An anonymous director reports

KARNALYTE RESOURCES ANNOUNCES CORPORATE UPDATE, SETTLEMENT OF LAWSUIT, AND ELECTION OF HIGHLY QUALIFIED NEW DIRECTOR

Karnalyte Resources Inc. has provided a corporate update, a highly qualified new director has been elected to the board and the company has settled a lawsuit.

These developments demonstrate the company's commitment to optimizing the Wynyard potash project, resolving legal matters and ensuring excellence in corporate governance.

Corporate update on National Instrument 43-101 technical report

As previously announced, based on an improvement in potash commodity price trends that began in 2021, Karnalyte decided to proceed with an update to its NI 43-101-compliant technical report as part of the company's strategic development plan. Karnalyte remains focused on the update to its NI 43-101-compliant technical report, a key precursor to any mine construction. Most recently, this included work done by Karnalyte and its advisers to identify cost-efficiencies, optimize construction and operation plans, and enhance project sustainability.

In furtherance of these efforts, Karnalyte has now tasked Wood PLC, a leading global consulting and engineering company and the independent lead author of the update, with undertaking additional evaluation of cost savings related to the compaction, drilling and insulation areas of the potash operation. A capital cost estimate workshop will also be held to identify further reductions in capital expenditures. Karnalyte will provide a further update as appropriate when the technical report is finalized.

Election of a highly qualified new director

The company is pleased to announce that Karnalyte shareholders elected Ritu Malhotra to the board as an independent director at the company's most recent annual general meeting. Ms. Malhotra is the president and chief executive officer of March Consulting Associates. She is an accomplished business leader with experience in engineering, leadership and board governance. Ms. Malhotra's experience in sponsoring and strategic management of projects in Canada's industrial sector, specifically in mining and clean energy, will bring valuable expertise to the Karnalyte board. Ms. Malhotra is a registered professional engineer and was recognized as engineer of the year by the Saskatoon Engineering Society in 2020. She was awarded the YWCA woman of distinction award in 2022 and the Queen Elizabeth II Platinum Jubilee in 2023 for her contributions to business in Saskatchewan. She serves on the board of governors at the University of Saskatchewan, is chair of the board of the Saskatchewan Industrial and Mining Suppliers Association, and is on the board of SaskTel.

With the election of Ms. Malhotra and the concurrent retirement of incumbent director Gerald Scherman, the board continues to consist of five directors, all of whom are independent for the purpose of National Instrument 58-101 (Disclosure of Corporate Governance Practices).

Mr. Scherman joined the Karnalyte board in 2019 and brought significant experience in the mining industry, having previously served as the chief financial officer with Areva Resources Canada Inc. (now Orano Canada Inc.).

Mr. Scherman has been an extremely valuable member of the board of directors, and Karnalyte wishes to express its sincere thanks to him for his significant contributions. The company benefited greatly from his leadership, guidance and wisdom.

Settlement of lawsuits

After months of negotiations and diligent efforts, the company is pleased to announce that in addition to the settlement in November of 2022 with Dan Brown, the company has now reached a settlement with Peter Matson and Gregory George Szabo, who, on Feb. 1, 2021, filed an originating application against Karnalyte, Gujarat State Fertilizers and Chemicals Ltd., each of the company's directors at the time, the interim chief executive officer of the company, and a former director of the company. This settlement and others achieved during the past year demonstrate the company's commitment to resolving legal disputes with a continuing objective to advance the company's initiatives.

About Karnalyte Resources Inc.

Karnalyte is a development-stage company focused on two fertilizer products, potash and nitrogen, to be produced and manufactured in Saskatchewan. Karnalyte owns the Wynyard potash project, with planned phase 1 production of 625,000 tonnes per year of high-grade granular potash, and two subsequent phases of 750,000 tpy each, taking total production up to 2,125,000 tpy. Karnalyte is also exploring the development of the company's nitrogen project, which is a proposed small-scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 metric tonnes per day (mtpd) of ammonia and approximately 1,200 mtpd of urea, and a target customer market of independent fertilizer wholesalers in central Saskatchewan.

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