Karnalyte RESOURCES

RESPEC wood.ERCOSPLAN MARCH

NI 43-101 Technical Report on the Feasibility Study of the Wynyard Project, Saskatchewan, Canada

Prepared for: Karnalyte Resources Inc.

Prepared by: Tabetha Stirrett, P.Geo., President, RESPEC Consulting Inc.
Sebastiaan van der Klauw, EurGeol, Consulting Geologist, ERCOSPLAN Ingenieurgesellschaft
David Mitchell, P.Eng., Senior Process Engineer, Wood Canada Limited
David Myers, P.Eng., Technical Director Mining and Minerals (Saskatoon), Wood Canada Limited
Kyle Krushelniski, P.Eng., Senior Project Manager, March Consulting Associates Inc.

Effective date: November 26, 2025

Project no.: 252512

Important Notice

This Report was prepared as a National Instrument 43-101 technical report for Karnalyte Resources Inc. (Karnaltye) by Wood Canada Limited, RESPEC Consulting Inc., ERCOSPLAN Ingenieurgesellschaft, and March Consulting Associates Inc, (collectively the Consultants). The quality of information, conclusions, and estimates contained herein is consistent with the terms of reference, constraints and circumstances under which the Report was prepared by the Consultants and are based on i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this Report. This Report is intended to be used by Karnaltye subject to terms and conditions of its contract with each of the Consultants. That contract permits Karnalyte to file this Report as a technical report with Canadian securities regulatory authorities pursuant to provincial and territorial securities law. Except for the purposes legislated under Canadian provincial and territorial securities law, any other use of this Report by any third party is at that party's sole risk.

RESPEC

CERTIFICATE OF QUALIFIED PERSON

Tabetha Stirrett, P.Geo.
RESPEC Consulting, Inc.
300-3333 8th Street East
Saskatoon, Saskatchewan, Canada, S7H 4K1

I, Tabetha Stirrett, P.Geo., am employed as President with RESPEC Consulting, Inc.

This certificate applies to the technical report titled "NI 43-101 Technical Report on the Feasibility Study of the Wynyard Project, Saskatchewan, Canada" with an effective date November 26, 2025 (the "Technical Report").

I am registered as a Professional Geologist with the Association of Professional Engineers and Geoscientists of Saskatchewan and a Professional Geoscientist (Member #10699). I graduated with a degree in geology from the University of Saskatchewan in 1997.

I have practiced as a professional geologist for 28 years. I have been working in potash exploration and development geology since 2008 in potash deposits in the Williston Basin and Prairie Evaporite Formation, Canada and Paradox Basin and Holbrook Basin in the US. The relevant experience I have includes assessing numerous potash projects for exploration companies throughout North and South Americas including the logging and interpreting potash cores; development of exploration plans, drilling programs, quality assurance/quality control procedures; completion of local geological desktop studies to assess the potential of inflow into conventional potash mines; estimation of mineral resources; and supervision of technical reports for listing on various stock exchanges. I have also conducted due-diligence reviews on potash properties for most of the global potash deposits. Additionally, I worked for nearly 10 years for a geophysical wireline company and was responsible for the acquisition, quality control, and interpretation of geophysical wireline logs, which are used extensively for interpreting the geological setting of potash deposits.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101), for those sections of the Technical Report that I am responsible for preparing.

I visited the Wynyard property on June 25, 2025.

I am responsible for Sections 1.1, 1.2, 1.5-1.7, 1.19, 1.20.1, 1.22; Sections 2; Sections 7.1-7.4; Sections 8-10; Sections 11.1, 11.2.1-11.2.4, 11.3.1, 11.3.2.1, 11.5, 11.6, 11.7.1; Sections 12.1, 12.2.1, 12.2.2, 12.8.1; Section 23; Sections 25.3, 25.14.1; Sections 26.1, 26.2, 26.5; and Section 27 of the Technical Report.

I am independent of Karnalyte Resources Inc. as independence is described by Section 1.5 of NI 43-101.

I have had no previous involvement with the Wynyard property.

I have read NI 43-101, and the sections of the Technical Report that I am responsible for have been prepared in compliance with that Instrument.

As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the sections of the Technical Report for which I am responsible for preparing contain all scientific and technical information that is required to be disclosed to make those sections of the Technical Report not misleading.

"signed and stamped"

Tabetha Stirrett, P.Geo.
Dated: 23 December, 2025

ERCOSPLAN

CERTIFICATE OF QUALIFIED PERSON

Dr Sebastiaan N G C van der Klaw, EurGeol
ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH
Arnstaedter Strasse 28
99096 Erfurt, Germany

I, Dr Sebastiaan N G C van der Klaw, EurGeol, am employed as a Consulting Geologist with ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH.

I am registered as a European Geologist with European Federation of (Registration Number 756). I graduated with a degree in Geology in 1990 from Rijksuniversiteit Utrecht and a Doctorate at the Ruhr-Universität Bochum (Ruhr University Bochum) in 1999.

I have practiced as a professional geologist for 29 years with experience focused in potash and salt exploration and potash mining geology in Germany, Russia, Brazil, Canada, Republic of Congo, Saudi Arabia, Ethiopia, Netherlands, Laos and Thailand. During this time, I have estimated mineral resources and mineral reserves for potash projects in Russia, Brazil, Canada, Republic of Congo, Laos and Thailand. Several of these projects for example in Brazil, Republic of Congo, Russia, Netherlands and Laos were designed as solution mining operations of carnallite with often besides potash, $\mathrm{MgCl}_2$ products as a further option.

I visited the Wynyard property on January 16, 2010, May 4, 2016 and May 30, 2022.

I am responsible for Sections 1.1, 1.2, 1.4, 1.7, 1.9, 1.10, 1.11, 1.19, 1.20.2, 1.21.1; Section 2; Sections 3.1, 3.4; Section 5; Section 6; Sections 7.5, 7.6; Sections 11.2.5, 11.3.2.2, 11.3.2.3, 11.4, 11.7.2; Sections 12.2.3, 12.2.4, 12.3, 12.5, 12.8.2, 12.8.4; Sections 14-16; Sections 25.1, 25.4, 25.5, 25.7, 25.14.2, 25.15.1; and Section 27 of the Technical Report.

I am independent of Karnalyte Resources Inc. as independence is described by Section 1.5 of NI 43-101.

I have had previous involvement with the Wynyard property with the preparation of the Technical Report Preliminary Assessment Study, Wynyard Carnallite Project, Subsurface Mineral Permit KP 360, Saskatchewan, Canada, effective date August 26, 2010, Technical Report KCl and $\mathrm{MgCl}_2$ Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, effective date June 27, 2012, and Technical Report KCl and $\mathrm{MgCl}_2$ Mineral Reserve and Resource Estimate for the Wynyard Carnallite Project, Sub-surface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada, effective date June 23, 2016.

I have read NI 43-101, and the sections of the Technical Report that I am responsible for have been prepared in compliance with that Instrument.

"signed and stamped"

Dr Sebastiaan N G C van der Klaw, EurGeol

Dated: 23 December, 2025

wood.

CERTIFICATE OF QUALIFIED PERSON

David Mitchell, P.Eng.
Wood Canada Limited
Innovation Place, 121 Research Drive, #301
Saskatoon, Saskatchewan, Canada, S7N 1K2

I, David Mitchell, P.Eng., am employed as a Senior Process Engineer with Wood Canada Limited.

I have practiced my profession for 22 years in the mining and minerals industry primarily in Potash. My relevant project experience includes site process engineering, where operating costs were tracked. Ten of these years were spent leading research and pilot testing for Nutrien, along with the development and commissioning of six major potash plant expansions in Canada. For the past five years I have consulted with Wood, where I have developed flowsheets for potassium sulphate, potassium chloride and lithium facilities.

I have not visited the Wynyard property.

I am responsible for Sections 1.1, 1.2, 1.7, 1.8, 1.12, 1.17, 1.19, 1.21.2, 1.22; Section 2; Sections 12.4, 12.8.3; Section 13; Section 17; Sections 21.1, 21.5; Sections 25.1, 25.6, 25.11, 25.15.2; Sections 26.1, 26.4, 26.5; and Section 27 of the Technical Report.

I am independent of Karnalyte Resources Inc. as independence is described by Section 1.5 of NI 43-101.

I have had no previous involvement with the Wynyard property.

I have read NI 43-101, and the sections of the Technical Report that I am responsible for have been prepared in compliance with that Instrument.

"signed and stamped"

David Mitchell, P.Eng.
Dated: 23 December, 2025

wood.

CERTIFICATE OF QUALIFIED PERSON

David Myers, P.Eng.
Wood Canada Limited
Innovation Place, 121 Research Drive, #301
Saskatoon, Saskatchewan, Canada, S7N 1K2

I, David Myers, P.Eng., am employed as a Technical Director Mining and Minerals (Saskatoon) with Wood Canada Limited.

I am registered as a Professional Engineer with The Association of Professional Engineers and Geoscientists of Saskatchewan. I graduated with a Bachelor of Science degree in Engineering in 1991 from the University of Saskatchewan. I obtained a Master of Science degree in Engineering in 2000 from the University of Saskatchewan and a Masters of Project Management degree in 2013 from Pennsylvania University.

I have practiced my profession for 34 years. For 29 years I practiced in the mining and minerals industry primarily in Saskatchewan and Manitoba. My relevant project experience includes engineering and cost estimating positions for surface and underground projects in potash mines in Saskatchewan, and major projects including the $2.8 billion Rocanville West expansion for Nutrien and the $4.1 billion Bethune mine for K+S Potash Canada. For these projects I had engineering management responsibility for surface infrastructure and capital cost estimation for initial project costs and change management estimating.

I visited the Wynyard property on June 25, 2025.

I am responsible for Sections 1.1-1.3, 1.7, 1.13, 1.15-1.19, 1.21.4; Sections 2-4; Sections 12.6, 12.8.5; Section 18; Section 20; Sections 21.1-21.4; Section 22; Section 24; Sections 25.1, 25.2, 25.8, 25.10-25.13, 25.15.4; Section 26.4 and Section 27 of the Technical Report.

I am independent of Karnalyte Resources Inc. as independence is described by Section 1.5 of NI 43-101.

I have had no previous involvement with the Wynyard property.

I have read NI 43-101, and the sections of the Technical Report that I am responsible for have been prepared in compliance with that Instrument.

"signed and stamped"

David Myers, P.Eng.

Dated: December 23, 2025

MARCH

CERTIFICATE OF QUALIFIED PERSON

Kyle Krushelniski, P.Eng.
March Consulting Associates, Inc
100-446 2nd Avenue North
Saskatoon, Saskatchewan, Canada, S7K 2C3

I, Kyle Krushelniski, P.Eng., PMP, am employed as a Senior Project Manager with March Consulting Associates, Inc.

I am registered as a Professional Engineer with The Association of Professional Engineers and Geoscientists of Saskatchewan. I graduated with a Bachelor of Science degree in Agriculture and Bioresource Engineering in 1996 from the University of Saskatchewan.

I have practiced my profession for 29 years. Since 2006 I have been involved with studies and design of industrial mining projects including potash production in Saskatchewan. I have managed pilot testing and wellfield design for K+S Potash Canada and managed maintenance and capital projects at most of Saskatchewan's potash producers. I have participated in due diligence reviews for international potash projects in Loas and Argentina. I have engaged in numerous value engineering programs including the economic evaluation of project alternatives. I have advised multiple management teams on project alternatives including implementation planning.

I have not visited the Wynyard property.

I am responsible for Sections 1.1, 1.2, 1.7, 1.14, 1.19, 1.20.3, 1.21.3, 1.22; Section 2; Section 3.4; Section 12.7, 12.8.6; Section 19; Sections 25.9, 25.14.3, 25.15.3; Section 26.1, 26.3, 26.5; Section 27 of the Technical Report.

I am independent of Karnalyte Resources Inc. as independence is described by Section 1.5 of NI 43-101.

I have had no previous involvement with the Wynyard property.

I have read NI 43-101, and the sections of the Technical Report that I am responsible for have been prepared in compliance with that Instrument.

"signed and stamped"

Kyle Krushelniski, P.Eng.
Dated: December 23, 2025

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

1.0 SUMMARY...1-1
1.1 Introduction...1-1
1.2 Terms of Reference...1-1
1.3 Location, Mineral Tenure, Surface Rights and Royalties...1-2
1.4 History...1-2
1.5 Geology and Mineralization...1-2
1.6 Exploration, Drilling and Sampling...1-3
1.7 Data Verification...1-4
1.8 Metallurgical Test Work...1-4
1.9 Mineral Resource Estimate...1-5
1.10 Mineral Reserve Estimate...1-5
1.11 Mining Methods...1-8
1.12 Recovery Methods...1-9
1.13 Project Infrastructure...1-10
1.14 Market Studies and Contracts...1-11
1.15 Environmental Studies, Permitting and Social or Community Impact...1-13
1.16 Capital Costs...1-13
1.17 Operating Costs...1-15
1.18 Economic Analysis...1-16
1.19 Conclusions...1-16
1.20 Opportunities...1-17
1.20.1 Geology...1-17
1.20.2 Mineral Resources and Mineral Reserves...1-17
1.20.3 Market Studies...1-17
1.21 Risks...1-18
1.21.1 Mineral Resources and Mineral Reserves...1-18
1.21.2 Metallurgical Test Work and Recovery Methods...1-18
1.21.3 Market Studies...1-18
1.21.4 Financial...1-18
1.22 Recommendations...1-18

2.0 INTRODUCTION...2-1
2.1 Terms of Reference...2-1
2.2 Qualified Persons...2-1
2.3 Site Visits...2-2
2.4 Effective Date...2-3
2.5 Information Sources...2-3

3.0 RELIANCE ON OTHER EXPERTS...3-1
3.1 Legal Status...3-1
3.2 Taxation...3-1

Project No.: 252512
24 December 2025
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

3.3 Environmental ... 3-1
3.4 Marketing and Commodity Pricing ... 3-2

4.0 PROPERTY DESCRIPTION AND LOCATION ... 4-1

4.1 Property Location ... 4-1
4.2 Mineral Rights in Saskatchewan ... 4-1
4.3 Surface Rights in Saskatchewan ... 4-2
4.3.1 Karnalyte's Mineral Rights ... 4-2
4.4 Surface Rights ... 4-4
4.5 Royalties, Agreements and Encumbrances ... 4-4
4.6 Environmental Obligations and Permitting Considerations ... 4-4
4.7 Significant Factors and Risk ... 4-5

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ... 5-1

5.1 Accessibility ... 5-1
5.2 Climate ... 5-1
5.3 Local Resources and Infrastructure ... 5-1
5.4 Physiography ... 5-2

6.0 HISTORY ... 6-1

7.0 GEOLOGICAL SETTING AND MINERALIZATION ... 7-1

7.1 Regional and Local Geology ... 7-1
7.2 Property Geology ... 7-6
7.2.1 Structure and Stratigraphy ... 7-6
7.3 Geological Anomalies ... 7-17
7.4 Mineralization ... 7-19
7.5 Carnallite Distribution and Solution Mining of Patience Lake and Belle Plaine Members ... 7-23
7.6 Sylvite Distribution and Solution Mining of the Esterhazy Member ... 7-25

8.0 DEPOSIT TYPES ... 8-1

9.0 EXPLORATION ... 9-1

9.1 Seismic Surveys ... 9-1
9.1.1 Carnallite Probability ... 9-2
9.1.2 Risks Collapse Anomalies ... 9-3

10.0 DRILLING ... 10-1

10.1 Drilling Procedures ... 10-4
10.1.1 2009 Drilling Procedures ... 10-4
10.1.2 2009 Water Source Drilling Procedure ... 10-4
10.1.3 2010/2011 Drilling Procedures ... 10-4
10.1.4 2011 Drilling Procedures ... 10-5
10.1.5 2013 Disposal Well Drilling Procedures ... 10-5
10.1.6 2013 Water Source Drilling Procedure ... 10-6
10.2 Core Handling Procedures ... 10-6
10.3 Summary of Coring, Recovery, and Drill Intercepts ... 10-7

Project No.: 252512
24 December 2025
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

10.4 Geophysical Logging... 10-7
10.4.1 2009 Geophysical Wireline Program... 10-9
10.4.2 2010/2011 Geophysical Wireline Program... 10-10
10.4.3 2011 Geophysical Wireline Program... 10-10
10.4.4 2013 Geophysical Wireline Program... 10-10
10.5 Collar Survey... 10-11
10.6 Downhole Survey... 10-11
10.7 Interpretation of Drill Results... 10-12
11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY... 11-1
11.1 Introduction... 11-1
11.2 Sample Preparation... 11-1
11.2.1 Re-Sampling Historical Core... 11-1
11.2.2 2009 Sampling Method... 11-2
11.2.3 2011 Sampling Method... 11-4
11.2.3.1 Geochemical Assay Sampling... 11-5
11.2.4 Sample Interval Determination... 11-8
11.2.5 Rock Mechanic and Dissolution Test Sampling... 11-9
11.2.5.1 Sample Interval Determination... 11-9
11.3 Analytical Testing... 11-11
11.3.1 Historical Drill Hole... 11-11
11.3.2 Karnalyte Wells... 11-11
11.3.2.1 Analytical Testing... 11-11
11.3.2.2 Analytical Testing of the Rock Mechanical Test Work Samples... 11-12
11.3.2.3 Analytical Testing of the Dissolution Test Samples... 11-13
11.4 Density Determination... 11-13
11.5 Missing Core Sections... 11-14
11.6 Sample Security... 11-16
11.7 QP Comments on Section 11... 11-16
11.7.1 Geochemical Sample Preparation and Testing... 11-16
11.7.2 Assaying of Rock Mechanical and Dissolution Test Samples... 11-16
12.0 DATA VERIFICATION... 12-1
12.1 Historical Data... 12-1
12.2 Verification of Karnalyte Exploration Drill Hole Data... 12-1
12.2.1 Introduction... 12-1
12.2.2 Assay-to-Gamma Correlation Study... 12-2
12.2.3 Duplicate Analysis of Samples in an Independent Laboratory... 12-2
12.2.4 Calculation of Mineralogy from Assay Data and Comparison with Core Description... 12-4
12.3 Mineral Resources Data Verification... 12-5
12.4 Metallurgical Data Verification... 12-5
12.5 Mineral Reserves and Mining Data Verification... 12-5
12.6 Infrastructure Data Verification... 12-5

Project No.: 252512
24 December 2025
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

12.7 Market Studies and Contracts Data Verification ... 12-6
12.8 QP Comments on Section 12 ... 12-6
12.8.1 Geology ... 12-6
12.8.2 Mineral Resources ... 12-6
12.8.3 Metallurgical ... 12-6
12.8.4 Mineral Reserves and Mine Planning ... 12-6
12.8.5 Infrastructure ... 12-6
12.8.6 Market Studies and Contracts ... 12-7

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ... 13-1
13.1 Introduction ... 13-1
13.2 Dissolution Test Work ... 13-1
13.3 Evaporation and Crystallization Test Work ... 13-4
13.4 Detailed Thermodynamic Modelling of the Evaporation and Crystallization Circuit ... 13-5
13.5 Pilot Solution Mining Test Work ... 13-6
13.6 Magnesium Products Prefeasibility Testing ... 13-9
13.6.1 Confirmatory Basic Magnesium Carbonate Testing ... 13-9
13.7 Brine Disposal Well Test ... 13-10

14.0 MINERAL RESOURCE ESTIMATES ... 14-1
14.1 Introduction ... 14-1
14.2 Key Assumptions and Input Data ... 14-1
14.3 Cut-off Grade Determination ... 14-2
14.4 Estimation Methodology ... 14-4
14.5 Mineral Resource Classification ... 14-5
14.5.1 Determination of Radius of Influence ... 14-5
14.5.2 Exclusions and Deductions ... 14-8
14.5.3 Measured Category ... 14-8
14.5.4 Indicated Category ... 14-9
14.5.5 Inferred Category ... 14-9
14.5.6 Estimating the Mineral Resource ... 14-9
14.6 Mineral Resource Statement ... 14-10
14.7 Factors That Could Affect the Mineral Resource Estimate ... 14-19
14.8 QP Comments on Section 14 ... 14-19

15.0 MINERAL RESERVE ESTIMATES ... 15-1
15.1 Key Assumptions, Parameters and Methods ... 15-1
15.2 Cut-off Grade Determination ... 15-1
15.3 Mineral Reserve Statement ... 15-3
15.4 Factors that Could Affect the Mineral Reserve Estimate ... 15-13
15.5 QP Comment on Section 15 ... 15-14

16.0 MINING METHODS ... 16-1
16.1 Introduction ... 16-1
16.2 Operating Requirements ... 16-1
16.2.1 Cavern Size and Cavern Pillar Configuration ... 16-1

Project No.: 252512
24 December 2025
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

16.2.2 Cavern Access... 16-4
16.2.3 Blanket Requirements... 16-6
16.3 Leaching Procedure... 16-6
16.3.1 Solution Mining Concept Esterhazy Member... 16-7
16.3.1.1 Preparation Leaching Esterhazy Member Lower Horizon... 16-7
16.3.1.2 Production Leaching of the Esterhazy Member Lower Horizon... 16-7
16.3.1.3 Preparation Leaching Esterhazy Member Upper Horizon... 16-8
16.3.1.4 Production Leaching of the Esterhazy Member Upper Horizon... 16-8
16.3.2 Solution Mining Concept Patience Lake and Belle Plaine Members... 16-8
16.3.2.1 Preparation Leaching Belle Plaine Member... 16-8
16.3.2.2 Production Leaching of the Belle Plaine Member Mining Cut 1... 16-9
16.3.2.3 Production Leaching of the Belle Plaine Member Mining Cut 2... 16-10
16.3.2.4 Leaching of the Intermediate Rock Salt... 16-10
16.3.2.5 Production Leaching of the Patience Lake Member Mining Cuts... 16-11
16.3.2.6 Cavern Backfill and Abandonment... 16-11
16.4 Production Brine Composition... 16-11
16.4.1 Concept for Estimating the Production Brine Composition... 16-11
16.4.2 Estimation of the Production Brine Composition... 16-16
16.4.2.1 Production Brine from the Sylvinitic Estherhazy Member... 16-16
16.4.2.2 Production Brine from the Carnallitic Patience Lake and Belle Plaine Members... 16-17
16.5 Brine Field Dynamics... 16-19
16.5.1 Cavern Recovery... 16-21
16.5.2 Mine Plan... 16-27
16.6 Surface Brine Field Design... 16-29
17.0 RECOVERY METHODS... 17-1
17.1 Potash Production Design Base... 17-1
17.2 Potash Processing Plant... 17-2
17.2.1 Insolubles and Blanketing Fluid Removal... 17-2
17.2.2 Evaporation... 17-4
17.2.3 Crystallization... 17-6
17.2.4 Drying... 17-7
17.2.5 Compaction... 17-8
17.2.6 Product Storage and Loadout... 17-8
17.2.7 Reagents... 17-8
17.2.8 Utilities... 17-9
17.3 Magnesium Products Recovery Method... 17-9
17.3.1 Hydromagnesite Process... 17-10

Project No.: 252512
24 December 2025
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

17.3.1.1 Gaseous Reagent Preparation ... 17-11
17.3.1.2 Pretreatment of the Potash Plant Waste Brine ... 17-12
17.3.1.3 Brine Dilution and Ammoniation ... 17-13
17.3.1.4 Hydromagnesite Precipitation ... 17-13
17.3.1.5 Hydromagnesite Recovery and Washing ... 17-14
17.3.1.6 Hydromagnesite Drying and Packaging ... 17-15
17.3.1.7 Reagents ... 17-15
17.3.1.8 Utilities ... 17-15

18.0 PROJECT INFRASTRUCTURE ... 18-1
18.1 Summary ... 18-1
18.2 Site Access ... 18-1
18.3 Brine Field ... 18-1
18.4 Tank Farm ... 18-3
18.5 Potash Process Plant ... 18-4
18.6 Magnesium Process Plant ... 18-4
18.6.1 Chemical Storage ... 18-4
18.7 Utility Building ... 18-5
18.8 Cooling Tower ... 18-5
18.9 Product Storage Buildings ... 18-5
18.10 Truck and Rail Loadout ... 18-5
18.11 Administration Building ... 18-6
18.12 Waste Management ... 18-6
18.13 Water Supply ... 18-7
18.14 Gas Supply ... 18-8
18.15 Electrical Power ... 18-8
18.16 Water Management ... 18-9
18.17 Offsite Infrastructure ... 18-9
18.17.1 Railway and Product Transport ... 18-9

19.0 MARKET STUDIES AND CONTRACTS ... 19-1
19.1 Potassium Chloride ... 19-1
19.1.1 Introduction ... 19-1
19.1.2 Product Details ... 19-1
19.1.3 Market Demand ... 19-2
19.1.3.1 Global ... 19-2
19.1.3.2 US Corn Belt ... 19-2
19.1.4 Market Supply ... 19-3
19.1.5 Pricing ... 19-4
19.1.6 Offtake Agreement ... 19-5
19.1.7 Market Entry Strategy ... 19-5
19.2 Magnesium ... 19-6
19.2.1 Introduction ... 19-6
19.2.2 Hydromagnesite ... 19-6
19.2.3 Market Demand ... 19-7

Project No.: 252512
24 December 2025
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

19.2.4 Market Supply ... 19-7
19.2.5 Pricing ... 19-8
19.2.6 Market Entry Strategy ... 19-8
19.2.7 Magnesium Chloride Brine ... 19-9
19.3 QP Comment on Section 19 ... 19-9

20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ... 20-1
20.1 Summary ... 20-1
20.2 Baseline Studies ... 20-2
20.3 Site Management for Operations and Closure ... 20-2
20.3.1 Monitoring Programs ... 20-5
20.4 Permitting ... 20-6
20.4.1 Environmental Impact Statement ... 20-6
20.4.2 Provincial Permitting ... 20-8
20.4.3 Site Audits ... 20-8
20.5 Social and Community Relations ... 20-11
20.5.1 Indigenous Groups/Communities ... 20-11
20.5.2 Local communities and Other Stakeholders ... 20-12
20.6 Reclamation and Closure Activities ... 20-12

21.0 CAPITAL AND OPERATING COSTS ... 21-1
21.1 Summary ... 21-1
21.1.1 Potash Processing Facilities ... 21-1
21.1.2 Magnesium Processing Facility ... 21-2
21.2 Capital Cost Estimate ... 21-3
21.2.1 Potash Processing Facilities ... 21-3
21.2.1.1 Basis of Estimate ... 21-3
21.2.1.2 Direct Costs ... 21-4
21.2.1.3 Indirect Costs ... 21-5
21.2.1.4 Contingency ... 21-6
21.2.2 Magnesium Processing Facility ... 21-6
21.2.2.1 Basis of Estimate ... 21-7
21.2.2.2 Direct Costs ... 21-7
21.2.2.3 Indirect Costs ... 21-8
21.2.2.4 Contingency ... 21-8
21.3 Sustaining Capital ... 21-8
21.4 Decommissioning and Reclamation Costs ... 21-9
21.5 Operating Costs ... 21-9
21.5.1 Potash Processing Facilities ... 21-9
21.5.1.1 Labour ... 21-10
21.5.1.2 Natural Gas and Power ... 21-10
21.5.1.3 Reagents ... 21-10
21.5.1.4 Maintenance Materials ... 21-11
21.5.1.5 Blanket Oil ... 21-11
21.5.1.6 Wellfield ... 21-11

Project No.: 252512
24 December 2025
TOC vii
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

21.5.1.7 Contingency and Other Costs...21-11
21.5.2 Magnesium Process Facility...21-12
21.5.2.1 Power...21-12
21.5.2.2 Maintenance...21-12
21.5.2.3 Natural Gas...21-12
21.5.2.4 Reagents...21-13
21.5.2.5 Process Water...21-13
21.5.2.6 Labour...21-13
21.5.2.7 Contingency...21-13

22.0 ECONOMIC ANALYSIS...22-1
22.1 Cautionary Statement...22-1
22.2 Methodology Used...22-1
22.3 Financial Model Parameters...22-2
22.3.1 Potash and Hydromagnesite Prices...22-2
22.3.2 Potash and Hydromagnesite Transport Costs...22-2
22.3.3 Exchange rate...22-2
22.3.4 Capital Costs...22-3
22.3.5 Operating Costs...22-3
22.3.6 Royalties...22-3
22.3.7 Taxes...22-3
22.3.8 Working Capital...22-6
22.3.9 Decommissioning and Reclamation Costs...22-6
22.3.10 Salvage Value...22-6
22.3.11 Inflation...22-7
22.3.12 Financing...22-7
22.4 Economic Analysis...22-7
22.5 Sensitivity Analysis...22-13
22.5.1 Potash Only Reference Case...22-14

23.0 ADJACENT PROPERTIES...23-1
24.0 OTHER RELEVANT DATA AND INFORMATION...24-1
25.0 INTERPRETATION AND CONCLUSIONS...25-1
25.1 Summary...25-1
25.2 Mineral Tenure and Surface Rights...25-1
25.3 Geology and Mineralization...25-1
25.4 Data Collection in Support of Mineral Resources...25-2
25.5 Mineral Resources...25-2
25.6 Metallurgical Test Work and Recovery Methods...25-3
25.7 Mine Plan and Mineral Reserves...25-3
25.8 Project Infrastructure...25-4
25.9 Market Studies and Contracts...25-4
25.10 Environmental Studies and Permitting...25-4
25.11 Capital and Operating Costs...25-5
25.12 Economic Analysis...25-5

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24 December 2025
TOC viii
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

25.13 Conclusions ... 25-5
25.14 Opportunities ... 25-5
25.14.1 Geology ... 25-5
25.14.2 Mineral Resources and Mineral Reserves ... 25-6
25.14.3 Market Studies ... 25-6
25.15 Risks ... 25-6
25.15.1 Mineral Resources and Mineral Reserves ... 25-6
25.15.2 Metallurgical Test Work and Recovery Methods ... 25-7
25.15.3 Market Studies ... 25-7
25.15.4 Financial ... 25-7

26.0 RECOMMENDATIONS ... 26-1
26.1 Summary ... 26-1
26.2 Geology and Mineral Resources ... 26-1
26.3 Magnesium Study ... 26-1
26.4 Metallurgical Test Work ... 26-1
26.5 Summary of Costs ... 26-2

27.0 REFERENCES ... 27-1

TABLES

Table 1-1: Karnalyte Mineral Resource Statement ... 1-6
Table 1-2: Karnalyte Mineral Reserve Statement ... 1-7
Table 1-3: Potash Capital Cost Estimate Summary ... 1-14
Table 1-4: Magnesium Process Facility Capital Cost Estimate Summary ... 1-14
Table 1-5: Potash Project Operating Costs ... 1-15
Table 1-6: LOM Magnesium Process Facility Operating Costs ... 1-15
Table 4-1: Mineral Leases Comprising the Property ... 4-3
Table 7-1: Thickness and Depth Summary of the Potash Members in the Relevant Drill Holes in the Project Area ... 7-6
Table 7-2: Thickness and Composition of the Carnallitite Horizon of the Patience Lake Member ... 7-24
Table 7-3: Thickness and Composition of the Upper Part of the Carnallitite Horizon of the Belle Plaine Member ... 7-25
Table 7-4: Thickness and Composition of the Lower Part of the Carnallitite Horizon of the Belle Plaine Member ... 7-25
Table 7-5: Thickness and Composition of the First Mineable Part of the Sylvinite of the Esterhazy Member ... 7-26
Table 7-6: Thickness and Composition of the Second Mineable Part of the Sylvinite of the Esterhazy Member ... 7-27
Table 10-1: Summary of Holes Drilled on the Property ... 10-2
Table 10-2: Summary of Drill Intercept ... 10-8
Table 10-3: Summary of Downhole Survey ... 10-12

Project No.: 252512
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 11-1: 2011 Sampling Intervals...11-6
Table 11-2: Wells with Identified Missing Core Intervals...11-14
Table 13-1: Composition of the Original Brine Sample and the Conditioned Brine Used in the Tests...13-5
Table 14-1: Mineral Resource Statement...14-11
Table 14-2: Estimated In-Situ Measured Mineral Resources for the Patience Lake Member...14-12
Table 14-3: Estimated In-Situ Indicated Mineral Resources for Patience Lake Member...14-12
Table 14-4: Estimated In-Situ Inferred Mineral Resources for the Patience Lake Member...14-13
Table 14-5: Estimated In-Situ Measured Mineral Resources for the Upper Belle Plaine Member...14-13
Table 14-6: Estimated In-Situ Indicated Mineral Resources for the Upper Belle Plaine Member...14-14
Table 14-7: Estimated In-Situ Inferred Mineral Resources for the Upper Belle Plaine Member...14-14
Table 14-8: Estimated In-Situ Measured Mineral Resources for the Lower Belle Plaine Member...14-15
Table 14-9: Estimated In-Situ Indicated Mineral Resources for the Lower Belle Plaine Member...14-15
Table 14-10: Estimated In-Situ Inferred Mineral Resources for the Lower Belle Plaine Member...14-16
Table 14-11: Estimated In-Situ Measured Mineral Resources for the Upper Horizon of the Esterhazy Member...14-16
Table 14-12: Estimated In-Situ Indicated Mineral Resources for the Upper Horizon of the Esterhazy Member...14-17
Table 14-13: Estimated In-Situ Inferred Mineral Resources for the Upper Horizon of the Esterhazy Member...14-17
Table 14-14: Estimated In-Situ Measured Mineral Resources for the Lower Horizon of the Esterhazy Member...14-18
Table 14-15: Estimated In-Situ Indicated Mineral Resources for the Lower Horizon of the Esterhazy Member...14-18
Table 14-16: Estimated In-Situ Inferred Mineral Resources for the Lower Horizon of the Esterhazy Member...14-18
Table 15-1: Mineral Reserve Statement...15-4
Table 15-2: Proven Potash Reserves for the Patience Lake Member...15-7
Table 15-3: Probable Potash Reserves for the Patience Lake Member...15-8
Table 15-4: Proven Potash Reserves for the Upper Belle Plaine Member...15-8
Table 15-5: Probable Potash Reserves for the Upper Belle Plaine Member...15-9
Table 15-6: Proven Potash Reserves for the Lower Belle Plaine Member...15-9
Table 15-7: Probable Potash Reserves for the Lower Belle Plaine Member...15-10
Table 15-8: Proven Potash Reserves for the Upper Horizon of the Esterhazy Member...15-10
Table 15-9: Probable Potash Reserves for the Upper Horizon of the Esterhazy Member...15-11
Table 15-10: Proven Potash Reserves for the Lower Horizon of the Esterhazy Member...15-11
Table 15-11: Probable Potash Reserves for the Lower Horizon of the Esterhazy Member...15-12
Table 15-12: Tonnes of KCl in the Production Brine...15-12
Table 15-13: Tonnes of $\mathrm{MgCl_2}$ in the Production Brine...15-12
Table 16-1: Preliminary Parameters for the Proposed Cavern Design...16-2
Table 16-2: Casing and Cementation Scheme for Solution Mining Wells...16-5
Table 16-3: Estimated Average Production Brine Composition for Solution Mining...16-17

Project No.: 252512
24 December 2025
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 16-4: Preliminary Mass Balance for the Material from a Single Cavern from the Lower Horizon of the Esterhazy Member ...16-22
Table 16-5: Preliminary Mass Balance for the Material from a Single Cavern from the Upper Horizon of the Esterhazy Member ...16-22
Table 16-6: Preliminary Mass Balance for the Material from the Carnallitite Cavern from the Bottom of the Belle Plaine Member to the Top of the Patience Lake Member ...16-22
Table 16-7: Cavern Volume...16-23
Table 16-8: Flow Volumes and Proposed Water and Brine Sources for Phase 1 ...16-23
Table 16-9: Average Flow Volumes of the Different Streams ...16-24
Table 16-10: Cavern Balances for an Average Cavern in Mineral Reserves for the Patience Lake Member ...16-24
Table 16-11: Cavern Balance for an Average Cavern in Mineral Reserves of the Upper Belle Plaine Member ...16-25
Table 16-12: Cavern Balance for an Average Cavern in Mineral Reserves of the Lower Belle Plaine Member used for Undercut Leaching ...16-25
Table 16-13: Cavern Balance for an Average Cavern in Mineral Reserves of the Upper Horizon of the Esterhazy Member ...16-26
Table 16-14: Cavern Balance for an Average Cavern in Mineral Reserves of the Lower Horizon of the Esterhazy Member ...16-26
Table 16-15: Production Schedule for KCl from the Brine Field and Annual Caverns in Preparation on Pipelines for Each Phase to Maintain Production ...16-30
Table 17-1: Key Design Criteria for the Potash Plant...17-1
Table 17-2: Phase 1 Evaporation Equipment Criteria...17-4
Table 17-3: Phase 1 Crystallization Equipment Criteria...17-7
Table 17-4: Phase 1 Drying Equipment Criteria...17-7
Table 17-5: Phase 1 Compaction Equipment Criteria...17-8
Table 17-6: Magnesium Plant Design Parameters...17-9
Table 17-7: Gas Preparation and Reclamation...17-11
Table 17-8: Pretreatment...17-13
Table 17-9: Hydromagnesite Precipitation...17-13
Table 20-1: Summary of Environmental Baseline Surveys Completed for the Wynyard Carnallite Project ...20-3
Table 20-2: Project Valued Components...20-6
Table 20-3: Summary of Key Potential Permitting Requirements for the Construction Phase of the Project ...20-9
Table 20-4: Summary of Significant Potential Permitting Requirements for the Operational Phase of the Project ...20-10
Table 21-1: Currency Exchange Rates...21-1
Table 21-2: Potash Process Facility Capital Cost Estimate Summary ...21-2
Table 21-3: Magnesium Process Facility Capital Cost Estimate Summary ...21-3
Table 21-4: Sustaining Capital over the LOM...21-9
Table 21-5: Decommissioning and Reclamation Costs...21-9
Table 21-6: Potash Project Operating Costs...21-10

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 21-7: LOM Magnesium Process Facility Operating Costs ...21-12
Table 22-1: Summary of Economic Results ...22-7
Table 22-2: Cash Flow Forecast on an Annual Basis ...22-9
Table 22-3: Summary of Economic Results of Potash Only Reference Case ...22-14
Table 26-1: Estimated Costs for Recommended Work ...26-2

FIGURES

Figure 1-1: Site Plan ...1-11
Figure 4-1: Karnalyte Property ...4-3
Figure 7-1: Subsurface Phanerozoic Stratigraphy of Central to Eastern Saskatchewan ...7-3
Figure 7-2: Elk Point Basin ...7-4
Figure 7-3: Regional Geological Cross-section of the Middle Devonian Prairie Evaporite Formation in Saskatchewan ...7-5
Figure 7-4: Prairie Evaporite Formation Type Section for Exploration Well KW 3A11-27 ...7-7
Figure 7-5: Upper Patience Lake Isopach ...7-9
Figure 7-6: Lower Patience Lake Isopach ...7-10
Figure 7-7: Belle Plaine Isopach ...7-11
Figure 7-8: Esterhazy Isopach ...7-12
Figure 7-9: North-South Geological Cross-Section (A-A') Through Wells in the Project Area ...7-13
Figure 7-10: Northwest to Southeast Geological Cross-Section (B-B') Through Wells in the Project Area ...7-14
Figure 7-11: West-East Geological Cross-Section (C-C') Through Wells in the Project Area ...7-15
Figure 7-12: Second Red Beds Structural Map Indicating the Change in Depth Level of the Deposit in the Project Area and Identified Collapses ...7-16
Figure 7-13: Disturbances Affecting the Continuity of the Potash-bearing Members in Saskatchewan ...7-18
Figure 7-14: Patience Lake Carnallite Probability Map ...7-21
Figure 7-15: Belle Plaine Carnallite Probability Map ...7-22
Figure 9-1: Historical Seismic Coverage around the Project Area and Location of 3D Seismic Investigations ...9-2
Figure 9-2: Illustration of the Definition of Collapse Boundary with Buffer ...9-4
Figure 11-1: RESPEC's Facility and Storage Warehouse ...11-4
Figure 11-2: Sampling Interval from KW 4B14-24 (Core 1, Boxes 13 and 14) ...11-7
Figure 11-3: DST Sample 017 from KW 2C6-32 (Core 8, Box 17) ...11-9
Figure 12-1: Comparison of the KCl Content Estimated from ALS and SRC Analysis ...12-3
Figure 12-2: Comparison of the $\mathrm{MgCl}_2$ Content Estimated from ALS and SRC Analysis ...12-3
Figure 13-1: Sample Leaching Apparatus ...13-2
Figure 13-2: Phase Diagram showing the Change in Brine Compositions over the Preparation Leaching Phase, the Production Leaching Phase, and the Post Operation Phase ...13-8
Figure 14-1: Polygon Areas and their Radii of Influence for Mineral Resources Categories for the Patience Lake and Belle Plaine Members ...14-6

Project No.: 252512
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Figure 14-2: Polygon Areas and their Radii of Influence for Mineral Resources Categories for the Esterhazy Member ... 14-7
Figure 15-1: Planned Positions of Caverns in the Areas for Mineral Resources for the Patience Lake and Belle Plain Members ... 15-5
Figure 15-2: Planned Positions of Caverns in the Areas for Mineral Resources for the Esterhazy Member ... 15-6
Figure 16-1: System Area of Representative Cavern and Pillar Distribution ... 16-2
Figure 16-2: Section View Along the Major Cavern Axis ... 16-3
Figure 16-3: Section View Along the Minor Cavern Axis ... 16-3
Figure 16-4: Schematic Casing Scheme for Solution Mining Wells ... 16-5
Figure 16-5: Equilibrium Phase Diagram of Carnallite in the $\mathrm{MgCl}_2\mathrm{-KCl}\mathrm{-NaCl}\mathrm{-H}_2\mathrm{O}$ System ... 16-13
Figure 16-6: Schematic Mine Plan with Years of Development over the Brine Field ... 16-28
Figure 17-1: Process Flowsheet ... 17-3
Figure 17-2: Typical Swenson Forced Circulation Evaporator and Elutriation Leg ... 17-5
Figure 17-3: Typical Swenson Potash DTB Crystallizer ... 17-6
Figure 17-4: Hydromagnesite Precipitation Process Overview ... 17-10
Figure 18-1: Site Layout ... 18-2
Figure 18-2: Processing Facilities Layout ... 18-3
Figure 19-1: Global MOP Consumption Forecast to 2039 ... 19-2
Figure 19-2: USA Imports of MOP by Origin, 2010-2024 ... 19-3
Figure 19-3: Argus' Modelled MOP Supply Gap ... 19-4
Figure 22-1: Cumulative After-Tax Undiscounted Cash Flow ... 22-8
Figure 22-2: Cumulative After-Tax Discounted Cash Flow ... 22-8
Figure 22-3: After-Tax NPV @ $8\%$ – Sensitivity ... 22-13
Figure 22-4: After-Tax IRR – Sensitivity ... 22-13
Figure 23-1: Adjacent Properties Surrounding the Karnalyte Project Area ... 23-2

Project No.: 252512
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

1.0 SUMMARY

1.1 Introduction

Karnalyte Resources Inc. (Karnalyte) retained Wood Canada Limited (Wood), RESPEC Consulting Inc. (RESPEC), ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN) and March Consulting Associates Inc. (MARCH) to update the existing feasibility study for the Wynyard deposit in central Saskatchewan (Project) and prepare a technical report under National Instrument 43-101 Standards of Disclosure for Mineral Project (NI 43-101) (Report).

The property is located approximately 175 km east of Saskatoon and some 65 km east of Nutrien Ltd.'s (Nutrien) Lanigan potash mine.

1.2 Terms of Reference

The Report supports the disclosure in the news release dated November 26, 2025 entitled "Karnalyte Resources Inc. Unveils Results of Updated Feasibility Study for Flagship Wynyard Project, Showcasing 70-year Potash Mine Life, Positive Economics, and Market Growth".

The potash project is based on the 2011 feasibility study (FS) design with the capital cost estimate updated in second quarter (Q2) 2025 based on revised vendor quotations which included pricing sourced from existing vendors, new vendors and select suppliers based in India. The magnesium processing facility is based on the 2012 prefeasibility study (PFS) design with the capital cost estimate escalated to Q2 2025 using Federal Reserve Economic Database (FRED) factors for direct and indirect costs based on equipment, material and labour of the PFS.

The potash product from the Project is white granular muriate of potash (MOP) with a 61.3% K₂O or 97% KCl grade (also referred throughout the report as MOP) which is considered a premium grade that attracts a premium price from fertilizer purchasers.

The mineral resource and mineral reserve estimates were prepared in accordance with the 2019 Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (2019 CIM Best Practice Guidelines) and reported in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves (2014 CIM Definition Standards).

All units of measure in this Report are metric unless otherwise stated. All amounts are in Canadian dollars unless otherwise stated.

Project No.: 252512

24 December 2025

Summary

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

1.3 Location, Mineral Tenure, Surface Rights and Royalties

The Project is located in central Saskatchewan on a property that consists of three mineral leases (KLSA 010, KL 246 and KL 247A) issued by the Crown to Karnalyte covering an aggregate area of 36,731.56 hectares (the Property). Karnalyte is recorded as the sole holder of these mineral leases. Within the Property boundary there are freehold lands, or lands under private landholders' mineral ownership as well as lands owned by First Nations. Karnalyte owns 3,782 acres of surface rights in the area of the Project.

The Property is subject to a Crown Royalty of 3% on potash produced on Crown land. There is also a Resource Surcharge of 3% on all potash sales.

1.4 History

Prior to Karnalyte's exploration programs (2009 and 2011) potash and magnesium exploration on the Property was limited to four wells drilled between 1953 and 1967 by four different oil and gas companies with only two wells penetrating the Prairie Evaporite. Only one of these four wells is used along with more recent wells, for mineral resource estimation.

1.5 Geology and Mineralization

Potash resources of Saskatchewan are located within generally flat-lying and laterally extensive shallow marine sequences of the Middle Devonian Elk Point Group that was deposited within a wide intracratonic depositional corridor that extends from Montana and North Dakota through central Saskatchewan into northeastern Alberta.

The Elk Point Group of Saskatchewan is subdivided into three formations known as the Ashern, Winnipegais and Prairie Evaporite. Potash mineralization exists within the uppermost salts of the Prairie Evaporite Formation containing an Upper Salt unit that comprises three potash-bearing members and several regional "marker beds". These units, listed in decreasing geological age, include the Esterhazy Member, the White Bear Marker Beds, the Belle Plaine Member, and the Patience Lake Member. These mineralized beds are generally flat lying interbeds of sylvite, halite, carnallite, clay, and minor amounts of anhydrite.

The Property is situated on the northern edge of the basin (Elk Point Seaway) where the potash-bearing beds range between 902–1,092 m below surface.

Wells drilled on the Property have identified the Patience Lake Member to be dominantly carnallite with local sylvite mineralization in the upper parts. The Belle Plaine Member consists

Project No.: 252512

24 December 2025

Summary

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

of a carnallite rich Upper Belle Plaine Member (UBPM) with minor halite rich beds and Lower Belle Plaine Member (LBPM) consisting of interlayering of halite rich beds with some carnallite and subordinate carnallite rich beds. The Esterhazy Member is generally sylvinitic with carnallite present as intercrystalline disseminations. Mineralization occurs within distinct higher grade sylvite zones separated by sylvite bearing rock salt.

1.6 Exploration, Drilling and Sampling

Exploration within the Project area has benefited from extensive two-dimensional (2D) and three-dimensional (3D) seismic surveys, which have successfully identified anomaly structures and provided qualitative insights into the presence of carnallite.

A total of 18 wells have been drilled on the Property including the four historical wells, two water source wells and a waste disposal well. The 12 wells used for mineral resource estimation have been drilled on mineral leases KLSA 010 and KL 247A, predominately by Karnalyte.

