Ms. Danielle Favreau reports

KARNALYTE RESOURCES INC. ANNOUNCES 2024 FIRST QUARTER RESULTS

Karnalyte Resources Inc. today released its financial results and corporate highlights for the first quarter ended March 31, 2024.

Q1 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 most recent quarter, this included work done by Karnalyte and its advisers to:

• Identify cost-efficiencies;
• Optimize construction and operation plans;
• Enhance project sustainability.

In pursuit of cost savings, the company began an analysis that includes a review of the costs of certain equipment from overseas. This initiative is being supported by the company's strategic partner, Gujarat State Fertilizers and Chemicals. This cost-savings initiative is being led by Wood PLC, a leading global consulting and engineering company that is the independent lead author of the update.

As previously announced, industry leading solution mining and engineering firm ERCOSPLAN ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN) 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 is also exploring 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 our business by adding a second fertilizer product line.

Business development

During the first quarter, Karnalyte took part in business development activities including meeting with providers of financing to explore capital raising opportunities.

The company also explored other potential cash-generating activities, such as asset sales and securing debt facilities.

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, and enhancing project sustainability;
• Increase business development activities to seek out and attract investment and strategic partners to move the company's projects forward to development.

2024 first quarter results

At March 31, 2024, the company had cash of $2-million and positive net working capital of $1.6-million and no debt. Karnalyte's first quarter 2024 financial statements and managements' discussion and analysis are available at SEDAR+ and on Karnalyte's website.

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

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 (TPY) of high-grade granular potash, and two subsequent phases of 750,000 TPY each, taking total production up to 2,125,000 TPY. 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 (MTPD) of ammonia and approximately 1,200 MTPD 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 TPY of high-grade granular potash, and two subsequent phases of 750,000 TPY each, taking total production up to 2,125,000 TPY. 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 MTPD of ammonia and approximately 1,200 MTPD 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 United States Midwest fertilizer wholesalers near to the Canadian-United States border. The proposed plant would be the first greenfield nitrogen fertilizer plant built in Canada in the last 26 years.

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