Topic: How To Invest

Pat: What do you think about Karnalyte Resources, a new stock on the TSX? Thank you.

Article Excerpt

Karnalyte Resources, $11.80, symbol KRN on Toronto (Shares outstanding: 20.6 million; Market cap: $243.4 million; www.karnalyte.com), is still at an early stage of exploration, though it hopes to have a feasibility study on its Wynyard carnallite project completed by the end of next year. If the study is positive, it aims to build a $287-million mine. The first phase would produce 500,000 tonnes of potash a year. That would rise to 2 million tonnes a year after initial production is achieved. The company plans to use the mine’s cash flow to fund its construction. Karnalyte first sold shares to the public and listed on the Toronto exchange in December 2010. The shares came to market at a time of high investor interest in potash stocks. The company has experienced management, but it still has considerable exploration and financing challenges to overcome. At this point, we don’t recommend Karnalyte’s thinly traded shares. shares. …

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