RESPEC conducted a re-sampling program of historical well DH-11 in 2008 collecting 117 new assay samples for geochemical analysis at the Saskatchewan Research Council's (SRC) Geoanalytical Laboratory in Saskatoon (SRC Geoanalytical). For the 2009 and 2011 drill programs, RESPEC prepared the samples at their facility, RESPEC Core Laboratory in Saskatoon, Saskatchewan (RESPEC laboratory) and photographed and logged the core before shipping them to SRC Geoanalytical for analysis through soluble inductively coupled plasma to determine geochemistry, % insoluble and % moisture. RESPEC relied on the internal quality assurance (QA)/quality control (QC) processes implemented by SRC Geoanalytical and after reviewing the results, QP Stirrett is of the opinion that the QC procedures employed and the QA actions taken provide adequate confidence in the processing of the data to be used in mineral resource estimation.

Rock mechanics and dissolution testing was conducted on two wells after samples were prepared at the RESPEC laboratory and shipped to ERCOSPLAN's office in Germany. Samples were then sent to the Institute for Rock Mechanics in Leipzig, Germany (IfG) where the dissolution samples were prepared and sent to NG Consulting laboratory Sondershausen, Germany while IfG performed the rock mechanical test work.

Project No.: 252512

24 December 2025

Summary

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

1.7 Data Verification

Data verification included site visits by the geology, mining and infrastructure QPs that incorporated an inspection of drill sites and solution mining tests as well as drill core and more recently an inspection of existing infrastructure and site access. Additional data verification included:

an assay-to-gamma correlation study showing a satisfactory comparison of mineralogy from assaying and from geophysical logging
duplicate analysis of samples at an independent laboratory showing good agreement of KCl and MgCl₂ assay values
comparison of the determination of assay mineralogy with the core description providing confidence in the mineralogical composition of the samples
review of metallurgical test work reports and analytical procedures undertaken
visit to rock mechanical and dissolution test work laboratories.

1.8 Metallurgical Test Work

Since 2011, Karnalyte has completed dissolution testing, evaporation and crystallization test work, thermodynamic modelling of the evaporation and crystallization circuit, pilot solution mining testing, and performed laboratory work to confirm the process of creating basic magnesium carbonate (BMC). The test work, combined with standard industry knowledge allowed for a predicted recovery to be estimated based on the deposit.

Dissolution test work was conducted on samples from the Patience Lake, Belle Plaine and Esterhazy members with most samples showing a low content of insoluble minerals which can have considerable impact on the dissolution rate and cavern shape development. Test work also showed correlation between KCl brine grade and the carnallite/sylvite content of the carnallite with carnallite providing KCl saturation values of approximately 80% at 50°C.

In 2016 Karnalyte performed a pilot solution mining test operation consisting of an initial cavern preparation phase using cold water from the Blairmore aquifer followed by a production leaching phase where the prepared cavern was injected with heated Blairmore water. The pilot operation concluded that carnallite solution mining of the Belle Plaine Member is technically feasible and the results sufficient to support the concepts used to estimate the production brine composition. Combined testing and design criteria illustrate that a suitable brine can be recovered for processing in the designed mill to produce a 97% pure KCl product at 90% recovery.

Project No.: 252512

24 December 2025

Summary

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In 2014, the SRC completed laboratory work that produced two samples of BMC from Karnalyte brine. During the testing process, it was confirmed that the proposed processing steps created the hydromagnesite form of BMC. The hydromagnesite product is comparable to products in the high purity synthetic market.

A brine disposal test that was completed in 2013 showed the disposal of excess MgCl_{2} brine and NaCl brine, from redissolved solid NaCl, in the Deadwood Formation is feasible. The brine disposal well was also successfully used to dispose all brines produced during the pilot solution test operation of 2016. Planned disposal to meet Phase 1 and 2 should be obtained with two disposal wells and a third as standby. Subsequently Phase 3 would require one additional active disposal well.

Mineral Resource Estimate

The mineral resource estimate presented in Table 1-1 assumes the solution mining of carnallite and sylvite and is reported in accordance with 2014 CIM Definition Standards. The mineral resource is reported at a cut-off of approximately 55% carnallite for carnallitite and 20% sylvite for sylvinite determined based on operating costs, process recovery and a potash price of US$516/t.

The total amount of magnesium by-product produced from MgCl_{2}-rich end brine of MOP production is significantly less to reflect the capacity constraint of the market.

Mineral Reserve Estimate

Modifying factors were applied to Measured and Indicated mineral resources to convert them to proven and probable mineral reserves based on the leaching of potash-bearing carnallite and sylvite members using a non-selective solution mining method. Table 1-2 presents the mineral reserves classified in accordance with 2014 CIM Definition Standards that reflects a mine plan developed over three project phases amounting to the production of 2.175 Mt/a 97% KCl. The point of reference is delivery of the production brine at the tank farm at the process facilities. Mineral reserves are defined for the minerals carnallite and sylvite that can be processed to MOP fertilizer and part of the MgCl_{2}rich end brine resulting from this process can be processed to a magnesium bearing product. The amount of magnesium bearing brine that can be processed is limited to the market capacity for the hydromagnesite product.

Technical, legal, metallurgical and environmental factors that could affect the mineral reserve estimates have been identified in Section 15.

Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 1-1: Karnalyte Mineral Resource Statement

Classification Category	Tonnes (Mt)	Carnallite Grade (%)	Sylvite Grade (%)	Avg. K₂O (%)	Avg. MgO (%)
Measured
Patience Lake	324.5	60.2	3.9	12.7	8.7
Upper Belle Plaine	392.9	67.7	1.2	12.2	9.8
Lower Belle Plaine	267.8	29.9	4.3	7.8	4.3
Esterhazy	177.2	8.6	23.7	16.4	1.3
Total/Avg. Measured	1,162.4	47.9	6.1	12.0	6.9
Indicated
Patience Lake	532.3	61.4	3.5	12.6	8.9
Upper Belle Plaine	627.5	67.1	1.1	12.1	9.7
Lower Belle Plaine	428.2	30.1	4.4	7.9	4.4
Esterhazy	201.9	8.8	23.3	16.2	1.3
Total/Avg. Indicated	1,789.9	50.0	5.1	11.7	7.2
Inferred
Patience Lake	1,160.1	57.4	4.8	12.8	8.3
Upper Belle Plaine	1,203.6	65.8	1.5	12.1	9.5
Lower Belle Plaine	814.9	30.0	4.4	7.8	4.3
Esterhazy	723.5	8.2	23.5	16.2	1.2
Total/Avg. Inferred	3,902.1	45.2	7.2	12.2	6.6

Note: (1) The effective date of the mineral resource is November 26, 2025. The QP for the mineral resource is Sebastiaan van der Klaw an employee of ERCOSPLAN.
(2) Mineral resources are reported in accordance with 2014 CIM Definition Standards.
(3) Mineral resources are reported inclusive of those mineral resources that have been converted to mineral reserves.
(4) Mineral resources are assumed to be extracted using solution mining.
(5) Mineral resource tonnage is determined by measuring the area of the resource using the polygonal method, calculating the volume by applying the thickness of the potash bearing member determined from the well and multiplying by the density determined by the mineralogical composition typically (1.7 to 1.9 g/cm³ for carnallitite, depending on relative amounts of sylvite in the rock, and between 2.01 and 2.1 for sylvinite, depending on the relative amount of carnallite in the rock).
(6) Cut-off grades are approximately 55% carnallite for carnallitite and 20% sylvite for sylvinite. Using these defined cut-offs the maximum mining, process and G&A operating costs ($134.01/t), process recovery of 90% and an assumed MOP price of US$516/t the Project generates positive cash flows. The Lower Belle Plaine Member does not make the cut-off grades; however, the brine from the Lower Belle Plaine Member is considered as part of the mineral resource as it is used as solvent for solution mining of the Upper Belle Plaine and Patience Lake Members.
(7) The average K₂O content for the mineralized material is obtained by the sum of the carnallite grade multiplied by a factor of 0.17 and sylvite grade multiplied by a factor of 0.63 representing the K₂O content of 100% carnallite and 100% sylvite, respectively. The average MgO content of the mineral resource is obtained by the product of the carnallite grade multiplied by the factor of 0.145 representing the MgO content of 100% carnallite.
(8) Mineral resources are estimated in-situ with no allowances for mine or process recoveries. A limiting factor will be applied to the magnesium products to reflect the capacity constraint of the market.
(9) Areas covered by 2D seismic that are outside the 3D seismic boundary have a 25% deduction applied to the tonnage to account for anomalies that might not have been detected by the 2D seismic investigations. Areas within the 3D seismic have a 10% deduction applied to the tonnage to account for anomalies that might not have been detected by the 3D seismic investigations.
(10) Figures may not sum due to rounding.

Project No.: 252512

24 December 2025

Summary

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 1-2: Karnalyte Mineral Reserve Statement

Confidence Category	Tonnes (Mt)	Carnallite Grade (%)	Sylvite Grade (%)	Avg. K₂O (%)	Avg. MgO (%)
Proven Mineral Reserves
Patience Lake	103.8	60.3	3.8	12.6	8.7
Upper Belle Plaine	125.9	67.6	1.3	12.3	9.8
Lower Belle Plaine	30.3	29.7	4.2	7.7	4.3
Esterhazy	53.2	8.8	23.9	16.6	1.3
Sub-total Proven	313.2	51.5	6.2	12.7	7.5
Probable Mineral Reserves
Patience Lake	166.9	61.4	3.5	12.6	8.9
Upper Belle Plaine	200.9	67.1	1.1	12.1	9.7
Lower Belle Plaine	48.5	29.9	4.4	7.8	4.3
Esterhazy	47.5	10.5	23.3	16.5	1.5
Sub-total Probable	463.8	55.4	4.6	12.3	8.0
Total Proven and Probable	777.1	53.8	5.2	12.4	7.8

Note: (1) The effective date of the mineral reserve is November 26, 2025. The QP for the mineral reserve is Dr Sebastiaan van der Klaw, an employee of ERCOSPLAN.
(2) Mineral reserves are reported in accordance with 2014 CIM Definition Standards.
(3) Mineral reserves have been determined by counting the number of solution mining caverns with their centre point within the mineral resource ROI for the Measured and Indicated categories for each well. The number of caverns was then multiplied by the dissolved tonnage of carnallite and sylvite for each member using for each well a standardized cavern, to obtain the tonnage and average grade that could be solution mined from this area.
(4) To ensure optimal plant operation the mine plan has been designed to maintain a sylvinite:carnallitite ratio between 25:75 and 10:90. To achieve this, not all Indicated and Measured mineral resources of the Esterhazy member were converted to proven and probable mineral reserves.
(5) Cut-off grades are approximately 55% carnallite for carnallitite and 20% sylvite for sylvinite. Using these defined cut-offs the maximum mining, process and G&A operating costs ($134.01/t), process recovery of 90% and an assumed MOP price of US$516/t the Project generates positive cash flows. The Lower Belle Plaine Member does not make the cut-off grades; however, the brine from the Lower Belle Plaine Member is considered as part of the mineral reserve as it is used as solvent for solution mining of the Upper Belle Plaine and Patience Lake Members.
(6) The average K₂O content for the mineral reserve is obtained by the sum of the carnallite grade multiplied by a factor of 0.17 and sylvite grade multiplied by a factor of 0.63 representing the K₂O content of 100% carnallite and 100% sylvite, respectively. The average MgO content of the mineral reserve is obtained by the product of the carnallite grade multiplied by a factor of 0.145 representing the MgO content of 100% carnallite.
(7) Mineral reserves include allowances for solution mining recovery, but not for process recovery. Each well has its own cavern solution recoveries that range from 84% to 91% for the Patience Lake Member, from 89% to 91% for the Upper Belle Plain Member, from 30% to 33% for the Lower Belle Plain Member, from 88% to 92% for the Upper Horizon of the Esterhazy Member and from 88% to 91% for the Lower Horizon of the Esterhazy Member (see Section 16.5.1). A limiting factor of marketing capacity will be applied to the magnesium by-products from MOP production to reflect the capacity constraint of the market.
(8) Areas covered by 2D seismic that are outside the 3D seismic boundary have a 25% deduction applied to the tonnage to account for anomalies that might not have been detected by the 2D seismic investigations. Areas within the 3D seismic have a 10% deduction applied to the tonnage to account for anomalies that might not have been detected by the 3D seismic investigations.
(9) Figures may not sum due to rounding.

Project No.: 252512

24 December 2025

Summary

wood.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

1.11 Mining Methods

Solution mining of carnallitite will occur from the Belle Plaine and Patience Lake Members and of sylvinite from the Esterhazy Member. Cavern configuration and potential for subsidence are based on rock modelling using parameters derived from test work on these rocks.

Up to seven caverns will be accessed by directional drilling from a central drilling/production pad. Wells will be vertical from 900 m depth downward to the end of the hole below the deepest part of the planned cavern. All casing is cemented from just below the deepest part of the planned cavern to the surface. The hole is extended a few metres to below the cemented casing and the leach string hangs unsupported from the well head at the surface down to about 5 m above the bottom of the open hole.

The overall leaching procedure is divided into separate procedures for solution mining of sylvite dominated horizons of the Esterhazy Member and carnallite dominated horizons of the Belle Plaine and Patience Lake Members. All horizons will be mined using double well caverns with 70 m distance between the cavern wells and with cavern development reaching a 50 m radius of the cavern away from the wells. A maximum of two mineable horizons (upper and lower) with grade >20% KCl and mineable thickness >2m are considered suitable for mining sylvite of the Esterhazy Member. Each of these horizons will be mined separately with a preparation leaching phase followed by a single phase of production leaching. The mining method for sylvinite uses cold (15°C) non-selective leaching. The mining method for carnallitite uses hot (~95°C) non-selective leaching to obtain a hot (50-60°C) production brine. The mining of the high grade carnallitite of the Upper Belle Plaine Member and the Patience Lake Member takes place in five (high grade Patience Lake Member <8 m thickness) or six phases (high grade Patience Lake Member >8 m). The first phase is cavern preparation leaching in the Lower Belle Plaine Member with low carnallite and sylvite grade. The low grade brine produced during this phase will be used as part of the hot solvent for the production leaching phases of the Upper Belle Plaine Member and Patience Lake Member. The preparation leaching phase is followed by two production leaching phases for the UBPM Upper Belle Plaine Member. The intermediate rock salt between the Upper Belle Plaine Member and Patience Lake Member will be leached to develop the cavern towards the bottom of the Patience Lake Member. All brine produced during this phase will have a high NaCl content and low KCl content and is disposed of in the Deadwood Formation. This is followed by one or two production leaching phases in the high grade carnallite of the Patience Lake Member.

The composition of the production brines has been designed for the Project based on temperature modelling and dissolution test work on samples from the Property. The brine from carnallitite caverns and the brine from sylvinite caverns are routed through separate pipelines to the feed tank for the plant where they are mixed and provide the plant feed brine. Plant brine

Project No.: 252512

24 December 2025

Summary

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

feed is not expected to have a constant composition due to the inconsistent composition of carnallitite and sylvinite brines and the variability in the relative proportions of each. To ensure optimal plant operation, the mine plan is designed to maintain a sylvinite:carnallitite brine ratio between 25:75 and 10:90.

Phase 1 requires a production brine volume of approximately 790 m³/h. Dissolution test work suggests an average flow rate of 45 m³/h over the lifetime of a single cavern, therefore 18 caverns must be operating in parallel with two caverns on stand-by. It is anticipated that a mature brine field will require five to six caverns producing NaCl waste brine from the halite interbed between the Patience Lake and Belle Plaine Member, four to five caverns in the preparation phase for the Belle Plaine Member, and about nine caverns in the preparation phase for one of the two mineable horizons of the Esterhazy Member.

Increased production in Phase 2 and 3 each requires a production brine volume of approximately 890 m³/h which equates to 20 active caverns with eight to nine new caverns prepared annually on a mature brine field.

The brine field over the life of the mine (LOM) has been defined by the cavern size and cavern pillar configuration, the mineral resources that were classified as Measured and Indicated and the requirement to maintain a certain ratio between the amount of carnallitite and sylvinite brine. To account for the potential of unidentified anomalous zones the amount of brine produced from a cavern has been reduced by 10% for caverns within the area covered by 3D seismic and 25% for cavern outside the 3D seismic zone in line with the deductions used for the mineral resource estimate. The mine plan shows cavern preparation beginning in Year -1 with the last caverns to be prepared in Year 66. The last year of full production is in Year 65 with five years of ramping down production as the last caverns are exhausted.

1.12 Recovery Methods

The design of the potash plant was developed from the test work completed since 2011. The basis of design is the production of 675,000 t/a of KCl product with a KCl grade of 97%. This initial phase (Phase 1) will be expanded in Year 3 with the commissioning of a separate facility capable of producing 750,000 t/a of 97% KCl (Phase 2) after a ramp up commissioning phase. A third facility (Phase 3) will be capable of producing a further 750,000 t/a of 97% KCl in Year 5 after another ramp up commissioning phase.

The potash processing facilities follow the same flowsheet by first removing insoluble and blanketing fluid from production brine followed by evaporation, NaCl and KCl crystallization, and drying and compacting producing a high-purity granular agricultural grade product.

Project No.: 252512

24 December 2025

Summary

wood.

Karnalyte RESOURCES

Wynyard Project
Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

The solid salt produced from the evaporation and crystallization circuit is dissolved into a NaCl brine and injected into the Deadwood Formation via disposal wells.

A portion of the MgCl₂-rich end brine from potash production is used to produce hydromagnesite in a separate facility. The process involves treating the brine with Epsom salt to remove any calcium from the brine through the precipitation of gypsum. This pre-treated brine is diluted with process water and ammoniated in an absorption tower. Carbonation of the brine results in the precipitation of hydromagnesite which is filtered from the spent brine, washed to dilute the remaining ammonia, dewatered and dried in a Holo-Flite dryer to produce dry hydromagnesite. In parallel, a limestone calcination process is operated to produce the CO₂ required for carbonation. The lime produced is slaked by adding process water and feeding the slaked lime to an ammonia stripping column which drives the ammonia back to a gaseous anhydrous form which can be recycled in the process. This part of the operation is similar to the well-known Solvay process for producing soda ash from sodium chloride brine.

The remaining portion of the MgCl₂-rich end brine is injected into the Deadwood formation as a waste material.

1.13 Project Infrastructure

The Project is accessible via an existing provincial road just south of the Trans-Canada Highway. A truck and rail loadout is located just south of the Phase 1 potash plant and storage building which stores potash produced from the three process facilities. A 3-km train rail connects to the Canadian Pacific (CP) Rail main line north of the site. Tank farms, utility buildings and cooling towers service each of the potash process plants.

The magnesium processing facility is located adjacent to the truck loadout to facilitate the transportation of the hydromagnesite product.

Solid waste produced from the processing facilities will be partly backfilled in mined out caverns. Remaining solid NaCl will be dissolved in water and injected into the Deadwood Formation along with the MgCl₂ and CaCl₂ waste brines eliminating the need for surface waste piles.

Storm water ponds will collect surface run-off, roof run-off and non-segregated drainage and will be used in the process with excess storm water injected into the Deadwood Formation.

Raw water from the Blairmore aquifer will supply solution mining, process utility water and cooling water. Natural gas will be purchased from a gas marketer and delivered to the site by TransGas. The infrastructure for the gas transportation will be funded by Karnalyte and offset by a rebate. SaskPower will supply power to site with a new line to site funded by Karnalyte.

Project No.: 252512
24 December 2025
Summary
Page 1-10
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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Power requirement for Phase 1 is 32 MW with each additional phase requiring 36 MW and the magnesium facility 2.1 MW.

The site layout is shown Figure 1-1.

Figure 1-1: Site Plan

Source: Wood, 2025

1.14 Market Studies and Contracts

Saskatchewan has the largest potash industry in the world, accounting for 45% of known global mineral reserves. The province is home to all of Canada's operating potash mines. By conservative estimates, Saskatchewan could supply world potash demand at current levels for several hundred years.

Karnalyte plans to produce 2.175 Mt/a of a compacted granular KCl 97 or 61.3% K₂O product. As a solution mine, the product produced by Karnalyte is a higher grade than traditional underground mines.

Project No.: 252512

24 December 2025

Summary

wood.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Karnalyte obtained a market study for KCl from an independent marketing analyst. The global MOP market is a stable market with a forecast compound annual growth rate (CAGR) of 1.2% from 2024 to 2040. Long-term prices for the Karnalyte products are as follows:

Real US$516/t for white 61.3% K₂O granular MOP free-on-truck (fot) US Corn Belt
Real US$507/t for white 61.3% K₂O granular MOP cost-of-freight (cfr) India
Real US$438/t for red 60% K₂O granular MOP free-on-board (fob) Vancouver.

In January 2013, Karnalyte entered into an offtake agreement for the purchase of potash for a period of 20 years. Potash sales for the offtake agreement account for between 42–52% (350,000–600,000 t/a) of the Phase 1 and Phase 2 production. Karnalyte will sell the balance of production into the US Corn Belt market. The US Corn Belt relies heavily on its supply of potash from Canada (80%).

Karnalyte plans to produce 104,000 tonnes of synthetic hydromagnesite starting in Year 3 with the start of production of the Phase 2 potash plant. Hydromagnesite is a naturally occurring mineral and can also be synthetically produced as is the case with this Project. Synthetic hydromagnesite is characterized by a higher purity and more uniform physical traits. Natural hydromagnesite has a purity in the range of 90–97% while synthetic is in the range of 99–99.8% pure.

Karnalyte obtained a market study for hydromagnesite from an independent marketing analyst. The current market is characterized by multiple small producers (<15,000 t/a) in a total market of 117,000 t/a. The majority of production is centred around the European and Asian continents with very little North American production.

Hydromagnesite demand, forecast for the period from 2025–2035 has a global CAGR of 22%. This can be compared to the CAGR of 11% for the period from 2019–2024. This demonstrates a rapidly growing market. The primary market for hydromagnesite is in the fire retardant materials sector. This is driven by environmental regulations to find alternatives for halogen based fire retardants.

Long-term pricing for hydromagnesite is:

Real US$740/t for natural hydromagnesite (90–97% purity)
Real US$1,409/t for synthetic hydromagnesite (99–99.8% purity).

Karnalyte will sell 104,000 tonnes of synthetic hydromagnesite into the North American synthetic and natural products markets. The North American market is primarily an import market and is currently paying a premium to account for the costs of shipping from existing suppliers in

Project No.: 252512

24 December 2025

Summary

wood.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Europe and Asia. As a North American producer, the cost for shipping product across North America is significantly lower than other producers.

Karnalyte also has the ability to produce and sell 100,000 t/a of $\mathrm{MgCl}_2$ brine. $\mathrm{MgCl}_2$ brine is typically used for road applications for de-icing or as a dust suppressant for gravel roads. $\mathrm{MgCl}_2$ brine has not been included in the project economics due to insufficient market data within the target area to determine a reasonable expectation of attainable revenue. Once in operations, Karnalyte can market $\mathrm{MgCl}_2$ brine in the target area to determine the market demand and make a determination of whether or not to include $\mathrm{MgCl}_2$ brine in the product offerings.

1.15 Environmental Studies, Permitting and Social or Community Impact

Karnalyte received approval for a comprehensive Environmental Impact Statement (EIS) in February 2013. The approval is based on the development of an underground potash solution mine with a design capacity to produce approximately 625,000 tonnes of saleable KCl mined over approximately 28 years. Since then, the Project has further increased its capacity to 2.175 Mt/a MOP with the introduction of Phase 2 and Phase 3 and has introduced a magnesium processing facility to produce hydromagnesite. Correspondence from the Ministry of Environment (MOE) in 2022 indicated that Phase 1 approval was still valid, and that changes to the Project may require approval under Section 16 of the Saskatchewan Environmental Assessment Act. The expectation is that Karnalyte would prepare, and submit to MOE, an amendment to the EIS as per Section 16 of the Saskatchewan Environmental Assessment Act for Phases 2 and 3, which are functionally similar to Phase 1.

1.16 Capital Costs

The capital cost for the Project has been determined for the facilities required for the processing of potash and hydromagnesite totalling $4.19 billion. The estimate was prepared with an expected accuracy to be within $\pm 15\%$ including contingency and is expressed in Q2 2025 Canadian dollars.

The total capital cost associated with the potash processing facility was developed to a feasibility level and is $3.96 billion over three phases (Table 1-3).

The capital cost estimate associated with the magnesium processing facility was developed to a prefeasibility level in 2012 and escalated to Q2 2025 with an accuracy within $\pm 25\%$ including contingency. The total capital cost is $231 million as shown in Table 1-4.

Project No.: 252512

24 December 2025

Summary

wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Sustaining capital costs associated with the drilling of new wells, and maintenance and replacement of equipment and materials in the processing plants over the LOM totals $7.62 billion.

Table 1-3: Potash Capital Cost Estimate Summary

| Area Description | Phase 1
675,000 t/a
($M) | Phase 2
750,000 t/a
($M) | Phase 3
750,000 t/a
($M) |
| --- | --- | --- | --- |
| Direct Costs | | | |
| Process Equipment and Facilities | 510.8 | 510.8 | 510.8 |
| Infrastructure | 86.9 | 10.0 | 5.9 |
| Utility Equipment and Facilities | 140.1 | 140.1 | 140.1 |
| Rail Loading Facilities | 22.9 | 22.9 | 0.0 |
| Solution Mining Facilities | 199.2 | 55.6 | 55.6 |
| Subtotal Direct Costs | 960.1 | 739.4 | 712.3 |
| Indirect Costs | | | |
| EPCM Services | 133.6 | 102.9 | 99.2 |
| Owner Costs | 201.7 | 42.9 | 41.3 |
| Indirect Field Costs | 153.6 | 118.3 | 114.0 |
| Taxes | 72.0 | 55.5 | 53.4 |
| Subtotal Indirect Costs | 561.0 | 319.6 | 307.9 |
| Contingency | 152.1 | 105.9 | 102.0 |
| Total | 1,673.1 | 1,164.8 | 1,122.2 |

Note: EPCM = engineering procurement construction management. Figures may not sum due to rounding.

Table 1-4: Magnesium Process Facility Capital Cost Estimate Summary

| Description | Cost
($M) |
| --- | --- |
| Direct Costs | |
| Process Equipment and Installation | 94.1 |
| Building | 7.2 |
| Structural | 8.1 |
| Plant Electrical, Instrumentation and Piping | 11.9 |
| Mobile Equipment | 0.6 |
| Subtotal Direct Costs | 121.9 |
| Indirect Costs | |
| EPCM | 16.5 |
| Other Indirect Costs | 16.4 |
| Owner's Cost | 34.2 |
| Subtotal Indirect Costs | 67.0 |
| Contingency | 42.1 |
| Total | 231.0 |

Note: EPCM = engineering procurement construction management. Figures may not sum due to rounding.

Project No.: 252512
24 December 2025
Summary
Page 1-14
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

1.17 Operating Costs

The total LOM operating cost for the potash project is $134.01/t with representative costs for each phase presented in Table 1-5. The total LOM operating costs for the magnesium process facility is $318.04/t (Table 1-6).

Table 1-5: Potash Project Operating Costs

Category	Phase 1 – 675,000 t/a		Phase 1, 2 – 750,000 t/a		Phase 1, 2, 3 – 750,000 t/a
	($M/a)	($/t)	($M/a)	($/t)	($M/a)	($/t)
Labour	10.51	15.81	19.16	13.88	24.92	11.46
Natural Gas	39.43	59.29	81.81	59.28	128.91	59.27
Power	18.54	27.88	38.37	27.80	60.41	27.77
Water	0.03	0.04	0.06	0.04	0.09	0.04
Reagents	2.43	3.66	4.79	3.47	7.36	3.39
Maintenance Materials	6.03	9.07	14.79	10.72	35.86	16.49
Blanket Oil	3.71	5.59	8.17	5.92	12.63	5.81
Wellfield	1.80	2.71	3.48	2.52	4.91	2.26
Contingency and Others	5.00	7.44	10.24	7.42	16.51	7.59
Total	87.44	131.49	180.87	131.06	291.60	134.07

Note: Figures may not sum due to rounding. Total costs are representative of costs incurred in Year 2, Year 4 and Year 10 for Phase 1, Phase 2 and Phase 3, respectively.

Table 1-6: LOM Magnesium Process Facility Operating Costs

Category	104,000 t/a
	Annual ($000s)	($/t)
Power	1,007	9.79
Maintenance	3,001	29.16
Natural Gas	3,573	34.71
Reagents	12,414	120.59
Process Water	6	0.05
Labour	9,762	94.83
Contingency	2,976	28.91
Total	32,739	318.04

Note: Figures may not sum due to rounding.

Project No.: 252512
24 December 2025
Summary
Page 1-15
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

1.18 Economic Analysis

Certain information and statements contained in this section are forward-looking in nature and are subject to known and unknown risks, uncertainties, and other factors, many of which cannot be controlled or predicted and may cause actual results to differ materially from those presented here. Forward-looking statements include, but are not limited to, statements with respect to the economic and study parameters of the Project; mineral reserves; the cost and timing of any development of the Project; the proposed mine plan and mining strategy; processing method and rates and production rates; projected metallurgical recovery rates; infrastructure requirements; capital, operating and sustaining cost estimates; potash and hydromagnesite marketability and commercial terms; the projected LOM and other expected attributes of the project; the net present value (NPV), internal rate of return (IRR) and payback period of capital; future potash and hydromagnesite prices and currency exchange rates; government regulations and permitting timelines; estimates of reclamation obligations; requirements for additional capital; environmental risks; and general business and economic conditions.

The Project has been evaluated using a discounted cash flow (DCF) analysis. Cash inflows consist of annual revenue projections for the mine. Cash outflows such as capital, pre-production mining costs, operating costs, taxes, and royalties, are subtracted from the inflows to arrive at the annual cash flow projections. Cash flows are taken to occur at the end of each period.

The evaluation of the Project under the assumptions used in this Report generated a positive before and after-tax result. The results show an after-tax NPV of $2.04 billion at an 8% discount rate, an IRR of 12.5% and a payback period of 8.8 years.

The Project is most sensitive to fluctuations in the potash selling price and less sensitive to changes to the hydromagnesite selling price. The sensitivity that the production of hydromagnesite has on the Project was assessed showing an after-tax NPV of $1.50 billion at an 8% discount rate, an IRR of 11.6% and a payback of 9.3 years for a Project producing potash only.

1.19 Conclusions

Based on the assumptions of the feasibility study the Project is economically viable and has sufficient mineral reserves to support a mine life of 70 years producing potash suitable for sale in the US Corn Belt and to meet the offtake agreement with GFSC.

Project No.: 252512

24 December 2025

Summary

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

1.20 Opportunities

1.20.1 Geology

The following exploration potential has been identified:

Exploration potential on disposition KL 246 exists to the east of the Project area. Additional seismic and drilling in this area would further delineate the potassium-bearing members. Positive results could support an increase in the current mineral resource and reserve estimates, which in turn may contribute to an extension of the projected mine life.

1.20.2 Mineral Resources and Mineral Reserves

Opportunities for mineral resources were identified in Section 14.7 and for mineral reserves in Section 15.4.

1.20.3 Market Studies

The following opportunities relating to the marketing of products have been identified:

Selling a $\mathrm{MgCl}_2$ brine for road dust suppression or de-icing directly to municipalities or through a distributor. The current plant has the ability to supply up to 100,000 tonnes of $\mathrm{MgCl}_2$ brine annually. If market conditions are favourable, $\mathrm{MgCl}_2$ brine production can be increased with minimal capital investment.
Ongoing market disruptions due to world events may improve opportunities for North American potash producers to access the US Corn Belt market, which imports a portion of its consumption from Russia.
The hydromagnesite market study shows rapid growth in the demand for hydromagnesite particularly in North America where supply currently relies on imports. If market supply remains restricted as indicated in the market study, hydromagnesite production can be increased and sold into the world market to help reduce supply limitations.
The synthetic world hydromagnesite market is supply limited. Karnalyte may capture a portion of the world synthetic market resulting in increased revenue.
Investigating alternative magnesium-based products to determine economic production and potential markets. Any new magnesium products would utilize excess $\mathrm{MgCl}_2$-rich end brine and would be in addition to planned hydromagnesite production.

Project No.: 252512
24 December 2025
Summary
wood.

Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

1.21 Risks

1.21.1 Mineral Resources and Mineral Reserves

Risks for mineral resources were identified in Section 14.7 and for mineral reserves in Section 15.4.

1.21.2 Metallurgical Test Work and Recovery Methods

There is a risk that the hydromagnesite processing plant will not perform as designed based on bench scale testing at a prefeasibility level. A larger scale test should be performed (e.g., pilot plant) to confirm its process design and capital cost. This risk has been mitigated with the inclusion of a higher percent contingency for this part of the overall project capital cost.
There is a risk that the brine sent from the potash facility to feed the magnesium facility may have higher than designed impurities (sulphates, calcium). This is a small risk to operational costs of the hydromagnesite plant and would require a small increase in water and reagent usage.

1.21.3 Market Studies

There is a risk that Karnalyte's ability to capture a share of the existing potash market for the new potash supply provided by the Project could be impacted given local emerging competitors. New planned production was taken into consideration for the establishment of long-term pricing.
There is a risk that Karnalyte's entry into the hydromagnesite market could affect pricing due to the scale of production relative to current market size.

1.21.4 Financial

There is a risk that the likely introduction of a royalty framework for magnesium will directly impact the Project NPV.

1.22 Recommendations

Recommendations to advance the Project to a pre-execution stage include density testing of existing samples, a magnesium study and metallurgical test work. The cost of this recommended work is estimated to be $1.05 million.

Project No.: 252512
24 December 2025
Summary
wood.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

2.0 INTRODUCTION

Karnalyte retained Wood, RESPEC, ERCOSPLAN and MARCH to update the feasibility study for the Wynyard deposit in central Saskatchewan and to prepare an NI 43-101 technical report for the Project.

2.1 Terms of Reference

The Report was prepared to support disclosure in the news release dated November 26, 2025 entitled "Karnalyte Resources Inc. Unveils Results of Updated Feasibility Study for Flagship Wynyard Project, Showcasing 70-year Potash Mine Life, Positive Economics, and Market Growth".

The potash project is based on the 2011 FS design with the capital cost estimate updated in Q2 2025 based on revised vendor quotations which included pricing sourced from existing vendors, new vendors and select suppliers based in India. The magnesium products plant is based on the 2012 PFS design with the capital cost estimate escalated to Q2 2025 using FRED factors for direct and indirect costs based on equipment, material and labour of the PFS.

The potash product from the Project is white granular MOP with a 61.3% K₂O or 97% KCl grade (referred throughout the report as MOP) which is considered a premium grade that attracts a premium price from fertilizer purchasers (Section 19).

Mineral resource and reserve estimates were prepared in accordance with the 2019 CIM Best Practice Guidelines and reported in accordance with the 2014 CIM Definition Standards.

All units of measure in this Report are metric unless otherwise stated. All amounts are in Canadian dollars unless otherwise stated.

2.2 Qualified Persons

The following individuals are qualified persons (QPs) for their content in the Report and meet the definition as required by NI 43-101:

Ms. Tabetha Stirrett, P.Geo., President, RESPEC
Dr. Sebastiaan van de Klauw, EurGeol, Consulting Geologist, ERCOSPLAN
David Mitchell, P.Eng., Senior Process Engineer, Wood
David Myers, P.Eng., Technical Director Mining and Minerals (Saskatoon), Wood
Kyle Krushelniski, P.Eng., Senior Project Manager, MARCH

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QP Stirrett takes responsibility for the introduction section, and sections relating to geology specifically deposit types, exploration, drilling, and adjacent properties as well as parts of geology and mineralization, sample preparation, analyses and security, data verification, and parts of the summary, interpretation and conclusions, and recommendations relating to those areas.

QP van de Klauw takes responsibility for the introduction, accessibility, climate, local resources, infrastructure and physiography, history, mineral resource estimate, mineral reserve estimate and mining methods, as well as parts of reliance on other experts, geology and mineralization, sample preparation, analyses and security, and parts of the summary, data verification, capital costs, operating costs and interpretation and conclusions, and recommendations relating to those areas.

QP Mitchell takes responsibility for sections relating to mineral processing and metallurgical test work, recovery methods, process operating cost as well as the introduction section and parts of the summary, data verification, interpretation and conclusions, and recommendations relating to those areas.

QP Myers takes responsibility for the introduction, reliance on other experts, property description and location, project infrastructure, and economic analysis sections as well as parts of the summary, capital costs, interpretation and conclusions, and recommendations relating to those areas.

QP Krushelniski takes responsibility for the introduction section and parts of the reliance on other experts as well as the market studies and contracts section and parts of the summary, interpretation and conclusions relating to it.

2.3 Site Visits

QP Stirrett visited the site on June 25, 2025 and observed Karnalyte's assets including their office and shop in Wynyard which includes space for heavy equipment storage. Several locations around the site were visited. The plant site showed a large, gravel-covered area with excellent drainage. Four well site locations were inspected with two wells requiring abandonment and fencing, and one of them showing a pressure reading of 300 psi. Access to one hole was limited requiring clearing. Infrastructure including power supply and piping along the road was observed. No core was seen as core is not stored at site.

QP van der Klauw visited the mineral property KP 360A near Wynyard on January 16, 2010, inspected the drill sites of the exploration holes DH-20 and DH-21, the KW WSW 2-16-32-16 water test well drilled for Karnalyte and the rail facilities at Wynyard. Furthermore, discussions

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with the councils of Wynyard and the nearby rural municipalities were made. He inspected the cores of DH-20 and DH-21 at the core storage facility in Saskatoon on January 15, 2010. The results of the 3D seismic survey were discussed with representatives of RPS Boyd Petrosearch on January 13, 2010 in Calgary. QP van der Klauw also visited the site on May 4, 2016 to inspect the start of the ongoing solution mining test at well DH 20, the water well providing the solvent for the operation and the brine disposal well to dispose of the bulk of the produced brine during the test. On 30 May 2022 QP van der Klauw, inspected the cores of exploration wells KW 3B4-26 and KW 4B14-24 at the core storage facility in Regina and observed Karnalyte's assets in Wynyard and walked the main site and visited the stockyard with casing north of Highway 16.

QP Myers visited the site on June 25, 2025 and observed the existing infrastructure around the Project area. This included walking the main site in the area of the pilot plant and observing the operable (locked-out) 4160 V electrical substation, natural gas let down station and main rail line adjacent to Highway 16. Site access was confirmed from Provincial Grid No. 640 which appears to be a wide, primary weight roadway connecting to Highway 16. The site and surrounding area were as expected.

QP Krushelniski did not visit the site as his scope of responsibility does not require site-specific technical assessments.

2.4 Effective Date

The overall effective date of this Report is November 26, 2025 including the mineral resource and mineral reserve estimates.

2.5 Information Sources

Reports and documents listed in Section 27 were used to support the preparation of this Report. Additional information was requested from Karnalyte where required with expert documentation referenced in Section 3.

Key sources of information for this Report include the following technical report:

Rauche, H., van der Klauw, S., Piché, L., and Buckner, E., 2016. Technical Report KCl and MgCl₂ Mineral Reserve and Resource Estimate for the Wynyard Carnallite Project, Sub-surface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada, effective date June 23, 2016
Rauche, H., van der Klauw, S., Piché, L., Balakrishnan, A., and Maxwell, D.K., 2012. Technical Report KCl and MgCl₂ Reserve and Resource Estimate for the Wynyard Carnallite Project,

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Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, effective date June 27, 2012

Rauche, H., van der Klauw, S., Molavi, M., and Rogers, P.D., 2010. Technical Report Preliminary Assessment Study, Wynyard Carnallite Project, Subsurface Mineral Permit KP 360, Saskatchewan, Canada, effective date August 26, 2010

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3.0 RELIANCE ON OTHER EXPERTS

3.1 Legal Status

QP Myers and QP van der Klaw have not independently reviewed legal information on the Karnalyte Property. The QPs have fully relied upon, and disclaim responsibility for information contained in the following:

Karnalyte, "Section 4", email dated December 9, 2025.

This legal expert information is used in Section 4 for information such as mineral rights, surface rights, royalties, agreements and encumbrances, in Section 14 for inputs for establishing reasonable prospects for eventual economic extraction, in Section 16 for inputs to the mine plan, and in Section 22 to support royalty costs.

QP Myers and QP van der Klaw understand that Karnalyte obtained an independent legal opinion when providing this information.

3.2 Taxation

QP Myers has not independently reviewed the taxation information. QP Myers has fully relied upon, and disclaims responsibility for tax information contained in the following:

Karnalyte "Taxation Considerations and Tax Inputs to the Financial Model used in the Wynyard Project Feasibility Study National Instrument 43-101 Technical Report", letter dated November 5, 2025.

This expert information is used in support of the sub-section on tax information and the tax inputs to the financial model that provides the after-tax economic analysis in Section 22.

QP Myers understands that Karnalyte obtained taxation advice from their independent taxation advisors when providing this information.

3.3 Environmental

QP Myers has not independently reviewed the existing environmental information on the Property. QP Myers has fully relied upon, and disclaims responsibility for the environmental information contained in the following:

Dillon Consulting Limited, "Draft Section 20", email dated September 19, 2025.

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This expert information is used in Section 20 and in support of the mineral resource estimate in Section 14 and the mineral reserve estimate in Section 15.

3.4 Marketing and Commodity Pricing

QP Krushelniski, QP Myers and QP van der Klauw have not independently reviewed the marketing information pertaining to the long-term KCl price and hydromagnesite price, and the markets for both products. The QPs have fully relied upon, and disclaim responsibility for marketing and commodity price information contained in the following:

Karnalyte, "Section 19", dated December 15, 2025.

This marketing expert information is used in Section 14 as support for the KCl price input when establishing reasonable prospects for eventual economic extraction, Section 15 as support for the KCl price when determining mineral reserves, and Section 22 to support the KCl price and hydromagnesite price used in the cash flow analysis.

QP Krushelniski, QP Myers and QP van der Klauw understand that Karnalyte obtained independent marketing reports when providing this information.

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4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 Property Location

The Property is located in central Saskatchewan, approximately 175 km east of Saskatoon and some 65 km east of Nutriens Lanigan potash mine.

The coordinates around the area of the process facilities is 5,732,100 N and 555,000 E (UTM Zone 13N, NAD83).

4.2 Mineral Rights in Saskatchewan

The majority of mineral rights in the Province of Saskatchewan are owned by the Crown in Right of Saskatchewan (the "Crown"). Crown-owned minerals are administered under The Crown Minerals Act (Saskatchewan) (the "Crown Minerals Act") by the Saskatchewan Ministry of Energy and Resources (the "Ministry"). Rights or interests in Crown-owned minerals may only be acquired through Crown dispositions made under the Crown Minerals Act and its regulations. Crown dispositions are administered by the Ministry under various regulations, depending on the nature of the mineral.

Pursuant to The Subsurface Mineral Tenure Regulations (Saskatchewan), (the "SMTR"), a "permit" issued by the Ministry grants the holder the exclusive right to explore for and to develop subsurface minerals that are within the permit lands. Permits are issued for a term of eight years and can be extended at the Ministry's discretion. A permit holder is required to pay annual rental of $2.00 per hectare per year for the first five years and $5.00 per hectare per year for the final three years of the term of the permit. If a permit was issued before the current regulations came into effect, the annual rental payable by the permit holder is $1.24 per hectare per year for the first five years of the term of the permit, $10,000 for the sixth year of the term of the permit, $20,000 for the seventh year of the term of the permit, and $40,000 for the eighth year of the term of the permit. The permit holder must meet the work expenditure that is calculated when the permit is granted, over the term of the permit.

The holder of a permit that is in good standing may apply to the Ministry to convert the permit to a lease. The Ministry will grant a lease of the applicable Crown minerals to the holder of a permit if, among other things, the holder meets the required work expenditure for the permit and is in compliance with all other requirements of the Crown Minerals Act and the SMTR.

A lease grants the holder the exclusive right to explore for, mine, work, recover, procure, remove, carry away and dispose of any subsurface minerals within the lease lands. A lease is issued for

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a term of twenty-one (21) years and, subject to the requirements of the SMTR, can be renewed at the Ministry's discretion. The holder of a lease is required to pay annual rental of $10 per hectare per year for the initial term of the lease and, subject to certain exceptions under the SMTR, $20 per hectare per year for any lease renewed after its initial term.

The Crown Minerals Act provides that any Crown disposition may be cancelled if there has been a breach by the holder of any of the provisions of the Crown disposition, any of the provisions of the Crown Minerals Act or the regulations made under the Crown Minerals Act. This cancellation is ordinarily subject to a 60-day cure period.

4.3 Surface Rights in Saskatchewan

A Crown disposition granted pursuant to the Crown Minerals Act and the SMTR does not grant the holder any right to enter upon or use the surface of the lands described or referred to therein. A party granted rights under a Crown disposition is required to obtain further rights from the owner of the surface lands to access the surface lands, as may be required.

Much of the surface land in the area in which the Property is located is vested in the Crown. Subject to certain exceptions, these Crown-owned lands are administered by the Ministry of the Environment ("MOE") under The Provincial Lands Act, 2016 (Saskatchewan) (the "Provincial Lands Act") and the Regulations made thereunder. In particular, resource land dispositions (including mineral surface lease agreements) may be granted by the MOE under The Crown Resource Land Regulations, 2019. Resource land dispositions issued under The Crown Resource Land Regulations, 2019 may be issued for a maximum term of 33 years and are subject to all the terms and conditions set forth in the Provincial Lands Act and the Regulations (including conditions addressing rent, impact mitigation plans and reclamation and restoration obligations).

4.3.1 Karnalyte's Mineral Rights

In 2008 Karnalyte was granted mineral permit KP 360 with the western portion converted to exploration lease KLSA 010 on February 14, 2011. The remainder of permit KP 360 was converted to KP 360A exploration permit. In June 2016, Karnalyte applied to the Saskatchewan Ministry of the Economy to transform mineral permit KP 360A into two separate mineral leases KL 246 and KL 247 which was granted on June 23, 2016. Subsequently, on November 29, 2016, KL 247 was amended to KL 247A which reduced the hectares under this lease from 7,132.343 to 6,975.227 hectares.

The Property consists of three mineral leases issued by the Crown to Karnalyte; namely KLSA 010, KL 246 and KL 247A which cover an aggregate area of 36,731.56 hectares. Karnalyte is recorded

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as the sole holder of these mineral leases (Table 4-1). The leases cover portions of Townships 31 and 32 and Ranges 14 to 17 over Sections 1 to 36 (approximate longitude 51°45'N, latitude 104°10'W). The dimensions of the Property are approximately 29 km east to west and 12.8 km north to south (Figure 4-1).

Table 4-1: Mineral Leases Comprising the Property

Lease Name	Lease Holder	Area (ha)	Expiry Date
KLSA 010	Karnalyte (100%)	6,808.77	September 7, 2031
KL 246	Karnalyte (100%)	22,947.56	April 24, 2037
KL 247A	Karnalyte (100%)	6,975.23	April 24, 2037

Figure 4-1: Karnalyte Property

Source: RESPEC, 2025

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Figure 4-1 shows adjacent permit holders as well as the freehold lands, or lands under private landholder's mineral ownership (displayed as white parcels) that do not form part of the leases and do not contribute to the mineral resource estimates. A portion of the land is owned by the First Nations Beardy's and Okemasis Indian Band.

4.4 Surface Rights

Karnalyte owns 3,782 acres of surface rights in the area of the Project as illustrated in Figure 4-1.

4.5 Royalties, Agreements and Encumbrances

The Crown Minerals Act provides that, except as otherwise provided in the regulations, every Crown lease shall except and shall reserve to the Crown a royalty or royalties on all Crown minerals that may be extracted, recovered or produced under that Crown lease. A Crown Royalty has a basic royalty rate on potash produced on Crown land of 3%. There is also a Resource Surcharge of 3% on all potash sales. A Potash Production Tax has two components, a base payment and a profit tax (refer to Section 22).

