12/26/2014

Stock Trades at 19% of BV and 46% Net Cash




The stock mentioned before but continues to be ignored; Karnalyte Resources (KRLTF or KRN.TO).



KRN.TO = .77 CAD on 12/26/14  (note exchange rate if you buy KRLTF and not KRN.TO) 

KRLTF = .66 USD on 12/26/14 (note Canadian to USD exchange rate .862 see latest rate) 12/31/14 KRN.TO last traded at .82 therefore the fair price of KRLTF based on .862 exchange rate would be .706. Dont pay more than the more liquid KRN.TO price converted to USD using current exchange rates. 


Company Description;
Karnalyte intends to explore and develop high quality agricultural and industrial potash and magnesium products.  Once financing is obtained for potash plant construction, Karnalyte plans to operate a solution mining facility that will initially produce 625,000 tonnes of potash per year, increasing to 2.125 million tonnes of potash per year. Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan , comprising a total of 85,126 acres.


Catalysts Summary:

1)Margin of safety, Net Cash of 1.54CND versus a market price of KRN.TO at .77CND or KRLTF =  .66USD.
2)Activist campaign started December 2014 by founder, former CEO (retired May 2014), and largest shareholder.
3)Gujarat StateFertilizers invested 44.74M for a 19.8% stake in Karnalyte. This private placement occurred January 2013 for a per share price of 8.15 Canadian Dollars.Note difference in current price versus price invested by Gujarat State Fertilizer at 8.15.
4)Book value per share of 3.41USD versus price of .66 (KRLTF).
5)Karnalyte trades at 5 years low, mean reversion candidate.
6) Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan , comprising a total of 85,126 acres.

Catalysts; 
Activist campaign started with a letter dated 12/23/14 by the largest shareholder and former CEO. Robin Pinny, founder of Karnalyte and former CEO and Director, retired May 2014.Shares owned 4,012,409.



The Concerned Shareholder Group is dismayed and concerned about the following...Lack of leadership, Lack of strategic oversight and direction, Lack of alignment in interests between the board and shareholders.




"Since announcing the formation and aggregate shareholdings of the Concerned Shareholder Group on December 10, 2014, I have reached out to the incumbent board with a view to working together to effect the requested changes to get our Company back on track to building long term shareholder value as quickly as possible.  In response, the incumbent board requested a member of the Concerned Shareholder Group to execute a confidentiality agreement so that the parties can discuss 'important developments at Karnalyte that have not been publicly disclosed'.  As the second largest shareholder in Karnalyte, I was disturbed by this request as Karnalyte is required under securities law and the rules of the Toronto Stock Exchange to publicly disclose material changes and information.  Moreover, as shareholders, we should all be entitled to be informed in a timely manner about important developments at our Company.”


Gujarat StateFertilizers &; Chemicals(GSFC india) invested a 19.8% stake in Karnalytefor 44.7M or 8.15 per share in a private placement, January 2013.


KRLTF (KRN.TO) trades at 5 year low. 
Market Cap: 18.14M ,Enterprise Value: -16.86M

Price/Book (mrq):0.19
Total Cash (mrq):37.47M,Cash Per Share: 1.36
Total Debt (mrq): 0.00 , Current Ratio (mrq):105.08
Book Value Per Share (mrq):3.41
52-Week Change:  -58.49%
52-Week High:1.72 , 52-Week Low: 0.66
Shares Outstanding: 27.48M , Float:  17.38M


Cash per share = 1.36
Equity Per share  = 3.41
Properpty Plant and Equipment Per share = 1.94
Total Assets Per share = 3.45



Long KRLTF


News update 01/02/15: "Karnalyte Resources Inc. Announces Update on Project Financing and Details of Annual General and Special Meeting of Shareholders and Provides Initial Response to the Dissident Shareholders to Set the Record Straight"

"Announced today that (01/02/15) it is in discussions in connection with obtaining financing in a targeted amount of approximately USD $700,000,000 for the development of the Wynyard Carnallite-Sylvite Project. An engagement letter was signed with an Indian financial institution in October, 2014 - well in advance of the recent dissident shareholder requisition - and due diligence and structuring discussions are now under way. The investment capital is expected to come from a syndicate of financial institutions." Continue reading the news release.

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