Mr. Sanjeev Varma reports

KARNALYTE RESOURCES INC. ANNOUNCES 2024 SECOND QUARTER RESULTS AND CORPORATE HIGHLIGHTS

Karnalyte Resources Inc. has released its financial results and corporate highlights for the second quarter ended June 30, 2024.

The company has appointed Danielle Favreau as permanent chief executive officer and Christie Gradin as permanent chief financial officer of the company.

"We are very pleased to share the news of the permanent appointments of Ms. Favreau and Ms. Gradin," said Sanjeev Varma, chair of the board of Karnalyte. "Both Danielle and Christie have demonstrated exceptional and dedicated leadership in their roles as interim CEO and CFO. We look forward to their future success as our management team continues to advance the company's Wynyard project toward development."

Ms. Favreau said: "I would like to thank the board and our small but dedicated team for their confidence and trust in my leadership. I look forward to continuing our work together to achieve our long-term objectives of becoming a low-cost producer of premium granular potash."

Q2 2024 highlights

The company continued to make progress on its National Instrument 43-101-compliant technical report, a key precursor to any mine construction. In the second quarter, this included work done by Karnalyte and its advisers to:

• Identify cost0efficiencies;
• Optimize construction and operation plans;
• Enhance project sustainability.

In the second quarter, Karnalyte made progress on the equipment cost savings initiative that the company previously announced. Through this work, the company anticipates potential cost savings from sourcing certain equipment from overseas. The company will provide further details in the second half of the year. The company's strategic partner, Gujarat State Fertilizers and Chemicals (GSFC), continues to support the project and Wood PLC continues to lead it.

As previously announced, industry-leading solution mining and engineering firm Ercosplan ingenieurgesellschaft Geotechnik und Bergbau mbH is assisting with the technical report, including the update of the mineral resource estimation and the mine plan for brine field development as the basis for the mineral reserve estimate.

The company also continues to explore product diversification related to the development of the magnesium operations given that this mineral is on the critical minerals list in Canada and worldwide.

The company's Proteos nitrogen project also remains under consideration as part of Karnalyte's future and may diversify the company's business by adding a second fertilizer product line.

Corporate and governance matters

Election of a highly qualified director

During the quarter and at its most recent annual meeting, Karnalyte shareholders elected Mr. Varma to the board as an independent director of the company. Mr. Varma previously served as a director at Karnalyte from 2015 to 2020.

Mr. Varma is currently serving as the executive director (agri business) at GSFC, where he has worked for over 34 years in various roles. Prior to his current role, he served in the finance department for more than 10 years, heading project financing, budgeting, financial control and corporate debt restructuring. He also led the project development department for five years. Throughout his time at GSFC, he has led other core functions, including engineering services, marketing and business development. He is a seasoned technological commercial senior executive of GSFC's petrochemical and fertilizer complex. In addition, he has served on the boards of many Indian companies and two foreign joint ventures for several years. Mr. Varma obtained his bachelor of engineering degree from Sardar Patel University, Gujarat, India, in 1990 and joined GSFC as a trainee engineer. While serving at GSFC, he obtained his master of business administration (finance) in 2002 from MS University Baroda, where he received recognition for academic achievement.

Ms. Favreau commented, "We are pleased to welcome back Mr. Varma to the Karnalyte board, and look forward to the positive impact his many years of experience in leadership, engineering services, project and business development will have on our company's future success."

Long-serving director Vishvesh Nanavaty retired from his position as a director on the board, which he held for over a decade. Mr. Nanavaty joined Karnalyte's board in 2013 following GSFC's investment in the company. He previously served as the executive director and CFO of GSFC, and has held a previous role as company secretary.

"Mr. Nanavaty has been an extremely valuable member of the board of directors, and, on behalf of the company, I offer my sincere thanks to him for his significant contributions and dedicated leadership over the past 10 years," said Ms. Favreau. "We wish him all the best in his retirement."

With the election of Mr. Varma and the concurrent retirement of incumbent director Mr. Nanavaty, the board continues to consist of five directors, all of whom are independent for the purpose of NI 58-101, Disclosure of Corporate Governance Practices.

Strategic asset sale of surplus equipment

On Aug. 1, 2024, the company announced it is pursuing the sale of certain non-essential assets from its Wynyard project as part of its continuing efforts to optimize its business operations and advance the project.

Assets for sale include a loader, skid steer, rig mats, miscellaneous office supplies and equipment. The proceeds from the asset sale will be reinvested into Karnalyte's Wynyard project development activities.

Outlook for 2024

In 2024, the company's plans are as follows:

• Complete the update to its NI 43-101 technical report;
• Continue to work on identifying cost-efficiencies, optimizing construction and operation plans, maximizing the plant layout, and enhancing project sustainability;
• Continue business development activities to seek out and attract investment and strategic partners to move the company's projects forward to development.

Executive biographies

Danielle Favreau, CPA, CA, CEO

Ms. Favreau was appointed interim CEO of Karnalyte in September of 2019. She had served as the company's CFO since Dec. 31, 2015, and prior to that was the company's corporate controller. Prior to joining Karnalyte, Ms. Favreau served as an audit manager and human resources (HR) manager at Virtus Group LLP. She has also served as controller at Great Western Minerals Group and served many mining clients with Deloitte in Saskatoon, Sask. Ms. Favreau has a bachelor of commerce degree from the University of Saskatchewan and a CPA, CA designation from CPA Saskatchewan. Ms. Favreau served as a director of the Mendel Art Gallery and the Remai Modern in Saskatoon, serving on the audit and finance committees of both organizations. She is currently serving as the past chair with the Saskatoon Community Foundation.

Christie Gradin, CPA, CA, CFO

Ms. Gradin was appointed interim CFO of Karnalyte in July of 2020. Ms. Gradin brings extensive expertise, business acumen and senior financial management experience to Karnalyte, having held numerous senior financial and management positions in both private and publicly traded companies. Most recently, she served as the director of finance and administration at SED Systems, a division of Calian Inc. She also has experience in the insurance and financial services industries. Ms. Gradin is currently the CEO of Christie Gradin CPA P.C. Inc., providing CFO services to multiple organizations and industries. At the University of Saskatchewan, Ms. Gradin obtained her bachelor of commerce degree, with great distinction, and a master of professional accounting. She is a CPA, CA.

2024 second quarter results

At June 30, 2024, the company had cash of $1.2-million, and positive net working capital of $1.1-million and no debt. Karnalyte's second quarter 2024 financial statements and management's discussion and analysis are available on SEDAR+ and on Karnalyte's website.

Information in the attached table has been summarized from the company's condensed interim unaudited financial statements.

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 construction-ready 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 million 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.

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