Under Karnalyte's agreements with Gujarat State Fertilizers and Chemicals Limited (GSFC), dated January 10, 2013, there is a restriction on Karnalyte to divest, sell, assign, transfer or otherwise dispose of any part of its interests in the Project without the prior written consent of GSFC. Additional information on the GSFC agreement can be found in Section 19.

Encumbrances that define exclusion zones that restrict mining and limit the extent of mineral resources and mineral reserves are discussed in Section 14.5.3 and 14.5.4.

4.6 Environmental Obligations and Permitting Considerations

Karnalyte has obtained the necessary permits to conduct work on the Property to-date. An environmental impact statement (EIS) for the northeast part of KLSA 010 has been accepted by federal and provincial institutions (see Section 20).

Karnalyte maintains funds for reclamation of existing site works as required by the Government of Saskatchewan as described in Section 20.

Environmental and permitting considerations for future work are detailed in Section 20.

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4.7 Significant Factors and Risk

QP Myers is not aware of any significant factors and risks that may affect access, title, or the right or ability to perform the proposed work program on the Property other than what is discussed in this Report.

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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The Property is accessible by a network of grid section gravel and paved roads, including Highway 16, a major paved highway less than 3 km from Karnalyte’s proposed load-out facility connecting the major urban centres of Saskatoon and Yorkton. Rail access in the form of trackage is good, with the CP Railway main line running north of the Property parallel to Highway 16 and within 3 km of Karnalyte’s proposed facility. The Canadian National (CN) Railway Company is within 38 km of Karnalyte’s facility.

5.2 Climate

The climate is typical of the Canadian prairies with a snowy winter season (November to March) and mean temperatures averaging -12.7°C. The summer season (June to early September) is typically warm, averaging 17.7°C with moderate precipitation. Average rainfall is 299.5 mm and average snowfall is 140.1 cm. The spring (April to May) and autumn (late September to October) is cool with precipitation in the form of rain and occasional snow.

It is expected that any future mining operations will operate year-round.

5.3 Local Resources and Infrastructure

The large urban population centre of Saskatoon, Saskatchewan, 175 km to the west and local rural communities such as Wynyard, Foam Lake, and Lanigan may provide supplies and a pool of skilled professional, technical, and trades persons; furthermore, an operating potash mine immediately to the west means that the local labour force has experience in potash mine construction and operation. The planned start of production of BHP’s Jansen mine in the near future is a major competitor for skilled labour.

The region is well served by an electrical distribution network. The Property is relatively close to the main electrical supply grid for SaskPower. The existing lines are sufficient to supply the required electrical power to the site.

Natural gas will be purchased from a gas marketer and delivered to the site by TransGas via a pipeline from a point on the main delivery line near the Jansen operation.

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Aquifers within the subsurface Lower Cretaceous Mannville Formation some 500 m below the surface could potentially supply the process water required for the operations. Two successful water wells drilled by Karnalyte provide water suitable for solution mining and for most processing steps. Karnalyte has received permits for Approval to Operate and Water Rights Licenses for both wells from the Saskatchewan Water Security Agency.

The Middle Cambrian -- Lower Ordovician Deadwood Formation, some 1,400 to 2,000 m below surface, consists of sandstone beds that are extensively used by other potash mines as a disposal reservoir for waste tailings brine. A disposal well has been drilled for testing and shows good potential for disposal (GeoEngineers, 2013a). Karnalyte has received approval from the Saskatchewan Ministry of the Economy, for disposal of brine from potash operations by commingled injection into the Deadwood Formations through the well KW SWD 4B6-14.

There are sufficient surface rights for the planned future mining operations. Karnalyte owns or has negotiated favourable land acquisition and usage agreements with private landowners for the brine field and owns the surface rights for lands which will be required for Phase 1. As waste brine is disposed of by deep-well injection, no tailings pond management is required.

5.4 Physiography

There are two lakes located to the northwest and north of the Property, Quill Lake and Little Quill Lake, respectively.

The cleared lands are utilized primarily for farming purposes, although there is scattered pasture and grazing lands some of which are unbroken grassland. Overall, the Property consists of flat to gently rolling cleared farmland with local mixed poplar/aspen bluffs at elevations between 560 and 650 m above mean sea level (masl).

Karnalyte RESOURCES

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Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

6.0 HISTORY

A search of the historical data held by Saskatchewan Ministry of the Economy was conducted on the Property to determine the extent of potash exploration development. Some of the data found included assay data, drill reports, drill stem tests and other information pertaining to the drilling of the wells.

Prior to Karnalyte's exploration programs, there had been limited potash and magnesium exploration on the Property. Four wells were drilled within the Property by Tide Water Oil Company (1953), Marlea Exploration Company Limited (1957), Dominion Energy (1958), and Mobil Oil Canada Limited (Mobile Oil) (1967). Out of the four historical wells drilled, only two wells penetrated the Prairie Evaporite; Dominion Kandahar 1-27-31-16W2 (DH-10) and Mobil Wynyard 1-20-032-16W2 (DH-11), drilled in 1958 and 1967, respectively. Both drill holes have geophysical logs, assay data and core from the Prairie Evaporite extending through the Patience Lake, Belle Plaine and Esterhazy Members. The original well data is stored at the Geodata Branch and core is retained by Saskatchewan Ministry of the Economy, both located in Regina, Saskatchewan.

The southern portion of the Property was held by William C. Lagos during the 1960s; however, there are no records of work having been done in this area. Permits were held north of the Property by King Resources Ltd.; however, there are no records of work having been done in this area. As to leases KL 246, KL 247A and KLSA 010, it is believed that the ground was held by oil and gas permits prior to exploration undertaken by Mobil Oil.

There has been no production from the Property.

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7.0 GEOLOGICAL SETTING AND MINERALIZATION

The potash beds of Saskatchewan's Middle Devonian Prairie Evaporite Formation have been studied and well documented by various geoscientists since their discovery in the 1940s. Much of the following geological material is derived and expanded upon from observations outlined in Karnalyte's previous technical reports (Rauche et al, 2010; Rauche et al., 2012; Rauche et al., 2016). Industry accepted concepts and considerations pertaining to potash mining in Saskatchewan that are presented within this section have been adapted in large part from Holter (1969) and Hardy and Halabura (2008).

7.1 Regional and Local Geology

Saskatchewan's subsurface Phanerozoic geology can be subdivided into three broad stratigraphic intervals (Figure 7-1), with the listed approximate depths based upon the examination of exploratory wells within the Project area:

An uppermost overburden sequence comprised of Cenozoic glacial tills, gravels and clays. This sequence extends from surface to an approximate subsurface depth of 125–175 m. This sequence commonly contains fresh water aquifers.
A medial sequence of bedded Mesozoic strata extending from the base of the glacial sediments to an approximate subsurface depth of 550 m consisting of shales, siltstones and sandstones with aquifers of brackish water.
A lowermost package of Paleozoic strata that extends from the Paleozoic/Mesozoic Unconformity to depths more than 1,900 m below surface, consisting primarily of thick successions of carbonate and evaporite rocks punctuated by sandstones and shales.

The above listed sedimentary sequence outlines the simplified subsurface Phanerozoic cover of Saskatchewan, which is itself underlain by Precambrian aged gneisses and granites. A modified version of the stratigraphic correlation chart of Saskatchewan is found in Figure 7-1. This chart outlines the interpreted Phanerozoic stratigraphy of the Project area.

The potash resources of Saskatchewan are comprised of a simple mineralogical mixture of bedded halite, sylvite, carnallite and clay that are found as bedded deposits within the generally flat-lying and laterally extensive shallow marine sequences of the Middle Devonian Elk Point Group. The Elk Point Group was deposited within a wide intracratonic depositional corridor known as the Elk Point Seaway which extended from its southern extremities in North Dakota and northeastern Montana up through southern and central Saskatchewan into northeastern

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Alberta (Figure 7-2). North of this point, the seaway is divided by tectonic features into a series of sub-basins.

The Elk Point Group strata range in depth from some 2,500 m below surface in southern Saskatchewan and rise to surface outcrop exposures in northwestern Manitoba.

The Elk Point Group of Saskatchewan can generally be subdivided into three widely distributed formations as illustrated in Figure 7-1. In ascending stratigraphic order, they are the Ashern, Winnipegosis, and Prairie Evaporite Formations. Potash mineralization exists within the uppermost salts of the Prairie Evaporite Formation. The Prairie Evaporite Formation is found within the lowermost Phanerozoic sequence and is comprised predominantly of bedded halite, anhydrite, and clay. The Formation is unconformably bound at its base by Silurian to Middle Devonian (Givetian) marine carbonate deposits and disconformably bound at its top by the shales and carbonate rocks of the Middle Devonian Dawson Bay Formation.

The Prairie Evaporite Formation is often subdivided into a Lower Prairie Sequence and an Upper Salt unit. The Upper Salt contains three potash-bearing members and several regional "marker beds". In ascending stratigraphic order, they are the Esterhazy Member, the White Bear Marker Beds, the Belle Plaine Member, and the Patience Lake Member. These mineralized beds are generally flat lying interbeds of sylvite, halite, carnallite, clay, and minor amounts of anhydrite.

A regional geological cross-section of the Prairie Evaporite Formation and its potash bearing members in Saskatchewan is provided in Figure 7-3, with the stratigraphic nomenclature adopted from Holter (1969). An inset map showing the location of the Property in relation to the section line is included. The section demonstrates the lateral extent and consistency of the Prairie Evaporite Formation within the Province through the correlation of clay seams and mineralized beds over hundreds of kilometers. The cross-section trends east to west starting from Saskatoon and ending 160 km southeast of the Property.

The Property is situated on the northern edge of the basin, the ancient Elk Point Seaway. Here the potash-bearing beds range between 950–1,075 m below surface. The depth to the top of the Prairie Evaporite Formation within the northern half of the Property ranges from 940–1,015 m below surface, deepening slightly towards the south.

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Figure 7-1: Subsurface Phanerozoic Stratigraphy of Central to Eastern Saskatchewan

Source: Modified from the Saskatchewan Ministry of Energy and Resources Website, 2022 (Geological Services, Well Information)

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Figure 7-2: Elk Point Basin

Source: RESPEC, 2024

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Figure 7-3: Regional Geological Cross-section of the Middle Devonian Prairie Evaporite Formation in Saskatchewan

Source: RESPEC, 2025
Note: PL = Patience Lake member, BP = Belle Plaine member, EZ = Esterhazy member

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7.2 Property Geology

7.2.1 Structure and Stratigraphy

The following is a summary of the key stratigraphic boundaries as determined for the drill holes in the Project area (Table 7-1). For the purposes of this section the KW 3A11-27 exploration well drilled in 2011 is used as a type of reference hole for the description of stratigraphic boundaries (Figure 7-4). All quoted depths are true vertical depths and given in metres. The quoted depths are specific to the Project area and are identified from well log signatures and visual examination of drill cores. Within the Project area, the three major Prairie Evaporite Potash Members are present with the Patience Lake and Belle Plaine Members mainly developed as carnallite and the Esterhazy Member mainly developed as sylvinite (more detailed mineralization discussion can be found in Section 7.4). The Whitebear Marker Beds are poorly developed and not easily identified. Table 7-1 summarizes the depth and thickness distribution of the potash members for each of the 12 test and exploration wells considered relevant in this Report. Potash intervals summarized in Table 7-1 and in this section represent the entire geological thickness of mineralization for each member and that these intervals do not represent specific mining intervals that take into account actual cut-off grade and minimum mining thickness. The specific mining intervals used in mineral resource and mineral reserve estimation are defined in Section 7.4. A series of isopach maps have been generated, Figure 7-5 to Figure 7-8 that define the extents and thicknesses of the potassium members. The isopach maps include the identified 3D seismic collapse features; however, thicknesses in these zones may not represent true stratigraphic intervals and are not considered prospective for further potassium exploration.

Table 7-1: Thickness and Depth Summary of the Potash Members in the Relevant Drill Holes in the Project Area

Well ID	Patience Lake Member			Belle Plaine Member			Esterhazy Member
	From (m)	To (m)	Thickness (m)	From (m)	To (m)	Thickness (m)	From (m)	To (m)	Thickness (m)
DH-11	925.61	939.47	13.86	945.93	963.50	17.57	989.32	1,006.10	16.78
DH-20	934.83	942.83	8.00	951.43	966.40	14.97	994.48	1,011.86	17.38
DH-21	920.58	928.39	7.81	936.26	951.80	15.54	980.57	997.26	16.69
KW 2-24	909.74	919.30	9.56	927.63	942.63	15.00	971.23	988.59	17.36
KW 2C6-32	995.12	1,003.10	7.98	1,011.33	1,026.72	15.39	1,054.65	1,071.50	16.85
KW 4B14-24	1,007.19	1,022.19	15.00	1,030.71	1,045.65	14.94	1,074.21	1,091.72	17.51
KW 4D14-21	1,010.50	1,022.90	12.40	1,030.62	1,045.62	15.00	1,073.65	1,089.34	15.69
KW 13-36	970.79	977.29	6.50	985.20	1,000.01	14.81	1,028.27	1,044.75	16.48
KW 3C4-8	965.12	973.78	8.66	982.15	997.26	15.11	1,025.50	1,042.28	16.78
KW 3B4-26	1,001.14	1,004.18	3.04	1,012.13	1027.45	15.32	1,054.42	1,072.57	18.15
KW 2A11-12	942.03	950.37	8.34	959.09	973.78	14.69	1,001.31	1,017.37	16.06
KW 3A11-27	988.46	999.68	11.22	1,007.75	1023.20	15.45	1,050.49	1,066.89	16.40

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Karnalyte RESOURCES

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Figure 7-4: Prairie Evaporite Formation Type Section for Exploration Well KW 3A11-27

Source: RESPEC, 2016

Patience Lake Member: The Patience Lake Member is stratigraphically the uppermost potash bearing Member of the Prairie Evaporite Formation and within the Property dominantly developed as carnallite. The Member can be subdivided into four sub-members, which are separated by clay rich and barren halite interbeds. The uppermost Patience Lake sub-member is only locally present in the west and usually developed as sylvinite. More commonly, the lower three sub-members of the Patience Lake Member are present as continuous carnallite mineralization. Exception occurs in the southeastern area of the Property near the seismic anomaly, where the second and third sub-member of the Patience Lake is developed as sylvinite. Core indicates that in this well, KW 3B4-16, the original carnallite was transformed to sylvite. The total thickness of the Patience Lake Member over the investigated area of the leases averages 9.4 m in thickness. The depth to the top of the Patience Lake Member occurs around 910 m in the northeast region of the Property and increases to depths around 1,010 m in the

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southwest. It is thickest in the south; up to 15 m in KW 4B14-24 and thinnest at KW 3B4-26 in the influence zone of a collapse feature. Figure 7-5 and Figure 7-6 illustrates the extents and thickness of the Upper and Lower Patience Lake across the property.

Belle Plaine Member: The Belle Plaine Member occurs stratigraphically below the Patience Lake Member and is predominantly carnallite. It is separated from the Patience Lake Member by an interval of barren halite and clay (interbed). The base of the Belle Plaine is generally marked by a clay seam and a decrease in KCl grade. The depth to the top of the Belle Plaine ranges from 927 m in the northeast to 1,030 m in the south and exhibits a uniform thickness across the Property averaging 15.3 m. Figure 7-7 illustrates the extents and thickness of the Belle Plaine across the property.

The Esterhazy Member: In the Project area, the depth to the top of the Esterhazy ranges from 971 m in the north to 1,074 m in the south. Contrary to the Patience Lake and Belle Plaine Members, the Esterhazy Member is generally sylvinitic within the Project area, with locally appreciable but subordinate amounts of carnallite. The distribution of KCl grade is used for defining the stratigraphy of the Esterhazy (as opposed to the clay seams used in the Belle Plaine and Patience Lake Members). The Esterhazy Member over the Project area has a uniform thickness averaging 16.8 m. Figure 7-8 illustrates the extents and thickness of the Esterhazy across the property.

The overall dip of the potash seams was determined by mapping the change in elevation for each of the three potash members across the Project area. Mapping the Prairie Evaporite Top illustrates that the Prairie Evaporite Formation is flat with a generalized dip of less than 1%. Local variations in dips of greater magnitude may exist, but the very low regional dip is favourable for solution mining with a blanket medium as practiced at Mosaic's Belle Plaine and K+S Potash Canada potash mines. A series of cross sections for all Karnalyte drilling as well as the reassessed historic drill hole were generated across the Project area. The cross sections illustrate lateral continuity, thickness, and outline the grades of the individual mineral constituents; carnallite and sylvite. A North to South Geological Section (A-A') shown in Figure 7-9 also illustrates the regionally interpreted gentle southwesterly dip of the local potash-bearing members within the Project area. Figure 7-10, Geological Cross Section (B-B'), illustrates wells from the Northwest to Southeast across KLSA 010 and KL 247A, and Figure 7-11, Geological Cross Section (C-C'), illustrates from West to East to the north of KLSA 010.

In addition to Figure 7-9, the overall structure of the deposit with its slight southwesterly dip of the potash bearing members is confirmed by the 3D seismic survey previously conducted by Boyd Exploration Consultants, Ltd., now a Tetra Tech Company, (Tetra Tech) in 2010, as shown in Figure 7-12. This figure also illustrates areas of severe structural lows (dark blue). The severe structural lows are often associated with interpreted collapse features discussed in Section 7.3.

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Figure 7-5: Upper Patience Lake Isopach

Source: RESPEC, 2011

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Figure 7-6: Lower Patience Lake Isopach

Source: RESPEC, 2011

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Figure 7-7: Belle Plaine Isopach

Source: RESPEC, 2011

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Figure 7-8: Esterhazy Isopach

Source: RESPEC, 2011

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Figure 7-9: North-South Geological Cross-Section (A-A') Through Wells in the Project Area

Source: RESPEC, 2016

Note: Figure is used to illustrate the relative differences in the geophysical response and not illustrate the actual geophysical units.

Well Name 2-24-32-16 = KW 2-24; Well Name 2A11-12-3D6-12-32-16 = KW 2A11-12; Well Name 13-36-31-16 = KW 13-36; Well Name 3A11-27-3A11-27-31-16 = KW 3A11-27.

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Figure 7-10: Northwest to Southeast Geological Cross-Section (B-B') Through Wells in the Project Area

Source: RESPEC, 2016

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Figure 7-11: West-East Geological Cross-Section (C-C') Through Wells in the Project Area

Source: RESPEC, 2016

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Figure 7-12: Second Red Beds Structural Map Indicating the Change in Depth Level of the Deposit in the Project Area and Identified Collapses

Source: Tetra Tech, 2010

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7.3 Geological Anomalies

The sylvinite and carnallite beds of the Prairie Evaporite Formation can be disrupted by three main types of geological anomalies, which render areas unsuitable for mining (Hardy and Halabura, 2008). These disturbances range from small features under a few hundred square metres to regional zones spanning several square kilometres (Figure 7-13).

Washout anomalies involve replacement of potash beds with halite masses composed of medium to large halite crystals and clay. These are interpreted as intraformational and local, often forming V- or U-shaped structures that disrupt stratigraphy (Mackintosh and McVittie, 1983).

Leach anomalies, or "salt horses," occur when potash minerals are removed and replaced by halite, typically without disturbing stratigraphic boundaries. These are post-depositional and often linked to underlying Winnipegosis reefs. At the Nutrien Vanscoy mine, they appear as zones with reduced or absent sylvite, ranging from a few metres to over 1,600 m in length.

Dissolution and collapse anomalies are where Prairie Evaporite salts dissolve and are replaced by collapsed overlying materials. These can be local (under 1 km²) or regional (several square kilometres), sometimes affecting the entire formation thickness.

A severe case was documented at Nutrien's Lanigan mine, where a machine encountered down-dropped Dawson Bay limestone blocks suspended in the salts after cutting through a leach anomaly (Danyluk et al., 1999). These anomalies are common in Saskatchewan and reduce ore grade—either in mined rock or brine—when intersected.

A combination of 2D/3D surface reflection seismic surveys and detailed analysis of surface drill holes is typically effective in identifying potentially anomalous ground in Saskatchewan potash exploration. While drill holes provide vertical detail, they offer limited insight into the lateral extent of anomalies unless they intersect a disturbance. The 3D seismic surveys; however, can map broader anomalies caused by large-scale alterations in the Prairie Evaporite Formation. These include salt dissolution and subsequent collapse of overlying beds and dipping of the potash horizons—key risks to cavern development. That said, seismic may not reliably detect more subtle features like washout or leach anomalies.

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Figure 7-13: Disturbances Affecting the Continuity of the Potash-bearing Members in Saskatchewan

a) Salt Dissolution and Collapse Anomaly

b) Leach ("Salt Horst") Anomaly

c) "Washout" Anomaly

Source: Modified from Hardy and Halabura, 2008

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7.4 Mineralization

The term "sylvinite" is used to describe the mineralogical character of a potash-bearing rock, predominantly comprised of the minerals sylvite and halite with subordinate amounts of other evaporite minerals. The term "carnallitite" is used to describe the mineralogical character of the potash and magnesium-bearing rock when it is composed primarily of the minerals carnallite and halite. For the purposes of nomenclature when completing the detailed description of the drill holes, sylvinite is considered to have $\geq 15\%$ sylvite and carnallitite is considered to have $\geq 40\%$ carnallite within the core. Sylvinite and carnallitite may also contain variable concentrations of impurities including anhydrite, dolomite crystals and clay minerals that are jointly identified in chemical assay reports as water insolubles. Other substances regarded as impurities that are commonly found in sylvinite include carnallite and anhydrite.

Potassium mineralization is identified from well data and consists of the Patience Lake, Belle Plaine, and Esterhazy Members.

Patience Lake Member: is dominantly carnallitite ($\geq 40\%$ carnallite) with local sylvite mineralization in the upper parts. The Patience Lake Member is typically recognized for its characteristic clay-rich nature, with several laterally extensive clay seams and zones of high insoluble content.

Belle Plaine Member: can be divided into a relatively homogeneous Upper Belle Plaine Member (UBPM) consisting of an interlayering of carnallite rich beds with minor halite rich beds and a Lower Belle Plaine Member (LBPM) consisting of an interlayering of halite rich beds with some carnallite and subordinate carnallite rich beds. Towards the bottom of this Member, thin sylvite rich beds usually occur.

Esterhazy Member: is generally sylvinitic within the Property. Carnallite is present as intercrystalline disseminations. The mineralization is observed to generally occur within two to three distinct higher grade sylvite zones, separated by sylvite bearing rock salt. Based on the average KCl concentration they can be grouped together in one or two mineralized zones that have solution mining potential.

Within the Project area, the typical sylvinitic interval consists of a mass of interlocked sub-hedral to euhedral sylvite crystals that range from reddish orange or pink to translucent in colour. Sylvite may be enveloped by greenish-grey clay or bright red iron oxides, with minor intercrystalline halite disseminated throughout the interval. Local coarse (greater than $2.0 - 2.5\mathrm{cm}$) cubic translucent to milky white halite crystals may be present within the sylvinite groundmass. Overall, the sylvinite ranges from a dusky brownish red colour (lower grade, $23.0\%$

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to 27.0% K₂O grade with an increase in amount of insoluble) to a bright, almost translucent pinkish orange colour (high grade, 30.0%+ K₂O).

Carnallite consists of aggregated crystal masses of very coarse interlocking amorphous carnallite with minor inclusionary halite and interstitial insoluble. Carnallite commonly exhibits a dark red to bronze colour and may grade locally to shades of very pale pink or may be nearly colourless. Carnallite crystals often display a characteristic variegated colour zoning, plastic texture, and vitreous luster along broken and cut core surfaces. Due to its extremely fragile nature, core preservation during drilling varied within the carnallite intervals ranging from very good to poor and rubbly composition. Intervening barren halite beds between potash members typically consist of brownish red, vitreous to translucent halite with minor sylvite and increased clay content.

The carnallite modelling and interpretation was derived from the original Wynyard 3D seismic study (Tetra Tech, 2010), focused on identifying carnallite responses within the Prairie Evaporite sequence. The analysis involved building models to recreate various lithological scenarios within potash members beneath the Second Red Bed horizon, specifically targeting the Patience Lake, Belle Plaine, and Esterhazy members.

Carnallite-rich well, DH-11 located in the western portion of the survey area, was selected to replicate the subsurface environment. Well log information indicated high concentrations of carnallite in the Patience Lake and Belle Plaine members. The logs included sonic, neutron porosity, and gamma ray data, with the gamma ray log used to determine the thickness of the potash zones based on the gamma ray response.

The modelling revealed three distinct effects of carnallitite at each stratigraphic level, primarily a combination trough/peak centred over the carnallitic portion of the model. These effects were observed on the seismic data and matched well with the model. Carnallite's water content and significant density contrast to surrounding halite create a measurable trough/peak combination on seismic data, which can be calibrated and mapped using root mean square (RMS) amplitude calculations. Figure 7-14 and Figure 7-15 show Tetra Tech's proprietary RMS carnallite probability interpretations for the Patience Lake and Belle Plaine Members that suggest that carnallite mineralization is continuous over these Members in the Property.

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Figure 7-14: Patience Lake Carnallite Probability Map

Source: Modified after Tetra Tech, 2012

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Figure 7-15: Belle Plaine Carnallite Probability Map

Source: Modified after Tetra Tech, 2012

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The type section in Figure 7-4, and Figure 7-9 to Figure 7-11 illustrate the distribution of sylvite and carnallite throughout the three potash members within the exploration wells and provides a spatial representation of the mineralization present within the exploration wells. The seismic and drilling data provide confidence to the interpretation that much of the Project area is underlain by the Prairie Evaporite salt with persistent carnallite mineralization within the Patience Lake and Belle Plaine Members and sylvite mineralization within the Esterhazy Member. Carnallite and sylvite content of the Belle Plaine and Patience Lake Members can vary, and carnallite may be partially or completely replaced by sylvite in places. It is QP Stirrett's experience that such mineralogical variations may be local and quite variable and suggest that carnallite-sylvite relationships observed within the Prairie Evaporite Formation are the product ofpost-depositional fluid rock-interactions and alterations.

7.5 Carnallite Distribution and Solution Mining of Patience Lake and Belle Plaine Members

Conventional or solution mining operations currently operating in Saskatchewan are all based on sylvinite and consider the presence of appreciable amounts of carnallite in the deposit as negative because their mining and processing methods are not designed to process the carnallite. However, the Project is designed to recover both potassium and magnesium from high-grade carnallite and low-grade sylvinite beds using solution mining techniques.

In the proceeding subsections the Potash Members of the Prairie Evaporite Formation have been discussed in terms of the geology interval (the first point of potash mineralization). In the following discussion the geology interval will be refined to the mining interval for the purpose of the mineral resource and mineral reserve estimation. This interval differs from the geology interval in that a grade cut-off is used to determine the top and base of the respective intervals (rather than the first sign of potash mineralization).

The mineable carnallite interval within the Patience Lake Member is defined as the upper mineralized seam below the Second Red Bed Member with a thickness over 2 m. From the base of the Second Red Bed Member, the first sample with KCl content over 15% is the top of the mineable carnallite. The mineable bed is defined when the length weighted average with previous and next samples (three to five samples in total about 1 m length) demonstrates a KCl content above 15% and the following average samples below also have an average KCl content above 15%. The base of the Patience Lake Member is defined by the first sample where the length weighted average with previous and next samples (in total three to five samples about 1 m in length) is below a KCl content of 15%.

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In the southern half of the Project area, appreciable amounts of sylvite are present in the upper part of the Patience Lake Member. Locally, (e.g., KW 3B4-26) the Patience Lake Member has sylvinitic upper sub-members and carnallite lower sub-members. In these areas the thickness of the Patience Lake Member is typically reduced.

The mineable carnallite horizon of the Belle Plaine Member was developed for the 2011 feasibility study (Foster Wheeler and ERCOSPLAN, 2011) using a similar procedure as with the Patience Lake Member and is defined as the Upper Belle Plaine Member (UBPM) and is the same for this updated study. The remaining Lower Belle Plaine Member (LBPM) will be used for undercut leaching but has been extended to below the geological boundary to have adequate thickness for the undercut. The lower boundary is located just above the first insoluble rich seam that occurs below the geological boundary. The brine from the undercut leaching will be recycled to pre-concentrate the dissolution brine for the solution mining of the UBPM and the Patience Lake Member and therefore should be considered part of the resource. For this reason, the Belle Plaine Member for solution mining is divided into a productive horizon and a cavern preparation horizon that has lower grades and lower recovery rates.

Mineralization has been shown in previous studies to be amenable to solution mining methods for the Patience Lake Member and UBPM as well as the LBPM. The thickness and composition of the mineable part of the Patience Lake Member for DH-11 and the Karnalyte exploration wells are given in Table 7-2. The thickness and composition of the mineable part of the UBPM as well as the LBPM for DH-11 and the Karnalyte exploration wells are given in Table 7-3 and Table 7-4, respectively.

Table 7-2: Thickness and Composition of the Carnallitite Horizon of the Patience Lake Member

Well ID	Depth From (m)	Depth To (m)	Thickness (m)	Carnallite (%)	Sylvite (%)	Halite (%)	Bischofite/ Tachyhydrite (%)	Anhydrite (%)	Insoluble Material (%)
DH-11	929.90	937.44	7.54	70.42	0.35	23.59	2.53	0.46	3.43
DH-20	934.83	942.51	7.68	61.25	0.74	27.39	2.36	0.85	7.39
DH-21	921.33	926.84	5.51	68.80	0.05	25.07	1.58	0.57	3.90
KW 2-24	911.40	919.03	7.63	66.18	2.36	25.52	1.23	0.45	3.96
KW 2C6-32	1,000.92	1,008.79	7.87	70.81	0.10	22.60	2.59	0.50	3.80
KW 4B14-24^{1}	1,007.97	1,020.98	13.01	37.70	11.38	43.76	2.20	0.80	4.65
KW 4D14-21	1,014.11	1,022.06	7.95	68.27	0.03	23.15	2.70	0.66	5.35
KW 13-36	970.79	976.90	6.11	60.54	6.56	26.16	1.95	0.62	4.55
KW 3C4-8	965.12	973.11	7.99	70.92	0.02	22.34	1.49	0.58	4.57
KW 3B4-26	1,000.80	1,003.85	3.05	33.84	21.24	37.67	1.67	0.66	5.18
KW 2A11-12	942.03	950.13	8.10	71.69	0.01	20.91	2.91	0.53	3.86
KW 3A11-27	992.94	999.54	6.60	63.97^{2}	0.31	28.81	1.91	0.48	5.24

Note: (1) KW 4B14-24 can be divided into two mineralogical domains, a lower carnallite rich domain and upper sylvite rich domain; (2) Due to core loss composition is partly estimated from geophysical logging.

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Table 7-3: Thickness and Composition of the Upper Part of the Carnallitite Horizon of the Belle Plaine Member

Well ID	Depth From (m)	Depth To (m)	Thickness (m)	Carnallite (%)	Sylvite (%)	Halite (%)	Bischofite/ Tachyhydrite (%)	Anhydrite (%)	Insoluble Material (%)
DH-11	946.27	956.14	9.88	66.04	0.31	29.82	2.13	0.38	2.46
DH-20	951.14	960.83	9.69	66.99	0.20	27.00	2.92	0.39	2.96
DH-21	936.48	946.93	10.45	70.72	0.77	25.30	1.41	0.84	1.84
KW 2-24	927.40	936.52	9.12	70.83	0.05	24.57	2.02	0.33	2.88
KW 2C6-32	1,017.57	1,026.51	8.94	69.61	0.02	25.34	2.09	0.36	2.37
KW 4B14-24	1,030.78	1,039.96	9.18	60.30	5.19	34.48	-	0.17	-
KW 4D14-21	1,030.62	1,039.64	9.02	69.90	0.77	24.22	2.30	0.45	2.57
KW 13-36	985.20	993.82	8.62	64.81	1.42	29.48	1.76	0.38	2.41
KW 3C4-8	982.15	992.13	9.98	70.66	0.09	24.23	2.50	0.37	2.25
KW 3B4-26	1,012.13	1,021.26	9.13	68.68	0.02	25.41	3.38	0.28	2.33
KW 2A11-12	959.26	968.40	9.14	62.24	1.22	30.90	1.68	0.53	3.56
KW 3A11-27	1,007.75	1,018.18	10.43	70.58	1.71	23.66	2.01	0.36	1.85

Table 7-4: Thickness and Composition of the Lower Part of the Carnallitite Horizon of the Belle Plaine Member

Well ID	Depth From (m)	Depth To (m)	Thickness (m)	Carnallite (%)	Sylvite (%)	Halite (%)	Bischofite/ Tachyhydrite (%)	Anhydrite (%)	Insoluble Material (%)
DH-11	956.14	962.8	6.66	15.75	4.30	78.20	0.00	0.66	1.55
DH-20	960.83	966.4	5.57	27.78	9.73	58.71	1.01	0.47	2.83
DH-21	946.93	953.28	6.35	22.64	9.00	65.36	0.81	0.58	2.09
KW 2-24	936.52	942.60	6.08	36.09	3.78	55.64	1.20	0.45	3.18
KW 2C6-32	1,027.29	1,032.52	5.23	32.86	0.38	61.93	1.12	0.56	2.90
KW 4B14-24	1,039.96	1,045.65	5.69	29.89	3.89	62.45	1.22	0.33	2.46
KW 4D14-21	1,039.64	1,045.62	5.98	30.95	1.30	63.03	1.18	0.42	3.09
KW 13-36	993.82	1,000.01	6.19	34.84	0.32	60.24	1.01	0.44	3.20
KW 3C4-8	992.13	997.26	5.13	27.25	7.94	59.83	1.05	0.35	3.56
KW 3B4-26	1,021.26	1,027.45	6.19	31.89	4.42	59.66	1.30	0.25	2.54
KW 2A11-12	968.40	973.78	5.38	32.02	5.91	57.73	1.03	0.39	2.81
KW 3A11-27	1,018.18	1,023.20	5.02	28.07	6.21	62.83	0.55	0.33	2.12

7.6 Sylvite Distribution and Solution Mining of the Esterhazy Member

The potash mineralization in the Esterhazy Member is developed as sylvite. The Esterhazy Member is relatively thick (15–18 m). The top of the Esterhazy Member (geology interval) is defined at the top of the first sylvinite bed occurring immediately below the "Interbed 2" salt, which separates the Esterhazy from the overlying Belle Plaine Member and is approximately

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30 m in thickness. The Esterhazy lower boundary is placed at the base of the lowermost sylvinite bed. Commonly the contact is abrupt and noticeable based on crystal sizes and texture but is not bound by distinct clay marker beds. The examination of assays for the drill holes within the permit areas shows that in the Esterhazy Member, the concentration of sylvite (KCl) is highly variable and ranges from less than 5% to locally over 60% in a sample from 20 cm length.

The Esterhazy Member has been divided into zones that are considered technically and economically suitable for solution mining. This is when the thickness of the productive mineralized zone exceeds 2 m and the average KCl content over the productive horizon exceeds 20%. These parameters are required to obtain from a cavern a significant volume of brine rich enough in KCl to stay within the specifications of the planned process.

With this strict KCl grade criterion, the number and thickness of the one or two mineable zones is reduced. Wells KW 3C4-8 and KW 3B4-26 do not contain a mineable horizon within the Esterhazy Member. Wells KW 3A11-27, KW 2A11-12 and KW 4D14-21 contain one mineable horizon within the Esterhazy Member, whereas for the wells DH-11, DH-20, DH-21, KW 4B14-24 and KW 13-36 two mineable horizons could be identified in the Esterhazy Member.

The thickness and composition of the first mineable part of the Esterhazy Member as well as the locally present second part of the mineable part of the Esterhazy Member for DH-11 and the Karnalyte exploration wells are given in Table 7-5 and Table 7-6, respectively.

Table 7-5: Thickness and Composition of the First Mineable Part of the Sylvinite of the Esterhazy Member

Well ID	Depth From (m)	Depth To (m)	Thickness (m)	Carnallite (%)	Sylvite (%)	Halite (%)	Bischofite/ Tachyhydrite (%)	Anhydrite (%)	Insoluble Material (%)
DH-11	989.63	993.6	3.96	2.66	20.16	74.18	-^{1}	-^{1}	3.00
DH-20	994.48	997.05	2.57	15.06	22.44	59.64	0.25	0.74	2.39
DH-21	989.89	992.14	2.25	4.97	23.87	69.64	0.66	0.24	1.54
KW 2-24	971.21	974.38	3.17	11.91	27.36	59.45	0.05	0.22	1.21
KW 2C6-32	1,060.38	1,062.41	2.03	16.64	25.9	55.59	0.61	0.18	1.29
KW 4B14-24	1,074.51	1,076.82	2.31	13.27	19.77	65.86	0.00	0.61	1.14
KW 4D14-21	1,073.65	1,076.65	2.00	15.23	16.08	65.71	0.18	0.96	1.68
KW 13-36	1,028.10	1,030.32	2.22	10.77	20.27	66.71	0.1	0.79	1.66
KW 3C4-8	-	-	-	-	-	-	-	-	-
KW 3B4-26	-	-	-	-	-	-	-	-	-
KW 2A11-12	1,013.95	1,017.37	3.42	4.42	23.55	71.26	0.00	0.46	0.18
KW 3A11-27	1,050.49	1,052.74	2.25	12.45	31.67	51.89	0.43	0.35	2.81

Note: (1) Not enough components reported in the chemical analysis to estimate the amounts of these minerals

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Geological Setting and Mineralization

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 7-6: Thickness and Composition of the Second Mineable Part of the Sylvinite of the Esterhazy Member

Well ID	Depth From (m)	Depth To (m)	Thickness (m)	Carnallite (%)	Sylvite (%)	Halite (%)	Bischofite/ Tachyhydrite (%)	Anhydrite (%)	Insoluble Material (%)
DH-11	1,003.35	1,005.79	2.44	6.21	25.25	68.11	-1	-1	0.43
DH-20	1,008.30	1,011.58	3.28	6.19	19.12	73.38	0.00	0.77	0.56
DH-21	993.95	997.27	3.32	5.16	23.84	69.54	0.31	0.36	0.61
KW 2-24	985.99	989.06	3.07	7.10	22.88	69.46	0.11	0.59	0.26
KW 4B14-24	1,080.37	1,082.36	1.99	6.76	36.22	55.90	0.15	0.31	1.13
KW 13-36	1,041.77	1044.45	2.68	6.06	19.06	73.81	0.00	0.73	0.26

Note: (1) Not enough components reported in the chemical analysis to estimate the amounts of these minerals

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Geological Setting and Mineralization

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The basis for the Project is the potassium and magnesium mineralization in the three salt members of the Prairie Evaporite Formation; the Patience Lake, Belle Plaine and Esterhazy Members. The stratigraphy of the Prairie Evaporite Formation, the overlying Dawson Bay Formation and underlying Winnipegosis Formation is well documented in the literature.

Potassium salt deposits are a type of industrial mineral deposit that occurs primarily within sequences of salt bearing evaporite sediments; the potassium mineral accumulations are hosted within the bedded halite layers of these evaporitic sequences. The extreme solubility of potassium salts results in their formation in only highly restricted settings (e.g. sabkhas, barred intracratonic seas, and evaporative lakes) where they precipitate from solution only toward the end of the evaporite depositional series (Warren, 2006). These extremely soluble salts are commonly referred to as the bittern series. Potassium salts are precipitated from these concentrated evaporating brines as chemical sediments that are deposited at or very near the depositional surface as the basin approaches desiccation. Progressive solar distillation of these salt-rich brines results in sequentially precipitated beds of limestone (CaCO_{3}), dolomite (CaCO_{3}·MgCO_{3}), anhydrite (CaSO_{4}), halite (NaCl), carnallite (KCl·MgCl_{2}·{6}H{2}O), sylvite (KCl), kieserite (MgSO_{4}.H_{2}O), and other calcium and magnesium salts. Their geologic provenance therefore dictates that potassium salt deposits are typically confined to relatively narrow stratiform intervals and, excluding deformation, erosion, and other post depositional destructive processes, nearly all potash deposits will exhibit some degree of lateral continuity.

Most of the world's rock salt and potassium salt resources are extracted from these types of deposits, as in the majority of the Canadian deposits, using conventional mining methods (Warren, 2006). In situations where the deposit cannot be conventionally mined, solution mining may be employed. Solution mining for potassium is performed by injecting water or nearly saturated sodium chloride brine into the deposit to dissolve potassium bearing minerals. After some time, the potassium-bearing brine is recovered from the mine cavern and subsequently crystallized on the surface into potassium salts, which are then refined into the desired end-product. Because of the immense size of many potassium salt deposits, a potassium salt processing facility may exploit a single deposit for decades.

This Report proposes that potassium salt deposits can be either simple or complex in mineralogical character. The potassium salt deposits underlying the prairies of Saskatchewan, Canada, can be considered simple potash deposits of either sylvinite or carnallitite. Other deposits, such as several European potassium salt deposits, may have a more variegated bittern salt mixture and other exotic contaminant species. These deposits are considered to have a complex mineralogical character.

Traditional potassium mining in Saskatchewan is based on sylvite bearing deposits. Generally, the presence of carnallite is considered undesirable in these operations as the processing plants can only handle up to 6% carnallite in the mill feed or even less in solution mining operations. There are no carnallite based potassium salt operations in Saskatchewan, but that has no consequence for the feasibility of the Project as the use of carnallite as the basis for KCl production has a long history in other jurisdictions and uses proven technology.

Based on 100 years of proven and optimized process design used in Germany, comparable to the design proposed for this Project, and the sizeable thickness of carnallitite within the Property, the deposit is considered well suited for solution mining. Existing carnallite operations show that the resulting KCl and MgCl_{2}-rich brine can be processed into potassium and magnesium products.

In contrast to potash with a single major use, the use of magnesium bearing products is more diverse and the sources for production of magnesium bearing products are much larger. These sources range from magnesium bearing salts like, carnallite, bischofite and magnesium sulphates (epsomite, kieserite) over naturally occurring magnesite (MgCO_{3}) to serpentinite, and occasionally sea water has also been used. Karnalyte plans to use the MgCl_{2} present in carnallite as a basis for producing hydromagnesite (Mg_{5}(CO_{3}){4}(OH{2})(H_{2}O)_{4}).

Potassium and magnesium concentrations are reported in the chemical assay reports as weight percent (wt.%) (di) potassium oxide (K_{2}O) and magnesium oxide (MgO), although the potassium and magnesium in the rock are present as KCl and MgCl_{2}, respectively. This is a historically based analytical convention. The transformation factors are based on the relative molar weights. To transform K_{2}O to KCl the K_{2}O grade is divided by the factor 0.63, whereas for the transformation of MgO to MgCl_{2} the MgO grade is divided by 0.42. Based on the reasonable assumption in Saskatchewan that MgCl_{2} is the limiting factor for carnallite content, the carnallite concentration is estimated by multiplying the MgCl_{2} content by a factor of 2.92. By multiplying the estimated carnallite by a factor of 0.27 the amount of KCl assigned to carnallite is estimated. The difference between KCl content calculated from analyzed K_{2}O content and the KCl assigned to carnallite is assigned to the mineral sylvite. Throughout this Report the concentrations of carnallite and sylvite are reported and can be converted to equivalent KCl/K_{2}O or MgCl_{2}/MgO using the scheme outlined above.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

9.0 EXPLORATION

Exploration on the Property has been limited to seismic surveys along with the drilling that has been used as a basis for mineral resource estimation. The results from the exploration programs were used to generate geological maps including isopach's, structure and anomaly maps that were used in the interpretation of Property geology.

9.1 Seismic Surveys

In the late 1960s the Saskatchewan Department of Energy and Mines (Holter, 1969) published a regional interpretation of potential seismic anomalous areas, based on the southern Saskatchewan composite seismic map published by the Saskatchewan Department of Mineral Resources (Sawatzky, 1968). These interpretations are included in Figure 9-1 to illustrate the potential areas in relation to the Property. The interpreted salt dissolution and collapse occur within the southeastern portion of the Property. These anomalies are expressed as structural lows identified and mapped on a reflector within the Upper Devonian strata. Surveys of this vintage do not provide sufficient information to confidently define deleterious anomalies that would affect portions of the potash resource. QP Stirrett recommends additional seismic investigations be undertaken to help evaluate the resource potential for the central and western part of KL 246 should future mining be considered in this area.

Karnalyte first shot a 3D seismic program over the northern portions of KLSA 010 and KL 247A of the Property in 2008 that covered $34.5\mathrm{km}^2$. The information from this survey was utilized to determine drill hole locations and identify any major subsurface anomalies. In 2009 the second 3D seismic program was completed and extended the 3D seismic data to the south of KLSA 010 and KL 247A and to the east of the 2008 program. This program covered $71\mathrm{km}^2$. Both the source and receiver spacing was $60\mathrm{m}$ resulting in a $30\times 30\mathrm{m}$ square bin. To image an anomaly, the anomaly must be three to four bins wide. The data acquisition was completed by Eagle Canada, Inc. out of Calgary, Alberta using a 24 bit - ARAM ARIES telemetry system. Fold plots at offsets of 800, 1,000, and $1,200\mathrm{m}$ were generated as a quality control tool to assess the quality of the seismic data. It was determined the Prairie Evaporite is in line with the $1,000\mathrm{m}$ offset with a maximum fold coverage of approximately $1,500\%$ (where the subsurface point is measured 15 times) (Costello and Edgecombe, 2010). Figure 9-1 illustrates the total seismic coverage area based on both 3D seismic programs conducted in 2008 and 2009. Results from the seismic operations were used for exploration and drill hole targeting within the 3D seismic area covered.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

The results of the two 3D seismic surveys were interpreted by Boyd (2008, 2010) and anomaly structures were identified as depicted in Figure 7-12, Figure 7-14, and Figure 7-15. Figure 7-14 and Figure 7-15 also illustrate the 2012 Tetra Tech interpreted carnallite probability within the 3D seismic coverage area based on proprietary calculations applied to the amplitude. Determined areas of structural lows are treated as non-potash bearing and no mining is planned in these areas.

Figure 9-1: Historical Seismic Coverage around the Project Area and Location of 3D Seismic Investigations

Source: RESPEC, 2013

9.1.1 Carnallite Probability

In February 2012 Tetra Tech provided updated interpretations of the probability of carnallite using the results of the nine additional wells drilled in 2010/2011 (Figure 7-14 and Figure 7-15). The Wynyard 3D seismic data is of sufficient quality to qualitatively map the presence of carnallite. As carnallite has a significantly lower density than sylvite or halite, carnallite will often cause a seismic reflection to appear when present in sufficient thickness and grade. However,

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

RMS amplitude mapping is an approach that allows only qualitative interpretation. Mineral resources or mineral reserves are not included or excluded based on carnallite probability maps, due to the lack of information on grade and thickness. The probability maps are a tool used only to qualitatively assess the likelihood of carnallite mineralization.

The probability maps (Figure 7-14 and Figure 7-15) were compared with the drilling results for verification of the carnallite probability interpretations. The percentage of carnallite determined for each well correlated very well with the probability maps for the respective members. QP Stirrett considers the probability maps available are more than sufficient for identifying carnallite zones to support mineral resource estimation.

9.1.2 Risks Collapse Anomalies

Tetra Tech worked directly with RESPEC to evaluate the risk from collapse anomalies for a solution mining operation, which is lower than the risk from a collapse anomaly when using conventional mining methods.

