Ms. Danielle Favreau reports

KARNALYTE RESOURCES INC. TO REVIEW DEVELOPMENT STRATEGY FOR ITS FLAGSHIP WYNYARD PROJECT

Karnalyte Resources Inc. will begin a review of its development strategy to evaluate the economic potential of increasing magnesium chloride production at the company's Wynyard project by developing the magnesium assets at the same time as the development of the potash project.

"We have initiated preliminary studies to determine the economic opportunity of co-developing magnesium and potash production from the company's underground deposits," said Danielle Favreau, chief executive officer.

Carnallite, also known as hydrated potassium magnesium chloride, is abundant within the company's mineral deposit. The studies are determining the economic balance of developing carnallite for the co-production of magnesium chloride and potassium chloride with the aim of significantly increasing magnesium chloride production, compared with previous studies, through the application of advanced solution mining technologies.

"Our goal is to create the most economically feasible operation we can while delivering value to shareholders. In light of the increasing importance of magnesium as one of the building blocks for the green and digital economy, we are re-evaluating our strategy and we believe we should review the inclusion of concurrent and optimized magnesium and potash deposit development in our plans for the benefit of all stakeholders," Ms. Favreau added.

The government of Canada lists magnesium as one of Canada's 34 critical minerals. Magnesium also appears on critical mineral lists in other jurisdictions, such as the United States, the European Union, Japan, South Korea and Australia. Magnesium is a key mineral in clean technologies and advanced manufacturing value chains.

Magnesium chloride serves as a key raw material in the production of various chemicals, including magnesium metal, magnesium hydroxide, magnesium oxide and magnesium carbonate. These chemicals are used in high-tech applications (such as semiconductor manufacturing and lithium-ion battery production) and in industries such as metallurgy, pharmaceuticals, agriculture, waste water treatment and advanced materials synthesis, driving the demand for magnesium chloride.

The company plans to make progress on its National Instrument 43-101 technical report through the remainder of the year, which is a key precursor to any mine construction. The company also expects to complete the study on the review of its development strategy by the first quarter of 2025.

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 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 2,125,000 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.

About the Wynyard potash project

The Wynyard potash project is a construction-ready solution mining potash project located in Wynyard, Sask., 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. All environmental permits remain valid, preliminary detailed engineering is complete, and the existing offtake agreement with Gujarat State Fertilizers & Chemicals Ltd. remains in effect. Further development is dependent on the continued strength of potash prices and obtaining financing.

About the Proteos nitrogen project

The Proteos nitrogen project is an advanced-stage development project consisting of a proposed small-scale nitrogen fertilizer plant to be located in central Saskatchewan, having a nameplate production capacity of approximately 700 metric tonnes per day of ammonia and approximately 1,200 metric tonnes per day of urea and designed to produce two products -- anhydrous ammonia (82-0-0) and granular urea (46-0-0). Karnalyte's primary target market is independent local Saskatchewan fertilizer wholesalers within a 400-kilometre radius of Saskatoon, Sask. A secondary target market is the U.S. Midwest fertilizer wholesalers near to the Canadian/U.S. border. The proposed plant would be the first greenfield nitrogen fertilizer plant built in Canada in the last 26 years.

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