KCl Surce: Karnalyte Resurces Inc. Technical Reprt entitled KCl and MgCl 2 Reserve and Resurce Estimate fr the Wynyard Carnallite Prject, Subsurface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada filed n the Cmpany s prfile at 7

8 2016 Updated Technical Reprt: Magnesium Fr the prductin f 100,000 tpy f MgCl 2 brine and 104,000 tpy f hydrmagnesite: NPV (10% discunt): $512 millin CAPEX (additinal t Phase I): $171 millin OPEX fr MgCl 2 Brine: $7.01 per tnne OPEX fr hydrmagnesite: $ per tnne IRR (after tax): 26.1% Prbable Reserves fr MgCl 2 : 695 millin tnnes f carnallite at 22.1% MgCl 2 Surce: Karnalyte Resurces Inc. Technical Reprt entitled KCl and MgCl 2 Reserve and Resurce Estimate fr the Wynyard Carnallite Prject, Subsurface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada filed n the Cmpany s prfile at 8

9 High Purity Prduct Lines Cmpacted pillws (industrial) Cmpacted granular (agricultural) Crystal (slutins/fd grade) 99% purity cmpacted granular 99% purity feedstck crystal 9

10 High Purity Prduct Lines Spherical granular (India) Nrth American suspensins market 97% purity granular 10

11 Year in Review: Accmplishments Crprate: Relcated head ffice t Saskatn frm Calgary t reduce verhead Opened Wynyard ffice Retained key peratins, engineering and management persnnel Exercised land ptins fr the purchase f nine parcels f land cvering KRN s permit area Cnverted KRN s mineral permits t lng-term mineral leases 11

12 Year in Review: Accmplishments Financing: Engaged Dundee Securities Ltd and Drylin Capital Advisrs as the Cmpany s financial advisrs t cnsider the merits f all available financing alternatives Entered int discussins with GSFC and SBI with respect t ptential financing fr the Cmpany s Wynyard Ptash Prject Cmpleted technical due diligence with SBI Annunced an agreement in principle fr apprximately $700 millin USD in financing fr Phase I ptash mine and spin-ut f secndary mineral assets and unexplred lands Negtiatins are were terminated as KRN and GSFC were unable t reach an agreement n terms f the financing KRN has an extremely strng prject and the Cmpany remains ptimistic that it will be able t achieve financing in the best interests f all sharehlders 12

13 Year in Review: Accmplishments Operatinal: 2015: Engaged independent third party cnsultants t supervise the design, peratin and results f the Optimizatin Prgram 2016: Hired peratins staff at Wynyard t cnduct the Optimizatin Prgram Cnducted engineering and develpment wrk necessary t implement the Optimizatin Prgram designed t: Optimize ptash prductin by increasing KCl cncentratin in the brine slutin Reduce the number f undergrund caverns required fr prductin Cnfirm equipment design parameters in preparatin fr cnstructin f the fullscale ptash prductin facility 13

14 Karnalyte: Optimizatin Prgram In 2016, KRN fcused n cmpleting a tw stage prgram designed t imprve prject efficiency and enhance ecnmics: Stage I: Cnstruct ptimizatin facility and cmmence the cld leaching prcess: apprximately three mnths t develp a prductin cavern Stage II: Ht leaching phase: injecting heated surce water int the prductin cavern t prduce a cncentrated ptash brine slutin Cmpletin f Stage II is expected in December 2016 KRN anticipates an increase in ptash cncentratin culd significantly reduce perating csts and enhance prject ecnmics: % KCl Tnnes $/Tnne % Change 9.3* 625, ** 672, % *Anticipated brine cncentratin based n KRN s 2012 Feasibility Study **KRN internal prjectins indicate that fr every 1% increase in brine cncentratin, apprx. 50,000 tnnes f KCl may be prduced frm the same brine feedstck 14

15 Psitining Karnalyte fr the Future: 2016/2017 KRN plans t maximize the Cmpany s wrld-class assets and the investments already made in the Wynyard Prject by cmpleting the Optimizatin Prgram fr: Ptash (KCl) in 2016 Magnesium chlride brine (MgCl 2 ) in 2017 Pending results f the MgCl 2 test in 2017 Karnalyte will cnsider: Repurpsing existing facilities fr the sale f magnesium brine Cnducting a pre-feasibility study fr a 20,000 tpy magnesium hydrxide (Mg0/Mg(0H) 2 ) and Basic Magnesium Carbnate (hydrmagnesite) demnstratin plant Secure sales fr 20,000 tnnes f hydrmagnesite and/r magnesium chlride brine Ptentially raise funds t cnduct 3D seismic and drill prgrams n undevelped lands (241 km 2 ) t: Further delineate re bdy Increase reserves and resurces Maximize sharehlder value Cntinued prudent management f KRN s financial resurces by: Maintaining efficient allcatin f capital Maintaining lean management and peratins 15

16 Psitining Karnalyte fr the Future: 2017/2018 Upn cmpletin f the Optimizatin Prgram, KRN will have achieved all f the key technical milestnes fr the planned ptash mine at Wynyard KRN has begun t implement a cmprehensive, market-driven cmmercial strategy based n branding and marketing its unique high-purity, lw sdium ptash prducts fr use in the higher margin specialty fertilizer sectr: White Sluble Cmpacted Agricultural Granular Pellets 16

17 Psitining Karnalyte fr the Future: 2017/2018 KRN will cntinue t pursue a sales strategy driven by its unique resurce t target increasing market demand fr high purity white sluble ptash prducts By prviding the ptash market with a superir grade prduct, KRN remains cnfident it will secure sales fr the remainder f prductin frm Phase I Securing sales fr the remainder f prductin frm Phase I will further de-risk financing fr the 625,000 tpy prject and psitin KRN t ensure the lng-term sustainability f the Wynyard prject 17

18 QUESTION AND ANSWER PERIOD Karnalyte s Bard f Directrs and Management Team wuld like t thank KRN sharehlders fr their cntinued supprt as we have mved the Cmpany frward ver the past year. We lk frward t prmising results in

19 3150B Faithfull Avenue Saskatn, SK S7K 8H3 Telephne (306) TSX: KRN 19