A boundary containing a buffer around collapse features was defined based on the transition of the seismically inferred dip of the layering from a regional trend to the steep dip of the collapse (Figure 9-2). This definition shifts the historical well DH-10, which has a slightly reduced Patience Lake thickness with 0.4 m sylvinite overlying about 4 m of carnallitite to be just inside the buffer zone. There is, however, not enough data preserved from this hole to determine whether or not there is any other influence from the interpreted collapse on this hole. Nearby well KW 3B4-26, which is just outside the buffer zone, also shows a reduction in Patience Lake thickness, which is attributed to a back reaction of the carnallite of the upper sub-members to sylvite. The collapse feature seems to have influenced the thickness of the Patience Lake deposit, which is still considered mineable. It is therefore inferred that the defined collapse feature boundary provides enough safety margin around the collapse feature for a solution mining operation.

Eight collapse features defined in Tetra Tech (2010) were further detailed. Three features that were originally classified as class 1 features, were re-defined as class 2 features, which were interpreted as karst features in the overlying Devonian carbonates and as such not likely to affect the deposit. Class 1 anomalies are characterized by substantial removal of the Prairie Evaporite salts with significant breakage in the overlying Second Red Beds.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Figure 9-2: Illustration of the Definition of Collapse Boundary with Buffer

Source: Tetra Tech, 2011
Note: Well Name 01-27-031-16W2 = KW 3A11-27

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

10.0 DRILLING

A total of 18 wells are within the Project area with exploration drilling focused on mineral leases KLSA 010 (eight drill holes) and KL 247A (nine drill holes). Drilling on mineral lease KL 246 is limited to a single historical well (DH-04). Drilling on the Property is summarized in Table 10-1. All wells listed therein form the basis of the following discussion. Well locations for all holes drilled on the Property are shown in Figure 4-1. All well data presented and discussed are current as of the effective date of the Report.

Historical core holes were drilled using a hole diameter of 8.89 cm. The historical record states that all the coring was done with an oil emulsion mud or diesel fuel which remained in the well when borehole geophysical logs were taken. Theoretically this drilling fluid should not dissolve any of the evaporite minerals. Examination of the outer surfaces of cores from DH-10 and DH-11 conducted by RESPEC, formerly North Rim Exploration (North Rim) in 2008, confirmed that there was very little evidence of dissolution of minerals that could be attributed to the drilling process. Small intervals of etching and disaggregation were noted in DH-10 drill core, which may have been due to dissolution of a highly soluble mineral such as carnallite. In other locations, there was evidence of minor dissolution, but it is likely that this may have occurred when samples were cut for assay. In general, the condition of the core was excellent, indicating good drilling and core storage practices. Assessment and geochemical sampling of the core is further discussed in Section 11.

Karnalyte had two vertical holes drilled in 2009 by Crusader Drilling Corp. (Crusader), a Saskatchewan-based drilling company, utilizing oil-field drilling equipment capable of drilling to depths beyond that of the Prairie Evaporite Formation. The goal of this drilling campaign was to evaluate the carnallite mineral potential of the Devonian Prairie Evaporite Formation that was inferred from historical drilling and preliminary evaluation of the 3D seismic data. DH-21 was plugged and abandoned after wire line logging whereas DH-20 was left open and filled with drilling mud that would not react with carnallite as it would be used for eventual solution mining test work. A water source well (KW WSW 2-16-32-16) completed in the Mannville Formation was also drilled in 2009 by Crusader to evaluate and pump test the potential volume the formation can supply for production wells for solution mining.

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 10-1: Summary of Holes Drilled on the Property

Year	Well ID	Unique Well ID	Well Status	Formation at Depth	Company
Pre-2009	DH-04	101/01-23-031-15W2/00	Abandoned Strat Test Hole	Duperow	Marlea Exploration
	DH-08	101/09-23-031-16W2/00	Abandoned Strat Test Hole	Duperow	Tide Water oil
	DH-10	111/01-27-031-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Dominion Kandahar
	DH-11	101/01-20-032-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Mobile Wynyard
2009	DH-20	141/01-16-032-16W2/00	Completed Potash Solution	Prairie Evaporite	Karnalyte
	DH-21	111/09-15-032-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW WSW 2-16-32-16	121/02-16-032-16W2/00	Completed Water Source	Mannville	Karnalyte
2010/ 2011	KW 2-24	131/02-24-032-16W2/00	Completed Potash Solution	Prairie Evaporite	Karnalyte
	KW 2C6-32	121/06-32-031-16W2/00	Completed Potash Solution	Prairie Evaporite	Karnalyte
2011	KW 4B14-24	111/13-24-031-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 4D14-21	131/14-21-031/16W2	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 13-36	121/13-36-031-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 3C4-8	191/06-08-032-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 3B4-26	191/01-27-031-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 2A11-12	191/06-12-032-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
	KW 3A11-27	111/11-27-031-16W2/00	Drilled and Abandoned Potash Test Hole	Prairie Evaporite	Karnalyte
2013	KW SWD 4B6-14	191/11-16-032-16W2/00	Suspended Waste Disposal	Deadwood	Karnalyte
	KW WSW 1-21-32-16	121/01-21-032-16W2/00	Completed Water Source	Mannville	Karnalyte

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Karnalyte RESOURCES

Wynyard Project
Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

A further two-hole exploration program was completed in December 2010 to January 2011. The primary purpose of the two-hole program was to recover whole core samples to determine carnallite mineral potential and to recover core samples for geochemical (dissolution) and rock mechanical testing. The results of the geochemical and rock mechanical testing were used for cavern stability and subsidence modelling as well as for confirmation of the attainable production brine composition for the Project. The two-hole program drilled wells KW 2-24 and KW 2C6-32 that were licensed as potash solutioning wells and are currently suspended but could be used for future production/injection testing. Each of the wells had approximately 145 m of core recovered with approximately 10 m of complete core sections selected by ERCOSPLAN and used for rock mechanical and geochemical testing.

In 2011, Karnalyte completed a seven-hole drilling program consisting of one vertical well and six directional wells. The six wells were drilled using directional drilling due to unfavourable drilling conditions at surface, such as a slough or low-lying area. The directional wells were drilled as "S" style wells which allowed for the correct bottom-hole locations to be reached, while remaining vertical throughout the Prairie Evaporite. The "S" style well allowed for the cored interval lengths to be the same as the true vertical thickness. The maximum deviation in all wells was throughout the upper sections of the well in the "S" curve.

Coring operations throughout the Prairie Evaporite Formation were completed successfully on the Karnalyte wells with exceptions on the DH-21, KW 4B14-24 and KW 3A11-27 wells. Coring reports completed by Blackie's Coring Services of Estevan, Saskatchewan (Blackie's Coring) indicate where loss occurred within the potash-bearing members. Completion of depth correction via geophysical wireline logs conducted by RESPEC confirmed that for DH-21 loss occurred within the first core barrel with a determined thickness of 3.04 m of the Upper Patience Lake Member, KW 4B14-24 had 8.07 m of unrecovered core through the Belle Plaine, KW 4D14-21 had 2.41 m of loss spanning the Salt Back, Upper Patience Lake contact and KW 3A11-27 had 7.64 m missing through the Patience Lake Member. Upon completing wireline logs all wells except DH-20, KW 2-24 and KW 2C6-32 were plugged and abandoned as per Saskatchewan Oil and Gas Regulations, 1985.

In 2013, two additional wells were completed, one of which was a brine disposal well (KW SWD 4B6-14) and the other a water source well (KW WSW 1-21-32-16). The brine disposal well was drilled to determine injection rates into the Deadwood Formation for solution mining operations by Nabors Drilling. As of the effective date of this Report, the brine disposal well is currently suspended and not actively injected. The wellsite geology report indicates no cores were taken from the Prairie Evaporite Formation; however, the wireline log confirms the presence of all three of the potash-bearing members. The water source well completed by Friesen Drilling targeted the Mannville Formation to evaluate the potential volume the formation can supply for production drill holes for solution mining.

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

10.1 Drilling Procedures

The following discusses the drilling procedures conducted for the 2009-2013 potash exploration drilling programs outlined in the Geological Wellsite Reports.

10.1.1 2009 Drilling Procedures

For each well drilled in 2009:

Casing was drilled with a 349 mm diameter bit and gel slurry drilling mud to a depth at which the surface casing was to be set.
Drilled ahead 222 mm diameter hole from surface casing to core point with water-based mud. Core point was set above the Prairie Evaporite Formation and in the Second Red Beds.
Ran a retrievable intermediate casing string to core point.
Drilling fluid was switched to invert from core point to total depth of hole.
Made up 156 mm core barrels and cored down into the Prairie Evaporite Formation to the base of the Esterhazy Member, or until no visible sylvite was present at the base of the cored interval.
Drilled ahead with a 156 mm diameter bit to total depth of well.
Geophysical logs were conducted for the open-hole section from casing to total depth.

10.1.2 2009 Water Source Drilling Procedure

For the water source well drilled in 2009:

Casing was drilled with a 298 mm diameter bit to a surface casing depth of 110 m.
Drilled ahead 219 mm diameter hole to 467 m and set intermediate casing.
Stainless steel screen set from 467.0 to 535.0 m in Mannville Formation.

10.1.3 2010/2011 Drilling Procedures

For each well drilled between 2010 and 2011:

Drill a 270 mm diameter hole with Gel Chem water-based mud from surface casing to core point just above the Devonian First Red Bed Formation. Wireline log the open hole.
Core ahead with a 199 mm core bit through First Red Beds and Dawson Bay to intermediate casing point in the Second Red Beds just above the Prairie Salt.

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Wireline log the open hole, then run and cement a 219.1 mm intermediate casing string.
Displace the fluid in the hole with mineral oil and core ahead out of casing with a 199 mm core bit through the Prairie Evaporite Formation potash zones to the barren salt below the basal Esterhazy potash member.
Drill ahead to supply some overhole for wireline logging and log the open hole from casing point to total depth.
Rig out drilling equipment and secure wellhead for future use in potential solution mining operations.

10.1.4 2011 Drilling Procedures

For each well drilled in 2011:

Drill a 222 mm diameter directional hole with Gel Chem water-based mud from surface casing to core point with directional tools to the Devonian Basal Dawson Bay just above the Second Red Beds Formation.
Wireline log the open hole, then run and cement a 177.8 mm retrievable casing string.
Displace the fluid in the hole with mineral oil and core ahead out of casing with a 156 mm core bit through the Basal Dawson Bay and into the Prairie Evaporite Formation potash zones to the barren salt below the basal Esterhazy potash member.
Drill ahead to supply some over hole for wireline logging and log the open hole from casing point to total depth.
Retrieve the intermediate casing string, plug and abandon the well, rig out drilling equipment.

10.1.5 2013 Disposal Well Drilling Procedures

For the disposal well drilled in 2013:

Drill a 311 mm diameter directional hole with water-based salt mud from surface casing to intermediate casing point in the top shale section of the Deadwood Formation.
Wireline log open hole from intermediate casing point to surface casing.
Run a non-retrievable intermediate casing string.
Drill ahead with a 215.9 mm bit through the Deadwood Formation and into the Precambrian basement below to supply sufficient over hole for wireline logging tools.
Wireline log the open hole from total depth to intermediate casing point.
Complete the well with production casing/liner for future saltwater disposal purposes.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

10.1.6 2013 Water Source Drilling Procedure

For the water source hole drilled in 2013:

Drill a 406.4 mm diameter hole to surface casing set at depth of 94 m.
Drill ahead 273.1 mm diameter hole to 439 m and set intermediate casing.
Stainless steel screen set from 439 to 510 m in Cantuar Formation.

10.2 Core Handling Procedures

Coring and core retrieval was completed by Blackie's Coring and Superior Coring of Calgary, Alberta (Superior Coring). Upon completion of coring, the retrieval of core from the core barrel was carried out following procedures to minimize the exposure time of carnalite to humidity. Procedures were followed to ensure the stratigraphic sequence of the core was maintained and to prevent loss of material. In addition to the core hands, the drill supervisor, well-site geologist and a RESPEC project geologist/engineer supervised each core retrieval process for all wells.

The core retrieval and shipment procedures are summarized as follows:

Waxed cardboard core boxes were sequentially numbered and labelled with the drill hole name, land location, depth interval, and core number. The empty boxes were stacked in ascending numeric order in the doghouse, ready to be filled upon core retrieval.
A safety meeting was held with the core hands, drill crew, and geologists prior to core retrieval. This meeting was a forum to review the retrieval process and to identify safety concerns.
The core was retrieved from the barrel and was broken by hammer into lengths approximately equivalent to that of the core boxes. Upon retrieving a length of core, the core hand would make a mark on the stratigraphic bottom of each core length.
The individual core lengths were immediately wrapped in plastic wrap inside the doghouse. The core was then placed in a plastic bag along with a desiccant (rice). The plastic bags were sealed by heat sealing the ends or by tightly taping the ends closed.
The core was then ready to be boxed. Individual core lengths were placed into core boxes in stratigraphic order.
Upon completion of core retrieval procedures, the core was ready for shipment to Saskatoon for sampling and detailed logging. The core boxes were carried down from the rig and were organized into a hot-shot trailer or van.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

The core was trucked to RESPEC's Saskatoon core laboratory by Superior Coring or Blackie's Coring hotshot service. Core sampling and detailed logging was completed at the laboratory (see Section 11).

In the opinion of QP Stirrett the drilling and core handling was performed in such way that any potential non-recognized recovery problems will not materially affect the accuracy and reliability of the results reported.

10.3 Summary of Coring, Recovery, and Drill Intercepts

Table 10-2 summarizes the Karnalyte exploration well intercepts from the 2009-2011 drilling programs and outlines depth and thickness of the member as well as the cored intervals and associated recoveries. The thickness indicated for the individual potash-bearing members are reflective of the geological unit and clay seam marker beds and is not representative of the thicknesses of the high-grade mineable units. As noted above, loss of core within the Prairie Evaporite Formation occurred in four wells (DH-21, KW 4B14-24, KW 4D14-21, and KW 3A11-27) and the Recovery Factor (RF) reflects these losses in the summary table. The RF is derived from the percentage of core recovered throughout the cored interval.

10.4 Geophysical Logging

After all cores were recovered from the wells, geophysical logging tools were run from total depth to intermediate casing point by Baker Hughes (formerly Baker Atlas) of Calgary, Alberta. These geophysical logs were completed to provide Karnalyte with detailed down-hole information that can be used to cross-reference lithology, mineralogy, geochemical assay data, and to depth-correct all cores.

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Table 10-2: Summary of Drill Intercept

Well ID	Coring Start TVD^{1} (m)	Coring Stop TVD^{1} (m)	RF^{2} over Cored Interval (%)^{1}	Formation Loss	Max. Deviation (degree)	Patience Lake Thickness (m)	Belle Plaine Thickness (m)	Esterhazy Thickness (m)	Spud Date
DH-20	933.00	1,038.50	100.0	-	<1	8.00	14.97	17.38	10.09.2009
DH-21	911.00	1,034.40	92.7	Upper Patience Lake	<1	7.81	15.54	16.69	01.10.2009
KW 2-24	859.23	999.44	99.4	Second Red Beds	8.8	9.56	15.00	17.36	12.12.2010
KW 2C6-32	929.56	1,078.45	99.4	BP – EZ Interbed Salt	8.5	7.98	15.39	16.85	01.05.2011
KW 4B14-24	994.37	1,102.11	92.9	Belle Plaine	25.7	15.00	14.94	17.51	03.29.2011
KW 4D14-21	995.49	1,102.53	98.3	Salt Back / Upper Patience Lake	26.4	12.40	15.00	15.69	04.20.2011
KW 13-36	953.90	1,065.38	100.0	-	1.7	6.50	14.81	16.48	04.20.2011
KW 3B4-26	983.35	1,092.07	100.0	-	28.4	3.04	15.32	18.15	05.02.2011
KW 3C4-8	940.00	1,046.39	97.5	Second Red Beds	46.5	8.66	15.11	16.78	05.05.2011
KW 2A11-12	925.46	1,032.68	100.0	-	10.2	8.34	14.69	16.06	05.13.2011
KW 3A11-27	983.78	1,088.03	95.1	Upper Patience Lake	11	11.22	15.45	16.40	05.18.2011

Note: (1) TVD = True Vertical Depth
(2) RF = The RF over all three potash bearing members

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The gamma log provides a depth-recorded dataset of the natural formation radioactivity and is displayed in American Petroleum Institute (API) units. As potassium isotope K-40 undergoes radioactive decay (which is read by the wireline gamma tool), the natural gamma log is then proportional to the potassium concentration of the Prairie Evaporite Formation. Therefore, the natural gamma log can be used to provide an estimate of the potassium grade. The spectral gamma ray measures the different radioactive elements (potassium, uranium, and thorium) that are predominantly found in the clay beds. The spectral gamma ray helps to identify clay-rich beds due to potassium-rich beds, especially when correcting the core depth. The density, neutron, and photoelectric logs are useful tools for assessing the mineralogy of the Prairie Evaporite Formation and the presence of impurities, such as clay, carnallite, and anhydrite. The induction tool is used for measuring formation resistivity and is useful for determining the type of fluid filling the pore space of rock formations. Multipole array acoustolog can indicate geological features, such as fractures and porosity which can provide information on the physical properties of the formation. The microimager tool provides high-resolution imaging of the formation that can capture thin beds, dip, and fractures. The following lists the geophysical wireline logging conducted for all drilling programs within the Property.

10.4.1 2009 Geophysical Wireline Program

The two wells (DH-20 and DH-21) from the 2009 drilling program were logged by Baker Hughes. For DH-20, logging was completed in two runs from the total depth of the well to intermediate casing, as well as intermediate casing to surface casing. For DH-21 logging was completed as one run, from the total depth to intermediate casing. The following lists the tools ran for the 2009 wireline logging program.

Multipole array acoustic log
Induction log
Spectral gamma
Cement volume log
Density neutron log
Compensated neutron.

The wireline program for the water source well KW WSW 2-16-32-16 was also logged by Baker Hughes where wireline tools were run at the determined interval depth of the Mannville Formation. The following lists the wireline tools ran.

Induction / gamma / caliper log
Slowness log
Magnetic resonance explorer log

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Sonic porosity log
Neutron porosity log
Density log.

10.4.2 2010/2011 Geophysical Wireline Program

Wells KW 2-24 and KW 2C6-32 were logged by Baker Hughes in three runs, listed in descending order from the Basal Souris River to surface casing, intermediate casing to approximately 800 m, and from total depth of the well to intermediate casing point. For all wireline logging runs, the following tools were run.

Induction log
Neutron density/gamma/caliper log
Sonic log.

10.4.3 2011 Geophysical Wireline Program

During the 2011 drilling program Weatherford International PLC. (Weatherford) conducted wireline logging for all seven wells. Two separate wireline logging runs were completed from the Dawson Bay to surface casing and the total depth of the well to the intermediate casing. For the second run (total depth to intermediate casing point), Weatherford ran the microimager tool. The following lists all tools ran by Weatherford as part of the 2011 drilling program.

Induction log
Neutron density/gamma/caliper log
Sonic log
Microlmager log.

10.4.4 2013 Geophysical Wireline Program

In 2013, the disposal well (KW SWD 4B6-14) was logged by Weatherford as two separate logging runs from intermediate casing to surface casing, and from total depth of the well to intermediate casing. The following lists the tools run by Weatherford.

Induction log
Compensated neutron log
Sonic log
Spectral pe density compensated neutron gamma ray log
Gamma ray and caliper log.

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The wireline program for the water source well (KW WSW 1-21-32-16), drilled in 2013, was also logged by Weatherford. Wireline tools were run from total depth of the well to surface casing. The following lists the wireline tools ran.

Induction log
Cased hole neutron porosity log
Sonic log
Spectral pe density compensated neutron gamma ray log.

10.5 Collar Survey

Prior to drilling, all well sites and access roads were surveyed using high-precision global positional system (GPS) and total station equipment. The surveys established exact well coordinates and lease boundaries. All wells were surveyed in accordance with Article XIII, Standards of Practice, Section 6 of the bylaws of the Saskatchewan Land Surveyor's Association (SLSA) (SLSA, 2023). The well site and access road were mapped to ensure regulatory compliance and operational efficiency as well as indicating presence of any underground facilities (SaskTel, SaskEnergy, SaskPower, or Transgas) within the well site and access roads.

10.6 Downhole Survey

Downhole surveys were conducted for deviated wells in conjunction with the wireline logging program to provide accurate measurements of the wellbore trajectory. Of the 18 wells drilled on the Property, 11 are deviated. Publicly available data indicates the historical wells are deviated; however, digital versions could not be sited. The deviation surveys completed during 2011 and 2013, were conducted from surface casing to intermediate casing, and intermediate casing to total depth of the well. A standard borehole navigation tool is run in the open hole well to measure the borehole deviation. The tool determines wellbore trajectory below the casing shoe by measuring magnetic and gravitational field components. It calculates real-time tilt and azimuth of the tool string, presenting results as measured depth (MD) and true vertical depth (TVD) in tabular form, along with polar and vertical section plots showing directional projections. For all recent drilling, the minimum curvature method was used to calculate the true vertical depth from the surveyed data locations down the borehole. Table 10-3 summarizes all wells drilled within the Property and indicates the company the survey was conducted by.

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Table 10-3: Summary of Downhole Survey

Well ID	Vertical/Directional	Conducted By
DH-04	Directional	Unknown
DH-08	Directional	Unknown
DH-10	Directional	Unknown
DH-11	Vertical	Not surveyed
DH-20	Vertical	Not surveyed
DH-21	Vertical	Not surveyed
KW WSW 2-16-32-16	Vertical	Not surveyed
KW 2-24	Vertical	Not surveyed
KW 2C6-32	Directional	Baker Hughes
KW 4B14-24	Directional	Weatherford
KW 4D14-21	Directional	Accurate MWD Systems Ltd.
KW 13-36	Vertical	Not surveyed
KW 3B4-26	Directional	Weatherford
KW 3C4-8	Directional	NuEra Oilfield Services
KW 2A11-12	Directional	Accurate MWD Systems Ltd.
KW 3A11-27	Directional	NuEra Oilfield Services
KW SWD 4B6-16	Directional	Accurate MWD Systems Ltd.
KW WSW 1-21-32-16	Vertical	Not surveyed

10.7 Interpretation of Drill Results

Table 10-1 outlines the well status for all drilling conducted on the Property. Of the total wells (18) drilled on the Property, a total well (14) were completed by Karnalyte; 11 were completed as potash solution wells or drilled and abandoned potash test holes. Two were completed as water source wells (KW WSW 2-16-32-16 and KW WSW 1-21-32-16), and one as a waste disposal well (KW SWD 4B6-14). The following section presents an interpretation of the drilling results based on the wells objective.

A geological interpretation of the drilling for all completed potash solution and drilled and abandoned potash test holes (11 wells) is outlined in Table 10-1 and illustrated in a series of cross-sections in Figure 7-9 to Figure 7-11. The cross-sections display the geophysical wireline data alongside the corresponding geochemical assay results for each potash member for all cored wells. Member thicknesses based on drill hole intercepts are listed in Table 7-1 as well as other geological interpretations based on drilling can be found in Table 14-2 to Table 14-6.

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Water source wells were drilled and tested to verify their capacity to meet the volume requirements of solution mining operations. The production testing was completed in the Mannville Formation to determine the formations capacity of water supply for wells, KW WSW 2-16-32-16 and KW WSW 1-21-32-16. The production testing was conducted by GeoEngineers Inc. (GeoEngineers). GeoEngineers through confirmation of the hydrogeological testing of both water source wells, confirmed that the Mannville Formation satisfies the criteria required to support solution mining operations. Based on projected production rates, 10 to 12 additional water source wells are recommended by GeoEngineers to ensure adequate supply from the formation. These findings reported by GeoEngineers (2013b, 2013c) support the suitability of the Mannville Formation as a primary water source for process operations.

Additionally, a waste disposal well, KW SWD 4B6-14, was drilled and tested to evaluate the feasibility of injecting waste brines generated during solution mining into the Deadwood Formation. Injectivity testing, conducted by GeoEngineers (2013a), confirmed that the Deadwood Formation meets the performance criteria required for effective waste disposal from solution mining operations.

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11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY

11.1 Introduction

Samples were taken from the cores of the exploration wells for geochemical analysis. The boundary conditions for current sampling procedures differ from historical core sampling, therefore slightly different methods and approaches were used. The sampling approach in 2009 also varies slightly from the procedures employed in the 2011 assay sampling procedures. The following discusses all the sampling efforts conducted by RESPEC and ERCOSPLAN.

11.2 Sample Preparation

11.2.1 Re-Sampling Historical Core

Of the four historical wells on the Property, DH-04 and DH-08 do not intersect the Prairie Evaporite, therefore no cored sections were available for further investigation. Historical wells DH-10 and DH-11 were examined by RESPEC personnel at the Saskatchewan Geological Survey's Subsurface Core Laboratory, located in Regina, Saskatchewan. Upon detailed examination of the core from both wells, RESPEC confirmed that the cored interval for DH-10 was not adequate for additional sampling based on the deteriorated condition of the core. However, DH-11 exhibited good preservation and core integrity, indicating that the core quality is sufficient to support the reliability of both historical and re-sampled assays. Based on historical assays for DH-11, RESPEC determined the original sampling procedures did not assess the entire mineralized zone; therefore, a supplementary sampling and assay program was undertaken by RESPEC in August 2008.

The following procedures were used in the 2008 re-sampling program for selecting and packaging the new samples for analysis for DH-11:

Drill core was measured and noted along with the historical samples. The intervals for new assay samples were selected to fill-in gaps left from the original historical sampling program. The new analysis combined with the historical data resulted in relatively comprehensive documentation of drill-core chemistry.
Samples were selected on the basis of drill core measurement only. The core was in variable states of preservation ranging from excellent to poor condition. The sample intervals, where possible, were determined from lithological boundaries, but in other cases on the basis of the set intervals. In total 117 new assay samples were collected.

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The samples taken for assay were numbered. The sample numbers were written in permanent ink on the inside of the core boxes.
The samples were placed in standard polypropylene sample bags which were labelled with the well name followed by a three-digit sample.
Labels were placed on the inside and outside of the bags.
The samples were heat sealed after bagging to prevent degradation by moisture.

The following procedures were used in the 2008 re-sampling program for preparing and shipping the new samples for analysis:

ADM Consulting of Saskatoon was contracted to cut and label the samples for geochemical assay. The cutting of the core was done at the Subsurface Core Laboratory, Saskatoon, a Saskatoon Government repository that is not accredited and is independent of Karnalyte.
After the samples were cut and bagged, personnel from ADM Consulting shipped the samples directly to the Saskatchewan Research Council's (SRC) Geoanalytical Laboratory in Saskatoon to be tested using SRC's basic potash analysis package.
Upon SRC's receipt of the samples, a packing slip was sent to SRC by RESPEC personnel to confirm the sample numbers of the submitted samples.
RESPEC personnel signed the packing slip to confirm the accuracy of the listed samples. Both RESPEC and SRC retained a copy of the slip for their records.
SRC provided written documentation of the job number indicating that the samples were entered into the processing queue.
Upon completion of the processing and assaying, the results of the analysis were compiled into tables by SRC and sent to RESPEC for review.

11.2.2 2009 Sampling Method

Two wells were completed during the 2009 exploration program which were logged and sampled by RESPEC. In 2009 the core was sampled only in the Patience Lake and Belle Plaine Members, whereas in 2011 all three potassium bearing members of the Prairie Evaporite were sampled including the Esterhazy Member.

The geochemical sampling interval of interest for the two drill cores ranged from several metres above the uppermost sylvinitic bed of the Patience Lake Member to approximately $15\mathrm{m}$ below the base of the Belle Plaine Member into the underlying interbed salt. The upper sampling

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boundary was set to capture the first mineralization of the Patience Lake Member, and the lower boundary was chosen to provide geochemical information for cavern design purposes should the deposit be amenable to solution mining. Therefore, not all the core was sampled for assaying including the Dawson Bay, Second Red Beds and the uppermost Salt Back.

In DH-20, 357 samples were taken over 90.6 m from 934.0 m to 1,024.60 m and in DH-21, 373 samples were taken over 90.3 m from 920.8 m to 1,011.1 m.

The core was examined, slabbed (i.e. cut in half lengthwise), marked for sampling, photographed, and crosscut on a box-by-box basis, which facilitated the integrity of the highly carnallitic core and minimized exposure to the atmosphere. Upon selection of the sampling interval, the plastic wrapping was removed from the individual core lengths and then was slabbed. Slabbing was completed in-house at the RESPEC core facility in Saskatoon, Saskatchewan (RESPEC facility) with a dry 2 hp band saw. RESPEC's facility is independent of Karnalyte. Saw blades were replaced when any breach of core integrity was noted (e.g. fracturing of crystals). After slabbing, the two complimentary core halves were placed back in the box in stratigraphic sequence with both cut surfaces facing up. The cut surfaces were wiped down with a damp cloth to remove any rock powder generated by the cutting process and to enhance the appearance of the rock during visual inspection. The upper core half was divided into sample intervals by drawing a straight line across the diameter of the core in permanent marker. The determination of sample intervals was based on several parameters outlined in Section 11.4.

Sample numbers for each interval were written on the slabbed core in permanent marker and a sample number tag was prepared. The core was then photographed. After photographing, each sample was measured to the nearest tenth of a centimeter (e.g. 25.4 cm). The length of each sample interval was recorded in a geological logging spreadsheet and a “depth from” and “depth to” was established for each sample number. The geological formation, member names (following established nomenclature), lithology, crystal sizes, and geological descriptions were recorded for each sample. Sample intervals and corresponding sample numbers were recorded on both cut surfaces. One of the marked core halves was cut into the designated sample intervals with the band saw and the other stored for further geological investigations. Each sample and corresponding sample tag were wrapped twice in plastic wrap to ensure the samples were not exposed to the atmosphere. Each wrapped core sample was then placed in a waterproof plastic bag, labelled with the sample number and put in pails for shipment. The samples were sent to SRC Geoanalytical. At SRC, the samples were crushed, split, and analyzed according to the parameters of the SRC basic potash analysis package (Section 11.3.2.1). Quality assurance and quality control (QA/QC) measures were strictly adhered to by SRC, including the use of standards, blanks and repeats throughout the analysis discussed in Section 12.0.

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Core recovery was excellent (with exception of core 1 in DH-21), and cutting of the drill core for slabbing and sampling purposes did not result in any notable material loss. Therefore, the accuracy and reliability of assay results were not compromised by these procedures. It is the opinion of QP Stirrett that the samples chosen for geochemical assay in 2009 were representative.

Figure 11-1 shows RESPEC's facility and storage warehouse in 2009.

Figure 11-1: RESPEC's Facility and Storage Warehouse

Source: RESPEC, 2009

11.2.3 2011 Sampling Method

All geochemical sampling activities were carried out at the RESPEC Laboratory. Prior to sampling the following steps were systematically carried out:

Upon arrival, the core boxes were carefully unloaded from the transport vehicle and laid out in sequential order onto the examining tables.
Core boxes were counted to verify that all of the core delivered matched the core that was listed on the shipping sheet.

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The core boxes were removed from their protective plastic bags and their lids were removed and stored under the examining tables in proper order. The core bags remained sealed until sampling procedures or logging processes commenced. If carnallite was present the plastic bags were replaced when the core was not being examined to minimize exposure to the atmosphere.
Using a cloth or shop towel wetted with a saturated brine solution, the core was cleaned thoroughly by wiping mud and debris from the surface. This step is necessary to correctly identify potash beds, clay seams, and mineralogical changes within the core.

11.2.3.1 Geochemical Assay Sampling

The following points summarize the steps taken by the RESPEC laboratory staff during the geochemical sampling:

Selection of the correct assay intervals was conducted by RESPEC geologists and subsequently confirmed by Karnalyte prior to slabbing. The formation contacts were chosen from the geophysical logs as the tops of the formations were occasionally ambiguous in the core making them difficult to identify. The core was then depth corrected by matching intervals of core to their corresponding intervals on the geophysical wireline logs which were collected at the well site.
Geochemical assay sampling was separated into two separate intervals after depth correcting was completed. The first began at the top of the Prairie Evaporite Formation and extended to the base of the Belle Plaine Member. The second interval included the entire Esterhazy Member. The salt interbed between the Belle Plaine and the Esterhazy Members was not sampled. The first and last samples taken over the two separate potash intervals were intended to capture the initial and final presence of sylvite. To ensure all mineralization was captured in sampling, 1.5–2.0 m of core was sampled below the Belle Plaine Member and above and below the Esterhazy Member. The first sampling interval was extended beyond the 1.5–2.0 m shoulder above the Patience Lake Member and included all of the salt from the base of the Second Red Beds to the top of the Patience Lake Member. This was done to capture all the sylvite, as several of the wells contained minor mineralization in the salt above the Patience Lake Member. Sample intervals are clearly outlined in Table 11-1.

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Table 11-1: 2011 Sampling Intervals

Sampling Interval	Sampling Interval Top	Sampling Interval Base
First	Base of Second Red Beds/Top of Prairie Evaporite Formation	1.5 – 2.0 m below Belle Plaine Member
Second	1.5 – 2.0 m above Esterhazy Member	1.5 – 2.0 m below Esterhazy Member

Once placement of the intervals to be assayed was determined, the core was slabbed lengthwise into halves using a dry, 2 hp band saw equipped with a dust collection system. Only one piece of core was removed from the assay interval and slabbed at any given time. The two complimentary core halves were placed back into their respective box in proper stratigraphic order, with both cut surfaces facing up. The cutting process was supervised at all times by a RESPEC geologist. Saw blades were replaced frequently when any breach of core integrity was noted (i.e. crystal fracturing or splintering of core).
Once the entire assay interval was slabbed, the cut surfaces were wiped down with a cloth wetted with a brine saturated solution to remove any rock powder generated by the cutting process.
The upper core half was divided into individual samples by drawing straight lines across the core diameter in permanent black marker, utilizing natural core breaks where possible. The determination of individual samples was based on several parameters outlined in Section 11.2.4. Once the samples were marked out, they were peer reviewed and confirmed prior to any further work.
As the samples were selected, they were labelled using a numbering scheme that incorporated both the well number and a sample number.
The sample number was written on the top piece of the core half in permanent black marker. A sample tag bearing this number was prepared to be used for identification in the core photo.
The core was photographed with a high-resolution digital camera (Figure 11-2).
Each sample within the assay interval was carefully measured to the nearest centimeter (e.g., 24 cm) and the sample length was recorded into the appropriate assay and logging spreadsheets. The sample intervals and numbers were then transposed onto the cut surface of the underlying second half of the core in the box. This preserves the sample data on one core half, as the other half was destroyed during the sampling process at SRC.
The upper core half was cross-cut into the designated sample intervals with the band saw under the direct supervision of the RESPEC geologist. Each sample and its corresponding

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sample tag were placed into a labelled, waterproof, plastic sample bag and stapled to enclose the sample within the bag.

Samples were placed into plastic pails or shipping boxes and sealed with lids. The well number, sample interval, and pail number were labelled on the lids of the pails. Shipping sheets were completed that included well information, pail numbers, sample numbers, and contact information which accompanied the samples to SRC Geoanalytical.

Figure 11-2: Sampling Interval from KW 4B14-24 (Core 1, Boxes 13 and 14)

Source: RESPEC, 2011

Core recovery was generally excellent for all wells, and the cutting and slabbing of the drill core did not result in any notable material loss. The accuracy and reliability of the assay samples was not compromised during the sampling procedure. It is the opinion of QP Stirrett that the samples chosen for geochemical analyses are representative of the selected intervals based on the above discussed parameters and guidelines.

RESPEC geologists delivered the samples to SRC Geoanalytical where they were crushed, split and analyzed according to the parameters stated in SRC's basic potash analysis package. QA/QC measures were strictly adhered to by SRC, including the use of standards, blanks and duplicates throughout the analysis period. RESPEC was not involved in procedures performed at SRC once the samples were delivered and was not there to supervise the analysis process. Assay results generated were reviewed and approved by SRC prior to release.

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11.2.4 Sample Interval Determination

The determination of individual samples collected in 2009 and 2011 within an assayed interval was based on the following geological parameters:

Changes in lithology, mineralogy, K₂O grade, crystal size, insoluble content warranted a new sample. Clay seams were broken out as individual samples as much as possible, with approximately 1 to 2 cm of overlap on either side of the seam.
Samples did not span over geological boundaries including the upper and lower boundaries of the potash members.
When possible, existing breaks within the core were used as sample boundaries.
Samples of potash bearing sections (from geophysical logging) were restricted to approximately 30 cm in length, whereas "barren" samples could have lengths of 65 cm.

Visual inspection of the core in conjunction with the respective gamma, density, and photoelectric curves for the wells provided RESPEC geologists with sufficient information to accurately assess changes in mineralogy, lithology, and grade. Within mineralized zones, new sampling intervals were established where changes in grade occurred; low-grade, moderate-grade and high-grade mineralized zones were set at K₂O percentages of >10%, >20% and >30%, respectively, estimated from the gamma curves. These K₂O percentages correlate to approximately 140, 270, and 390 API units. The 2009 sampling included two additional conditions:

Barren halite and insoluble zones could be sampled at intervals greater than 30 cm, but could not exceed approximately 65 cm in length.
The sample interval selection limited the amount of core exposed at one time due to the carnallite content. It was undesirable to open more than one core box at a time, resulting in a larger number of samples overall.

Sampling in 2011 did not include the above two conditions. The first condition did not apply, as barren halite beds were not sampled. In 2011 environmental conditions in the laboratory were monitored and controlled at ≤35 to 40% humidity with a regulated temperature of ~20°C to maintain the integrity of the core, making it possible to open more than one box at a time.

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11.2.5 Rock Mechanic and Dissolution Test Sampling

Wells KW 2-24 and KW 2C6-32 were chosen to be sampled for rock mechanic testing (RM) and dissolution testing (DST) in Germany in January of 2011. Samples for rock mechanical testing were selected in such way that representative samples from the different deposit horizons as well as from the rocks that will form the roof of the cavern were available for testing. For dissolution testing a suite of samples with a range in sylvite and carnallite content were selected from the wells, to obtain a reliable estimate about the dissolution behaviour of the rock.

11.2.5.1 Sample Interval Determination

Thirty-two samples were selected from KW 2-24 and 35 samples were selected from KW 2C6-32 for test work by an ERCOSPLAN geologist. Under the direction of the ERCOSPLAN geologist, the following steps were completed by RESPEC personnel at the RESPEC Laboratory, to prepare the selected samples:

As the samples were selected, they were labelled using an unambiguous numbering scheme that incorporated both the well number and a sample number.
The core boxes with samples were photographed in a similar manner and using the same equipment as in Section 11.2.3.1 (Figure 11-3).

Figure 11-3: DST Sample 017 from KW 2C6-32 (Core 8, Box 17)

Source: RESPEC, 2011

Samples were measured to the nearest centimeter (e.g., 55 cm) and recorded in sample spreadsheets by RESPEC personnel. Once the rock mechanics testing was completed on the whole cores, they were slabbed and sampled for the potash intervals following the steps outlined in Section 11.2.4..

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The whole core samples were individually removed from boxes and cut, if required, by the band saw to the selected size.
Place markers were put into the boxes identifying the depth and number of the removed core sample for future reference.
Each sample was individually wrapped in plastic wrap, bagged in waterproof plastic bags with the appropriate sample tag inside and heat sealed to ensure protection from moisture due to the delicate carnallite nature of the core.
The bagged core samples were then wrapped in small bubble wrap followed by large bubble wrap and placed in waxed cardboard boxes. Newspaper, styrofoam packing peanuts were packed around the edges of the core to ensure that there would be no shifting during transportation.
The sample boxes were labelled on the exterior with the sample number(s) in permanent black marker.
Samples from KW 2-24 and KW 2C6-32 were stacked on pallets separately. The pallets were reinforced with wooden supports on all sides and banded together with plastic banding strips. The pallets were also wrapped tightly with plastic wrap to ensure that the stacked boxes were as stable as possible for transport.
The core was picked up at the RESPEC Laboratory and shipped through UPS to the ERCOSPLAN office in Erfurt, Germany, accompanied by all the appropriate shipping documents prepared by RESPEC and UPS personnel.
Upon arrival at the ERCOSPLAN office, ERCOSPLAN personnel verified the completeness of the shipped samples, divided the samples in RM and DST samples and transported them to the Institute for Rock Mechanics in Leipzig (IfG), who have a special low humidity storage room for salt samples.
At the IfG laboratory the samples for dissolution testing were prepared, sealed in plastic and transported to the laboratory of NG-consulting in Sondershausen.
The DST samples were unpacked directly before testing, weighted, measured and photographed and put in the dissolution cell. During the experiment, the samples were completely dissolved.

From RM samples a representative number was selected for rock mechanical test work. These samples were cut (cut-off sections were put uniquely in a marked plastic bag) and further prepared for test work.

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11.3 Analytical Testing

11.3.1 Historical Drill Hole

Of the four historical wells drilled on the Property, only one (DH-11) was used in the mineral resource estimate. Examination of the historical data for the Mobil Wynyard well offered no information as to the original sample preparation methods or QC measures employed prior to dispatch of samples to an analytical testing laboratory, the method process of sample splitting and reduction, and the security measures taken to ensure the validity and integrity of samples taken.

There is the possibility that cores may have been cut by a saw using a water-based fluid as a cooling fluid for the blade. If this were the method employed, then the assay samples may have been affected by preferentially leaching of carnallite and sylvite relative to halite during sampling. This may produce results suggestive of a lower than accurate sylvite and carnallite content. The re-sampled section of DH-11 was treated similarly to the samples from the Karnalyte holes.

11.3.2 Karnalyte Wells

11.3.2.1 Analytical Testing

The following procedures were reported as being carried out by SRC Geoanalytical for the chemical assaying of the Karnalyte samples:

Prepared an in-house sample list and group number for the shipment
Labelled sample vials with the appropriate sample numbers
Individually crushed all samples in the group
Evenly distributed each sample in the splitter to avoid sample bias. Cleaned the crusher and splitter equipment between each sample using compressed air
Split the crushed sample and inserted one portion into the appropriate sample vial
Reject material was resealed in original labelled plastic bags and stored in plastic pails with appropriate group number marked on the pail.
Sent vials of material for grinding. The material was placed in a pot, ground for one minute then returned to the vial. Vials were visually inspected to ensure fineness of material. Grinding pots were cleaned with compressed air between each sample and cleaned with silica sand and rinsed with water between each group.

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The pulverized samples were placed in a tray and sample paperwork was submitted to the main office. Worksheets were created detailing the samples to be analyzed, the type of analyses requested as well as the standards, blanks and split replicates to be completed.
The samples and paperwork were sent to the geochemical laboratory, and samples were analyzed using SRC's basic potash package for the determination of soluble $\mathrm{K}_2\mathrm{O}$ and MgO weight percent via soluble inductively coupled plasma optical emission spectroscopy (ICP-OES). The package is comprised of three analyses including geochemistry, % insoluble and % moisture.
An aliquot of the prepared material is placed in a test-tube with $15~\mathrm{mL}$ of 30 degree deionized water. The sample is shaken, and the soluble solution is then analyzed by ICP-OES. Soluble detection limits for the analytes are $0.01\%$ with an estimation uncertainty of $\pm 1.0\%$ within the percent $\mathrm{K}_2\mathrm{O}$ range of 20-39.
With each set of 40 samples, two potash standards, one quartz blank, and one sample pulp replicate analysis was completed. After processing the entire group of samples, a split sample replicate was completed. After receiving all results, the QA/QC department from SRC Geoanalytical completed checks to ensure accuracy.
Upon completion of the assaying and QA/QC procedures, the geochemical results were emailed to the RESPEC contact list in a password-protected zip file.

QP Stirrett reviewed the above procedures carried out by SRC for sample preparation and geochemical analysis. SRC has a dedicated potash preparation and analysis laboratory and is an International Organization for Standardization (ISO) accredited to 17025 accredited method for the determination of water-soluble CaO, $\mathrm{K}_2\mathrm{O}$, $\mathrm{Na}_2\mathrm{O}$, MgO in addition to other analytes that are of interest to potash exploration. SRC has a reputation for delivering quality assay results for the potash industry and is one of only a few laboratories in the world that can provide this service. The SRC laboratory is independent of Karnalyte.

11.3.2.2 Analytical Testing of the Rock Mechanical Test Work Samples

The 10 potassium salt bearing samples that were used for rock mechanical test work were reunited with the cut-off sections and the complete samples were sent to Kali-Umwelt Technik laboratory (KUTEC) Sondershausen, Germany, which have extensive experience in the analysis of polymineralic and sulphatic salt rock and brine samples, are certified according to DIN EN ISO/IEC 17025 by the Deutsche Akkreditierungssystem Prüfwesen GmbH (DAR) and independent of Karnalyte. The following parameters were determined at the KUTEC laboratory:

K⁺, DIN ISO 9964-3 1996-08 (flame emission spectrometry)
Na⁺, DIN ISO 9964-3 1996-08 (flame emission spectrometry)

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Mg²⁺, DIN 38406-E3 2003-03 (atomic absorption spectroscopy)
Ca²⁺, DIN 38406-E3 2003-03 (atomic absorption spectroscopy)
Cl⁻, DIN 38405-D 1-2 1985-12 (ion chromatography)
SO₄²⁻, DIN 38405-D 1-2 1985-01 (ion chromatography)
Insoluble content, dissolution and weighing.

The parameters provide the main components for all normal salt rocks.

11.3.2.3 Analytical Testing of the Dissolution Test Samples

The 19 potassium salt bearing samples from dissolution test work were completely dissolved at the end of the test and the resulting brine was gathered. The remaining insoluble material was also gathered, rinsed with distilled water and the material was dried and weighed for determination of the insoluble content. The brines were analyzed for the cations K, Na, Mg, and Ca and the anions Cl and SO₄, by the laboratory of DEUSA International, a potash producing company in Germany using solution mining of carnallite and that has experience in analysis of mineralized brines. This laboratory has no accreditation but is independent of KARNALYTE.

11.4 Density Determination

The density of the carnallite and sylvite bearing rocks has been estimated from the mineralogical composition (including insoluble material) of the samples as determined from the chemical analysis. The following formula is used to determine the density of a sample:

$$
Density = \sum \frac{\%sy + \%ha + \%ct + \%an + \%insol}{\%sy/dsy + \%ha/dha + \%ct/dct + \%an/dan + \%insol/dinsol}
$$

where:

%sy – percent sylvite
%ha – percent halite
%ct – percent carnallite
%an – percent anhydrite
%insol – percent insoluble material
dsy – density of sylvite = 1.990 g/cm³
dha – density of halite = 1.268 g/cm³
dct – density of carnallite = 1.600 g/cm³
dan – density of anhydrite = 2.960 g/cm³

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$d_{\text{insol}}$ – density of insoluble material conservatively assumed to be $2.600 \, \text{g/cm}^3$.

Based on the realistic assumption that the porosity of the salt rocks sylvinite and carnallitite are negligible this formula provides a conservative estimate of the density of salt rocks.

Considering that the geophysical density log along the drill hole does not provide the actual density of the rock, but rather the electron density of the rock, the calculation of density using this formula can be verified against these measurements by using the electron density of the minerals instead of the actual density.

11.5 Missing Core Sections

Few wells had core losses in the cored intervals (Table 11-2). For these wells, the mineralogy of the missing sections has been estimated from the geophysical logging data. The results of the estimation procedure were verified for consistency using deposit sections that had assaying data and if necessary, corrections were made to the procedure to obtain reasonable consistency.

The procedure was also used to estimate the sections of KW 2-24 and KW 2C6-32 for which no assaying data were available as some of the core that was retained for future rock mechanical test work was not available for assaying.

In the absence of assay data, three logs have been used: the density log, the porosity log and the natural gamma log. The first division was made based on the density log. Depth intervals with densities above $2.2\,\mathrm{g/cm}^3$ were assigned the mineralogy clay, anhydrite, and halite. For the intervals that met this criteria, natural gamma ray count and neutron porosity responses were assumed to be due to the presence of clay. With that assumption, relative amounts of other minerals were estimated using the density of these three minerals.

