Ms. Danielle Favreau reports

KARNALYTE RESOURCES INC. ANNOUNCES 2026 SECOND QUARTER RESULTS AND CORPORATE HIGHLIGHTS

Karnalyte Resources Inc. has released its financial results and corporate highlights for the second quarter ended June 30, 2026.

Q2 2026 highlights

During the quarter, Karnalyte advanced key initiatives supporting the continued development of the Wynyard project.

On Jan. 7, 2026, the company filed an updated National Instrument 43-101 technical report on SEDAR+, marking an important milestone in advancing the Wynyard project and supporting future development and financing activities.

The company also progressed its review of its development strategy, including the evaluation of proposals to advance the magnesium opportunity associated with the Wynyard deposit. This includes consideration of a concept study for potential magnesium metal production, reflecting efforts to enhance and optimize the value of its resource base.

The company is encouraged by developments during the first six months of 2026 with respect to commitments made by the governments of Canada and India to collaborate in the fertilizer sector and strengthen partnerships supporting long-term food and agriculture security. The company believes these commitments will strengthen the demand for Canadian potash and support the sector's long-term growth.

To support the development planning and operational readiness of the Wynyard project, the company initiated a rail study to evaluate infrastructure requirements, including advancing the design of a rail spur connecting the project site to the Canadian Pacific Kansas City Ltd. (CPKC) main line. Significant progress was made on the rail study during the quarter, including the development of several route options, preliminary design and drawings. Remaining work on the study is planned to be completed in the third quarter and will include stakeholder review culminating in the development of a best option with design of overall layout, one CPKC rail connection layout and one highway layout.

The company continues to consider its options to enhance business development activities in support of advancing project financing initiatives.

Asset sales

During the second quarter of 2026, Karnalyte sold three parcels of land in the Wynyard area for net proceeds of $1.6-million. The company also obtained options on these parcels to plan, develop and lease areas necessary for the development of well pads and related facilities to support the planned solution mining operations.

These activities are part of the company's continuing efforts to optimize its asset portfolio and ensure that landholdings align with development requirements.

The company intends to sell additional parcels of farmland in compliance with an updated exemption order the company received from the Saskatchewan Farm Land Security Board on March 24, 2026.

Corporate and governance matters

Election a new highly qualified director

During the quarter, at its most recent annual meeting, Karnalyte shareholders elected Dr. Pujan Vaishnav to the board as a directors of the company.

Dr. Vaishnav is currently serving as vice-president, research and development, at Gujarat State Fertilizers and Chemicals Ltd. (GSFC). Dr. Vaishnav has more than 25 years of experience in the chemical sector and has held a variety of strategic positions within GSFC, including roles in quality, manufacturing technology and operations. He also holds a Six Sigma Green Belt certification in process technology.

The company welcomes Dr. Vaishnav and looks forward to benefiting from his expertise as Karnalyte continues development of the Wynyard project.

On May 11, 2026, the company announced the acceptance of the resignation of Sanjeev Varma as director and chair of the board of Karnalyte. Mr. Varma also resigned from his role as executive director at Gujarat State Fertilizers & Chemicals, Karnalyte's major shareholder and strategic partner. Mr. Varma has accepted a position as Managing Director at Indian Potash Ltd. Ms. Favreau commented, "Karnalyte sincerely thanks Mr. Varma for his dedicated service and the meaningful impact he has made as a member of the board of directors."

In addition, the board of directors has unanimously approved the appointment of Dilip Pathakjee as chair of the board.

With the election of Dr. Vaishnav and the concurrent resignation of Mr. Varma, 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.

Outlook for 2026

In 2026, Karnalyte intends to continue advancing the Wynyard project through continuing technical, infrastructure and strategic initiatives. The company's key priorities include:

• Continuing to refine development plans and execution strategies;
• Advancing supporting studies, including infrastructure planning such as rail access;
• Evaluating and advancing development opportunities related to magnesium products;
• Pursuing strategic partnerships, financing initiatives and other business development opportunities to support project advancement;
• Maintaining a disciplined approach to capital allocation and corporate expenditures while positioning the company for future development.

Karnalyte remains focused on advancing the Wynyard project in a disciplined and responsible manner to enhance long-term shareholder value and support the growing global demand for fertilizer products and critical minerals.

2026 second quarter results

At June 30, 2026, the company had cash of $600,000 and positive working capital of $600,000. The company has no debt. Karnalyte's second quarter 2026 financial statements and management discussion and analysis are available on SEDAR+ and on Karnalyte's website.

The following information has been summarized from the company's condensed interim unaudited financial statements.

ABOUT Karnalyte Resources Inc.

Karnalyte Resources is a development-stage potash company. Karnalyte owns the Wynyard project, with planned phase 1 production of 675,000 tonnes per annum of high-grade granular potash, and two subsequent phases of 750,000 tonnes per annum each, taking total production up to 2,175,000 tonnes per annum. All environmental permits remain valid, preliminary detailed engineering is complete, and the existing offtake agreement with GSFC remains in effect. Karnalyte is also considering opportunities relating to secondary magnesium compounds. Further development is dependent on the continued strength of potash prices and obtaining financing.

We seek Safe Harbor.