Ms. Danielle Favreau reports

KARNALYTE RESOURCES INC. ANNOUNCES 2023 YEAR END RESULTS AND PROVIDES CORPORATE UPDATE

Karnalyte Resources Inc. has released its financial results and corporate highlights for the financial year ended Dec. 31, 2023.

2023 -- year in review

In 2023, Karnalyte continued work on the update to its National Instrument 43-101-compliant technical report, including additional work, to identify cost-efficiencies, optimize construction and operation plans, and enhance project sustainability.

Potash -- Wynyard potash project

Market update

The market conditions for potash softened in 2023 but remain positive. While capacity in Russia and Belarus following the Russian invasion of Ukraine is returning to normal, new projects in this region are still expected to face significant delays as compared with presanction timelines. And in the long term, demand is expected to stay strong especially for Canadian potash as continued geopolitical uncertainty makes the Saskatchewan region an attractive supply jurisdiction.

Update to the NI 43-101-compliant technical report

In January of 2022, the company announced the appointment of Wood PLC, a leading global consulting and engineering company, as lead author of an update to its NI 43-101-compliant technical report. Wood was appointed after a significant improvement in the market conditions for potash, which began in 2021 and continued through 2022 and 2023.

Karnalyte has made diligent progress on this important step toward construction of its Wynyard potash project, despite unforeseen challenges that have resulted in delays.

There has been significant growth in Western Canada's economic activity over the past two years and this, in conjunction with supply chain constraints impacting suppliers worldwide, is, among other factors, causing delays to the update to the technical report. In conjunction with the update Karnalyte is also investigating certain capital cost-efficiencies and opportunities to enhance sustainability, and is working toward getting more comfort on the assumptions used given the current market and economic conditions. In furtherance of these efforts, in the second quarter, Karnalyte tasked Wood with undertaking additional evaluation of costs savings related to the compaction, drilling and insulation areas of the potash operation. Significant progress was made during this evaluation during the last half of the year and to date. Karnalyte will provide a further update as appropriate once the technical report is finalized.

"Karnalyte continues to focus on advancing the update to the NI 43-101-compliant technical report and has continued making steady progress, despite challenges the mining industry is facing beyond our control and the company's desire to move forward in a responsible way," said Danielle Favreau, interim chief executive officer of Karnalyte. "The company remains committed to following best practices as we work through this critical step, which will serve as a strong foundation for our Wynyard potash project."

To date, Karnalyte has achieved a number of key milestones in relation to the update to the report. This includes engaging industry-leading solution mining and engineering firm ERCOSPLAN ingenieurgesellschaft Geotechnik und Bergbau mbH, which provided Karnalyte with a positive review of core samples, and confirmation from Saskatchewan's Ministry of Environment that Karnalyte's previous environmental impact study approval from 2013 remains valid.

Nitrogen -- the Proteos nitrogen project

The Proteos nitrogen project remains under consideration as part of Karnalyte's future and may diversify the company's business by adding a second fertilizer product line. The Proteos nitrogen project is a proposed regional-scale nitrogen fertilizer plant to be located in central Saskatchewan, with a nameplate capacity of 700 metric tonnes per day ammonia and 1,200 metric tonnes per day urea. The company's primary target market is local, independent wholesalers within an approximately 400-kilometre radius of Saskatoon, Sask., with a secondary target market of Midwest United States wholesalers near the Canadian border. There were no significant developments to report on this project in 2023.

Investor relations

In February of 2024, the company retained IR Labs, a leading investor relations firm in Canada, to provide investor relations services. Ms. Favreau stated: "We are pleased to retain IR Labs as part of our strategy to increase business development activities and enhance communication with investors -- both existing investors and outreach aimed at growing our shareholder base. Our strategy includes engaging in investor webinars and other events with a goal to communicate the strength of Karnalyte and its projects, and to outline the opportunities for growth to potential investors."

Outlook for 2024

The company plans to complete the update to its NI 43-101 technical report, to continue to work on identifying cost-efficiencies, optimizing construction and operation plans, and enhancing project sustainability. Furthermore, the company plans to increase business development activities to seek out and attract investment and strategic partners to move one or both company's projects forward to development.

2023 year-end results and selected annual information

During the year ended Dec. 31, 2023, the company's focus was on updating its NI 43-101-compliant technical report. On Dec. 31, 2023, the company had cash of $2.3-million, a positive working capital of $2.1-million and no debt.

The information in the attached table has been summarized from the company's audited financial statements. Karnalyte's 2023 year-end financial statements, management's discussion and analysis, and annual information form are available on SEDAR+ and on the company's website.

About Karnalyte Resources Inc.

Karnalyte Resources 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 tonnes per year each, taking total production up to 2,125,000 tonnes per year. Karnalyte is also exploring the development of the Proteos nitrogen project, which is a proposed small-scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 metric tonnes per day of ammonia and approximately 1,200 metric tonnes per day of urea, and a target customer market of independent fertilizer wholesalers in central Saskatchewan. Also under consideration is the secondary magnesium compounds, on Canada's critical minerals list.

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