Table 11-2: Wells with Identified Missing Core Intervals

Well ID	Member	Interval From (m)	Interval To (m)	Length (m)
DH-21	Patience Lake	917.74	920.78	3.04
KW 3A11-27	Upper Belle Plaine	989.98	997.62	7.64
KW 4B14-24	Upper Belle Plaine	1,030.78	1,038.85	8.07
KW 4D14-21	Patience Lake	1,010.25	1,012.66	2.41

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For all other intervals, the following procedure was used:

The K₂O content of the rock was estimated using the relation that Bannatyne (1983) developed for potash bearing rocks of the Elk Point Basin.
Assuming the absence of clay and brine, the neutron porosity relation of Crain and Anderson (1966) was used to estimate the amount of carnallite K₂O present.
The sylvite content was estimated using total K₂O minus carnallite K₂O.
Using the density log and the amounts of sylvite and carnallite, the relative amounts of insoluble material and halite were calculated.
A section along the holes was selected for which assays showed high insoluble content and minimal sylvite and carnallite content and this was used to derive a linear relationship between insoluble content, natural gamma value and neutron porosity value.
The measured natural gamma and neutron porosity were corrected for the insoluble amount estimated in step 4 and steps 1 to 3 were repeated to produce a final mineralogical composition.
Based on the mineralogy boundaries defined for deposit and non-deposit, the average mineralogy was calculated for the missing core.
The averaged KCl and MgCl₂ content over the missing sections were estimated using the following:

$$
\% KCl = 0.268 \times (\% \text{ carnallite} + \% \text{ sylvite})
$$

$$
\% MgCl_2 = 0.343 \times \% \text{ carnallite}
$$

Corrections were kept to a minimum and in general the estimated mineralogy was slightly lower in carnallite and sylvite than the mineralogy calculated from the assays, resulting in a conservative estimate. QP Stirrett suggests that the overall error in the carnallite content estimate for these sections is less than 15% for complex sections with minerals carnallite, halite, sylvite, anhydrite and insoluble material and less than 5% for sections with simple mineralogy (e.g., carnallite, sylvite, halite). The resulting error in K₂O content estimation is at most ±4% and in the opinion of QP Stirrett, these sections can be included in the mineral resource estimate.

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11.6 Sample Security

The following procedures were closely followed to ensure that the core and core samples were under the supervision of qualified personnel at all times:

RESPEC was responsible for the supervision of core as soon as it arrived at the RESPEC Laboratory. Staff inspected the shipment, signed the shipment invoice and unloaded the core onto the tables in stratigraphic order. The RESPEC Laboratory is equipped with an alarm system to ensure the security and integrity of the core when the laboratory is not under direct surveillance. The laboratory is temperature and humidity controlled to prevent deterioration of the core. All samples were selected, cut, and packaged as quickly as possible under the supervision of a RESPEC geologist.
Samples collected for geochemical assay sampling were secured in plastic bags to ensure they were not exposed to moisture. To preserve sample identification, the sample number was written on the sample in permanent ink, on a sample tag placed inside the bag, and on the bag the core was placed in. The sample bags were sealed and packed into labelled pail containers and remained sealed until they were opened for processing at SRC.
Samples were delivered by RESPEC staff to SRC, for analysis. Information sent along with the sample shipment included the client's name, address, distribution email list, type of geochemical analyses required, and a sample list clearly explaining which samples were stored in each pail.
When SRC Geoanalytical received the core samples, they signed, dated and returned the RESPEC packing slip. Upon SRC Geoanalytical confirming that the sample list matched the samples in the pails, a sample receipt report was e-mailed to a pre-determined distribution list.

11.7 QP Comments on Section 11

11.7.1 Geochemical Sample Preparation and Testing

It is the opinion of QP Stirrett that sample preparation, security and analytical procedures are adequate to support mineral resource estimation.

11.7.2 Assaying of Rock Mechanical and Dissolution Test Samples

It is the opinion of QP van der Klawu that the analytical procedures applied to the dissolution test and rock mechanical test samples meet industry standards and best practices and are adequate to allow their use in mineral resource and mineral reserve estimation.

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12.0 DATA VERIFICATION

12.1 Historical Data

For DH-11, historical data were used for the sylvinite sections of Patience Lake and Esterhazy Member that were sampled in the 1960s.

QP Stirrett reviewed the re-assaying results and is confident of the following statements:

Drill cores reflect the sampling and analysis as described in the well file reports.
Drill cores have been preserved in cardboard boxes in the core and sample repository of the Saskatchewan Subsurface Geological Laboratory.
Assay intervals and stratigraphic markers present in cores correlate well with core assays and depths determined from examination of borehole gamma ray-neutron logs.

The re-assay program undertaken in 2008 shows that new assay results are consistent with the results obtained from the initial historical assays.

QP Stirrett's review of the assay program found that the data for the Belle Plaine and Patience Lake Members contained internal laboratory standards and duplicate samples, which showed good agreement indicating good quality, accurate and reproducible results for the analysis. A comparison between the analysis of samples for overlapping intervals from historical and the re-assayed data, shows high consistency, suggesting that the historical data are of good quality. Because of the good correlation between historical and re-assay results and the availability of internal standards and duplicate samples for the Karnalyte dataset, QP Stirrett considers the assay results of DH-11 to be reliable and representative and adequate to support mineral resource estimation.

12.2 Verification of Karnalyte Exploration Drill Hole Data

12.2.1 Introduction

QP Stirrett and van der Klaw have verified the Karnalyte exploration drill hole data and the associated geochemical data as they were involved in the sampling process and carried out QC measures to ensure the security and integrity of the core. The sampling and assaying procedures detailed in Sections 10 and 11 were of high quality and are compatible with procedures typically undertaken in industry. The results of the assaying were checked for plausibility with several methods as outlined in the following sections.

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12.2.2 Assay-to-Gamma Correlation Study

A correlation study between the assay-derived % K₂O data and the associated gamma curves for all Karnalyte holes has been completed. The objective of this study was to cross-reference the two data sets as a data verification procedure. The two data sets were plotted on the same chart for each hole, with potash grade along the x-axis and depth along the y-axis. The depths recorded by the gamma wireline curve were taken as true depths and the assay sample intervals were adjusted to these curves using a best-fit approach. These adjustments were completed on the Prairie Evaporite Member basis over the sampled intervals for each drill hole. There was good overall correlation between the assay and gamma data over all drill holes.

For all drill holes a mineralogical interpretation of the geophysical logging was made comparable to Section 11.5. For all drill holes a satisfactory comparison between mineralogy determined from assaying and from geophysical logging could be obtained.

12.2.3 Duplicate Analysis of Samples in an Independent Laboratory

Material from DH-20 was sent to the ALS Laboratory in Calgary for verification. The components Na, K, Mg, Ca, Cl, SO₄, H₂O as well as insoluble material were analyzed. The large errors in the ionic balance calculated for these analytical results, suggest that the ALS laboratory encountered problems analyzing the very high chloride concentrations of the samples. Chloride was therefore not further used but assumed to be required to achieve ionic balance.

A comparison of the results of the ALS Laboratory with the KCl contents derived from analysis of the same sample by SRC (Figure 12-1) shows in general a relatively good agreement, with a tendency to slightly lower KCl content in the samples of SRC. A comparison for the MgCl₂ content is shown in Figure 12-2 and shows in general a good agreement.

This indicates that the analytical results for the samples provide a good estimate of the KCl and MgCl₂ content of the samples, which is on the conservative side if compared to the ALS analysis.

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Figure 12-1: Comparison of the KCl Content Estimated from ALS and SRC Analysis

Source: ERCOSPLAN, 2011

Figure 12-2: Comparison of the $\mathrm{MgCl}_2$ Content Estimated from ALS and SRC Analysis

Source: ERCOSPLAN, 2011

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12.2.4 Calculation of Mineralogy from Assay Data and Comparison with Core Description

The 2010/2011 analyses of the main components for salt minerals were reported and as the first quality check, the charge balance between positive ions (Mg²⁺, Ca²⁺, Na⁺, K⁺) and negative ions (Cl⁻ and SO₄²⁻, calculated from S) is determined for each analysis. If the absolute difference in moles 2 × (cations – anions)/(cations + anions) × 100% is larger than 5% the analysis is classified as an outlier and should be considered suspect. All 2010/2011 analyses passed this test. This test was not possible for the 2009 analysis as Cl⁻ was not analyzed. The Cl⁻ content was estimated based on charge balance.

With the chemical analysis the mineralogical composition of the sample was calculated after recalculating the elements from weight % to mole and rearranging them to the basic salts according to following scheme:

Combine cations and anions to simple salts according to the following scheme:
Combine with Cl⁻, in the following order: Na, K, Mg, Ca.
Combine with SO₄²⁻ in the following order: Ca, Mg, K, Na.
Based on experience with potash deposits, the analyses should be either MgCl₂ or K₂SO₄ normative, meaning that if CaCl₂ or Na₂SO₄ results from these combinations, the analysis is suspect.
Combine the simple salts to salt mineralogy according to the following simplified scheme:
All NaCl is halite.
If CaCl₂ is present combine with MgCl₂ to tachyhydrite.
The remaining MgCl₂ is combined 1:1 with KCl to carnallite.
If MgCl₂ > KCl, remaining MgCl₂ to bischofite.
If KCl > MgCl₂ and MgSO₄²⁻ available, combine remaining KCl 1:1 to kainite.
If K₂SO₄ > MgSO₄²⁻ or CaSO₄²⁻/2, arcanite, otherwise with CaSO₄²⁻ and MgSO₄²⁻ to polyhalite.
If remaining KCl > MgSO₄²⁻, remaining KCl after kainite to sylvite, otherwise remaining MgSO₄²⁻ to kieserite.
Remaining CaSO₄²⁻ to anhydrite.

The mineralogy was recalculated to masses of elements, including the water that is part of the crystal structure. The sum of these elements together with the insoluble content should be close to 100.

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Using this procedure all 2009 to 2011 analyses provided results with a mineralogy which is comparable to the mineralogy from the core descriptions. Only minor amounts (<1%) of minerals not expected in the deposit (e.g. tachyhydrite, kieserite, kainite and polyhalite) result, suggesting that the analysis is consistent. The occurrence of some calculated bischofite could mean that MgCl_{2} is overestimated or KCl underestimated but can also be explained by assuming that minor brine filled porosity existed in the samples. The deposit, being a carnallite deposit, requires such porosity brine to be MgCl_{2} rich.

QP van der Klauw considers the assays for K^{+} and Mg^{2+} to be sufficiently precise and accurate to be used for carnallite and sylvite mineral resource and mineral reserve estimation purposes.

Mineral Resources Data Verification

During his site visits, QP van der Klauw inspected drill sites and drill core of four Karnalyte exploration drill holes, the ongoing solution mining test and the water test well and brine disposal well. There has been no additional drilling since QP van der Klauw's last site visit.

QP van der Klauw reviewed the documentation supporting the economic and technical inputs for establishing reasonable prospects for eventual economic extraction.

Metallurgical Data Verification

QP Mitchell reviewed the metallurgical test work reports, the analytical procedures, qualification of the laboratory and presentation of test results and consider all to have followed industry accepted practice.

Mineral Reserves and Mining Data Verification

QP van der Klauw reviewed the documentation supporting the modifying factors used to convert mineral resources to mineral reserves.

QP van der Klauw directed the rock mechanical and dissolution test work during which he verified the rock mechanical properties as well as the dissolution behaviour of carnallitite and sylvinite. He visited both laboratories where these tests were conducted. The results of which were used directly in mine planning.

Infrastructure Data Verification

QP Myers completed a recent site visit to confirm infrastructure and conditions of the site.

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12.7 Market Studies and Contracts Data Verification

QP Krushelniski reviewed Karnalyte's market entry strategy for potash and hydromagnesite and the independent market study reports that included long-term pricing obtained by Karnalyte for these products. QP Krushelniski also reviewed the Gujarat State Fertilizers and Chemicals Limited (GSFC) Offtake Agreement and confirms the contents of the agreement are accurately reflected in the Report.

12.8 QP Comments on Section 12

12.8.1 Geology

In the opinion of QP Stirrett the drill hole database is adequate for the purposes used in this Report.

12.8.2 Mineral Resources

In the opinion of QP van der Klawu the inputs for estimating mineral resources and establishing reasonable prospects for eventual economic extraction are adequate for the purposes used in this Report.

12.8.3 Metallurgical

In the opinion of QP Mitchell the metallurgical data is adequate for the purposes used in this Report.

12.8.4 Mineral Reserves and Mine Planning

In the opinion of QP van der Klawu, the rock mechanical and dissolution test work and modifying factors for converting mineral resources to mineral reserves are adequate for the purposes used in this Report.

12.8.5 Infrastructure

In the opinion of QP Myers the infrastructure information is accurate and adequate for the purposes used in this Report.

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12.8.6 Market Studies and Contracts

In the opinion of QP Krushelniski the commodity price, market entry strategy and contracts information for potash and hydromagnesite is adequate for the purposes used in this Report.

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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Introduction

The following mineral processing and metallurgical test work have been performed under the direction of Karnalyte:

Dissolution testing of samples from the deposit (ERCOSPLAN, 2011)
Evaporation and crystallization test work with the assumed production brine composition (Swenson, 2011).
Detailed thermodynamic modelling of the evaporation and crystallization circuit and update of mass balances and process flow sheets (Whiting, 2013)
Pilot solution mining test work (ERCOSPLAN; 2016)
Magnesium products preliminary feasibility report (Lyntek, 2012)
Confirmation of the Basic magnesium carbonate production process in the laboratory (SRC, 2014)
Test on a brine disposal well to the Deadwood Formation to determine potential capacity (GeoEngineers, 2013).

The combined testing and design criteria (Section 17) illustrate that a suitable brine can be recovered for processing in the designed mill to produce a 97% pure KCl product at 90% recovery assuming contaminants (calcium, lithium), remain at typical low levels for Saskatchewan ore bodies. Testing of the magnesium carbonate process indicates a recovery of 69% is achievable, with a purity of greater than 99% hydromagnesite (4MgCO₃·Mg(OH)₂·4H₂O).

All of the testing completed showed typical Saskatchewan brine chemistries with no unusual contaminants that would reduce recovery and plant efficiencies and can be considered representative for the overall deposit.

13.2 Dissolution Test Work

The dissolution test work was completed by NG-consulting at their facility under the direction of ERCOSPLAN. The test objectives were as follows:

Determine chemical composition of brines that would be returned to surface to generate design parameters for the process plant
Compare the Karnalyte deposit results to other known deposits that currently use dissolution mining

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Predict final brine composition with the key minerals (KCl, NaCl, MgCl₂, CaSO₄) and determine if any deleterious compounds (MgSO₄, CaCl₂) will impact brine processing
Measure dilution rate of the sample to build an estimate of what in ground dissolution rate can be expected.

The basic test protocol for dissolution testing has the test sample placed in the leaching cell (Figure 13-1). Water or brine are pumped from below which dissolves the sample in the leaching cell. The solvent carries the soluble material to an outlet port on the top of the apparatus, while the insoluble material sinks to the bottom of the leaching cell. Leaching is carried out at a constant solvent temperature of 50°C and a constant solvent flow rate of 10.0 L/h. During the dissolution process the out flowing brine shows an increasing density.

Figure 13-1: Sample Leaching Apparatus

Source: ERCOSPLAN, 2011

During the dissolution test, the following data are measured every 30 seconds:

Weight loss of the specimen
Density of brine
Temperature of the solvent and the brine
Volume flow of solvent or brine (inflow = outflow).

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The leaching test is terminated when the out flowing brine increases less than 0.001 g/cm³ during a 30-minute period. During the test four brine samples were taken from each run at different densities. The brine samples are used to estimate the brine composition produced in future full-size caverns as well as for calculating the composition of the carnallite/sylvinite core sample. The dissolution test quantified the decrease of the dissolution rate with increasing brine concentration.

A total of 19 samples have been investigated from each potash bearing member which are representative of the Prairie Evaporite on the Property:

Four Patience Lake Member samples
Seven Belle Plaine Member samples
Eight Esterhazy Member samples.

The evaluation of the data from these tests can be summarized regarding the dissolution kinetics as follows:

At 50°C the dissolution rates of carnallite are approximately five times higher compared to halite and approximately 2.5 times higher compared to sylvinite.
The dissolution rates vary as expected between halite, sylvinite and carnallite and correlate well with test data from other deposits.

Most samples show a low content of insoluble minerals. However, the dissolution residues (insoluble) can have a considerable impact on the dissolution rate and subsequently on (irregular) cavern shape development. The available drill hole data suggests that deposit horizons chosen for production solution mining do not contain significant amounts of insoluble material. Further dissolution test work could detail the relation between dissolution rate and insoluble content for different carnallite/sylvinite grades, for eventual addition of such horizons to the mineral resources or mineral reserves to optimize the operation as this extends the lifetime of a cavern and decreases the number of new caverns required annually. This test work is not required at this time, but can be done to optimize operations in the future.

Dissolution test results provided the following conclusions:

A correlation between dissolution rate and potassium content of the carnallite ore can be established and used to control cavern shape development. This relationship will be used for future well planning and design.
Based on the gamma log and the relation between dissolution rate and KCl/carnallite content, a dissolution rate log can be generated for future wells which indicates fast growing and slow growing areas inside the cavern.

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The phase chemistry of the dissolution test work can be summarized as follows:

The dissolution path of all carnallite samples shows a linear relation between core sample solid potassium content and final brine potassium concentration with slight taper downwards in final brine content at the high range of the samples tested.
Carnallite gives KCl saturation values of approximately 80% at 50°C.
NaCl saturation reaches a super saturation of approximately 106%.
Sufficient correlation between the KCl brine grade and the carnallite/sylvite content of the carnallite was found.

The correlation of the KCl brine grade with the carnallite/sylvite content of the core sample can provide a KCl brine grade log adjustable by the dissolution rate log to provide an estimate of KCl brine grade over the height of the potash horizon.

These results allow optimization of the mining cuts and prediction of the KCl brine grade for each well (dual well cavern) and for each mining cut.

In the opinion of QP Mitchell, the dissolution test work shows that the carnallite within the Project area behaves comparably to other carnallite deposits currently being solution mined and is technically suitable for extraction with this ore body.

To obtain a production brine with a continuous high KCl grade, mining portions of the deposit that contain on average high grade carnallite (>50% carnallite) and high grade sylvinite (>20% sylvite + carnallite) should be prioritized (Section 7.4).

13.3 Evaporation and Crystallization Test Work

Two sets of laboratory experiments were performed in the Swenson Test Center in Harvey, Illinois to maximize the KCl product yield and purity using the evaporation and crystallization processing methods described in Section 17.

Two feed samples (Sample 1 and Sample 2) were created using the brine produced from the dissolution test work. The samples had additional salts added to them to create the expected initial plant feed (Sample 1) and evaporator feed (Sample 2). The brine compositions used are given in Table 13-1.

The experimental laboratory runs were thermodynamically modelled using OLI MSE aqueous chemistry software. The results of the thermodynamic modelling were used to optimize the conditions to maximize product yield and purity.

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Table 13-1: Composition of the Original Brine Sample and the Conditioned Brine Used in the Tests

Item	Original Sample (%)	Initial Feed (%)	Evaporator Feed (%)
NaCl	15.80	12.2	9.1
KCl	6.11	9.2	7.9
MgCl₂	6.80	8.6	14.7

The tests produced crystal crops consisting of KCl crystals with a purity of 93.9% for Sample 1 and 88.7% for Sample 2. The overall results of the tests agreed reasonably well with the predicted values but are below the yield and recovery values for a typical plant operation. Additional development of the model should be carried out including minimization of recycles and purges, to produce a more robust operating design.

The test was designed for KCl production from crystallization only and no data for the composition of the MgCl₂-rich end brine was obtained, as no flash evaporation stage was included.

13.4 Detailed Thermodynamic Modelling of the Evaporation and Crystallization Circuit

As the basis for the detailed design phase, the evaporation and crystallization process circuit from the 2011 feasibility study (Foster Wheeler & ERCOSPLAN, 2011), has been thermodynamically modelled by Whiting Equipment Canada Inc. (Whiting) to provide more detailed material balances and improved process flow sheets (Whiting, 2013). These modelling calculations confirmed the overall design from the feasibility study but have resulted in minor changes to the process flowsheets.

An important outcome of this study has been that it sets boundary conditions on the overall composition of the production brine coming from the brine field. The proposed design will not perform to design parameters when the production brine composition differs significantly from the design brine. This limits the relation between sylvinite and carnallite production brine to stay within the boundaries 25:75% and 10:90% sylvinite:carnallite. Production brine compositions outside this compositional range can still be processed, but at lower recoveries.

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13.5 Pilot Solution Mining Test Work

In 2015, ERCOSPLAN was engaged to design and supervise a solution mining test operation. The goal of the operation was to show that controlled carnallite solution mining of the Belle Plaine Member is technically feasible and to obtain data to calibrate the thermal model for the cavern.

Well DH-20 was used for the solution mining test operation with limited work to occur (e.g., no significant drilling of sections or new cementation jobs) during the test operation. This means that instead of the double well cavern planned for the commercial operation only a single well cavern can be developed. With the completion scheme of the DH-20 well with last cemented 8⅝" casing at the boundary between Dawson Bay Formation and Prairie evaporite and no new cement jobs, a well layout with three pathways between cavern and surface was necessary for:

blanket material, to control the roof position of the cavern
solvent/water pumped down the well to dissolve salt
brine to come from the well due to dissolution of the salt rock.

This required the installation of two steel leach strings down the well, one inside the other to have:

an annulus between last cemented casing or open hole and outer leach string (5½"), for the blanket, with no space to install a blanket level control system
an annulus between inner (2⅜") and outer leach string for injection or extraction
an inner leach string for injection or extraction.

An initial cavern preparation phase was executed with cold Blairmore water injected to develop the dissolution area for the production leaching. During the production leaching phase the prepared cavern was injected with heated (80-85°C) Blairmore water. The Blairmore water unexpectedly contained fine sand which caused problems with the cavern preparation phase. The fine sand reduced the permeability of the Belle Plaine Member resulting in a negligible open cavern volume.

The cavern was further prepared for production in the Upper Belle Plaine Member by releasing oil to establish a new cavern roof in the carnallite rich lower section of the Upper Belle Plaine Member. This allowed the sand to settle deeper in the cavern over 30 days resulting in a new dissolution surface and a smaller dissolution area than was originally planned.

Production leaching started early September and ran for nearly two months.

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Water injected at the well head at a temperature of approximately 85°C was shown to heat the well cavern to approximately 73°C, which was above the predicted temperature of 65°C. This allowed more potassium to enter solution and reduce the amount of waste NaCl in solution. An ambient rock temperature of close to 25°C was originally estimated based on temperatures measured in the mud during wireline logging and compares well with the thermodynamic modelling completed.

Key discoveries from the pilot testing were concluded:

The surface pump, piping and heater were selected considering these conditions; however, the set-up was not suitable to obtain reliable data for the cavern thermal model since injected hot water and the warm brine produced in the cavern can exchange heat through the steel piping along more than 950 m length.
On the surface, pipeline system measurement equipment was installed to check injected/extracted flow volumes, temperature, density and pressure on selected lines.
Piping, pumps and heater were designed for flow rates during production leaching of around 25 m^{3}/h.
The brine produced was stored in tanks before being disposed of underground.
Design capacity of the disposal system was 35 m^{3}/h.
The elevation of the blanket level could only be estimated by comparing the volume of DH-20 estimated over a sonar survey with the volume of injected blanket oil and an evaluation of the salt rock being dissolved based on the ratio of different salt components (NaCl, KCl, MgCl_{2}), providing information about the mineralogy.

The pilot solution mining operation was run between March 5, 2016 and November 1, 2016. It concluded that carnallite solution mining of the Belle Plaine Member is technically feasible. After the pilot operation ceased, the blanket oil was released and the cavern and well were abandoned with the remaining brine. Further samples were taken in July and November 2017 and a sonar survey was conducted in November 2017.

Figure 13-2 shows the two brine samples collected up to a year after test completion (solid green circles). They indicate that brine in the cavern reacted further with carnallite and reached KCl saturation, with a shift to a more MgCl_{2}-rich brine composition due to KCl crystallization. The two samples align with the theoretical 10°C saturation curve indicating that the ambient temperature could be as low as 10°C. This coupled with the thermodynamic modelling provides a cavern temperature between 10°C and 25°C.

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Figure 13-2: Phase Diagram showing the Change in Brine Compositions over the Preparation Leaching Phase, the Production Leaching Phase, and the Post Operation Phase

Source: ERCOSPLAN, 2022

Initial flow rates during production leaching were around $20\mathrm{m}^3/\mathrm{h}$, resulting in NaCl saturated relatively low mineralized brine from dissolution of halite and carnallite. The reduction of flow rate to $10\mathrm{m}^3/\mathrm{h}$ resulted in an increase in mineralization of the production brine from dissolution of mainly carnallite. Figure 13-2 shows the maximum mineralization reached for the production brine is about $100\mathrm{g}$ KCl for $1,000\mathrm{g}\mathrm{H}_2\mathrm{O}$. This is about $85\%$ of the KCl content of a KCl saturated brine for the maximum reasonable cavern brine temperature of $25^{\circ}\mathrm{C}$. This is a similar saturation range used at a higher cavern brine temperature to estimate the production brine composition of carnallite in Section 16.3.1.

The evaluation of the cavern development from changing flow rates and brine compositions suggest that at flow rates lower than $10\mathrm{m}^3/\mathrm{h}$ (the testing technical limit), the relation between available dissolution area and reaction time for the injected water would have allowed an even higher mineralization of the brine. This might have provided an independent confirmation of the cavern brine temperature with a compositional shift indicating that KCl saturation had been reached.

Results of the pilot test are sufficient to support the concepts used to estimate the production brine composition discussed in Section 16.4.

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13.6 Magnesium Products Prefeasibility Testing

Lyntek outlined brine pre-treatment and basic magnesium carbonate precipitation testing conducted by Karnalyte in April 2012. The testing determined the feasibility of using either magnesium sulphate or sodium sulphate to remove calcium as a pre-treatment for the magnesium brine. Product produced from the tests was analyzed by Hazen Research, Inc and GR Petrology Consultants Inc. The precipitate from the witnessed tests was analyzed by ALS in Okotoks Alberta. Lyntek reviewed the product analysis in all cases and concluded the following:

X-ray diffraction showed the product formation of hydromagnesite (4MgCO₃·Mg(OH)₂·4(H₂O)₂).
Products are able to achieve at least 99% purity hydromagnesite.
Both magnesium sulphate and sodium sulphate were used to precipitate gypsum for the removal of calcium, which will allow the plant to vary reagent types and maintain stable reagent costs.
The process can remove soda ash by using a modified Solvay process to produce synthetic soda ash, this requires the use of a buffer, and successful testing was completed using ammonia to achieve the end goal.
A final test combining all of the steps in the previous tests was completed and showed 80% conversion efficiency of MgCl₂ in the brine to hydromagnesite, with a greater than 99.9% hydromagnesite purity.

The testing was used to set the design parameters (reagent dosages, temperatures, reaction times) for the full scale operation and allowed Lyntek to design the magnesium products plant. A lower conversion rate is expected in full scale operation, and a design basis of 69% was chosen by Lyntek to account for other process losses not seen in the bench scale testing.

13.6.1 Confirmatory Basic Magnesium Carbonate Testing

The SRC laboratory work conducted in 2014 (SRC, 2014) focused on confirming the process of creating hydromagnesite (4MgCO₃·Mg(OH)₂·4H₂O) (also referred to as a hydrated basic magnesium carbonate mineral). A 40 kg sample of brine was shipped to SRC for processing using the following steps:

Flocculation to remove insoluble material
Evaporation to remove NaCl
Precipitation to remove KCl
Dilution of the resultant brine with NH₃·H₂O

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Introduction of CO₂ to precipitate hydromagnesite.

Two samples of hydromagnesite were produced that are comparable to current products in the high purity market. Soluble impurities such as sodium and potassium chloride can be reduced with proper equipment and further washing to less than 0.02%. Calcium impurity can be more tightly controlled in a continuous evaporation process and may also be reduced with pretreatment.

The products have either a block like or a rod-like habitus and a high Brunauer, Emmet and Teller surface area making it suitable for a number of applications as described in Section 19.2.

SRC proposes further test work to:

Define process parameters to produce a range of surface areas
Tailor the crystal morphologies
Optimize particle size distribution
Optimize bulk density
Determine calcination parameters for producing in later stage high purity, medium to high reactive magnesium oxide powder.

The SRC testing is not required at this time but may be useful to optimise areas of the plant when in production.

13.7 Brine Disposal Well Test

To test whether the planned disposal of excess MgCl₂ brine and NaCl brine from redissolved solid NaCl in the Deadwood Formation is feasible, Karnalyte engaged GeoEngineers (2013) to perform an injection test. Results of the high-pressure injection testing in the first deep disposal Well 91/11-16-032-16W2M (Well 91/11-16) located to the northwest of the planned processing facility are summarized below.

Water supply required for the injection testing was obtained by groundwater abstraction from the Blairmore aquifer water supply well (Well 121/02-16-032-16W2M/00 (Well 2-16)). Injection was performed through a 177.8 mm diameter liner slotted over the full thickness of the Deadwood Formation to a total depth of 1,560 m.

The fluid level in Well 91/11-16 prior to testing was logged at 144 m below the Kelly bushing (m KB), equivalent to a downhole pressure of 14.2 MPa at the formation midpoint.

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A step-rate injection test was completed in increasing injection rate increments of 1.5 m³/min up to a maximum rate of 9 m³/min.
Each step was targeted to last 15 minutes but was continued until the requisite total fluid volume had been injected.
The maximum surface injection pressure of 12.4 MPa was attained during the sixth and final step.
The instantaneous shut-in pressure recorded after injection ceased at the end of the step-rate test was 8.6 MPa at the surface.
Downhole pressures were monitored throughout injection at a depth of 1,440 m KB.
Pressure fall-off was monitored during post-injection temperature logging and had declined to zero (vacuum) at the surface by the following morning (20 hours after the end of the step-rate test).

The step-rate injection test of the Deadwood Formation in Well 91/11-16 was completed successfully within the constraints of the Ministry of Economy approval number MRO 777/12 dated 26 November 2012 under License No. 13B033. A maximum injection rate of 9 m³/min (12,960 m³/d) was sustained for 10 minutes during the final step at constant pressure with no indication that the formation parting pressure had been exceeded.

The injectivity testing of Well 91/11-16 confirmed that the Deadwood Formation at the Project site has sufficient injection capacity to accept the deep disposal of waste brine fluids via injection wells at rates of at least 12,960 m³/d. Additional injection capacity may be possible by comingling injection simultaneously into both the Winnipeg and Deadwood Formations.

Adequate capacity to meet Phase 1 and 2 operational demand for the disposal of up to 21,600 m³/d should be obtained with two such disposal wells, with a third required as standby. Phase 3 would require the use of the standby disposal well to achieve up to 30,000 m³/d.

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14.0 MINERAL RESOURCE ESTIMATES

14.1 Introduction

It is the opinion of QP van der Klawu that historical drilling, subsequent 3D seismic and exploration drilling conducted by Karnalyte are sufficient to confirm that subsurface mineral leases KLSA 010, KL 247A and the western portion of KL 246 have substantial beds consisting of, a significant part of, the potassium bearing minerals sylvite and/or carnallite within the Patience Lake, Belle Plaine, and Esterhazy Members.

The principle of extracting KCl (muriate of potash, MOP) from the rock types sylvinite or carnallitite by solution mining under circumstances comparable to Karnalyte is proven to be economically feasible by Mosaic Inc. at its Belle Plaine operation, by K+S at their Bethune operation (for sylvinite) and by DEUSA International GmbH (DEUSA) at their Bleicherode/Kehmstedt operation in Germany (for carnallitite). At the forecast US Corn Belt price, QP van der Klawu has determined that reasonable prospects for eventual economic extraction is met for the minerals sylvite and carnallite from the Esterhazy, Belle Plaine and Patience Lake Members of the Prairie Evaporite (Section 14.3).

Bench scale testing has shown it to be feasible to produce hydromagnesite products from these $\mathrm{MgCl}_2$-rich end brines. The amounts that can be economically produced depend on the market demand and are not limited by the availability of $\mathrm{MgCl}_2$-rich end brine from KCl production.

14.2 Key Assumptions and Input Data

In determining the potential extent, quality, and volume of a potash mineral resource, QP van der Klawu followed the principles of exploration techniques and sampling methods commonly employed by other Saskatchewan potash junior mining companies as well as mine operators:

The primary method to determine thickness and concentration of the potash mineralization is drill core obtained with conventional oil well drilling equipment. The 2009–2011 drilling exploration programs were designed with a spacing that allows the definition of a radius of influence (ROI) to cover most of mineral lease KLSA 010, KL 247A and the western part of KL 246 and provided sufficient core to confirm thickness and grade of potash mineralization in these areas.
An ROI is defined around each well with information about interpolated thickness and grade of the deposit between them. The extent of the ROI depends on the mineral resource classification category and the confidence in the continuity of the deposit.

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As described in the CIM mineral resource estimation guidelines for potash (CIM, 2003), potash deposits in Saskatchewan typically display consistency of grade and thickness over large areas and it is more important to define areas where the potash mineralization is disrupted or is absent, which is typically done using 3D seismic.

The 3D seismic surveys confirmed the continuity of the sylvite and carnallite mineralization on the leases KLSA 010, KL 247A and the western portion of KL 246.

The mineral resource estimate is based on historical well DH-11, and 11 exploration wells drilled by Karnalyte between 2009 and 2011. The thickness and mineral grades (carnallite and sylvite) of all relevant intersections for these wells are shown in the Table 7-2 to Table 7-6.

The township and range grid used to determine areas in ArcMap (GIS) was from Information Services Corporation (ISC). The geological features were taken from the Geological Atlas of Saskatchewan (extracted from the atlas in 2011) produced by the Saskatchewan Geological Survey. The well base map is correlated to the Geoscout based NAD83 coordinates; however, these were not verified. There is the possibility that this may introduce a small error into the area calculation; however, it is the opinion of QP van der Klaw that the error is insignificant for the purposes of this Report.

14.3 Cut-off Grade Determination

In solution mining, part of the processing of the mineralized material takes place in the underground. The material brought to the plant is a brine which is processed to a KCl product, whereby the NaCl and MgCl₂ brine that remain after processing can be considered potential by-products or waste. The plant is designed for a certain production capacity based on the installed capacity for evaporation of water from the production brine from the brine field. The plant design requires an average production brine composition that falls within a narrow pre-defined compositional range (see Section 16.3). The plant is designed for a minimum KCl content in the brine of 115 g/L at which the plant produces 675,000 t/a for Phase 1 and increases by 750,000 t/a for each of Phase 2 and Phase 3. Therefore, for carnallitite rock the cut-off grade has been set at 15% KCl (~55% carnallite) and for sylvinite the cut-off grade has been set to 20% KCl as is explained further below. Using these defined cut-offs the maximum mining, process and G&A operating costs ($134.01/t) and an assumed MOP price of US$516/t, the Project generates positive cash flows.

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over the cavern, the temperature in the system and the dissolution characteristics of the minerals making up the rock. Therefore, the cut-off grade is determined by the dissolution characteristics of the potassium bearing minerals carnallite and sylvite.

The dissolution tests on carnallitite rock from the deposit (ERCOSPLAN, 2011), typically from all high grade carnallitite rocks, show that there is a strong preference to dissolve the mineral carnallite from the rock compared to the mineral halite. As long as there is a reasonable production brine flow rate (40 to 60 m^{3}/h) over the cavern, the mineral carnallite is accessible for the solvent and the KCl content of the production brine will increase until on average about 85% KCl saturation is maintained. The dissolution tests indicate that if the average carnallite content of the rock falls below 55% carnallite (∼15% KCl) after the initial dissolution of carnallite then the required dissolution of halite to make carnallite available to the solvent determines the further rate of increase of KCl content in the production brine. A cavern with lower grade carnallitite rock operating at flow rates of 10 to 15 m^{3}/h would still achieve planned production brine composition; however, the required number of caverns running in parallel would become three to five times larger. This would significantly increase the capital expenditures for drilling especially at the start-up of operation.

For sylvinite rock the situation is different because at a given temperature the dissolution rate of the minerals halite and sylvite are similar. The brine composition that can be obtained from a sylvinite rock in a normal solution mining operation is typically linearly dependent on the sylvite content. Ideally, the average KCl concentration of the brine coming from the caverns in the sylvinite rock should be similar or higher than the average production brine coming from caverns in the carnallitite rock. To achieve an average production brine with 115 g/l KCl as defined in Section 16.3.2.2, would require an average KCl content of a rock containing sylvite as the dominant potash bearing mineral of about 23%. Since the overall production brine is a mixture of brines from several different caverns (e.g. approximately six sylvinite caverns and 12 carnallitite caverns for a mature brine field in Phase 1 (see Section 16.4), it is acceptable that some caverns in sylvinite produce a brine with a KCl grade as low as 100 g/L. To achieve this the sylvinite rock in the cavern must have an average grade of 20% KCl, which is considered the cut-off grade for sylvinite.

The carnallite and sylvite cut-off grades do not need to consider the production of the magnesium byproduct as the processing of brine to the MOP product generates an MgCl_{2}-rich end brine used for the production of the hydromagnesite.

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14.4 Estimation Methodology

A geological model was developed over a portion of the Property based on a single historical exploration drill hole, 11 exploration drill holes drilled by Karnalyte and the 3D seismic survey. The mapping based on the drill hole data and the 3D seismic survey indicates a continuous layering of potash bearing Patience Lake, Belle Plaine and Esterhazy Members which dips slightly (<2°) to the south. The continuous layering of the potash horizons is only disturbed at certain anomalous zones (Class 1 collapse structures) that have been identified from the 3D seismic survey. Around these areas a buffer has been defined with the assumption that within this buffer area the potash members are not present.

The thickness and grade of the potash bearing members are, with few exceptions (e.g., Patience Lake Member at KW 3B4-26 and KW 4B14-24), all considered mineable without detailed scrutiny. Except for these two wells in the Patience Lake Member there are only minor variations from the averages with no spatial trends. This is also true for the upper and lower potash horizons in the Esterhazy Member, which can be identified in most wells but often have too low grade over the required minimum thickness to be considered independently economically extractable. The Patience Lake Member for exploration well KW 3B4-26 is not representative for a larger area as it is located at the boundary of a buffer around an interpreted collapse structure. The reduced thickness and high grade at this well are attributed to dissolution and partial transformation to sylvite of the uppermost part of the carnallite of the Patience Lake Member and as such would not be considered mineable by solution mining. To be conservative the mineral resources for the area around this well have been estimated using these low values. Exploration well KW 4B14-24 in the Patience Lake Member shows the development of relatively thick sylvinite above carnallitite, which cannot be correlated with nearby wells. The thickness and grades shown in Table 7-2 for KW 4B14-24 are averaged over a carnallitite thickness of 6.47 m at an average carnallite grade of 75% and a sylvinite thickness of 6.54 m at an average sylvite content of 22%. Therefore, the lower part of this well can be mined as a carnallitite mining cut, whereas the upper part can be mined as sylvinite like the Esterhazy Member and will be solution mined independently after mining the carnallitite below.

To solution mine the Upper Belle Plaine Member it is necessary to prepare the cavern by solution mining in the Lower Belle Plaine Member. The brine obtained from the Lower Belle Plaine Member does not reach production brine grade but is recycled as solvent for the Upper Belle Plaine and Patience Lake Members. As such the Lower Belle Plaine Member contributes to the mineral resources. This can be compared to "planned" dilution in conventional mining.

For both mineral resource and mineral reserve estimates a polygon method with each polygon centred on a well has been used. The thickness and grade of the potash deposit from the central well is applied to the whole polygon area. This results in small abrupt changes in thickness and

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grade at polygon boundaries between neighbouring wells. In the opinion of QP van der Klaw this is not considered problematic as the polygon method reflects the inherent variation in thickness and grade observed for all mineable members (with exception of the Patience Lake Member in drill hole KW 3B4-26), which has been sampled in the exploration wells. This method will tend to underestimate the mineral resources in KW 3B4-26 of the Patience Lake Member.

14.5 Mineral Resource Classification

In classifying Measured and Indicated mineral resources, QP van der Klaw considered the proximity to a cored and assayed drill hole as well as other technical, economic and legal considerations. QP van der Klaw considered the data quality of the Karnalyte holes, re-sampling and re-assaying of core of historical wells, and the presence of a modern 3D seismic program as criteria used to assign confidence in deposit continuity and quality.

14.5.1 Determination of Radius of Influence

The polygon areas used to determine the existence of the mineral resource and the classification categories are defined by an ROI around each well. Polygons were modified using the results of the 3D seismic survey, geotechnical and mineral tenure boundary considerations.

The ROIs used for the mineral resource classification for the Project are comparable to those used to classify mineral resources for other solution mining projects in Saskatchewan (e.g., March, 2021 for Western Potash Corp.). The ROI for Measured mineral resources in the carnallite-rich Patience Lake and Belle Plaine Members is slightly larger than for other operations that use sylvite. This is supported by carnallite probability maps that qualitatively assess the likelihood of carnallite mineralization that is not used in operations that mine sylvite. For conventional mining operations, an ROI for the inferred category in the order of $3.2\mathrm{km}$ is commonly used as the presence of an undetected anomalous zone can negatively affect the mining operation. For solution mining, restrictions on lateral and vertical continuity of the deposit caused by an anomalous zone during cavern preparation are less severe as wells can be abandoned and a new well drilled away from the anomalous zone with minimal effect on the overall operation. Furthermore, solution mining produces brine from multiple members whereas conventional operations mine only a single member which provides more flexibility should a barren zone in a single member be intercepted. For these reasons, the ROI has been extended to $6\mathrm{km}$, in line with recent solution mining resource estimates in Saskatchewan.

Figure 14-1 and Figure 14-2 show the extent of the ROIs and the polygons for the different mineral resource classification categories for each well for the Patience Lake and Belle Plaine Members, and Esterhazy Member, respectively.

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Figure 14-1: Polygon Areas and their Radii of Influence for Mineral Resources Categories for the Patience Lake and Belle Plaine Members

Source: ERCOSPLAN, 2025

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Figure 14-2: Polygon Areas and their Radii of Influence for Mineral Resources Categories for the Esterhazy Member

Source: ERCOSPLAN, 2025

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14.5.2 Exclusions and Deductions

Mineral resources are excluded from the following:

Anomalies identified by 3D and 2D seismic surveys Figure 14-1
Freehold Mineral Rights or First Nations Mineral Rights (see Figure 4-1) within the boundaries of the mineral leases
Areas around the town of Wynyard
Areas covered by 2D seismic that are outside the 3D seismic boundary have a 25% deduction applied to the tonnage to account for anomalies that might not have been detected by the 2D seismic investigations
Areas with 3D seismic have a 10% deduction applied to the tonnage to account for anomalies that might not have been detected by the 3D seismic investigations.

14.5.3 Measured Category

Inside the 3D seismic area:
ROI within 1.0 km of a cored and assayed well in the Esterhazy member, Patience Lake and Belle Plaine Members.
Outside the 3D seismic area:
ROI within 0.8 km area of a cored and assayed well in the Esterhazy Member, Patience Lake and Belle Plaine Members.

The following Measured mineral resources within geotechnical exclusion zones have been downgraded to Inferred:

Plant subsidence buffer ... 900 m
Highway 16 buffer ... 800 m
Property boundary ... 600 m

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14.5.4 Indicated Category

Inside the 3D seismic area:
ROI between 1.0 km and 2.2 km from a cored and assayed well in the Patience Lake and Belle Plaine Members, and between 1.0 km and 1.6 km for the Esterhazy Member.
Outside the 3D seismic area:
ROI between 0.8 km and 1.6 km from a cored and assayed well for all Members.

The following Indicated mineral resources within geotechnical exclusion zones have been downgraded to Inferred:

Plant subsidence buffer ... 900 m
Highway 16 buffer ... 800 m
Property boundary ... 600 m

14.5.5 Inferred Category

Inside the 3D seismic area:
ROI between 2.2 km and 6.0 km from a cored and assayed well for the Patience Lake and Belle Plaine Members, and between 1.6 km and 6.0 km maximum radius for the Esterhazy Member.
Outside the 3D seismic area:
ROI between 1.6 km and 6.0 km from a cored and assayed well for all Members.

Areas that would have been classified as Measured or Indicated but were downgraded because they were within the geotechnical exclusion zones or within 600 m of the Property boundary are classified as Inferred.

14.5.6 Estimating the Mineral Resource

The area of all polygons around each well by mineral resource category, inside or outside 3D seismic area was then extracted from the GIS system. For areas outside the 3D seismic boundary a 25% deduction of the area was used for anomalies that might not have been detected by the seismic investigations. In the area within the 3D seismic a 10% deduction of the area was used.

Project No.: 252512
24 December 2025
Mineral Resource Estimates
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Karnalyte RESOURCES

Wynyard Project

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For each polygon the mineral resource was estimated for the different potash bearing Members using the following methodology:

Sum the area of the polygons of each classification category around each well.
For each classification category of each well multiply the total area of the polygon with the thickness of the potassium bearing member of the well to determine the volume.
For each classification category of each well multiply the volume with the density of the potassium bearing member estimated from the mineralogical composition of that interval (e.g., typically between 1.7 and 1.9 for carnallitite, depending on relative amounts of sylvite in the rock, and between 2.01 and 2.1 for sylvinite, depending on the relative amount of carnallite in the rock) to determine the tonnage.

This method estimates the in-situ tonnage of mineralized material with an average carnallite and sylvite content for each potash bearing member, for each mineral resource classification category, for each well. The sum of the tonnage for the given member and mineral resource classification category over all wells and the weighted average of the carnallite and sylvite content provides the total tonnage of in-situ mineralized material for each member.

14.6 Mineral Resource Statement

The mineral resource statement for the Project assuming solution mining of potassium bearing members is presented in Table 14-1. Mineral resources are reported as in-situ. The total amount of magnesium by-products produced from $\mathrm{MgCl}_2$-rich end brine of MOP production is significantly less than the reported mineral resource to reflect the capacity constraint of the market.

A detailed breakdown of the mineral resource estimate is provided for the Patience Lake Member (Table 14-2 to Table 14-4), for the Upper Belle Plaine Member (Table 14-5 to Table 14-7), for the Lower Belle Plaine Member (Table 14-8 to Table 14-10), for the Upper Horizon of the Esterhazy Member (Table 14-11 to Table 14-13) and for the Lower Horizon of the Esterhazy Member (Table 14-14 to Table 14-16).

