An anonymous director reports

KARNALYTE RESOURCES INC. NOTES CONTRADICTIONS AND UNSUBSTANTIATED DISSIDENT CLAIMS

Karnalyte Resources Inc. is noting the documents issued yesterday from dissident shareholder Robin L. Phinney. Based on a preliminary review of the documents, Karnalyte notes a number of distortions, mischaracterizations and confusing statements. For example, Mr. Phinney promotes "an aggressive capital conservation strategy" on the first page of his letter, and then proposes significant capital spends in the form of "proof-of-concept" studies, construction of production wells and further engineering work, on the following page.

In addition, at the time the board of directors of Karnalyte terminated Mr. Phinney, he argued that the corporation should focus on the development of magnesium. Also, Mr. Phinney spent shareholder capital on this strategy, yet (at least in the documents distributed) he is silent on this now.

The corporation will address these and other concerns when it files its management information circular in due course. Further, the corporation believes that Mr. Phinney may be breaching his agreements with the corporation, including his termination agreement. The corporation reserves the right to seek associated damages.

The board of directors remains committed to evaluating all realistic alternatives for enhancing shareholder value. As Karnalyte noted in its press release of Feb. 11, 2015, it also remains open to engaging with the dissident in constructive dialogue regarding credible value-creation plans. To date, Mr. Phinney has not accepted this offer.

The corporation does not believe that the dissident's hollow rhetoric, rainbows (as they appear on the cover of the dissident circular and website) and suggestions of significant capital expenditures -- in lieu of a budget and clear strategy -- constitute a credible plan to create value for shareholders. Rather, Mr. Phinney has created a sideshow distraction to management's efforts to enhance shareholder value already under way.

There is no action for shareholders to take at this time.

We seek Safe Harbor.