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Mineral Resource Estimates

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Karnalyte RESOURCES

Wynyard Project

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Table 14-1: Mineral Resource Statement

Classification Category	Tonnes (Mt)	Carnallite Grade (%)	Sylvite Grade (%)	Avg. K₂O (%)	Avg. MgO (%)
Measured
Patience Lake	324.5	60.2	3.9	12.7	8.7
Upper Belle Plaine	392.9	67.7	1.2	12.2	9.8
Lower Belle Plaine	267.8	29.9	4.3	7.8	4.3
Esterhazy	177.2	8.6	23.7	16.4	1.3
Total/Avg. Measured	1,162.4	47.9	6.1	12.0	6.9
Indicated
Patience Lake	532.3	61.4	3.5	12.6	8.9
Upper Belle Plaine	627.5	67.1	1.1	12.1	9.7
Lower Belle Plaine	428.2	30.1	4.4	7.9	4.4
Esterhazy	201.9	8.8	23.3	16.2	1.3
Total/Avg. Indicated	1,789.9	50.0	5.1	11.7	7.2
Inferred
Patience Lake	1,160.1	57.4	4.8	12.8	8.3
Upper Belle Plaine	1,203.6	65.8	1.5	12.1	9.5
Lower Belle Plaine	814.9	30.0	4.4	7.8	4.3
Esterhazy	723.5	8.2	23.5	16.2	1.2
Total/Avg. Inferred	3,902.1	45.2	7.2	12.2	6.6

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24 December 2025

Mineral Resource Estimates

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Karnalyte
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Table 14-2: Estimated In-Situ Measured Mineral Resources for the Patience Lake Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.44	7.54	1.73	18.78	70.42	0.35
DH-20	0.60	7.68	1.79	8.22	61.25	0.74
DH-21	2.52	5.51	1.75	24.29	68.80	0.05
KW 2-24	2.06	7.63	1.76	27.65	66.18	2.36
KW 2C6-32	2.46	7.87	1.73	33.61	70.81	0.10
KW 4B14-24	2.83	13.01	1.90	69.93	37.70	11.38
KW 4D14-21	2.68	7.95	1.75	37.25	68.27	0.03
KW 13-36	2.29	6.11	1.78	24.89	60.55	6.56
KW 3C4-8	1.19	7.99	1.74	16.47	70.92	0.02
KW 3B4-26	1.64	3.05	1.91	9.59	33.84	21.24
KW 2A11-12	2.06	8.10	1.73	28.75	71.69	0.01
KW 3A11-27	2.14	6.60	1.77	25.04	63.88	0.27
Total/Average	23.91	7.60	1.78	324.48	60.24	3.86

Table 14-3: Estimated In-Situ Indicated Mineral Resources for Patience Lake Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	2.61	7.54	1.73	34.09	70.42	0.35
DH-20	3.31	7.68	1.79	45.49	61.25	0.74
DH-21	2.38	5.51	1.75	22.86	68.80	0.05
KW 2-24	2.67	7.63	1.76	35.79	66.18	2.36
KW 2C6-32	4.07	7.87	1.73	55.54	70.81	0.10
KW 4B14-24	4.04	13.01	1.90	99.79	37.70	11.38
KW 4D14-21	4.03	7.95	1.75	55.96	68.27	0.03
KW 13-36	4.41	6.11	1.78	48.00	60.55	6.56
KW 3C4-8	3.36	7.99	1.74	46.68	70.92	0.02
KW 3B4-26	2.04	3.05	1.91	11.90	33.84	21.24
KW 2A11-12	4.85	8.10	1.73	67.84	71.69	0.01
KW 3A11-27	0.71	6.60	1.77	8.37	63.88	0.27
Total/Average	38.47	7.78	1.78	532.31	61.36	3.47

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24 December 2025
Mineral Resource Estimates
Page 14-12
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Karnalyte
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Table 14-4: Estimated In-Situ Inferred Mineral Resources for the Patience Lake Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	10.18	7.54	1.73	133.14	70.42	0.35
DH-20	4.09	7.68	1.79	56.25	61.25	0.74
DH-21	0.09	5.51	1.75	0.86	68.80	0.05
KW 2-24	11.35	7.63	1.76	152.19	66.18	2.36
KW 2C6-32	2.94	7.87	1.73	40.10	70.81	0.10
KW 4B14-24	16.28	13.01	1.90	402.63	37.70	11.38
KW 4D14-21	6.17	7.95	1.75	85.75	68.27	0.03
KW 13-36	5.01	6.11	1.78	54.55	60.55	6.56
KW 3C4-8	7.23	7.99	1.74	100.43	70.92	0.02
KW 3B4-26	1.24	3.05	1.91	7.21	33.84	21.24
KW 2A11-12	8.98	8.10	1.73	125.50	71.69	0.01
KW 3A11-27	0.13	6.60	1.77	1.48	63.88	0.27
Total/Average	73.69	8.75	1.80	1,160.11	57.40	4.78

Table 14-5: Estimated In-Situ Measured Mineral Resources for the Upper Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.44	9.88	1.76	24.92	64.12	0.31
DH-20	0.60	9.69	1.75	10.12	66.99	0.21
DH-21	2.52	10.45	1.74	45.79	70.72	0.77
KW 2-24	2.06	9.12	1.73	32.60	70.83	0.05
KW 2C6-32	2.46	8.94	1.73	38.22	72.65	0.01
KW 4B14-24	2.83	9.18	1.78	46.20	60.30	5.19
KW 4D14-21	2.68	9.02	1.73	41.91	69.90	0.77
KW 13-36	2.29	8.62	1.76	34.70	64.81	1.42
KW 3C4-8	1.19	9.98	1.73	20.46	70.66	0.09
KW 3B4-26	1.64	9.13	1.73	26.03	68.68	0.02
KW 2A11-12	2.06	9.14	1.78	33.42	62.25	1.22
KW 3A11-27	2.14	10.43	1.73	38.54	70.58	1.71
Total/Average	23.91	9.41	1.75	392.90	67.70	1.21

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-13
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Karnalyte
RESOURCES
Wynyard Project
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NI 43-101 Technical Report on the Feasibility Study

Table 14-6: Estimated In-Situ Indicated Mineral Resources for the Upper Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	2.61	9.88	1.76	45.22	64.12	0.31
DH-20	3.31	9.69	1.75	56.01	66.99	0.21
DH-21	2.38	10.45	1.74	43.10	70.72	0.77
KW 2-24	2.67	9.12	1.73	42.19	70.83	0.05
KW 2C6-32	4.07	8.94	1.73	63.16	72.65	0.01
KW 4B14-24	4.04	9.18	1.78	65.94	60.30	5.19
KW 4D14-21	4.03	9.02	1.73	62.95	69.90	0.77
KW 13-36	4.41	8.62	1.76	66.92	64.81	1.42
KW 3C4-8	3.36	9.98	1.73	57.97	70.66	0.09
KW 3B4-26	2.04	9.13	1.73	32.27	68.68	0.02
KW 2A11-12	4.85	9.14	1.78	78.86	62.25	1.22
KW 3A11-27	0.71	10.43	1.73	12.88	70.58	1.71
Total/Average	38.47	9.32	1.75	627.48	67.13	1.07

Table 14-7: Estimated In-Situ Inferred Mineral Resources for the Upper Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	2.61	9.88	1.76	45.22	64.12	0.31
DH-20	3.31	9.69	1.75	56.01	66.99	0.21
DH-21	2.38	10.45	1.74	43.10	70.72	0.77
KW 2-24	2.67	9.12	1.73	42.19	70.83	0.05
KW 2C6-32	4.07	8.94	1.73	63.16	72.65	0.01
KW 4B14-24	4.04	9.18	1.78	65.94	60.30	5.19
KW 4D14-21	4.03	9.02	1.73	62.95	69.90	0.77
KW 13-36	4.41	8.62	1.76	66.92	64.81	1.42
KW 3C4-8	3.36	9.98	1.73	57.97	70.66	0.09
KW 3B4-26	2.04	9.13	1.73	32.27	68.68	0.02
KW 2A11-12	4.85	9.14	1.78	78.86	62.25	1.22
KW 3A11-27	0.71	10.43	1.73	12.88	70.58	1.71
Total/Average	73.69	9.31	1.75	1,203.57	65.82	1.52

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-14
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 14-8: Estimated In-Situ Measured Mineral Resources for the Lower Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.44	5.26	2.06	15.52	19.36	5.18
DH-20	0.60	5.57	1.96	6.54	27.78	9.73
DH-21	2.52	6.35	2.00	32.01	22.64	9.00
KW 2-24	2.06	6.08	1.92	24.09	36.09	3.78
KW 2C6-32	2.68	5.98	1.96	31.34	30.95	1.33
KW 4B14-24	2.46	5.23	1.95	25.07	32.86	0.38
KW 4D14-21	2.83	5.69	1.96	31.47	29.89	3.89
KW 13-36	2.29	6.19	1.93	27.39	34.84	0.32
KW 3C4-8	1.19	5.13	1.97	11.99	27.25	7.95
KW 3B4-26	1.64	6.19	1.94	19.77	31.89	4.42
KW 2A11-12	2.06	5.38	1.94	21.49	32.02	5.91
KW 3A11-27	2.14	5.02	1.97	21.11	28.07	6.21
Total/Average	23.91	5.72	1.96	267.81	29.88	4.28

Table 14-9: Estimated In-Situ Indicated Mineral Resources for the Lower Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	2.61	5.26	2.06	28.18	19.36	5.18
DH-20	3.31	5.57	1.96	36.19	27.78	9.73
DH-21	2.38	6.35	2.00	30.13	22.64	9.00
KW 2-24	2.67	6.08	1.92	31.18	36.09	3.78
KW 2C6-32	4.07	5.23	1.95	41.43	32.86	0.38
KW 4B14-24	4.04	5.69	1.96	44.91	29.89	3.89
KW 4D14-21	4.03	5.98	1.96	47.09	30.95	1.33
KW 13-36	4.41	6.19	1.93	52.82	34.84	0.32
KW 3C4-8	3.36	5.13	1.97	33.98	27.25	7.95
KW 3B4-26	2.04	6.19	1.94	24.51	31.89	4.42
KW 2A11-12	4.85	5.38	1.94	50.71	32.02	5.91
KW 3A11-27	0.71	5.02	1.97	7.06	28.07	6.21
Total/Average	38.47	5.68	1.96	428.18	30.10	4.39

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-15
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Karnalyte
RESOURCES
Wynyard Project
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NI 43-101 Technical Report on the Feasibility Study

Table 14-10: Estimated In-Situ Inferred Mineral Resources for the Lower Belle Plaine Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	10.18	5.26	2.06	110.06	19.36	5.18
DH-20	4.09	5.57	1.96	44.74	27.78	9.73
DH-21	0.09	6.35	2.00	1.13	22.64	9.00
KW 2-24	11.35	6.08	1.92	132.60	36.09	3.78
KW 2C6-32	16.28	5.69	1.96	181.21	29.89	3.89
KW 4B14-24	6.17	5.98	1.96	72.16	30.95	1.33
KW 4D14-21	2.94	5.23	1.95	29.92	32.86	0.38
KW 13-36	5.01	6.19	1.93	60.02	34.84	0.32
KW 3C4-8	7.23	5.13	1.97	73.11	27.25	7.95
KW 3B4-26	1.24	6.19	1.94	14.87	31.89	4.42
KW 2A11-12	8.98	5.38	1.94	93.81	32.02	5.91
KW 3A11-27	0.13	5.02	1.97	1.25	28.07	6.21
Total/Average	73.69	5.64	1.96	814.88	29.96	4.37

Table 14-11: Estimated In-Situ Measured Mineral Resources for the Upper Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.44	3.96	2.12	12.08	2.66	20.16
DH-20	0.60	2.57	2.03	3.12	15.06	22.44
DH-21	2.52	2.25	2.09	11.87	4.97	23.87
KW 2-24	2.15	3.17	2.04	13.90	11.97	27.36
KW 2C6-32	2.26	2.03	2.01	10.03	16.64	25.90
KW 4B14-24	2.83	2.31	2.04	13.35	13.27	19.77
KW 4D14-21	2.68	2.00	2.04	10.93	15.23	16.08
KW 13-36	2.29	2.22	2.06	10.47	10.77	20.27
KW 2A11-12	2.06	3.42	2.09	14.74	4.42	23.55
KW 3A11-27	2.14	2.25	2.03	9.76	12.45	31.67
Total/Average	21.16	2.53	2.06	110.24	10.11	15.06

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-16
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Karnalyte
RESOURCES
Wynyard Project
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NI 43-101 Technical Report on the Feasibility Study

Table 14-12: Estimated In-Situ Indicated Mineral Resources for the Upper Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.59	3.96	2.12	13.33	2.66	20.16
DH-20	1.79	2.57	2.03	9.35	15.06	22.44
DH-21	1.72	2.25	2.09	8.06	4.97	23.87
KW 2-24	2.73	3.17	2.04	17.62	11.97	27.36
KW 2C6-32	3.10	2.03	2.01	12.64	16.64	25.90
KW 4B14-24	3.45	2.31	2.04	16.29	13.27	19.77
KW 4D14-21	2.74	2.00	2.04	11.16	15.23	16.08
KW 13-36	2.55	2.22	2.06	11.67	10.77	20.27
KW 2A11-12	2.97	3.42	2.09	21.26	4.42	23.55
KW 3A11-27	0.54	2.25	2.03	2.46	12.45	31.67
Total/Average	23.17	2.60	2.06	123.85	10.29	22.59

Table 14-13: Estimated In-Situ Inferred Mineral Resources for the Upper Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	11.20	3.96	2.12	94.19	2.66	20.16
DH-20	5.61	2.57	2.03	29.26	15.06	22.44
DH-21	0.75	2.25	2.09	3.52	4.97	23.87
KW 2-24	11.83	3.17	2.04	76.46	11.97	27.36
KW 2C6-32	3.91	2.03	2.01	15.91	16.64	25.90
KW 4B14-24	16.87	2.31	2.04	79.63	13.27	19.77
KW 4D14-21	7.46	2.00	2.04	30.41	15.23	16.08
KW 13-36	6.87	2.22	2.06	31.45	10.77	20.27
KW 2A11-12	10.87	3.42	2.09	77.83	4.42	23.55
KW 3A11-27	0.30	2.25	2.03	1.38	12.45	31.67
Total/Average	75.67	2.81	2.07	440.05	9.34	22.09

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-17
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Karnalyte
RESOURCES
Wynyard Project
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NI 43-101 Technical Report on the Feasibility Study

Table 14-14: Estimated In-Situ Measured Mineral Resources for the Lower Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.44	2.44	2.08	7.28	6.21	25.25
DH-20	0.60	3.28	2.09	4.10	6.19	19.12
DH-21	2.52	3.32	2.09	17.49	5.16	23.84
KW 2-24	2.15	3.07	2.08	13.72	7.10	22.88
KW 4B14-24	2.83	1.99	2.06	11.58	6.76	36.22
KW 13-36	2.29	2.68	2.09	12.82	6.06	19.06
Total/Average	11.82	2.72	2.08	66.99	6.18	24.73

Table 14-15: Estimated In-Situ Indicated Mineral Resources for the Lower Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	1.59	2.44	2.08	8.03	6.21	25.25
DH-20	1.79	3.28	2.09	12.30	6.19	19.12
DH-21	1.72	3.32	2.09	11.89	5.16	23.84
KW 2-24	2.73	3.07	2.08	17.39	7.10	22.88
KW 4B14-24	3.45	1.99	2.06	14.12	6.76	36.22
KW 13-36	2.55	2.68	2.09	14.30	6.06	19.06
Total/Average	13.82	2.71	2.08	78.03	6.32	24.39

Table 14-16: Estimated In-Situ Inferred Mineral Resources for the Lower Horizon of the Esterhazy Member

Well ID	Area (km²)	Thickness (m)	Density (t/m³)	Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	11.20	2.44	2.08	56.75	6.21	25.25
DH-20	5.61	3.28	2.09	38.49	6.19	19.12
DH-21	0.75	3.32	2.09	5.19	5.16	23.84
KW 2-24	11.83	3.07	2.08	75.46	7.10	22.88
KW 4B14-24	16.87	1.99	2.06	69.05	6.76	36.22
KW 13-36	6.87	2.68	2.09	38.53	6.06	19.06
Total/Average	53.13	2.57	2.08	283.48	6.54	25.59

Project No.: 252512
24 December 2025
Mineral Resource Estimates
Page 14-18
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

14.7 Factors That Could Affect the Mineral Resource Estimate

Although exploration well results suggest variation in thickness and mineral grades, especially for the Belle Plaine and Patience Lake Members, are limited, the presence of local variations cannot be completely ruled out and can affect the result of the mineral resource estimate. For the Esterhazy Member the observed variation in thickness and grade of sections considered mineable by solution mining is more significant. The use of the polygonal method provides a more conservative mineral resource estimate than the application of a model that correlates observed thickness and mineral grade between the available wells. Using such a model could increase the tonnes of the estimate.

Within the Property some free hold sections are present. Mineral resources could increase if Karnalyte obtains mining rights on free hold lands, especially those at the outer boundary of the Property. Conversely, should the government consider the three mining leases as separate properties, a 1,200 m wide buffer at the west edge of KL 246 would be required and would negatively affect the mineral resource estimate.

The ability to capture market share and maintain the market share at the assumed potash prices could affect the reasonable prospect for eventual economic extraction.

14.8 QP Comments on Section 14

It is QP van der Klauw's opinion that with several decades of operating experience the actual dimension of subsidence will be known, and the geotechnical exclusion zones might be redefined to be smaller.

Based on QP van der Klauw's experience with other solution mining potash projects and the interpretations of the data reviewed, it is QP van der Klauw's opinion that the ROIs used in mineral resource classification are acceptable and appropriate and are consistent with industry practice in Saskatchewan.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

15.0 MINERAL RESERVE ESTIMATES

15.1 Key Assumptions, Parameters and Methods

Mineral reserves are converted from Measured and Indicated mineral resources based on the following assumptions:

Leaching of potash bearing carnallite and sylvite members using a non-selective solution mining method.
Grade and thickness of each of the mineralized members are more or less uniform within each polygon.
Cavern size and the number of caverns planned to be mined in the area is defined by the polygons around each cavern as shown in Figure 15-1 and Figure 15-2.
Each well has its own cavern solution recoveries that range from 84% to 91% for the Patience Lake Member, from 89% to 91% for the Upper Belle Plain Member, from 30% to 33% for the Lower Belle Plain Member, from 88% to 92% for the Upper Esterhazy Member and from 88% to 91% for the Lower Esterhazy Member.
Only a portion of the Measured and Indicated mineral resources are converted to proven and probable mineral reserves due to the unmined portions left between the caverns (pillars) for ground support.
To ensure optimal plant operation the mine plan has been designed to maintain a sylvinite:carnallitite ratio between 25:75 and 10:90. To achieve this, not all Indicated and Measured mineral resources of the Esterhazy member were converted to proven and probable mineral reserves.
Areas covered by 2D seismic that are outside the 3D seismic boundary have a 25% deduction applied to the brine volume to account for anomalies that might not have been detected by the 2D seismic investigations. The brine volume and its concentration are used to determine tonnage that can be produced from a cavern.
Areas with 3D seismic have a 10% deduction applied to the brine volume to account for anomalies that might not have been detected by the 3D seismic investigations.

15.2 Cut-off Grade Determination

In solution mining part of the processing of the mineralized material takes place in the underground. The material brought to the plant is a brine which is processed to a KCl product, whereby the NaCl and MgCl₂ brine that remain after processing can be considered potential by-products or waste. The plant is designed for a certain production capacity based on the installed

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Karnalyte RESOURCES

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capacity for evaporation of water from the production brine from the brine field. The plant design requires an average production brine composition that falls within a narrow pre-defined compositional range (see Section 16.3). The plant is designed for a minimum KCl content in the brine of 115 g/L at which the plant produces 675,000 t/a for Phase 1 and increases by 750,000 t/a for each of Phase 2 and Phase 3. Therefore, for carnallitite rock the cut-off grade has been set at 15% KCl (~55% carnallite) and for sylvinite the cut-off grade has been set to 20% KCl as is explained further below. Using these defined cut-offs the maximum mining, process and G&A operating costs ($134.01/t) and an assumed MOP price of US$516/t, the Project generates positive cash flows.

The average production brine composition coming to the plant is a mixture of brine mainly from the carnallitite caverns in the rocks of the Belle Plaine and Patience Lake Members and the sylvinite caverns in the rocks mainly from the Esterhazy Member. The composition of the production brine from a cavern either in carnallitite or sylvinite rock depends on the flow rate over the cavern, the temperature in the system and the dissolution characteristics of the minerals making up the rock. Therefore, the cut-off grade is determined by the dissolution characteristics of the potassium bearing minerals carnallite and sylvite.

The dissolution tests on carnallitite rock from the deposit (ERCOSPLAN, 2011), typically from all high grade carnallitite rocks, show that there is a strong preference to dissolve the mineral carnallite from the rock compared to the mineral halite. As long as there is a reasonable production brine flow rate (40 to 60 m³/h) over the cavern, the mineral carnallite is accessible for the solvent and the KCl content of the production brine will increase until on average about 85% KCl saturation is maintained. The dissolution tests indicate that if the average carnallite content of the rock falls below 55% carnallite (~15% KCl) after the initial dissolution of carnallite then the required dissolution of halite to make carnallite available to the solvent determines the further rate of increase of KCl content in the production brine. A cavern with lower grade carnallitite rock operating at flow rates of 10 to 15 m³/h would still achieve planned production brine composition; however, the required number of caverns running in parallel would become three to five times larger. This would significantly increase the capital expenditures for drilling especially at the start-up of operation.

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mixture of brines from several different caverns (e.g. approximately six sylvinite caverns and 12 carnallitite caverns for a mature brine field in Phase 1 (see Section 16.4), it is acceptable that some caverns in sylvinite produce a brine with a KCl grade as low as 100 g/L. To achieve this the sylvinite rock in the cavern must have an average grade of 20% KCl, which is considered the cut-off grade for sylvinite.

Mineral Reserve Statement

The mineral reserve statement for the Project is presented in Table 15-1. Measured and Indicated mineral resources were converted to proven and probable mineral reserves by applying appropriate modifying factors. The point of reference is delivery of the production brine at the tank farm at the process facilities. Mineral reserves are defined for the minerals carnallite and sylvite that can be processed to MOP fertilizer and part of the MgCl_{2}-rich end brine resulting from this process can be processed to a magnesium-bearing product. The amount of magnesium-bearing brine that can be processed is limited to the market capacity for the hydromagnesite product.

Mineral reserves have been derived from Measured and Indicated mineral resources by using the number of caverns planned in each such area defined by the exploration drill hole polygons. Furthermore, technical exclusion zones for cavern placement in the form of subsidence safety pillars along the highway and around the plant location have been applied. Figure 15-1 and Figure 15-2 show the polygons referencing Measured and Indicated mineral resources for each drill hole and the location of the caverns for the future brine field for the Patience Lake/Belle Plaine Members and Esterhazy Member, respectively. It is assumed that within the polygon area around the exploration drill hole the grade and thickness of the mineralized members are more or less uniform.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

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Table 15-1: Mineral Reserve Statement

Confidence Category	Tonnes (Mt)	Carnallite Grade (%)	Sylvite Grade (%)	Avg. K₂O (%)	Avg. MgO (%)
Proven Mineral Reserves
Patience Lake	103.8	60.3	3.8	12.6	8.7
Upper Belle Plaine	125.9	67.6	1.3	12.3	9.8
Lower Belle Plaine	30.3	29.7	4.2	7.7	4.3
Esterhazy	53.2	8.8	23.9	16.6	1.3
Sub-total Proven	313.2	51.5	6.2	12.7	7.5
Probable Mineral Reserves
Patience Lake	166.9	61.4	3.5	12.6	8.9
Upper Belle Plaine	200.9	67.1	1.1	12.1	9.7
Lower Belle Plaine	48.5	29.9	4.4	7.8	4.3
Esterhazy	47.5	10.5	23.3	16.5	1.5
Sub-total Probable	463.8	55.4	4.6	12.3	8.0
Total Proven and Probable	777.1	53.8	5.2	12.4	7.8

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Figure 15-1: Planned Positions of Caverns in the Areas for Mineral Resources for the Patience Lake and Belle Plain Members

Source: ERCOSPLAN, 2025

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Figure 15-2: Planned Positions of Caverns in the Areas for Mineral Resources for the Esterhazy Member

Legend:
- Drillhole
- Karnalyte Disposition Area
- 3D Seismic Area (2009/2010 Boyd)
- Collapse Area & Buffer (2011 RPS Boyd Petroseach)
- Historical Seismic Anomaly (Holter, 1969)
- Cavern planned

Town of Wynyard
Plant Subsidence Buffer

Resources:
- Measured
- Indicated
- Inferred

Source: ERCOSPLAN, 2025

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Page 15-6

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Wynyard, Saskatchewan

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For each exploration drill hole the proven and probable mineral reserves for the extrapolated area of influence is shown for the Patience Lake Member in Table 15-2 and Table 15-3 respectively, for the Upper Belle Plaine Member in Table 15-4 and Table 15-5, for the Lower Belle Plaine Member in Table 15-6 and Table 15-7 for the upper horizon of the Esterhazy Member in Table 15-8 and Table 15-9, and for the lower horizon of the Esterhazy Member in Table 15-10 and Table 15-11. To maintain the necessary ratio between the amount of carnallitite and sylvinite in the production brine, not all the mineral resources in the Esterhazy Member are converted to mineral reserves which explains why Table 15-8 to Table 15-11 contains fewer number of caverns than what is displayed in Figure 15-2.

Total KCl that can be mined from the carnallitite and sylvinite mineral reserves taking into account modifying factors including cavern recovery and the same deductions applied to the resource estimate is shown in Table 15-12. At a 90% plant efficiency and 97% KCl product quality it makes approximately 142 million tonnes of MOP product.

Total MgCl₂ that can be mined from the carnallitite and sylvinite mineral reserves taking into account modifying factors including cavern recovery and the same deductions applied to the resource estimate is shown in Table 15-13. The total amount of magnesium by-products from MgCl₂-rich end brine of MOP production reflects the capacity constraint of the market, resulting in a total production of about 7 million tonnes of hydromagnesite.

In the opinion of QP van der Klaw, potential variations in this estimate are minor only and will not significantly affect the economic viability of the Project.

Table 15-2: Proven Potash Reserves for the Patience Lake Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	41	194.3	7.97	89.0	6.38	70.42	0.35
DH-20	18	204.3	3.68	89.8	2.97	61.25	0.74
DH-21	61	142.9	8.72	90.7	7.12	68.80	0.05
KW 2-24	54	199.2	10.76	90.3	8.75	66.18	2.36
KW 2C6-32	70	202.6	14.18	91.3	11.65	70.81	0.1
KW 4B14-24	82	367.4	30.12	84.5	22.90	37.70	11.38
KW 4D14-21	74	206.5	15.28	87.2	11.99	68.27	0.03
KW 13-36	62	161.7	10.02	87.5	7.90	60.55	6.56
KW 3C4-8	32	206.3	6.60	90.6	5.38	70.92	0.02
KW 3B4-26	34	86.7	2.95	91.2	2.42	33.84	21.24
KW 2A11-12	50	207.6	10.38	91.3	8.53	71.69	0.01
KW 3A11-27	56	174.0	9.74	89.3	7.83	63.88	0.27
Total/Average	634	196.8	130.39	88.5	103.81	60.30	3.79

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 15-3: Probable Potash Reserves for the Patience Lake Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	72	194.3	13.99	89.0	11.21	70.42	0.35
DH-20	85	204.3	17.36	89.8	14.04	61.25	0.74
DH-21	61	142.9	8.72	90.7	7.12	68.80	0.05
KW 2-24	73	199.2	14.54	90.3	11.82	66.18	2.36
KW 2C6-32	105	202.6	21.27	91.3	17.47	70.81	0.10
KW 4B14-24	109	367.4	40.04	84.5	30.44	37.70	11.38
KW 4D14-21	111	206.5	22.92	87.2	17.99	68.27	0.03
KW 13-36	107	161.7	17.30	87.5	13.63	60.55	6.56
KW 3C4-8	91	206.3	18.77	90.6	15.30	70.92	0.02
KW 3B4-26	67	86.7	5.81	91.2	4.77	33.84	21.24
KW 2A11-12	125	207.6	25.95	91.3	21.32	71.69	0.01
KW 3A11-27	13	174.0	2.26	89.3	1.82	63.88	0.27
Total/Average	1,019	205.0	208.93	88.8	166.92	61.41	3.49

Table 15-4: Proven Potash Reserves for the Upper Belle Plaine Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	41	257.8	10.57	89.2	8.48	64.12	0.31
DH-20	18	251.5	4.53	90.1	3.67	66.99	0.21
DH-21	61	269.5	16.44	89.2	13.20	70.72	0.77
KW 2-24	54	234.8	12.68	90.3	10.30	70.83	0.05
KW 2C6-32	70	230.4	16.13	90.9	13.19	72.65	0.01
KW 4B14-24	82	242.7	19.90	91.7	16.43	60.30	5.19
KW 4D14-21	74	232.3	17.19	90.1	13.93	69.90	0.77
KW 13-36	62	225.4	13.97	90.3	11.35	64.81	1.42
KW 3C4-8	32	256.2	8.20	91.9	6.78	70.66	0.09
KW 3B4-26	34	235.1	7.99	90.6	6.52	68.68	0.02
KW 2A11-12	50	241.3	12.07	89.9	9.77	62.25	1.22
KW 3A11-27	56	267.8	14.99	91.4	12.33	70.58	1.71
Total/Average	634	235.8	154.66	90.5	125.95	67.62	1.27

Project No.: 252512
24 December 2025
Mineral Reserve Estimates
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Karnalyte RESOURCES

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NI 43-101 Technical Report on the Feasibility Study

Table 15-5: Probable Potash Reserves for the Upper Belle Plaine Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	72	257.8	18.56	89.2	14.90	64.12	0.31
DH-20	85	251.5	21.38	90.1	17.32	66.99	0.21
DH-21	61	269.5	16.44	89.2	13.20	70.72	0.77
KW 2-24	73	234.8	17.14	90.3	13.93	70.83	0.05
KW 2C6-32	105	230.4	24.19	90.9	19.78	72.65	0.01
KW 4B14-24	109	242.7	26.46	91.7	21.84	60.30	5.19
KW 4D14-21	111	232.3	25.78	90.1	20.90	69.90	0.77
KW 13-36	107	225.4	24.12	90.3	19.59	64.81	1.42
KW 3C4-8	91	256.2	23.31	91.9	19.29	70.66	0.09
KW 3B4-26	67	235.1	15.75	90.6	12.84	68.68	0.02
KW 2A11-12	125	241.3	30.16	89.9	24.41	62.25	1.22
KW 3A11-27	13	267.8	3.48	91.4	2.86	70.58	1.71
Total/Average	1,019	242.2	246.77	90.4	200.87	67.14	1.06

Table 15-6: Proven Potash Reserves for the Lower Belle Plaine Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	41	203.3	8.34	32.3	2.43	19.36	5.18
DH-20	18	162.5	2.92	32.3	0.85	27.78	9.73
DH-21	61	188.4	11.49	32.2	3.33	22.64	9.00
KW 2-24	54	173.5	9.37	30.9	2.60	36.09	3.78
KW 2C6-32	70	151.1	10.58	30.9	2.95	32.86	0.38
KW 4B14-24	82	165.3	13.56	31.2	3.81	29.89	3.89
KW 4D14-21	74	173.7	12.86	31.2	3.61	30.95	1.33
KW 13-36	62	177.9	11.03	32.6	3.24	34.84	0.32
KW 3C4-8	32	150.2	4.81	30.3	1.31	27.25	7.95
KW 3B4-26	34	178.6	6.07	31.4	1.71	31.89	4.42
KW 2A11-12	50	155.2	7.76	30.2	2.11	32.02	5.91
KW 3A11-27	56	146.7	8.21	31.7	2.34	28.07	6.21
Total/Average	634	162.9	106.99	31.5	30.29	29.68	4.21

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Mineral Reserve Estimates

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Table 15-7: Probable Potash Reserves for the Lower Belle Plaine Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	72	203.3	14.64	32.3	4.26	19.36	5.18
DH-20	85	162.5	13.81	32.3	4.01	27.78	9.73
DH-21	61	188.4	11.49	32.2	3.33	22.64	9.00
KW 2-24	73	173.5	12.67	30.9	3.52	36.09	3.78
KW 2C6-32	105	151.1	15.87	30.9	4.42	32.86	0.38
KW 4B14-24	109	165.3	18.02	31.2	5.07	29.89	3.89
KW 4D14-21	111	173.7	19.28	31.2	5.42	30.95	1.33
KW 13-36	107	177.9	19.04	32.6	5.59	34.84	0.32
KW 3C4-8	91	150.2	13.66	30.3	3.72	27.25	7.95
KW 3B4-26	67	178.6	11.96	31.4	3.38	31.89	4.42
KW 2A11-12	125	155.2	19.40	30.2	5.27	32.02	5.91
KW 3A11-27	13	146.7	1.91	31.7	0.54	28.07	6.21
Total/Average	1,019	168.5	171.75	31.4	48.53	29.85	4.41

Table 15-8: Proven Potash Reserves for the Upper Horizon of the Esterhazy Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	29	124.8	3.62	88.3	2.87	2.66	20.16
DH-20	16	77.5	1.24	89.6	1.00	15.06	22.44
DH-21	61	69.8	4.26	88.9	3.41	4.97	23.87
KW 2-24	54	95.9	5.18	90.5	4.22	11.97	27.36
KW 2C6-32	70	60.5	4.23	90.7	3.45	16.64	25.90
KW 4B14-24	82	70.1	5.75	88.6	4.59	13.27	19.77
KW 4D14-21	56	60.6	3.39	88.2	2.69	15.23	16.08
KW 13-36	60	68.0	4.08	91.7	3.37	10.77	20.27
KW 2A11-12	50	106.4	5.32	89.8	4.30	4.42	23.55
KW 3A11-27	53	67.8	3.59	91.6	2.96	12.45	31.67
Total/Average	531	75.5	40.67	89.9	32.87	10.40	23.25

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Mineral Reserve Estimates
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Table 15-9: Probable Potash Reserves for the Upper Horizon of the Esterhazy Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	29	124.8	3.62	88.3	2.87	2.66	20.16
DH-20	37	77.5	2.87	89.6	2.31	15.06	22.44
DH-21	39	69.8	2.72	88.9	2.18	4.97	23.87
KW 2-24	60	95.9	5.76	90.5	4.69	11.97	27.36
KW 2C6-32	29	60.5	1.75	90.7	1.43	16.64	25.90
KW 4B14-24	85	70.1	5.96	88.6	4.75	13.27	19.77
KW 4D14-21	0	60.6	0.00	88.2	0.00	15.23	16.08
KW 13-36	58	68.0	3.94	91.7	3.25	10.77	20.27
KW 2A11-12	62	106.4	6.60	89.8	5.33	4.42	23.55
KW 3A11-27	0	67.8	0.00	91.6	0.00	12.45	31.67
Total/Average	399	83.3	33.22	89.7	26.83	9.50	22.84

Table 15-10: Proven Potash Reserves for the Lower Horizon of the Esterhazy Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	29	75.3	2.18	90.3	1.77	6.21	25.25
DH-20	16	102.0	1.63	88.2	1.30	6.19	19.12
DH-21	61	102.9	6.28	90.0	5.08	5.16	23.84
KW 2-24	54	94.7	5.11	89.3	4.11	7.10	22.88
KW 4B14-24	82	60.8	4.99	91.2	4.09	6.76	36.22
KW 13-36	60	83.3	5.00	88.3	3.97	6.06	19.06
Total/Average	302	84.1	25.19	89.5	20.33	6.21	25.03

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Table 15-11: Probable Potash Reserves for the Lower Horizon of the Esterhazy Member

Well ID	No. of Caverns	Mineralized Tonnage/Cavern (kt)	Total Mineralized Tonnage (Mt)	Cavern Recovery Factor (%)	Mineable Tonnage (Mt)	Carnallite (%)	Sylvite (%)
DH-11	29	75.3	2.18	90.3	1.77	2.66	20.16
DH-20	37	102.0	3.77	88.2	3.00	15.06	22.44
DH-21	39	102.9	4.01	90.0	3.25	4.97	23.87
KW 2-24	60	94.7	5.68	89.3	4.57	11.97	27.36
KW 4B14-24	85	60.8	5.17	91.2	4.24	16.64	25.90
KW 13-36	58	83.3	4.83	88.3	3.84	13.27	19.77
Total/Average	308	83.3	25.65	89.5	20.67	11.72	23.77

Table 15-12: Tonnes of KCl in the Production Brine

Evaporite Member	Tonnes KCl (Mt)
Patience Lake	54.1
Upper Belle Plaine	62.8
Lower Belle Plaine	9.7
Esterhazy	26.4
Total	152.9

Table 15-13: Tonnes of MgCl₂ in the Production Brine

Evaporite Member	Tonnes MgCl₂ (Mt)
Patience Lake	56.6
Upper Belle Plaine	75.4
Lower Belle Plaine	8.0
Esterhazy	3.3
Total	143.3

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15.4 Factors that Could Affect the Mineral Reserve Estimate

There are a number of technical, legal, metallurgical and environmental issues that could affect the mineral reserves estimates, as discussed below.

Unknown anomalies not detected by the 3D seismic survey. The mineral reserve estimation has considered this by applying reductions in the area of the 3D seismic survey (10%) and outside the survey (25%); however, the extent to which unknown anomalies exist is uncertain. Technical advancements in 3D seismic may result in better resolution, allowing a more detailed mapping of barren zones. In the opinion of QP van der Klaw this would have minor effects on the mineral reserve estimate.
Missed opportunity to mine caverns based on the location of the fixed cavern grid used. Caverns with their centre of gravity outside the grid extent have not been included in the mineral reserve estimate. By optimizing the location of this grid, more caverns may be captured. Additionally, in some instances discarded caverns could have been slightly shifted or rotated to remain within the limits defined by the rock mechanical modelling to be acceptable. In the opinion of QP van der Klaw, this could have resulted in a small increase in the mineral reserve estimate and recommends this be explored in the future as part of production optimisation studies.
Change in the timing of the phased process plant development. The mineral reserve estimate is based on the mine plan that balances the relation between carnallite and sylvite brine over the three production phases. Any changes to the phased increase in process plant capacity will require a new production plan that would likely affect the sequencing of mining in the Esterhazy Member sylvite. In the opinion of QP van der Klaw this would not significantly affect the mineral reserve estimate as the sylvite of the Esterhazy caverns represents only a small part of the total mineral reserves.
Location of the central platform. Caverns are accessed from a central platform using directional drilling. Optimal location of drill platforms is not always possible due to the presence of wetlands, dwellings, road off-sets and shallow pipelines. The location of the platforms has been studied in detail for the first six years of operation of Phase 1 with limited risk of having to relocate. However, this has not been completed for the entire brine field. Because of the flexibility that directional drilling provides for cavern preparation, there is always the opportunity to relocate a drill platform and pipeline routes with minimal disturbance to the overall mine plan. In the opinion of QP van der Klaw the inability to reach planned caverns from a centralized drill platform should not materially affect the reserve estimate.
The presence of freehold properties within the Property boundary. Acquiring the rights to freehold properties provides the opportunity to increase the mineral reserve estimate. If

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these rights for some reason cannot be obtained, the Ministry of Economy has indicated that Karnalyte should leave a boundary of at least 80 m between caverns and the lease boundary. If none of these rights are obtained, this would impact the mineral reserve estimate by removing in the range of 25 caverns on a total of near 1,653 or 1.5% of total planned caverns.

Not receiving approval for an updated EIS to capture areas of the brine field not covered by the current EIS. The first five years of the mine plan is covered by the EIS. Beyond this time period, parts of the planned brine field extends outside the EIS boundaries. Karnalyte will be required to obtain approval for an updated EIS for the remaining parts of the planned brine field in order to continue mining. Because the LOM brine field area regarding EIS relevant factors, is not significantly different from the brine field area with the approved EIS, it is the opinion of QP van der Klaw that there is no reason to assume that Karnalyte will not get EIS approval for the extension. If approval is not granted, the mineral reserve estimate would be significantly reduced.
In principle the 600 m buffer zone of the outer lease boundary could be applied to the boundaries between Karnalyte's three leases. The assumption has been made that this buffer zone is not applicable between leases owned by the same company. If permission is not granted this would significantly impact the reserve estimate as several hundred caverns could be affected in later years of the Project.
The ability to capture market share and maintain the market share at the assumed potash prices could affect the reasonable prospect for eventual economic extraction.
The process design for the hydromagnesite product is based on bench scale test work and not with piloting which should be completed before construction of the plant.

15.5 QP Comment on Section 15

In the opinion of QP van der Klaw, the probable mineral reserves will be transformed to proven mineral reserves with the continuing exploration and development of the brine field during operations.

In the opinion of QP van der Klaw, potential variations in this estimate are minor only and will not significantly affect the economic viability of the Project.

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16.0 MINING METHODS

16.1 Introduction

Carnallitite from Belle Plaine and Patience Lake Members, and sylvinite from the Esterhazy Member and part of the Patience Lake Member will be solution mined separately for each rock type to avoid crystallization of halite in the pipeline system, when mixing the different brines.

The relative amounts of production brine from sylvinite and carnallitite depend on the relative mineable thickness of the different horizons and the average grade of these horizons. As shown in Section 7.4, most wells have a relatively constant and significant thickness of carnallitite from the Belle Plaine and Patience Lake Members, whereas the Esterhazy Member horizons are inconsistent in thickness and average grade suitable for mining. As a result, most of the production brine will come from the carnallitite of the Belle Plaine and Patience Lake Members while a smaller amount of the production brine will come from the sylvinite of the Esterhazy Member.

16.2 Operating Requirements

16.2.1 Cavern Size and Cavern Pillar Configuration

The average design parameters for the caverns are listed in Table 16-1 and visually represented in Figure 16-1 to Figure 16-3. The cavern configuration consists of lower cavern(s) in the Esterhazy Member and an upper cavern in the Belle Plaine and Patience Lake Members, separated by a thick layer of rock salt. A series of index tests on samples from the deposit and surrounding rocks (23 triaxial compression tests, four shear tests on claystone and salt rock interfaces as well as triaxial creep test) confirm that the database with generic parameters for rock mechanical modelling for these rock types Institut für Gebirgsmechanik (IfG, 2011a) could be used for the rock mechanical modelling. The rock mechanical modelling has shown that the proposed configuration results in long term stable caverns (IfG, 2011b).

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Table 16-1: Preliminary Parameters for the Proposed Cavern Design

Parameter	Unit	Esterhazy Member	Belle Plaine and Patience Lake Members
Maximum length	m	170	170
Maximum width	m	100	100
Maximum height	m	8.8	35
Maximum area	m²	14,850	14,850
Minimum horizontal distance between caverns	m	80	80
Average depth of cavern top	m	978	915
Vertical distance between caverns	m	28	28

Note: Depths are typical depths and may differ up to 100 m depending on the location of a cavern on the brine field.

Figure 16-1: System Area of Representative Cavern and Pillar Distribution

Source: ERCOSPLAN, 2012

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Figure 16-2: Section View Along the Major Cavern Axis

Source: ERCOSPLAN, 2012

Figure 16-3: Section View Along the Minor Cavern Axis

Source: ERCOSPLAN, 2012

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Rock mechanical modelling was also used to estimate the potential for subsidence. The initial study (IfG, 2011b) was based on the assumption that during or shortly after leaching the Patience Lake Formation, hydraulic contact between the cavern and Dawson Bay Formation would evolve. With this hydraulic contact the maximum pressure in the cavern would be the pressure of the brine column. This resulted in relatively fast subsidence rates in the range of 5.4 m after 100 years . Information available from the Dawson Bay Formation in the region indicates that the formation is actually a non-aquifer in the Project area. This has been confirmed by permeability tests on core material from the Dawson Bay Formation that were selected based on visual inspection to have the highest porosity (e.g. CoreLab Petroleum Services, 2013). This information means that as long as the cavern is properly sealed, the cavern will stay a closed system even in contact with the Dawson Bay Formation, and the pressure inside the cavern will rise to near lithostatic. At that point the actual cavern closure rate, determining subsidence rate is controlled by the ability of the brine to move out of the sealed cavern which is a very slow process. The long-term subsidence rates over the brine field have been estimated using this approach. Most of the subsidence occurs during mining of the caverns and shortly after (∼0.5 m) with long term rates as low as 0.006 mm/a (IfG, 2013). This indicates that after 100 years the maximum subsidence will be in the range of 1.0 m, with no significant damage for surface infrastructure expected.

16.2.2 Cavern Access

The caverns will be accessed by directional drilling from a central drilling/production pad. Wells will be vertical from 900 m depth downward to below the deepest part of the cavern. Up to seven caverns can be reached from a central pad. This can be achieved with a maximum defined curvature parameter of 3°/100 m. This allows for the opportunity to shift the pad from a central position if required (e.g. for environmental reasons).

The use of directional drilling does not allow for a continuously controlled blanket system (the lowering of a cable without damaging it on the outer leach string to allow for a continuous control cannot be guaranteed). Under these conditions, a double leach string offering three separate pathways to the caverns has a high probability of failure of leach strings during work over operations that can block the cavern access. The preferred well design offers only two pathways with a discontinuous blanket operation, and only requires the operation of a leach string during cavern preparation. The preliminary well design is listed in Table 16-2 and schematically depicted in Figure 16-4. All casing is cemented from the bottom of the hole to surface. The leach string hangs unsupported (except for centralizers) from the well head at the surface down to about 5 m above the bottom of the open hole.

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Table 16-2: Casing and Cementation Scheme for Solution Mining Wells

Casing	Geological Position	Depth Range (m)	Hole Size (inches)	Casing Size (inches)
Conductor casing	Below overburden	~100	17 ½	13 ⅝
Surface casing	Below groundwater section	500–600	12 ¼	9 ⅝
Production/final casing	~2 m below Esterhazy Member	950–1,050	8 ½	7
Leach string	~7 m below Esterhazy Member	960–1,060	6 ⅛	4 ½

Figure 16-4: Schematic Casing Scheme for Solution Mining Wells

Source: ERCOSPLAN, 2016
Note: TD = total depth. Depths depend on the actual location in the brine field.

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16.2.3 Blanket Requirements

Given the depth of the deposit (~1,000 m), high pressure for a gas blanket would require high pressure armatures for the wells. To avoid this, an oil blanket is chosen. A continuous blanket system is not possible with directional drilling; therefore, the method of reverse flushing was chosen for blanket operation. To control the blanket level, regular geophysical logging will be required.

16.3 Leaching Procedure

The leaching procedure is divided into separate procedures for solution mining of the sylvite dominated rocks of the Esterhazy Member and the carnallite dominated rocks of the Belle Plaine and Patience Lake Members.

A maximum of two mineable horizons (upper and lower) with grade >20% KCl and mineable thickness >2 m is considered suitable for mining sylvite of the Esterhazy Member (Section 7.6). Each of these horizons will be mined separately with preparation leaching followed by a single phase of production leaching. Cavern heights as shown in Figure 16-2 and Figure 16-3, show the summed preparation leaching and production leaching height. Only the height of the production leaching mining cut has been used in the mineral reserve estimation. Mass/volume balances suggest that the brine from at least one preparation leaching phase can be recycled into the hot solvent for carnallitite solution mining. Remaining preparation phase brine will be disposed of using disposal wells into the Deadwood Formation.

Given the low height and small volume of these caverns, modelling shows that hot leaching is not effective in significantly raising the production brine temperature (and the KCl saturation %) in these caverns. Therefore, cold leaching is considered for the sylvinite caverns in the Esterhazy Member to optimize energy requirements.

Solution mining of the Esterhazy Member can be adapted in areas where exploration wells show one mineable horizon. The mining method uses cold non-selective leaching in double well caverns with 70 m distance between the cavern wells and a 50 m radius of the cavern away from the wells.

The carnallite solution mining of the Patience Lake and Belle Plaine Members focuses on the high grade carnallite. These two Members will be leached in five phases. The brine from the preparation leaching phase of the LBPM (e.g., Section 16.3.2), will be recycled as the hot solvent for carnallitite solution mining. The mining method used is hot non-selective leaching in double well caverns with 70 m distance between the cavern wells and with a 50 m radius around the wells.

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16.3.1 Solution Mining Concept Esterhazy Member

16.3.1.1 Preparation Leaching Esterhazy Member Lower Horizon

In the preparation leaching stage the cavern is prepared for production leaching. This involves two steps.

Sump Leaching: Sump leaching is required for both of the wells of a single cavern, which are not yet connected in the underground. Water as solvent is injected through the inner leach string, which is positioned approximately 5 m below the last cemented casing about 1 m below the lower horizon. The brine formed is extracted through the annulus between the last cemented casing and leach string. At this stage the available dissolution surface is small and only low flows (5 to 10 m³/h) are necessary to develop a pear-shaped cavern below and behind the cemented casing. After about one week oil is injected to fill the cavern behind the casing.
Undercut Leaching: With the start of undercut leaching the flow regime is changed and the annulus between last cemented casing and leach string is used for solvent injection. The solvent volumes used for undercutting leaching will increase initially from about 10 m³/h to up to 25 m³/h. Undercut leaching for the well continues until the undercut has reached a radius of approximately 35 m and the two wells are connected underground. This will take up to eight months. During this time the blanket oil volume has to be increased regularly to ensure that the undercut develops at the level as planned. When the two wells are connected, one well will be used for injection and the other for extraction. This occurs until an undercut radius from the wells reaches about 50 m, which could take another three to four months. At the end of this stage the leach strings of both holes are extracted. The casing of the well with the highest blanket level is perforated to release the blanket oil.

16.3.1.2 Production Leaching of the Esterhazy Member Lower Horizon

At the onset of production leaching of the lower horizon a small cavern is leached behind the casing of the hole where the casing was perforated, over the height of the mining horizon (injection well). Blanket oil is then injected to start production leaching. Production leaching starts, with cold solvent (water) flow rates of 25 m³/h, that increases to up to 45 m³/h towards the end of the mining cut. Oil is added to maintain the blanket at the required level. To develop a more symmetric cavern, the casing of the former extraction well is perforated near the top of the deposit, with eventual release of some blanket oil. This well is then used as the injection well. When mass and volume balances indicate that the mining cut has reached its volume, solvent injection is stopped. The casing of the last injection well of the cavern is cut near the top of the

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deposit to release the blanket oil. Through the last extraction well heavy $\mathrm{MgCl}_2$ brine from the plant is pumped down to displace the remaining production brine. Then the cavern can be abandoned.

16.3.1.3 Preparation Leaching Esterhazy Member Upper Horizon

With the top of the lower horizon cavern near the planned bottom of the undercut, sump leaching is likely not required during the preparation stage of upper horizon. Before undercut leaching begins, the casings of both wells are perforated near the bottom of upper horizon and the leach strings are re-inserted about 5 m below upper horizon. The further procedure is comparable to undercut leaching of the lower horizon.

16.3.1.4 Production Leaching of the Esterhazy Member Upper Horizon

Production leaching of the upper horizon is similar to production leaching of lower horizon. As the upper horizon is the uppermost mineable Esterhazy horizon, care is taken to make this cavern as large as possible to allow for rubblization of the halite interbed between Esterhazy and Belle Plaine Member developing a large dissolution area at the bottom of the Belle Plaine Member. The rubblization procedure is a standard procedure in solution mining in Saskatchewan and when successful, saves significant time in preparation leaching of the Belle Plaine Member.

16.3.2 Solution Mining Concept Patience Lake and Belle Plaine Members

The solution mining concept for the Patience Lake and Belle Plaine Members assumes conservatively that rubblization has not been successful and that a normal cavern development is required.

16.3.2.1 Preparation Leaching Belle Plaine Member

In the preparation leaching stage the cavern is prepared for production leaching. This involves three steps.

Sump Leaching: Sump leaching is required for both of the wells of a single cavern, which are not yet connected underground. Cold water, as solvent, is injected through the leach string, which is positioned approximately 4 m below the perforated cemented casing, with perforations situated about 5 m above the clay layer below the Belle Plaine Member. The brine formed is extracted through the annulus between leach string and cemented casing. At this stage the available dissolution surface is small and only low flows (5 to 10 m³/h) are

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necessary to develop a pear-shaped cavern below and behind the cemented casing. After about one week oil is injected to fill the cavern behind the casing.

Undercut Leaching – Well Connection: With the start of undercut leaching the flow regime is changed and the annulus between last cemented casing and leach string is used for solvent injection. The solvent volumes used for undercut leaching will increase from initially about $10\mathrm{m}^3/\mathrm{h}$ to up to $25\mathrm{m}^3/\mathrm{h}$. Undercut leaching for the well continues until the undercut has reached a radius of approximately $35\mathrm{m}$ and the two wells are connected underground. This will take up to eight months. During this time the blanket oil volume must be increased regularly to ensure that the undercut develops at the level as planned.
Further Undercut Development: When the wells are connected underground, the operation is changed. One well is used for injection of warm/hot solvent $(80^{\circ}\mathrm{C})$ through the cemented casing and the other is used for extraction of brine through the leach string. The solvent and brine volumes will be in the range of 15 to $30\mathrm{m}^3/\mathrm{h}$. It is expected that this period of further undercut development will take about three months. Hot solvent is used in this stage to heat up the cavern surroundings to reduce heat losses during the onset of production leaching. To ensure symmetric cavern development, the injection and extraction will be changed several times between the wells. Further undercut development is complete when mass and volume balances indicate that the undercut has reached a radius of about $50\mathrm{m}$ along the wells. Oil is injected regularly to force the development of the undercut in the lower part of the deposit horizon. At the end of this stage the leach strings of the holes are removed and the casing of the hole with the highest blanket level is perforated to release the blanket oil. Then the low grade brine from undercut leaching is replaced by warm $\mathrm{MgCl}_2$ rich end brine from the plant to a level just below the uncut casing of the extraction well to prevent uncontrolled dissolution of carnallite with potential crystallization of KCl from the brine standing in the cavern.

Preparation leaching of the Belle Plaine Member takes place in the LBPM, which contains appreciable amounts of potash bearing minerals. The brines produced during preparation leaching will therefore contain potash and will be recycled as hot solvent for production leaching.

16.3.2.2 Production Leaching of the Belle Plaine Member Mining Cut 1

The UBPM can have a thickness of nearly $10\mathrm{m}$ and is mined in two slices (called cuts) of similar thickness to minimize losses of carnallite from the lower part of the mining cut.

At the onset of production leaching of mining cut 1, the $7''$ cemented casing is perforated for the hole where it is deepest which is about $5\mathrm{m}$ below the top of the Belle Plaine Member (injection well). A small cavern is leached behind the casing over the height of the mining cut.

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Blanket oil is then injected to start production leaching. Production leaching initially starts with hot solvent flow rates of 30 m³/h, that increases to up to 50 m³/h over the development of the mining cut. Oil is added through the injection well to maintain the blanket at the required level. When mass and volume balances indicate the mining cut has reached its volume, solvent injection is stopped and the 7" cemented casing is perforated at the extraction well near the top of the cut to release the oil (new injection well).

16.3.2.3 Production Leaching of the Belle Plaine Member Mining Cut 2

At the onset of production leaching of mining cut 2 a small cavern is leached behind the casing over the height of the mining cut. Blanket oil is then injected to start production leaching. The leaching procedure is repeated in the same way as for mining cut 1. After blanket oil has been released by perforating the extraction well casing at the top of the Belle Plaine Member, a MgCl₂-rich end brine is introduced to displace the production brine in the cavern. A sonar survey can be run from the injection hole to determine the size and shape of the cavern. This provides the available volume for disposal of solid NaCl waste from the plant which is introduced in the lower part of the cavern, displacing MgCl₂-rich end brine, which is returned to the plant for disposal.

If the first cavern generation shows regular cavern development during the production stages, a sonar survey is only necessary every fourth or fifth cavern and the displacement of hot production brine from the cavern can be achieved using a slurry of solid NaCl and MgCl₂-rich end brine, reducing the number of operations at the cavern.

16.3.2.4 Leaching of the Intermediate Rock Salt

For the leaching of the intermediate rock salt, the casing of the former injection well is perforated about 1 m below the Patience Lake Member (injection well). A small cavern is leached behind the casing over the height of the mining cut. Blanket oil is then injected to start production leaching. Rock salt leaching initially starts with 30 to 40 m³/h and increases to 60 to 70 m³/h (depending on capacity of leach strings and pipeline connections). All brine produced during this stage will have high NaCl content and low KCl content and is therefore disposed of in the Deadwood Formation as it would dilute the normal production brine.

Initially solvent will be cold, but during the last stage of this mining cut hot solvent will be used to pre-heat the surroundings of the cavern and reduce temperature losses during the onset of production leaching in the Patience Lake Member. In between, oil must be added through the injection well to keep the blanket at the required level. To reduce the amount of waste brine for this mining cut an effective cavern span of 80 to 90 m along the minor cavern axis is developed. When mass and volume balances indicate that the mining cut has reached its

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estimated volume, solvent injection is stopped. The casing of the extraction well is perforated near the bottom of the Patience Lake Member to release the blanket oil. The remaining NaCl rich brine is displaced by $\mathrm{MgCl_2}$-rich end brine from the plant to prevent mixture of NaCl rich brine with production quality brine during production leaching. The cavern is considered ready for the next mining cut.

Alternatively, to reduce the amount of NaCl rich disposal brine a new preparation phase can be started below the Patience Lake Member that is comparable to the preparation leaching of the Belle Plaine Member. This option will take longer than leaching through the intermediate rock salt and further increase the number of operational caverns in the brine field.

16.3.2.5 Production Leaching of the Patience Lake Member Mining Cuts

The procedures for production leaching of the Patience Lake Member mining cuts are similar to the procedure for mining of the Belle Plaine Member mining cuts. Where Patience Lake Member has a thickness over 8 metres, it is mined in two cuts of similar thickness. Otherwise, the Patience Lake Member is mined in a single cut.

16.3.2.6 Cavern Backfill and Abandonment

After finalization of production leaching of the Patience Lake Member and displacement of the remaining production brine with $\mathrm{MgCl_2}$ brine, the remaining cavern space will be filled with solid NaCl from the plant operation. This reduces the amount of solid NaCl that needs to be dissolved for disposal in the Deadwood Formation. Adding solid material in the cavern reduces the final overall subsidence over a cavern. The displaced $\mathrm{MgCl_2}$ brine is transported back to the plant for disposal.

16.4 Production Brine Composition

16.4.1 Concept for Estimating the Production Brine Composition

The solution mining of sylvinite can be described in the system:

$$
KCl - NaCl - H_2O.
$$

The solution mining of carnallite requires a minimum of a four-component system:

$$
MgCl_2 - KCl - NaCl - H_2O.
$$

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Using equilibrium thermodynamics, these systems provide all the required physicochemical background to calculate mass balances, physical material values and saturation behaviour. These systems have been very well studied because of their economic importance for the early potash industry, which relied on the hot leaching process. There is a large amount of thermodynamic information available for these systems (e.g. D'Ans, 1933; Autenrieth, 1955; Eugster et al. 1980; Voigt, 2001) and all potential reactions in the KCl rich parts are well understood.

As solution mining of sylvinite takes place in the simplified system NaCl--KCl--H_{2}O, the solution mining operations for carnallite and sylvite cannot be directly compared. Karnalyte's operation can be compared with the Nedmag operation in Veendam, Netherlands, and the DEUSA Bleicherode/Kehmstedt operations, Germany. Since the Veendam operation focuses on the production of MgCl_{2} over KCl production, the Bleicherode/Kehmstedt operation is used as a benchmark comparison.

The Bleicherode/Kehmstedt operation is a commercial operation based on an industrial scale pilot operation. Investigations on solution mining of carnallite were started in East Germany as a research and development program in the 1970s with theoretical studies and laboratory test work. At the end of the 1970s, the theories were tested in a number of relatively small (~thousands m^{3}) caverns in an underground potash mine. These test caverns were accessed from the mine to verify the theoretical predictions about shape development and dissolution and crystallization in the cavern with in-situ observations confirming the theoretical considerations based on laboratory experimentation. In the mid-1980s, first pilot cavern operations were successfully completed demonstrating that solution mining of Carnallite could produce brine with KCl concentration as predicted at flow rates that allow commercial operation.

The carnallitite at the Bleicherode/Kehmstedt operation consists of a homogeneous mixture of carnallite (~60%), halite (~30%), sulphate minerals (~7%) and insoluble material (~3%). All minerals occur as lenses in a matrix of carnallitite, no continuous halite bands occur in the carnallitite. This homogeneity results from the cataclastic structure of the Bleicherode/ Kehmstedt deposit. By comparison, the Belle Plaine Member and the Patience Lake Member also show a relatively homogeneous distribution of large carnallite crystals acting as a matrix for the remaining minerals. It is therefore expected that the dissolution behaviour of both deposits will be similar. The results of the dissolution testing performed by ERCOSPLAN (2011) on rocks from the Property confirmed this assumption.

The processes taking place with the dissolution of carnallite in the MgCl_{2}--KCl--NaCl--H_{2}O system are depicted in Figure 16-5. The use of this diagram requires the simplifying assumption that brine in the cavern is NaCl saturated (the halite present in the carnallitite will achieve this). Figure 16-5 shows the relevant points for dissolution of carnallite from carnallitite rock and the design

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ranges for production brine of the sylvinitic Esterhazy Member (red quadrangle) and the carnallitic Patience Lake and Belle Plaine Members (orange quadrangle). It also shows the compositions of average production brine resulting from mixing different amounts of average sylvinitic and average carnallitic production brine (open red circles). Typically, water is the solvent in the solution mining of carnallite. As carnallite and halite dissolves, the brine composition will change its KCl and $\mathrm{MgCl_2}$ content along the carnallite dissolution line (blue line through the origin in Figure 16-5). Dissolution continues until at a certain temperature KCl saturation is reached (red lines, and red dot at $70^{\circ}\mathrm{C}$ ) and from that point onwards, KCl will crystallize upon dissolution from carnallite (decomposition). The brine composition will change along the red line to higher $\mathrm{MgCl_2}$ content and lower KCl content, until equilibrium is reached between carnallite, halite and solution (dark blue dot on the E-line). These theoretical considerations have been confirmed in practice at the Bleicherode/Kehmstedt operation for many years.

Figure 16-5: Equilibrium Phase Diagram of Carnallite in the $\mathrm{MgCl}_2$ -KCl-NaCl- $\mathrm{H}_2\mathrm{O}$ System

Source: ERCOSPLAN, 2012

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From a processing perspective, the optimum KCl concentration should be as high as possible (e.g., just at saturation for a given temperature), but for solution mining, a lower saturation is preferred. Contrary to sylvite solution mining, for carnallite solution mining, the limiting factor for KCl saturation is not the dissolution rate of the mineral. In principle for sylvite the dissolution rate decreases with increasing KCl concentration of the brine, limiting the saturation level that can be reached with a reasonable flow rate. Because for carnallite, the KCl saturation is reached at much lower $\mathrm{MgCl_2}$ concentrations than the $\mathrm{MgCl_2}$ saturation, the dissolution rate of carnallite depends strongly on the $\mathrm{MgCl_2}$. The challenge for carnallite solution mining is preventing the crystallization of KCl in the system. This could occur in the following situations:

In the extraction well and pipeline system because of cooling of the brine during transport from cavern to the surface and from well to brine tank at the plant.
In the cavern due to local carnallite decomposition in areas of the cavern where the brine has a longer residence time or where the deposit is more carnallite rich. This decomposition results in a higher $\mathrm{MgCl_2}$ concentration in the production brine and a lower KCl recovery. Since an increase in $\mathrm{MgCl_2}$ concentration in the production brine results in a lower KCl saturation at given temperature, local carnallite decomposition in the cavern also influences the maximum KCl content that could be achieved from the cavern.

For these reasons, the KCl saturation from production brine consisting of brine from various locations in the cavern should be kept below $100\%$ saturation at any given temperature. These theoretical considerations have been confirmed in practice at the Bleicherode/Kehmstedt operation for many years.

For every solution mining operation, the dissolution kinetics of the material is one of the determining factors in the production brine concentration. The dissolution kinetics of all salt rocks is influenced by the following boundary conditions:

pre-concentration of solvent
solvent temperature
available mineral dissolution surface
residence time of solvent at the dissolution surface.

How these parameters can be changed and how these changes influence the dissolution rate and/or the KCl concentration of the brine is discussed in the following based on experiences from the Bleicherode/Kehmstedt operation:

Pre-concentration of solvent influences the carnallite dissolution rate significantly only if a high $\mathrm{MgCl_2}$ pre-concentration is present. The dissolution rate is reduced and the KCl content at $100\%$ saturation will be lower than without pre-concentration. At higher $\mathrm{MgCl_2}$

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pre-concentrations, the amount of halite and other non-carnallite salt minerals that can be dissolved decreases to nearly zero and carnallite will be selectively dissolved.

An increase in solvent temperature increases the temperature of the production brine; at higher temperatures, the KCl saturation is at higher KCl concentrations. An increase in solvent temperature therefore increases the KCl content of the production brine. Furthermore, at higher temperatures, dissolution rates are increased and higher flow rates can be maintained.
Available mineral dissolution surface determines the residence time of solvent at the carnallitite interface at a constant flow rate; a longer residence time translates to higher KCl concentrations. The dissolution surface depends on the height of a mining cut and the developing span of the cavern. Expanding the oil blanket prevents contact between cavern roof and solvent above the blanket level. At the same time the cavern bottom is prevented from dissolution by concentrated insoluble material and saturated brine at the bottom of the cavern. As a result, the mineral dissolution surface changes during a mining cut with increasing span of the cavern. The dissolution surface at a given span depends on the distance between injection point and extraction point as well as on the blanket level. Both can be changed within relatively narrow bounds during operation, without major workovers. Large changes require major workovers and should be avoided. Instead of trying to change the effective dissolution surface, the flow rates must be adapted to achieve the same effect.
Residence time of the solvent at a given dissolution surface is dependent on the flow rate. At a constant mining cut height, the flow rate has to be adapted constantly to keep the average residence time constant as the increase in cavern span results in a change in effective dissolution surface. Flow rate can be easily adapted by opening or closing of the inflow valve at the well head.

After preparation, caverns have relatively large effective volumes (several tens of thousands of cubic metres) and flow rates are in the range of 25 to $60\mathrm{m}^3/\mathrm{h}$, residence time is relatively long, and it will take between one week and one month before a change in conditions will have a significant influence on the brine composition.

The initial conditions (e.g., distance between injection and extraction point, initial flow rates, timing of blanket additions) can be relatively well estimated based on experience with other operations and results of the dissolution test work. These conditions will have to be optimized within a certain range for each cavern individually in order to achieve production brine with a composition in an acceptable range. Most of these optimizations require only minor changes to the set up and do not significantly interrupt operation. These theoretical considerations have been confirmed in practice at the Bleicherode/Kehmstedt operation for many years.

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The theoretical considerations and the results of the dissolution testing performed by ERCOSPLAN (2011) indicate that there is no significant difference between the dissolution behaviour of the Bleicherode/Kehmstedt carnallitite and the Karnalyte carnallitite. Therefore, the operational experience from Bleicherode/Kehmstedt can be applied to the Karnalyte deposit to design the solution mining operation and estimate the operating cost for the operation.

16.4.2 Estimation of the Production Brine Composition

The composition of the production brines has been designed for the Project based on temperature modelling (W&T Geoingenieure, 2011) and dissolution test work on samples from the deposit (ERCOSPLAN, 2011).

16.4.2.1 Production Brine from the Sylvinitic Estherhazy Member

Cold water will be used for solution mining of the sylvinite of the Esterhazy Member as well as for most of the rock salt interbed between Patience Lake and Belle Plaine Member. It is assumed that the production brine from this leaching operation will have an ambient temperature near 15°C.

KCl Saturation Level

The KCl saturation level for production brine coming from the cavern should be as high as possible. Theoretically 100% saturation can be reached; however, dissolution velocity decreases to near zero close to saturation, requiring long residence time from the solvent in the cavern and flow rates in the cavern that would not produce a significant amount of brine. Depending on the composition of the deposit, KCl saturation in the order of 85% (best case) to 75% (worst case) can be achieved at brine production levels in the range of 25 to 40 m³/h. This will allow a relatively small number of caverns to supply the necessary amount of brine for KCl production to the plant.

Carnallite Concentration in Sylvinite

The presence of variable amounts (between 2 and 15% per mass) of carnallite in the sylvinite of the Esterhazy Member will generate a MgCl₂ content in the brine. An increase in MgCl₂ concentration in the production brine results in a lower KCl saturation at a given temperature and will result in a reduction of the KCl content of the brine. Because carnallite dissolves more easily than sylvite there will always be a slightly higher MgCl₂ concentration in the brine than expected due to the carnallite content in parts of the deposit. For the best case it has been assumed that 10% of the KCl in the brine is due to carnallite dissolution and the magnesium

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content is estimated based on the $\mathrm{MgCl}_2$ and KCl content of carnallite. For the worst case it has been assumed that $25\%$ of the KCl in the brine is due to carnallite dissolution.

The red dotted quadrangle on the left side of Figure 16-5 depicts the range of potential compositions based on these two cases. As there are limited occurrences of high carnallite content in the sylvinite part of the Esterhazy Member (compare Section 7.6) producing brine from numerous caverns, the compositional range of the expected production brine will be closer to the red quadrangle within the red dotted quadrangle. The estimated average production brine composition from the Esterhazy Member is provided in Table 16-3 (and represented by the blue outline circle in the red quadrangle of Figure 16-5) and has been used in the design. The variation in KCl content is not significant enough to influence the design.

Table 16-3: Estimated Average Production Brine Composition for Solution Mining

Parameter	Unit	Esterhazy Sylvinitic	Belle Plaine/Patience Lake Carnallitic	Carnallitic Brine Only	Mixture 15% Sylvinitic with 85% Carnallitic Brine
Temperature	°C	15	55	55	~50
Density	g/cm³	1.232	1.232	1.232	1.232
KCl	g/L	100.7	116.9	116.9	114.5
NaCl	g/L	252.8	119.3	119.3	139.3¹
MgCl₂	g/L	19.7	140.7	140.7	122.6
CaSO₄	g/L	3.0	3.0	3.0	3.0
H₂O	g/L	855.2	852.0	852.0	853.0

Note: (1) Not taking into account the potential crystallization of NaCl when mixing these brines.

16.4.2.2 Production Brine from the Carnallitic Patience Lake and Belle Plaine Members

The carnallitic Belle Plaine and Patience Lake Members will be leached using a solvent consisting of water or a low grade brine at $95^{\circ}\mathrm{C}$. Cavern mass-volume balancing suggests that for a mature brine field (with caverns in preparation and production for the Esterhazy Member, Belle Plaine Member and Patience Lake Member) a solvent with at maximum $170\mathrm{g/L}$ NaCl and KCl and $\mathrm{MgCl}_2$ pre-concentration of about $23\mathrm{g/L}$ and $10\mathrm{g/L}$, respectively can be used in the solution mining process.

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Production Brine Temperature

Based on a comparison with other hot leaching operations and cavern temperature modelling (W&T Geoingenieure, 2011) it has been estimated that during steady state production for a solvent of 95°C a production brine with a temperature between 50°C (worst case) and about 60°C (best case) can be expected.

KCl Saturation Level

The KCl saturation level for production brine coming from the cavern should be as high as possible. Dissolution rates decrease with increasing salt concentrations of the brine limiting the saturation level that can be reached with a reasonable flow rate. For a carnallite solution mining operation the limiting factor for KCl saturation is, however, not primary to the dissolution rate, because KCl saturation in this system is reached much earlier than carnallite saturation. Therefore, the maximum KCl concentration that is obtained is limited by the risk one wants to take with KCl crystallization from the brine in the cavern or pipeline system.

The results for dissolution testing of carnallitite from Belle Plaine and Patience Lake Members show reasonably fast dissolution of the carnallite indicating that local KCl oversaturation cannot be ignored but should not be considered a major loss issue (Section 13.1).

For these reasons the KCl saturation from production brine coming from the cavern must be below 100% at a given temperature. For the best case an 85% KCl saturation at temperatures between 50°C and 60°C is assumed, which allows cooling to about 40°C before crystallization of KCl starts. For the worst case an average saturation of 75% is assumed to avoid local KCl crystallization occurring in the cavern as a result of an inhomogeneous deposit.

Even though the average brine from the cavern does not exceed the KCl saturation, localized KCl crystallization may occur resulting in an increased MgCl₂ content of the average production brine. Best case is the assumption that no KCl crystallization occurs. Worst case is that the crystallization results in a loss of about 15% of the KCl from the carnallite dissolved.

The quadrangle with the orange dotted outline in Figure 16-5 depicts the range of potential compositions based on these cases. Dissolution testing shows that even at low flow rates the carnallite decomposition should not be considered a major loss factor. The orange quadrangle represents the design average production brine composition from the Patience Lake and Belle Plaine Members. The detailed cavern temperature development modelling shows that an average production brine temperature of 55°C is a conservative estimate. The design average production brine composition has been estimated for a production brine of 55°C as presented in Table 16-3 and depicted by the blue circle in the orange field in Figure 16-5.

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The brine from carnallitite caverns and the brine from sylvinite caverns are routed through separate pipelines to the feed tank for the plant where they are mixed and provide the plant feed brine. The plant feed brine will not have a constant composition because of:

inconsistent composition of carnallitite brine and sylvinite brine
variability in the relative proportions of carnallitite and sylvinite brine in the feed brine.

The relative proportions of carnallitite and sylvinite brine that result in an average production brine depend on the amount of KCl that can be derived from the carnallitite caverns and from the sylvinite caverns. Based on the present understanding of the geology, the proportion of sylvinite to carnallitite brine will be between 15:85 or 20:80 depending on which exploration wells are used to estimate this ratio. These compositions are depicted as open red circles on the left side in Figure 16-5.

The proportion is not fixed as the cavern preparation phases for sylvinite solution mining and the waste leaching of the intermediate rock salt will not allow a continuous production brine flow from single caverns. The different time frames for each solution mining phase in such cavern horizons will result in changing proportions between sylvinite versus carnallitite brine production.

Furthermore, the risk of KCl crystallization in the cavern, either due to cooling of the brine or due to carnallite decomposition, precludes a pause in operation of the carnallitite caverns. To reduce KCl losses in the cavern, when a carnallitite mining cut has commenced, there should be no pause in the leaching operation until the mining cut is complete (displacement of production brine with $\mathrm{MgCl_2}$ brine). Sylvinite caverns do not show this critical behaviour. Therefore, from an operational perspective it would be advantageous to have spare cavern capacity in the brine field in sylvinite caverns that can be switched on or off depending on production brine requirements.

To ensure optimal plant operation the mine plan must be designed to maintain a sylvinite:carnallitite ratio between 25:75 and 10:90. The estimate for the average production brine composition is presented in Table 16-3.

16.5 Brine Field Dynamics

The dimensions of the producing brine field can be estimated based on the average brine composition. The brine field is designed such that on average $15\%$ of the brine will be coming from sylvinite caverns and $85\%$ from carnallitite caverns resulting in an average KCl content of $115~\mathrm{g / L}$. This is based on the assumption that the initial brine field will be developed in the region defined by wells DH-11, DH-20 and DH-21, containing two mineable Esterhazy horizons.

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The efficiency of the plant has been designed to be 90%. For a production of 675,000 t/a of 97% KCl means about 727,500 tonnes of KCl in the production brine with an annual volume of brine of ~6.3 Mm³. Assuming 8,000 hours of annual production requires a production brine volume of approximately 790 m³/h.

The dissolution test work suggests that an average flow rate of 45 m³/h over the lifetime of a single cavern is a realistic estimate. At the onset of a mining cut, flow rates will be lower and will increase by the end of a mining cut representing a "mature" brine field. Therefore, 18 caverns must be operating in parallel producing production quality brine with two caverns on stand-by resulting in 20 active producing caverns.

For a mature brine field six sylvinite caverns will be producing at a flow rate near 40 m³/h with the remaining 12 carnallitite caverns producing at an average flow rate between 45 and 50 m³/h. In addition, the following caverns, in preparation for production, are anticipated for a mature brine field:

Five to six caverns producing NaCl waste brine from the halite interbed between Patience Lake and Belle Plaine Member
Four to five caverns in the preparation phase for the Belle Plaine Member
About nine caverns in the preparation phase for one of the two mineable horizons of the Esterhazy Member.

The initial brine field will begin with production from the carnallitite which will require a minimum 20 caverns to produce sufficient production brine in the first year. For a mature brine field annually about eight new caverns need to be prepared (16 wells). For the onset of production from the Esterhazy Member with ongoing continuous production from the initial carnallitite wells, 20 to 38 caverns will be required to be active and in preparation within the first three years of production, which requires additional drilling, compared to a mature brine field. The cost for these caverns is included in the initial capital cost.

For each additional production phase of 750,000 t/a, the production brine needs to contain 808,000 tonnes of KCl. This means an annual volume of brine of 7.1 Mm³. Assuming 8,000 hours of annual production requires a production brine volume of approximately 890 m³/h.

At an average brine flow rate of 45 m³/h, 20 caverns will be active for each new phase of 750,000 t/a of production. On a mature brine field eight to nine new caverns per phase need to be prepared annually.

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For a mature brine field for the production of 2.175 Mt/a between 11 and 16 sylvinite caverns and 41 and 49 carnallitite caverns will be operational. In addition, there will be caverns in preparation for production:

Between 30 to 40 caverns producing NaCl waste brine from the halite interbed between Patience Lake and Belle Plaine Member
Between 20 to 28 caverns in the preparation phase for the Belle Plaine Member
Between 20 and 40 caverns in the preparation phase for one of the two mineable horizons of the Esterhazy Member.

16.5.1 Cavern Recovery

The solution mining recovery is reduced from 100% by the losses of mineable material due to the solution mining method. These losses can be subdivided into two groups of losses:

direct mineralized material losses due to:
safety pillars between caverns
geometry of cavern including:
undercut development
irregular cavern wall
Carnallite/sylvite distribution in the Members and along the cavern wells.
losses of brine produced by dissolution of the mineralized material due to:
incomplete brine replacement from cavern
Measurement reconciliation issues.

Safety pillars between caverns reduce the overall (area) recovery to 36.5% (Figure 16-1) and have been accounted for in the mine plan. Reconciliation losses are considered negligible.

The remaining factors are taken into account in the mass and volume balances for each of the caverns that are estimated based on:

Cavern dimensions (Section 16.2.1)
Thickness and compositions of the mineralized zones in the potash bearing members (Section 7)
Estimates for production brine composition (Section 16.4)
Assumption that 5% of the KCl in the cavern volume will not be available for dissolution due to shielding of the sylvite and carnallite crystals by halite crystals or drop of a sylvite/carnallite crystal to the cavern bottom before dissolution.

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Exploration well DH-20 is used as the base case. Table 16-4 shows the balance for a cavern in the lower horizon Esterhazy Member, Table 16-5 for the upper cavern in the Esterhazy Member, and Table 16-6 shows the balance for a cavern extending from the bottom of the Belle Plaine Member to the top of the Patience Lake Member with their respective undercuts in low grade parts of the Esterhazy Member and the LBPM.

The remaining open volume in the sylvinite Esterhazy caverns is relatively small and only a minor portion of the halite dissolved from this unit can be returned to the cavern. Part of the halite dissolved during preparation leaching will be recycled to the carnallitite caverns.

Table 16-4: Preliminary Mass Balance for the Material from a Single Cavern from the Lower Horizon of the Esterhazy Member

Item	Volume (TCM)	Tonnes (kt)
		Sylvite	Halite	Carnallite	Anhydrite	Insoluble Material
Cavern	80.6	20.5	136.2	10.7	1.2	1.1
Dissolved material	70.1	19.5	111.9	10.1	1.0	-
Remains in cavern	10.5	1.0	24.3	0.6	0.2	1.1

Note: TCM = thousand cubic metres

Table 16-5: Preliminary Mass Balance for the Material from a Single Cavern from the Upper Horizon of the Esterhazy Member

Item	Volume (TCM)	Tonnes (kt)
		Sylvite	Halite	Carnallite	Anhydrite	Insoluble Material
Cavern	76.3	23.1	112.1	18.1	1.0	0.3
Dissolved material	72.0	21.9	108.8	17.2	1.0	-
Remains in cavern	4.3	1.2	3.3	0.9	0.0	0.3

Note: TCM = thousand cubic metres

Table 16-6: Preliminary Mass Balance for the Material from the Carnallitite Cavern from the Bottom of the Belle Plaine Member to the Top of the Patience Lake Member

Item	Volume (TCM)	Tonnes (kt)
		Sylvite	Halite	Carnallite	Anhydrite	Insoluble Material
Cavern	386.7	7.8	337.9	341.5	5.0	31.3
Dissolved material	328.4	7.4	302.1	325.2	4.4	-
Remains in cavern	58.3	0.4	35.8	16.3	0.6	31.3

Note: TCM = thousand cubic metres

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The NaCl pre-concentration of the solvent (from undercut brines) reduces the amount of halite that can be dissolved from the carnallitite members. The large caverns over the Belle Plaine and Patience Lake Members still have a large open volume which can be used to dispose solid halite produced at the plant. The volume of solid material in the cavern amounts to $99.5\mathrm{m}^3$, but the volume of the cavern filled by the solids is larger, this is because of the voids between the grains of solid material which is usually about $40\%$ of the solid volume. Furthermore, about $10\%$ of the open cavern volume will not be available for displacement because of irregular cavern shape. The volume balance is summarized in Table 16-7.

The amount of halite produced in the plant from a single cavern is approximately 88,000 tonnes from carnallitite brine and 99,000 tonnes from sylvinite brine. This equates to a solid volume of about $86,000\mathrm{m}^3$ and considering the bulking factor due to pores between the solids, requires about $121,000\mathrm{m}^3$ of available cavern space. Even if the cavern can only be filled from two centrally located wells it should still be possible to dispose of all halite in the cavern during full scale operation. Only during the onset of operation will some halite have to be dissolved in the non NaCl saturated waste brine coming from dissolution of the rock salt interbed between Patience Lake and Belle Plaine Member. During operation in a mature brine field, it will usually not be necessary to have a separate NaCl disposal system for solid material from the plant.

The average flow rate for streams coming to the brine field and the potential sources of these flows are given in Table 16-8. The average flows coming from the brine field and their further uses are given in Table 16-9.

Table 16-7: Cavern Volume
| Description | Volume (m³) |
| --- | --- |
| Open volume | 328,400 |
| Voids | 23,300 |
| Irregular shape | 32,800 |
| Effective open space | 272,300 |

Table 16-8: Flow Volumes and Proposed Water and Brine Sources for Phase 1
| Injection Brine | Source 1 (m³/h) | Source 2 (m³/h) | Total Flow Volume (m³/h) |
| --- | --- | --- | --- |
| Cold solvent cavern preparation sylvinite leaching | Fresh water | Condensates | |
| | 570 | 160 | 730 |
| Warm solvent carnallitite leaching | Weak brine | Condensates | |
| | 280 | 370 | 650 |
| MgCl₂ brine slurry | Plant | - | |
| | 160 | - | 160 |

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Table 16-9: Average Flow Volumes of the Different Streams

Production Brine	Use Area	Total Flow Volume (m³/h)
Hot carnallitite brine	Plant for production	650
Sylvinite brine	Plant for production	200
Weak mineralized brine	To hot solvent for carnallitite leaching	280
Disposal brines	Plant for NaCl dissolution or MgCl₂ brine dilution	560

For mineral reserve estimation the cavern balances for each exploration well have been calculated taking these factors into account and the average production of a single cavern from each mineable member is given in Table 16-10 for the Patience Lake Member, Table 16-11 for the Upper Belle Plaine Member, Table 16-12 for the Lower Belle Plaine Member, Table 16-13 for the upper horizon of the Esterhazy Member and Table 16-14 for the lower horizon of the Esterhazy Member.

Table 16-10: Cavern Balances for an Average Cavern in Mineral Reserves for the Patience Lake Member

Well ID	Thickness (m)	Volume (TCM)	Average Density (t/m³)	Carnallitite Tonnage (kt)	Average Carnallite Grade (%)	Average Sylvite Grade (%)	Average Recovery (%)	Mineable Tonnage (kt)
DH-11	7.54	112.00	1.735	194.3	70.42	0.35	89.04	172.99
DH-20	7.68	114.08	1.791	204.3	61.25	0.74	89.84	183.53
DH-21	5.51	81.85	1.747	142.9	68.80	0.05	90.68	129.63
KW 2-24	7.63	113.34	1.757	199.2	66.18	2.36	90.35	179.94
KW 2C6-32	7.87	116.90	1.733	202.6	70.81	0.10	91.26	184.87
KW 4B14-24	13.01	193.25	1.901	367.4	37.70	11.38	84.47	310.30
KW 4D14-21	7.95	118.09	1.748	206.5	68.27	0.03	87.23	180.09
KW 13-36	6.11	90.76	1.782	161.7	60.55	6.56	87.55	141.56
KW 3C4-8	7.99	118.68	1.738	206.3	70.92	0.02	90.57	186.83
KW 3B4-26	3.05	45.30	1.913	86.7	33.84	21.24	91.22	79.05
KW 2A11-12	8.10	120.32	1.725	207.6	71.69	0.01	91.28	189.47
KW 3A11-27	6.60	98.04	1.774	174.0	63.88	0.27	89.27	155.30

Note: TCM = thousand cubic metres

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Table 16-11: Cavern Balance for an Average Cavern in Mineral Reserves of the Upper Belle Plaine Member

Well ID	Thickness (m)	Volume (TCM)	Average Density (t/m³)	Carnallitite Tonnage (kt)	Average Carnallite Grade (%)	Average Sylvite Grade (%)	Average Recovery (%)	Mineable Tonnage (kt)
DH-11	9.88	146.76	1.757	257.8	64.12	0.31	89.17	229.88
DH-20	9.69	143.94	1.747	251.5	66.99	0.21	90.05	226.47
DH-21	10.45	155.22	1.736	269.5	70.72	0.77	89.21	240.38
KW 2-24	9.12	135.47	1.733	234.8	70.83	0.05	90.29	212.01
KW 2C6-32	8.94	132.79	1.735	230.4	72.65	0.01	90.86	209.31
KW 4B14-24	9.18	136.36	1.780	242.7	60.30	5.19	91.70	222.58
KW 13-36	8.62	128.04	1.760	225.4	69.90	0.77	90.27	203.47
KW 3C4-8	9.98	148.24	1.728	256.2	64.81	1.42	91.95	235.57
KW 3B4-26	9.13	135.62	1.734	235.1	70.66	0.09	90.59	212.98
KW 2A11-12	9.14	135.77	1.777	241.3	68.68	0.02	89.93	217.01
KW 3A11-27	10.43	154.93	1.728	267.8	62.25	1.22	91.36	244.63

Note: TCM = thousand cubic metres

Table 16-12: Cavern Balance for an Average Cavern in Mineral Reserves of the Lower Belle Plaine Member used for Undercut Leaching

Well ID	Thickness (m)	Volume (TCM)	Average Density (t/m³)	Carnallitite Tonnage (kt)	Average Carnallite Grade (%)	Average Sylvite Grade (%)	Average Recovery (%)	Mineable Tonnage (kt)
DH-11	6.66	98.93	2.055	203.3	19.36	5.18	32.33	65.73
DH-20	5.57	82.74	1.964	162.5	27.78	9.73	32.26	52.41
DH-21	6.35	94.32	1.997	188.4	22.64	9.00	32.19	60.65
KW 2-24	6.08	90.31	1.921	173.5	36.09	3.78	30.89	53.60
KW 2C6-32	5.23	77.69	1.945	151.1	29.89	3.89	30.94	46.76
KW 4B14-24	5.69	84.52	1.956	165.3	30.95	1.33	31.24	51.65
KW 4D14-21	5.98	88.83	1.956	173.7	32.86	0.38	31.22	54.24
KW 13-36	6.19	91.95	1.935	177.9	34.84	0.32	32.63	58.05
KW 3C4-8	5.13	76.20	1.971	150.2	27.25	7.95	30.25	45.43
KW 3B4-26	6.19	91.95	1.942	178.6	31.89	4.42	31.38	56.03
KW 2A11-12	5.38	79.91	1.942	155.2	32.02	5.91	30.21	46.88
KW 3A11-27	5.02	74.57	1.967	146.7	28.07	6.21	31.65	46.42

Note: TCM = thousand cubic metres

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Table 16-13: Cavern Balance for an Average Cavern in Mineral Reserves of the Upper Horizon of the Esterhazy Member

Well ID	Thickness (m)	Volume (TCM)	Average Density (t/m³)	Sylvinite Tonnage (kt)	Average Carnallite Grade (%)	Average Sylvite Grade (%)	Average Recovery (%)	Mineable Tonnage (kt)
DH-11	3.96	58.82	2.121	124.8	2.66	20.16	88.28	110.15
DH-20	2.57	38.17	2.031	77.5	15.06	22.44	89.62	69.47
DH-21	2.25	33.42	2.090	69.8	4.97	23.87	88.92	62.10
KW 2-24	3.17	47.09	2.038	95.9	11.97	27.36	90.55	86.88
KW 2C6-32	2.03	30.15	2.006	60.5	16.64	25.90	90.67	54.84
KW 4B14-24	2.31	34.31	2.044	70.1	13.27	19.77	88.62	62.16
KW 4D14-21	2.00	29.71	2.039	60.6	15.23	16.08	88.23	53.43
KW 13-36	2.22	32.98	2.062	68.0	10.77	20.27	91.67	62.33
KW 2A11-12	3.42	50.80	2.094	106.4	4.42	23.55	89.78	95.51
KW 3A11-27	2.25	33.42	2.029	67.8	12.45	31.67	91.64	62.16

Note: TCM = thousand cubic metres

Table 16-14: Cavern Balance for an Average Cavern in Mineral Reserves of the Lower Horizon of the Esterhazy Member

Well ID	Thickness (m)	Volume (TCM)	Average Density (t/m³)	Sylvinite Tonnage (kt)	Average Carnallite Grade (%)	Average Sylvite Grade (%)	Average Recovery (%)	Mineable Tonnage (kt)
DH-11	2.44	36.24	2.077	75.3	6.21	25.25	90.25	67.94
DH-20	3.28	48.72	2.093	102.0	6.19	19.12	88.22	89.95
DH-21	3.32	49.32	2.087	102.9	5.16	23.84	89.98	92.61
KW 2-24	3.07	45.60	2.077	94.7	7.10	22.88	89.31	84.59
KW 4B14-24	1.99	29.56	2.057	60.8	6.76	36.22	91.18	55.45
KW 13-36	2.68	39.81	2.092	83.3	6.06	19.06	88.29	73.54

Note: TCM = thousand cubic metres

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16.5.2 Mine Plan

The outline of the brine field over the LOM has been defined by the cavern size and cavern pillar configuration and the mineral resources that were classified as Measured and Indicated and the requirement to maintain a certain ratio between the amount of carnallitite and sylvinite brine. Figure 16-6 shows the general mine plan developed for the three production phases. Each phase is planned with a separate main pipeline system for distributing flows to and from the caverns. The mine plan is based on the simplifying assumption that the amount of production brine a cavern in a certain member will produce over its lifetime can be estimated over the summed KCl content present in the sylvite (100% KCl) and carnallite (26.83% KCl) of the mineable tonnage as discussed in the previous section. To account for the potential of unidentified anomalous zones the amount of brine produced from a cavern has been reduced by 10% for caverns within the area covered by 3D seismic and 25% for caverns outside the 3D seismic zone in line with the area deductions used for the mineral resource estimate. Based on these production brine volumes, for each exploration well a typical monthly cavern brine production profile has been developed considering time required for cavern preparation for the caverns in different levels and an average production brine flow rate of 40 m³/h over sylvite dominated caverns and 45 m³/h over carnallite dominated caverns. Caverns are added until the required volume of brine for a given phase is reached. To maintain the ratio between the amount of sylvinite and carnallitite brine, between 25:75 and 10:90, either the Esterhazy Member of a cavern is not mined or the start of production from a next member is delayed.

Phase 1 starts with a plant production capacity of 675,000 t/a of MOP. The brine field ramps-up the brine production for this capacity over a period of 18 months. Production is expanded in Year 3 with the Phase 2 plant providing an additional 750,000 t/a capacity reaching full capacity in Year 4. Phase 3 capacity of an additional 750,000 t/a starts in Year 5 and reaches full capacity in Year 6. Final plant capacity including Phases 1, 2 and 3 will be a combined 2,175,000 t/a. The overall mine plan assumes mixture of all brines from the three phases with the overall balance of carnallitite and sylvinite brine maintained.

The Phase 1 brine field pipeline system is developed in the northwest direction, using mainly DH-11 caverns. During the initial years of Phase 1, the Esterhazy Member is not mined in all caverns in order to produce the required amounts of carnallitite and sylvinite brine. During the life of the mine the Phase 1 pipeline system will extend to the west and south producing near the end from caverns of DH-11 and KW 3C4-8, where no sylvinite resources are present and therefore produce mainly carnallitite brine. After 37 years there are no further caverns available on the Phase 1 pipeline system and all production brine for Phase 1 plant will come from the pipeline systems constructed for the Phase 2 and Phase 3 capacity expansions.

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Figure 16-6: Schematic Mine Plan with Years of Development over the Brine Field

Legend
Cavern in area of Measured Resources with mining of Patience Lake, Belle Plaine and Esterhazy Members
Cavern in area of Measured Resources with mining of Patience Lake and Belle Plaine Members
Cavern in area of Indicated Resources with mining of Patience Lake, Belle Plaine and Esterhazy Members
Cavern in area of Indicated Resources with mining of Patience Lake and Belle Plaine Members
Boundary between the polygons of the ROI's of the different exploration wells, that each have a different brine production profile
phase 1 main pipeline, 29 representing the year that mining in the area begins
phase 2 main pipeline, 24 representing the year that mining in the area begins
phase 3 main pipeline, 23 representing the year that mining in the area begins

Source: ERCOSPLAN, 2025

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The Phase 2 brine field pipeline system is developed towards the south of the process plant initially producing from both DH-20 and KW 3C4-8 caverns. Because KW 3C4-8 caverns produce carnallitite brine only, the balance between required amounts of carnallitite and sylvinite brine can be maintained without leaving Esterhazy Member material of DH-20 caverns in the ground. Phase 2 will extend south to develop KW 2C6-32 caverns and later KW 4D14-21 caverns before extending east to mine KW 3A11-27 and KW 3B4-26 caverns as well as KW 4B14-24 caverns.

The Phase 3 brine field is developed east of the process plant, initially producing from DH-21 caverns. Because there are adequate numbers of carnallitite only caverns available from Phase 1 and Phase 2, the required amounts of carnallitite and sylvinite brine can be maintained without leaving Esterhazy Member material of DH-21 caverns in the ground. Over time the brine field will extend further east and will produce from KW 2A11-12 caverns followed by KW 2-24 caverns. Later the Phase 3 brine field will extend south producing from KW 13-36 and later KW 4B14-24 and some KW 3A11-27 caverns.

The approximate production and operating cavern schedules determining drilling requirements for the different phases according to the mine plan are given in Table 16-15, with Year -1 being the start of cavern preparation. According to the mine plan, the last cavern wells will be drilled in Year 64, that go in production in Year 66. The last year of full production is Year 65 with a period of five years ramping down production till the last caverns are exhausted.

16.6 Surface Brine Field Design

To produce an annual production of 675,000 tonnes of solid KCl product per year, the Phase 1 brine field will require the following in steady state operation:

18 production caverns
2 stand-by caverns
7 caverns in development.

For start-up a total of 44 wells will be drilled to create 22 caverns, 18 caverns for direct production ramp-up, two spare caverns and two caverns for initial development. In the first three years of production the number of active caverns will be increased rapidly to over 40, to allow establishment of stable operation of the brine field.

For initiation of each of the expansion phases 46 wells will be drilled to create 23 caverns, 20 caverns for direct production ramp-up, two spare caverns and one cavern for initial development. These expansion phases benefit in their ramp-up from the available capacity of the Phase 1 brine field.

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Table 16-15: Production Schedule for KCl from the Brine Field and Annual Caverns in Preparation on Pipelines for Each Phase to Maintain Production

Year	MOP Product from KCl in Produced Brine (k t/a)				Number of Caverns in Preparation along the Pipelines for the Different Phases
	Phase 1	Phase 2	Phase 3	Total	Phase 1	Phase 2	Phase 3	Total
-1	-	-	-	-	16	-	-	16
1	407	-	-	407	21	-	-	21
2	665	-	-	665	7	8	-	15
3	675	302	-	977	6	18	-	24
4	675	705	-	1,380	8	19	5	32
5	675	750	208	1,633	16	6	13	35
6	675	750	732	2,157	12	5	7	24
7	675	750	750	2,175	8	4	5	17
8	675	750	750	2,175	8	8	10	26
9	675	750	750	2,175	15	8	8	31
10	675	750	750	2,175	7	11	5	23
11	675	750	750	2,175	4	8	9	21
12	675	750	750	2,175	4	11	10	25
13	675	750	750	2,175	4	13	5	22
14	675	750	750	2,175	5	13	22	40
15	675	750	750	2,175	3	11	3	17
16	675	750	750	2,175	4	15	7	26
17	675	750	750	2,175	4	13	9	26
18	675	750	750	2,175	3	9	7	19
19	675	750	750	2,175	4	11	7	22
20	675	750	750	2,175	4	15	12	31
21	675	750	750	2,175	4	9	16	29
22	675	750	750	2,175	4	5	6	15
23	675	750	750	2,175	4	14	12	30
24	675	750	750	2,175	4	10	7	21
25	675	750	750	2,175	4	8	10	22
26	675	750	750	2,175	4	9	13	26
27	675	750	750	2,175	4	11	17	32
28	675	750	750	2,175	5	9	7	21
29	675	750	750	2,175	4	12	7	23
30	675	750	750	2,175	4	16	15	35
31	675	750	750	2,175	4	7	9	20
32	675	750	750	2,175	2	12	17	31
33	675	750	750	2,175	-	16	10	26
34	675	750	750	2,175	-	16	11	27
35	675	750	750	2,175	-	11	9	20
36	675	750	750	2,175	-	9	15	24
37	675	750	750	2,175	-	16	14	30
38	675	750	750	2,175	-	17	20	37
39	675	750	750	2,175	-	6	11	17
40	675	750	750	2,175	-	11	10	21

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Year	MOP Product from KCI in Produced Brine (k t/a)				Number of Caverns in Preparation along the Pipelines for the Different Phases
	Phase 1	Phase 2	Phase 3	Total	Phase 1	Phase 2	Phase 3	Total
41	675	750	750	2,175	-	13	9	22
42	675	750	750	2,175	-	18	15	33
43	675	750	750	2,175	-	14	18	32
44	675	750	750	2,175	-	12	16	28
45	675	750	750	2,175	-	17	11	28
46	675	750	750	2,175	-	7	9	16
47	675	750	750	2,175	-	14	18	32
48	675	750	750	2,175	-	19	9	28
49	675	750	750	2,175	-	10	16	26
50	675	750	750	2,175	-	18	17	35
51	675	750	750	2,175	-	10	8	18
52	675	750	750	2,175	-	13	12	25
53	675	750	750	2,175	-	12	14	26
54	675	750	750	2,175	-	4	13	17
55	675	750	750	2,175	-	15	11	26
56	675	750	750	2,175	-	15	17	32
57	675	750	750	2,175	-	12	10	22
58	675	750	750	2,175	-	11	10	21
59	675	750	750	2,175	-	6	8	14
60	675	750	750	2,175	-	12	16	28
61	675	750	750	2,175	-	15	15	30
62	675	750	750	2,175	-	2	10	12
63	675	750	750	2,175	-	5	17	22
64	675	750	750	2,175	-	7	7	14
65	675	750	750	2,175	-	11	20	31
66	675	600	750	2,025	-	-	14	14
67	675	157	750	1,582	-	-	-	-
68	675	-	707	1,382	-	-	-	-
69	675	-	463	1,138	-	-	-	-
70	531	-	-	531	-	-	-	-

Note: Bolded values represent the number of initial caverns prepared. All remaining values represent the number of caverns during the mine life.

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For the Phase 2 and Phase 3 expansions each producing 750,000 tonnes of solid KCl product per year, the brine fields will each require the following in steady state operation:

20 production caverns
2 standby caverns
8-9 caverns in development.

A tank farm for solvent and brines will be constructed with a pump house near the process plant that contains:

pumps for cold solvent for preparation leaching and leaching of the Esterhazy Member
pumps for hot solvent for late-stage preparation leaching and leaching of the Belle Plaine and Patience Lake Members
pumps for MgCl₂ brine and NaCl slurry backfill for replacement of cavern brine from the caverns.

Solvent is transported from the tank farm to the caverns on the well pad with the production brines pumped back to the tank farm and from there to the process plant. The pipeline system connecting the tank farm pump house to the caverns on the well pad consists of single pipelines for:

cold solvent
hot solvent
brine and slurry backfill.

The pipeline system from the caverns to the tank farm consists of:

sylvite production brine
carnallite production brine
low K-content waste brines
higher K-content waste brines of the LBPM.

The surface infrastructure at each well pad for up to seven caverns with two wells consists of the following:

well heads
brine distribution system for each cavern on the well pad.

Construction of drilling platforms, drilling of wells and all work-over operations on the wells will be performed by external contractors.

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17.0 RECOVERY METHODS

The brine processing method for the Potash operation is based on the 2011 FS design (Foster Wheeler & ERCOSPLAN, 2011) and summarized below. The processing of $\mathrm{MgCl_2}$ -rich end brine from potash production to produce saleable magnesium products is summarized from the 2012 prefeasibility study completed by Lyntek (2012). Cost savings measures have since been identified and have been incorporated in the process design.

17.1 Potash Production Design Base

The design basis for the onsite process plant is a production of 675,000 t/a of KCl product (426,600 t/a $\mathrm{K}_2\mathrm{O}$ equivalent) with a KCl grade of $97\%$ (Phase 1). The plant will be expanded in two phases following Phase 1.

The design of Phase 1 is based on feed from the brine field with approximately $6.3\mathrm{Mm}^3$ of brine at a density of $1.265\mathrm{g/cm}^3$ and temperature of around $50^{\circ}\mathrm{C}$ . Key plant design parameters are detailed in Table 17-1.

Table 17-1: Key Design Criteria for the Potash Plant

Item	Unit	Value
Phase 1 production	t/a	675,000
Phase 1 & 2 production	t/a	1,425,000
Phase 1, 2 & 3 production	t/a	2,175,000
MOP product grade	%KCl	97.0
Operating hours	h/a	8,000
Brine chemistry
MgCl₂	%	9.86
MgCl₂	g/L	121.5
KCl	%	9.29
KCl	g/l	114.5
NaCl	%	11.31
NaCl	g/L	139.4
CaCO₄	%	0.24
CaCO₄	g/L	3.0

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17.2 Potash Processing Plant

The Phase 1 potash process plant includes the following buildings:

Main process building including a maintenance workshop (mechanical/electrical/instrumentation), control room and electrical building.
Utility building
Administration building
Substation building
Product storage and loading structures

The plant area will also include the wellheads from the production water wells extracting brackish water from the Blairmore aquifer and the disposal wells discharging brine to the Deadwood Formation.

The pump enclosure and tank farm can be considered as extensions of the solution mining operations.

The first step of the potash production process is the removal of insoluble and blanketing fluid from the production brine. This is followed by evaporation, crystallization, drying and compaction to create agricultural sized products. A simplified block flow diagram for the process is shown in Figure 17-1.

17.2.1 Insolubles and Blanketing Fluid Removal

The brine contains fine particulates or insolubles and residual blanketing fluid suspended within it. Removal of the insolubles is accomplished using flocculants and an inclined plate thickener. The brine flows into the separator where a flocculant is added, then through the inclined plates where the solid and liquid separation occurs. The insolubles are separated from the brine, settle and then are densified to from a slurry that is sent to the sludge treatment area.

After insoluble removal, the residual blanketing oil is removed prior to the evaporation circuit. The brine passes through oil/brine separators where residual oil is removed and recycled back to the well field for reuse in the caverns. The clean brine is then stored in the evaporation feed tank before it is sent to evaporation.

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Figure 17-1: Process Flowsheet

Source: modified after Foster Wheeler, 2011

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17.2.2 Evaporation

The objective of the evaporation circuit is to precipitate NaCl and KCl crystals and to purge the remaining brine which is highly concentrated in MgCl₂. Key equipment criteria for Phase 1 are detailed in Table 17-2. The crystals are formed and precipitated using two trains of Multiple Effect Evaporation (MEE) where the brine is heated through a series of three evaporators. This evaporates the brine increasing the NaCl and KCl concentrations in the brine to the point where super-saturation is achieved, causing crystals to form and precipitate. The crystals settle in the elutriation leg of the evaporator where it is slurried and then separated from the brine (mother liquor) using centrifuges (Figure 17-2).

The mother liquor from the evaporators is then flash cooled in two stage flash coolers, resulting in carnallite (KCl·MgCl₂·6H₂O) precipitation. The carnallite slurry from flash cooling is passed through hydrocyclones and a thickener removing the crystals from the mother liquor. Some of the mother liquor is purged from the circuit while the carnallite is sent to a draft tube (DTB) crystallizer where it is converted to form KCl and NaCl crystals and mother liquor. The KCl and NaCl crystals from the MEE evaporators and DTB crystallizer are combined in a wash leg before being debrined in centrifuges. The mother liquor streams are recycled back into the evaporation trains.

Table 17-2: Phase 1 Evaporation Equipment Criteria

Item	Unit	Value
Evaporator type	-	Multiple effect evaporator
Number of evaporators per train	#	3
Number of evaporator trains	#	2
Cooling type	-	Flash cooler
Number of cooling vessels	#	2
Evaporator thickener size	m	20
Crystallizer type	-	Draft tube
Evaporator centrifuge type	-	Screen bowl
Evaporator centrifuge size	mm	1,400 x 2,100
Number of evaporator centrifuges	#	2
Low magnesium thickener size	m	25
Salt centrifuge type	-	Screen bowl
Salt centrifuge number	#	3

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Figure 17-2: Typical Swenson Forced Circulation Evaporator and Elutriation Leg

Source: modified after Whiting (2014)

The evaporator centrifuge cake which is comprised of KCl and NaCl crystals is then mixed with hot brine in the repulp tank where the KCl preferentially dissolves and the NaCl remains in crystal form. NaCl crystals are removed from the circuit using the low magnesium thickener and salt centrifuges, and the hot clarified brine is fed to crystallization. The salt centrifuge cake is then dissolved into a NaCl brine which is injected into a disposal well (Deadwood Formation). The magnesium rich brine is sent to the magnesium product plant.

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17.2.3 Crystallization

The low magnesium thickener overflow is a KCl rich brine that is then heated and sent to crystallization. The crystallization circuit consists of one train with three stages of vacuum (DTB) crystallizers (Figure 17-3) designed to produce KCl crystals by flashing the liquor at increasingly lower pressures. KCl crystallization occurs as the liquor cools from 99.0°C to 44.1°C. Water is added to the contents of each stage to dissolve any residual NaCl crystals, leaving the solid KCl crystals. The mother liquor is used to condense vapour from the stages countercurrently and eventually returning to the repulp tank.

The KCl slurry from the third-stage crystallizer is centrifuged to separate the KCl crystals from the mother liquor. The centrifuge centre is recycled back to the crystallization circuit feed and the cake comprising of the KCl product is conveyed to the dryer. Key equipment criteria of the crystallization circuit of Phase 1 are detailed in Table 17-3.

Figure 17-3: Typical Swenson Potash DTB Crystallizer

Source: Swenson, 2011

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Table 17-3: Phase 1 Crystallization Equipment Criteria

Item	Unit	Value
Crystallizer type	-	Draft tube
Number of crystallizers per train	#	3
Number of crystallizer trains	#	1
Centrifuge type	-	Screen bowl
Number of centrifuges	#	2

17.2.4 Drying

The rotary drum dryer receives the 95% solid potash cake from the crystallizer centrifuges and heats the material to evaporate the 5% remaining liquid. The final dried product contains approximately 0.1% moisture. The dry solids are then conveyed to a screen, where the dried product fines are delivered to two parallel compaction circuits. The vent gas from the rotary drum dryer goes to a cyclone to remove some of the particulate and then to an electrostatic precipitator to remove all the solids in the vent gas stream. The vent gas is sent through a stack to the atmosphere. All the solid particulate collected in the cyclone and baghouse are collected and recycled to the compactor feed bin. The particulate control system has been designed to meet the Saskatchewan Potash Refining Air Emissions Regulation limit of 0.57 grams per dry reference cubic metre. The dryers will be high efficiency, low nitrogen oxide (NOx) burners to limit the amount of NOx in the exhaust. The heat for the rotary drum dryer is provided by a natural gas burner and a blower provides the hot combustion gas to the drum to perform the drying operation. Key equipment criteria of the drying circuit of Phase 1 are detailed in Table 17-4.

Table 17-4: Phase 1 Drying Equipment Criteria

Item	Unit	Value
Dryer type	-	Rotary
Number of dryers	#	1
Dryer diameter	m	3.3
Dryer length	m	18
Dust cyclone diameter	m	1.5
Number of dust cyclones	#	4
Number of electrostatic precipitators	#	1
Precipitator sections	#	3

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17.2.5 Compaction

The dryer product reports to a compaction feed bin and metered out to two parallel compaction circuits. Details of the equipment compaction criteria are presented in Table 17-5. The material is conveyed to each compactor where it is pressed at high pressure to make a 14 mm thick sheet of material. The sheet passes through a flake breaker where it is broken into smaller pieces. The flake breaker discharge is carried by bucket elevator to compaction screens where oversize and undersize material are removed. The oversize is crushed in a roll crusher and re-sent to the compaction screens. The undersize reports to the compaction feed screen where it is recompacted.

The on-size material is hardened by spraying a liquid to coat the potash particles and then redried in a fluid bed dryer. The resultant hardened potash product is then rescreened to remove any lumped particles that have formed. The lumps are broken and report back to compaction screening with an impactor. The on-size material is conveyed to product storage.

Table 17-5: Phase 1 Compaction Equipment Criteria

Item	Unit	Value
Number of compaction loops	#	2
Compactor throughput	t/h	120

17.2.6 Product Storage and Loadout

The final high purity granular agricultural product is stored in the KCl granular storage building which acts as surge capacity between the processing plant and product loading. When the product is reclaimed for loading it is first screened removing any undersized material. These fines are stored and eventually recycled back to granulation. The product screen oversize is then weighed in the garner way system prior to being sampled and loaded into the railcars.

17.2.7 Reagents

The processing of brine to create potash product uses a number of reagents stored in totes in the warehouse, including:

Flocculent for insoluble material removal
Lime to neutralize dryer exhaust
Compaction additive to improve hardness
Typical water treatment chemicals for industrial boilers and coolers.

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17.2.8 Utilities

The mill equipment will be electrically powered with an agreement from Saskpower. Design rates including power factors are approximately 0.32 MWh/t of finished product.

Natural gas will be used to generate steam for boilers, dryer fuel, and building heating and is anticipated to be between 15.5 and 16.5 GJ/t of finished product.

The largest water consumers of the process plant are used in cavern development, process plant water and NaCl dissolution. These users, along with other smaller water consumers in the plant account for approximately 18 m³ per finished tonne.

17.3 Magnesium Products Recovery Method

The design basis for the magnesium product plant is to produce 104,000 t/a of hydromagnesite with 99% purity.

The plant is provided with feed from the potash process plant consisting of approximately 545,000 tonnes of brine annually at a temperature of about 56°C. Key plant design parameters are detailed in Table 17-6.

Table 17-6: Magnesium Plant Design Parameters

Parameters	Unit	Value
Feed	t/d	1,604
Overall plant availability^{1}	%	92%
Plant annual operation	h	7,500
Feed Chemistry
MgCl_{2}	%	35.0
MgCl_{2}	g/L	445
KCl	%	0.8
KCl	g/L	10
NaCl	%	0.6
NaCl	g/L	8
CaCl_{2}	%	<2.0
CaCl_{2}	g/L	<25
CaSO_{4}	%	<2.5
CaSO_{4}	g/L	<30

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17.3.1 Hydromagnesite Process

A simplified process flow chart of the hydromagnesite process is given in Figure 17-4. The overall hydromagnesite process consists of six steps, with a seventh step required to produce gaseous reagents for the process.

Figure 17-4: Hydromagnesite Precipitation Process Overview

Source: Modified from Lyntek, 2012

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17.3.1.1 Gaseous Reagent Preparation

The proposed process for carbonation of the magnesium brine uses carbon dioxide (CO₂) and anhydrous ammonia (NH₃) gases to reduce the overall cost of the process. The cost savings are realized by reclaiming ammonia gas using slaked lime (Table 17-7). The slaked lime is produced from the residue of the production of CO₂ from calcining limestone. This portion of the process closely mirrors the proven Solvay process for producing soda ash from salt brine with high concentration CO₂ exhaust gas from a lime kiln, and subsequent ammonia regeneration using slaked lime. Limestone is first fed to a natural gas fired kiln to produce two products, CO₂ gas and quicklime (CaO), as shown below:

$$
CaCO_3(s) \Rightarrow CaO(s) + CO_2(g)
$$

Table 17-7: Gas Preparation and Reclamation

Parameters	Unit	Value	Notes
Limestone quality	%	>90	-
Limestone demand	t/d	498	Ammonia dependent
Ammonia makeup	t/d	1.6	1.5% loss per pass

Air for combustion is fed in 20% excess by an integrated blower. The exhaust gas from the kiln is air-cooled to 120°C and pressurized to 80 kPa. Increased pressure is required to compensate for the pressure maintained in the headspace and the fluid head from the tank contents. Pressurized gas is split in a manifold and distributed via spargers to the six carbonation tanks. The remaining quicklime from the kiln is slaked using process water in a vertical ball mill to produce Ca(OH)₂ as below:

$$
CaO + H_2O \Rightarrow Ca(OH)_2
$$

The slaking reaction is exothermic and will need to be cooled to maintain appropriate temperature for the equipment.

The final destination for the slaked lime is the ammonia stripping column. Ammonia is dissolved in the MgCl₂ brine to buffer the solution in subsequent reactions and provide an additional driving force for magnesium carbonate precipitation during the carbonation step in the processing. The ammonia stripping column accepts various magnesium plant effluents which are mixed with the slaked lime to drive the ammonia back into the gaseous anhydrous form and recycle the gas. The reaction is between the ammonium chloride formed in the carbonation reactors and slaked lime which produces ammonia gas as shown below:

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Heat from steam injection and the high pH from the slaked lime addition reduce the solubility of the ammonia to very low levels, allowing for high recovery. The preliminary design assumes an ammonia recovery efficiency of 98% in this unit operation, but this can be improved. Ammonia to make up the losses is supplied from a pressurized storage tank. Expected losses are estimated at 1,300 t/a. Ammonia capture in the process could be improved with testing and detailed design, which would improve both the operational costs and reduce environmental impacts.

Pretreatment of the Potash Plant Waste Brine

MgCl_{2} brine at 56°C from the KCl plant is stored in a heated tank that raises the temperature to 80°C. The brine is then diluted to 32% MgCl_{2} concentration using process water heated to 80°C. Dilution and heating prevent precipitation of salts by reducing the concentration from the solubility limit for MgCl_{2}. The diluted MgCl_{2} brine is sent to the gypsum precipitation tank where epsom salt (MgSO_{4}•7(H_{2}O)) will be added in agitated mixing tanks. The addition of the MgSO_{4} results in the precipitation of calcium in the brine as gypsum (CaSO_{4} •2(H_{2}O)) as seen below:

CaCl 2 (aq) + MgSO 4 (aq) + 2 H 2 O (l) = CaSO 4 • 2(H 2 O) (s) + MgCl 2 (aq)

Using sodium sulphate (Na_{2}SO_{4}) as a replacement pretreatment reagent produces gypsum but increases NaCl concentration in brine, see below:

CaCl 2 (aq) + Na 2 SO 4 (aq) + 2 H 2 O (l) = CaSO 4 • 2(H 2 O) (s) + 2NaCl (aq)

The increased NaCl concentration is not expected to affect product quality as its reaction products are highly soluble and will be removed during dewatering processes.

Calcium is removed in a pretreatment step because calcium carbonate is less soluble than magnesium carbonate, therefore, any calcium in the brine feeding the plant will precipitate with the product. MgSO_{4} additions will be adjusted to match the CaCl_{2} concentration in the feed. Excess epsom salt (or alternatively sodium sulfate), somewhat more than the amount needed to precipitate the calcium present, should be fed to account for variations in the feed and to ensure minimum calcium solubility. Table 17-8 lists the parameters for pretreatment.

This reaction will be performed in two tanks in series for better residence time distribution. Calcium will be removed to a level representing the solubility of gypsum in the process brine. The slurry with the CaSO_{4}•2(H_{2}O) will be sent to a thickener where the gypsum particles are allowed to settle. The settled solids will be removed as the thickener underflow and sent to be

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combined with other waste fluids from the KCl operations for deep well disposal. The overflow from the thickener is sent to a filter to ensure complete removal of the gypsum particles. Backwash from the filter will be combined with the thickener underflow for disposal.

Table 17-8: Pretreatment
| Parameters | Unit | Value | Notes |
| --- | --- | --- | --- |
| Contaminant CaCl₂ | % | Estimated maximum 2% | 40 min residence time |
| Epsom salt usage | t/d | 80.2 | 20% excess |

17.3.1.3 Brine Dilution and Ammoniation

Filtered brine and process water are sprayed into an absorption tower where ammonia gas is fed from the bottom. The process water dilutes the brine, and the diluted brine absorbs the ammonia gas. The clear liquid from the clarifying filter is chilled to 25°C to be used as feed to the ammonia contacting tower. The ammonia contacting tower will have two liquid feeds, clarifier brine and treated process water from the main plant. The gas feed from the bottom of the tower is ammonia gas at 22°C. Dilution water is used in addition to the brine to absorb the ammonia more effectively. Ammonia addition buffers the solution from the CO₂ absorption which results in moderate carbonic acid generation in solution. Composition of the solution prior to carbonation is 12% MgCl₂ and 4% ammonia, by weight, in the design.

17.3.1.4 Hydromagnesite Precipitation

The ammoniated solution will be carbonated in a circuit of six tanks arranged in series. Parameters for hydromagnesite precipitation are summarized in Table 17-9. The carbonation reaction will occur in two steps, CO₂ dissolution and MgCl₂ carbonation. Exhaust gas from the lime kiln will provide the CO₂ necessary for the magnesium chloride carbonation reaction. As the CO₂ dissolves, carbonic acid (H₂CO₃) will be generated. Carbonic acid exists in equilibrium with two ionic forms: bicarbonate (HCO₃⁻) and carbonate (CO₃²⁻).

Table 17-9: Hydromagnesite Precipitation
| Parameters | Unit | Value | Notes |
| --- | --- | --- | --- |
| MgCl₂ brine conversion | % | 69.20 | 120 min residence time |
| Hydromagnesite product | t/d | 307 | 99% purity |

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The carbonic acid will be consumed throughout the MgCl_{2} precipitation reaction which will drive additional CO_{2} dissolution and carbonic acid regeneration as the solution attempts to reach equilibrium. Carbonation will result in a slurry of precipitated hydromagnesite in an ammonium chloride brine according to the following reaction.

5MgCl 2 + 4CO 2 + 10NH 3 + 10H 2 O = Mg 5 (CO 3) 4 (OH 2) • 4 (H 2 O) + 10NH 4 Cl

Without ammonium ion in solution, a successful carbonation reaction would yield hydrochloric acid instead of ammonium chloride. This would tend to re-dissolve the magnesium and cause corrosion problems in the equipment. The ammonium ions in solution allow the reaction to proceed at lower activation energies and buffers acidic solution.

The carbonic acid in solution will also be consumed by NaCl in the brine producing sodium bicarbonate (NaHCO_{3}) as in the Solvay process according to the following reaction:

NaCl + H 2 CO 3 + NH 3 = NaHCO 3 + NH 4 Cl

Excess CO_{2} gas is fed to the process for dissolution which should account for any losses to the NaCl carbonation reaction. NaHCO_{3} is highly soluble and will stay in solution during the dewatering step and is not expected to affect product quality.

17.3.1.5 Hydromagnesite Recovery and Washing

The slurry from the carbonation system will feed a thickener as the first separation step. The thickened underflow slurry containing the settled hydromagnesite solids will be pumped from the thickener to a horizontal belt vacuum filter to remove more of the entrained liquid. The filter cake will be washed on the filter with treated water to remove additional water containing NaCl and other salts. The filter cake will then be dried on the filter to low moisture content. Thickener overflow and filtrate liquid from the vacuum filter will be sent to the ammonia stripping column to recover the ammonia.

The hydromagnesite filter cake will be further washed by mixing it with treated water in a re-pulping tank, to dilute the remaining ammonia and salts remaining in the belt filter solids. That slurry will be dewatered in a centrifuge to remove the wash water. The wash water recovered from the centrifuge will be sent to the ammonia stripping column, while the solids recovered from the centrifuge will be dried in a Holo-Flite screw dryer.

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17.3.1.6 Hydromagnesite Drying and Packaging

The Holo-Flite dryer consists of four hollow screws running in a rectangular chamber. Hot fluid is circulated through the screws and optionally through the walls of the chamber to provide heat for drying. The hydromagnesite will be heated to a temperature of 100°C in the dryer to drive off free water (surface moisture). Thermogravimetric analysis (TGA) data suggests that carbonate groups are lost from hydromagnesite at temperatures above 300°C; therefore, the temperature of the heating fluid for the dryer will be limited to a maximum temperature of 300°C. The heating fluid will be fed concurrent with the solid material to minimize deformation of the product. Continuous operational testing at an appropriate scale is required to confirm the amount of mass loss from the drying operation as the hydromagnesite product begins to dehydrate at temperatures just above 100°C. Excessive heat in the drying process could remove up to 15% of the mass of the product. The current process design uses the superheat to determine a 4.3% mass loss due to dehydration.

After cooling, the dry hydromagnesite powder will be transferred to a storage bin. The dry hydromagnesite product will be transferred to a loading system for dry bulk semi-trailer trucks. The off gas from the dryer will be treated to remove any particulates and discharged to the atmosphere.

17.3.1.7 Reagents

The hydromagnesite precipitation process will use three main reagents in the processing of the brine:

Epsom salt or sodium sulphate, used to eliminate calcium impurities in the feed, will be stored in a silo with an operating size of 1,161 m³ for nine days of operation.
Limestone calcined on site to produce high CO₂ gas feed and quicklime for ammonia recovery will be stored in two 1,415 m³ silos giving nine days of operational time.
Ammonia used as a solution and precipitation buffer will be stored in a 40-tonne capacity pressurized storage tank. Typical ammonia shipments are 31 tonnes, which will be required every two weeks.

17.3.1.8 Utilities

The hydromagnesite mill equipment will be electrically powered with an agreement from Saskpower. Design rates including power factors are approximately 0.1 MWh/t of finished product.

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Natural gas will be used to generate steam for boilers, dryer fuel, and building heating with demand anticipated to be 7.4 GJ/t of finished product.

The largest water consumer of the hydromagnesite process plant are the boilers, cooling tower make-up and process water. It is anticipated that 24.0 m³ of water will be required for each tonne of finished product.

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18.0 PROJECT INFRASTRUCTURE

18.1 Summary

The proposed site layout is presented in Figure 18-1 and will consist of the following facilities:

Brine field wells and pipelines
Potash process plants
Magnesium process plant
Production water wells
Disposal wells
Product storage buildings
Utility building
Boiler building
Cooling tower
Tank farm
Electrical substation and distribution
Storm water containment ponds
Administration building
Warehouse and offices
Loading facilities (truck and rail).

The processing facilities layout is presented in Figure 18-2.

18.2 Site Access

The Project is located approximately 175 km east of Saskatoon and 176 km north of Regina. The plant site is located on primary Provincial Grid No. 640, 2.5 km south of the town of Wynyard. Highway 16 (Yellowhead Highway, the northern route of the Trans-Canada Highway) and the northern main line of CP Rail run through the town of Wynyard and provide primary access to the site.

18.3 Brine Field

Design and infrastructure of the brine field is described in Section 16.

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Figure 18-1: Site Layout


		CP RAIL MAINLINE		TOWN OF WYNYARD
	TRAIN RAIL	HIGHWAY 16
EXISTING
WATERCOURSE
HIGHWAY 640
RE-ROUTED
SASK ENERGY
H.P. GAS LINE
INITIAL
WELLFIELD		EXISTING 6" WATER LINE (UNDERGROUND)
		PHASE 3	PHASE 1	HV
TRANSMISSION
LINE
		PHASE 2	PHASE 1	WYNYARD
REGIONAL PARK
Qe 100 200 300 400 500
1:100000

Source: Wood, 2025

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Figure 18-2: Processing Facilities Layout

Source: Wood, 2025

18.4 Tank Farm

The tank farm serves the brines to and from the wellfield. The tanks include hot and cold solvent tanks, production sylvinite and carnallite tanks, blanketing oil tanks and evaporation feed tanks. The tanks and their associated pumps are housed separately from the process plant, with secondary containment sized at 110% of the largest tank. The tank farm is replicated in Phase 2 and Phase 3 to accommodate higher wellfield production.

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18.5 Potash Process Plant

The potash process plant houses the evaporation, crystallization, debrining, drying and compaction process systems. The building is a pre-engineered steel structure 195 m x 125 m. The building peak is 64.5 m elevation. Secondary structural steel within the building provides elevated platforms for equipment and maintenance access for personnel.

A maintenance, electrical and control room area is located within the plant building. The structure is 49 m x 15 m, with multiple floors to accommodate elevated electrical equipment with cable entry from below.

Phases 2 and 3 are near duplicates of the Phase 1 plant, constructed to the west of the Phase 1 facility. The intent is to use repeat engineering along with improvements from the startup of Phase 1 for efficient execution of Phases 2 and 3. The plants are physically separate from Phase 1 to provide clear custody of construction and operations areas.

18.6 Magnesium Process Plant

The magnesium process plant will be constructed south of the Phase 1 potash plant during Phase 2 construction. The actively heated equipment, such as the gypsum precipitation system and the solids dryers are housed in a single-story building with 86 m x 62 m footprint and 30 m tall. Equipment included in the ammonia cycle of the process (carbonation tanks, hydromagnesite product thickener, ammonia contacting tower, ammonia stripping tower, and the re-slurry tank) are outdoors. Some of this equipment is also actively cooled, and so is logically separated from the actively heated portions of the process. The lime kiln is a standalone process and is at the far end of the plant.

18.6.1 Chemical Storage

The magnesium process plant requires facilities for transport and storage of:

Epsom salt: transported to the facility in 20 tonne trucks and stored on site in silos
Limestone and lime: transported to site in trucks or rail and will be stored on site in silos
Anhydrous ammonia gas: transported to site in trucks and stored in a pressurized storage tank.

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18.7 Utility Building

A utility building houses the air compressors, potable water and reverse osmosis systems, and the fire water system. The building has a 93 m x 88 m footprint and is 30 m at peak. Phases 2 and 3 include similar, new utility buildings.

18.8 Cooling Tower

A five-cell cooling tower is located adjacent to the utility building. Phases 2 and 3 include additional cooling towers.

18.9 Product Storage Buildings

Potash product is stored in a tension fabric building 55 m x 122 m and 18.2 m at peak, providing a storage capacity of 20,000 tonnes. It is located southeast of the potash plant. The building supports an elevated tripper conveyor to dispatch potash for storage. The building floor is a concrete slab. Product is reclaimed though floor openings to a belt conveyor in a trench beneath the floor. A second identical storage building is planned for Phase 2 at the loading station adjacent to Phase 1, which includes capacity for Phase 2 and Phase 3. Product from Phase 2 and Phase 3 is conveyed to this centralized storage.

18.10 Truck and Rail Loadout

Reclaimed potash product is conveyed to a rail loading facility south of the Phase 1 product storage warehouse. The rail yard consists of a set of dead-end spurs for storage of empty and full rail cars. The capacity of this yard is 125 rail cars each with nominal capacity of 100 tonnes product. Two parallel sidings allow marshalling of empty cars to the rail loading station, and removal of filled cars. The cars are loaded with an automatic weighing system with a throughput capacity of 500 t/h.

The rail loading system will be expanded in Phase 2 to double its car loading rate and rail capacity. This is considered sufficient for the final production rate of the Project.

Hydromagnesite will be transported in dry bulk hopper trailers by truck. The magnesium product plant is located near highway 640 on the site plan to facilitate truck traffic. Truck loading is sized for 300 t/h.

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18.11 Administration Building

An administration building is included for office-based activities such as site management, production and maintenance planning, engineering, training, health, safety and security.

18.12 Waste Management

A number of large and small waste streams will result from the solution mining and brine processing to KCl product:

solid NaCl from brine processing
NaCl brines from cavern preparation
concentrated MgCl₂ brine
flocculated insoluble solids
dust
gas emissions from steam boilers and driers
domestic waste.

The following waste streams are expected for the magnesium product plant:

solid gypsum from pre-treatment
concentrated CaCl₂ brine
dust
gas emissions from steam boilers and driers
domestic waste.

The solid NaCl from brine processing will be dissolved in water; the resulting brine will be injected into the Deadwood Formation. After the first five years of production, when caverns are available, a major portion of the solid NaCl can be disposed of in the mined-out caverns, reducing the waste brine injection volume.

The solid gypsum from pre-treatment and the insoluble solids can be mixed with the solid NaCl and backfilled in mined out caverns, which will reduce the need for water to dissolve any remaining solid NaCl.

The concentrated MgCl₂ and CaCl₂ brines will be diluted and injected into the Deadwood Formation using different injection wells.

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Dust emission from the plant is minimized by using industry best practice equipment to collect dust. Heavily travelled roads are paved, and road surfaces will be treated to minimize dust generation. Excess MgCl₂ brine can be used for this purpose.

Equipment will ensure gas emissions from boilers and drying will stay within the limits given by the Saskatchewan Clean Air Regulations.

The resources of the local area will be used for domestic waste management. A septic truck service will haul waste off site for disposal at the Town of Wynyard sewage lagoons.

18.13 Water Supply

Raw water required will be drawn from the Blairmore aquifer (approximately 475 m depth) and will be used for solution mining, process utility water requirements within the plant and cooling water. An analysis of this water has shown that it is not suitable for agricultural purposes.

Based on the material balance and the cavern mass balances, the following requirements for process water are identified for the 675,000 t/a steady state potash production:

Cold solvent for sylvite caverns and cavern preparation ... 790 m³/h
Process water ... 400 m³/h
NaCl dissolution ... 320 m³/h
Boiler and cooling tower makeup ... 160 m³/h
Reverse osmosis ... 80 m³/h
Miscellaneous for plant ... 20 m³/h

Potable water for plant and office use is expected to come from the Town of Wynyard, which will provide up to 11 m³/h, which is more than the volumes required.

For each 750,000 t/a phased expansion of the potash production capacity process water requirements are as follows:

Cold solvent for sylvite caverns and cavern preparation ... 890 m³/h
Process water ... 450 m³/h
NaCl dissolution ... 350 m³/h
Boiler and cooling tower makeup ... 170 m³/h
Reverse osmosis ... 90 m³/h
Miscellaneous for plant ... 25 m³/h

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Steam is generated by two 1,750 hp steam generators which provide a total of 434,000 kg of steam per hour with a capacity of 574,000 kg. Water sent to the boilers is Blairmore water run through a reverse osmosis system. Steam is used in the ammonia reclamation tower. Steam is injected into the tower to mix the material at the bottom of the tower and to provide heat for the evaporation of the ammonia in that solution.

Water requirements for the magnesium product plant are estimated to be:

Clean process water...310 m³/h
Cooling water...20 m³/h

Clean process water will be supplied from reverse osmosis of Blairmore water.

18.14 Gas Supply

Natural gas is required for the boilers and product drying, as well as for heating office spaces and the control room. The total amount of energy required from natural gas for the Phase 1 potash facility is estimated at 1,168 GJ/h.

The energy required from natural gas for each expansion phase is estimated at 1,172 GJ/h.

The magnesium process plant will use natural gas to heat feed brine and process water for pretreatment. Furthermore, the kiln, product dryers and the steam generators (two 800 hp steam generators capable of delivering 25,000 kg of steam) consume natural gas. The overall heat demand of the magnesium product plant is 141 GJ/h.

Natural gas will be purchased from a gas marketer and delivered to the site by TransGas, a Provincial Crown-owned gas transmission company. Infrastructure for the gas transportation will be funded by Karnalyte and will be offset by a rebate on gas prices for the first five years of operation provided Karnalyte takes a 20 TJ/d contract for five years. Pressure reduction, custody metering and odorant injection will be contracted to SaskEnergy, a sister company of TransGas; their facility will be built adjacent to the Karnalyte plant.

18.15 Electrical Power

SaskPower, the provincial Crown-owned power generation and transmission utility company, will supply power to the plant site from the main power grid. A new line to the site will be installed by SaskPower and funded by Karnalyte.

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Total installed capacity for the process plant and brine field is in the order of 32 MVA and continuous power demand is estimated to be 32 MW for the initial Phase 1 potash plant.

The additional power required for each expansion phase is 36 MW. The system will be expanded in Phase 2 including capacity for Phase 3.

The magnesium facility requires an estimated continuous power draw of 2.1 MW.

18.16 Water Management

Storm water ponds for Phase 1 and a shared storm water pond for Phases 2 and 3 are included to which the site will drain in case of high precipitation events. The storm water pond will receive surface run-off, roof run-off and non-segregated drainage. Potentially contaminated storm water will be collected in curbed/diked areas and used in the process.

Excess storm water collected on site will be added to the waste injection brine that reports to the Deadwood Formation.

18.17 Offsite Infrastructure

18.17.1 Railway and Product Transport

A train rail of about 3 km will be constructed to connect the site rail loadout to the CP Rail main line north of the site.

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19.0 MARKET STUDIES AND CONTRACTS

19.1 Potassium Chloride

19.1.1 Introduction

The term potash is an informal term used to describe MOP which is expressed with the chemical formula KCl or potassium chloride. The terms potash and muriate of potash are often used in the Saskatchewan potash industry to describe the sales product resulting from the mining and milling of sylvite bearing rocks. Sylvite is the potash bearing mineral which is the most common source for producing potassium in Saskatchewan.

Saskatchewan has the largest potash industry in the world, accounting for 45% of known global reserves. The province is home to all of Canada's operating potash mines. By conservative estimates, Saskatchewan could supply world potash demand at current levels for several hundred years.

MOP market information provided in this section is based on the information and analysis prepared by Argus Media Group (Argus).

19.1.2 Product Details

Typical potash mines produce a potash grade of KCl 95. This is a 95% pure KCl product. This is also reported as an equivalent grade of potassium oxide (K₂O), which is the potassium fertilizer component of potash. KCl 95 is equivalent to 60% K₂O.

Karnalyte plans to produce KCl 97 or 61.3% K₂O. As a solution mine, the product produced by Karnalyte is a higher grade than traditional underground mines due to the fact that the solution mining process leaves many of the impurities in the cavern, and the evaporation-crystallization process inherently produces more pure KCl. Solution mining also has the benefit of producing pure white KCl since the impurities that contribute to potash's pinkish colour remain in the cavern after dissolution of the sylvinite. If specific customers require the pinkish colour, an additive can be used to colour the white product.

Karnalyte will produce a compacted granular product. This is the typical form for agricultural use. Standard product, which is a powdered version, is used for customers that want to compound and create their own granules. Standard product is typically a lower priced product, and it is not planned as a current product.

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19.1.3 Market Demand

19.1.3.1 Global

The global MOP market is a stable market with a forecast compound annual growth rate (CAGR) of 1.2% from 2024 to 2040 (Figure 19-1). LOM growth rate from 2050 to end of mine life was forecast at a terminal value to highlight the uncertainty at these timescales. Global demand for MOP is largely driven by growth in Asia and Latin America.

Figure 19-1: Global MOP Consumption Forecast to 2039

Source: Argus, 2025

19.1.3.2 US Corn Belt

The US heavily relies on imports of MOP due to their limited ability to produce potash. More than 80% of their supply is from Canada with the bulk of the remaining imports from Russia followed by Israel (Figure 19-2).

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Figure 19-2: USA Imports of MOP by Origin, 2010-2024

Source: Argus, 2025

19.1.4 Market Supply

Potash supply growth over the past decade has been primarily from Russia and Laos with Laos projects supported by Chinese investments to support their demand growth. Argus forecasts capacity expansion to be dominated in the short term by new and existing projects in Canada (BHP) and Russia (Uralkali, Eurochem and Acron). Production disruptions to Russia and Belarus exports due to sanctions are returning to their typical market share with Belarus demonstrating export levels of those achieved prior to the sanctions.

Argus modelled the global supply gap of MOP on their long-run MOP forecast with their results summarized in Figure 19-3. The model predicts a supply gap occurring around 2037. Given the timescale, this provides the opportunity for new MOP investment beginning in the early 2030s.

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Figure 19-3: Argus' Modelled MOP Supply Gap

Source: Argus, 2025
Note: Production reported in million tonnes

19.1.5 Pricing

Argus reports the long-term price of potash is dictated by the industry's marginal cost which is the cost for developing new capacity to the extent necessary to meet the forecast long-term supply gap. Demand growth is met first by existing brownfield projects in Russia and Canada followed by greenfield projects.

Canadian mined and produced potash is subject to Canada US Mexico Agreement and is tariff free as of the effective date of the Report.

White MOP typically represents a higher $K_2O$ content than the red MOP which contains traces of iron oxide. In the US Corn Belt, granular white $62\%$ MOP tends to have a $5/t$ premium over the $60\%$ $K_2O$ red MOP. Given Karnalyte will be producing $61.3\%$ $K_2O$ granular MOP, Argus is expecting it to achieve a $3.25/t$ premium in real terms over the red product.

Argus provided price forecasts for free-on-truck (fot) US Corn Belt with product sold from warehouses across the US as well as free-on-board (fob) Vancouver. A representative granular MOP cost-and-freight (cfr) India is based on that for Thailand/Vietnam as India does not currently import significant volumes of MOP.

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The long-term price forecast is an average over the 70-year LOM plan. This price is considered conservative given the terminal price for the 40 years following the limits of their macroeconomic input data used in the long-run marginal cost analysis. Long-term prices for the Karnalyte product are as follows:

Real US$516/t for white 61.3% K₂O granular MOP for US Corn Belt
Real US$507/t for white 61.3% K₂O granular MOP cfr India
Real US$438/t for red 60% K₂O granular MOP for Vancouver.

Argus provided additional costs for transportation and storage including:

US$80/t for transportation by rail from Saskatchewan to US Corn Belt
US$15–20/t for warehouse storage
US$50–60/t for transportation by rail from Saskatchewan to Vancouver.

19.1.6 Offtake Agreement

In January 2013, Karnalyte and GSFC entered into an Offtake Agreement for GSFC's option to purchase potash for a period of 20 years. The Offtake Agreement is a staged delivery based on the current operational phase of the project as follows:

Phase 1: 350,000 t/a at a prescribed price
Phase 2: 250,000 t/a at a prescribed price
Phase 3: 400,000 t/a at a price to be negotiated in the future.

The Phase 1 commitment accounts for approximately 52% of planned Phase 1 production of 675,000 t/a. The addition of the Phase 2 commitment accounts for approximately 42% of planned Phase 1 and 2 productions of 1,425,000 t/a.

19.1.7 Market Entry Strategy

The Offtake Agreement provides Karnalyte a low risk guaranteed customer for the first 40–50% of production during the ramp up years of the Project. The Offtake Agreement is in effect for a 20-year period.

Balance of production will be sold into the US Corn Belt. The balance of production ramps up over the first six years of operation enabling a soft entry into the market.

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19.2 Magnesium

19.2.1 Introduction

After extraction of potash, less than 10% of the MgCl₂-rich end brine is used for magnesium production. The brine contains 35% MgCl₂. MgCl₂ is a foundational compound that can be used to process many different magnesium compounds including:

Magnesium chloride brine
Magnesium chloride hexahydrate
Hydromagnesite
Magnesium hydroxide
Magnesium oxide.

MgCl₂ can also be used as the base for the electrolysis of magnesium metal but this hasn't been investigated at this time.

For the purposes of this study, the Project has focused magnesium production on hydromagnesite.

19.2.2 Hydromagnesite

Hydromagnesite is a hydrated magnesium carbonate mineral that is a naturally occurring mineral characterized by its white or colourless crystalline structure. It decomposes endothermically, giving off water and carbon dioxide when heated which makes it a versatile material due to its flame-retardant capabilities and environmental compatibility. Its key applications are:

Flame retardant in plastics, textiles and construction materials
Functional fillers in polymers, paints and coatings to enhance thermal stability and mechanical properties
Environmental applications such as wastewater treatment for heavy metal adsorption and pH regulation
Additives in paper production, fire-resistant inks and papers
Niche industrial processes.

Hydromagnesite can also be synthetically produced as is the case with this Project. Synthetic hydromagnesite is characterized by a higher purity and more uniform physical traits. Natural

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hydromagnesite has a purity in the range of 90–97% while synthetic is in the range of 99–99.8% pure.

Hydromagnesite market information provided in this section is based on the information and analysis prepared by PW Consulting.

19.2.3 Market Demand

Hydromagnesite demand forecast for the period from 2025–2035 has a global CAGR of 22%. This can be compared to the CAGR of 11% for the period from 2019–2024. This demonstrates a rapidly growing market.

The natural market will grow slightly faster than the synthetic market. Natural hydromagnesite is forecast for a CAGR (2025–2031) of 31% and synthetic is forecast for a CAGR of 27%. It is not clear from the data whether this is due to a supply shortage of synthetic or if natural product demand is higher.

The hydromagnesite market has a current split of 74% natural and 26% synthetic. By 2031 this is forecast to change to 86% natural and 14% synthetic. The majority of existing production is from natural sources. The change in market share is likely due to product demand exceeding synthetic production capacity meaning customers can only purchase what is available which in this case is the natural product.

The primary market for hydromagnesite is in the fire retardant materials sector. This is driven by environmental regulations to find alternatives for halogen based fire retardants. The fire retardant material market in 2024 accounts for 75% of sales. Secondary markets include chemical and environmental and inks and papers. These two markets account for approximately 15% of sales.

19.2.4 Market Supply

The current market is characterized by multiple small producers (<15,000 t/a) in a total market of 117,000 t/a. The majority of production is centred around the European and Asian continents with very little North American production.

One producer, Tibet Zhongxing has annual production of 42,861 t/a which accounts for 36% of the current market. In 2022, Tibet Zhongxing received regulatory approval for a phased increase to 1 Mt/a through 2028. Tibet Zhongxing markets primarily to the Asian Pacific region and produces a natural product. Global economic headwinds may limit Tibet Zhongxing's production, so conservative estimates of this production were considered in the market analysis.

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Outside of Tibet Zhongxing, the market study did not identify upcoming capacity to match the forecast CAGR in the short term.

19.2.5 Pricing

PW Consulting provided long-term pricing for natural and synthetic hydromagnesite reflecting the LOM plan. Synthetic hydromagnesite products command a price premium over mined hydromagnesite due to their superior purity and enhanced physical properties. Long-term pricing is as follows:

Real US$740/t for natural hydromagnesite (90–97% purity)
Real US$1,409/t for synthetic hydromagnesite (99–99.8% purity).

Given the nature of the global hydromagnesite market, PW Consulting did not provide transportation and storage costs for the various markets. To determine representative costs, data from Argus was extrapolated to determine average costs.

US$91/t for transportation by rail within Canada
US$105/t for transportation by rail from Saskatchewan to continental US
US$20/t for warehouse storage.

19.2.6 Market Entry Strategy

Karnalyte has a market entry strategy for the sale of 104,000 tonnes of synthetic hydromagnesite to be sold in North America into both the synthetic and natural products markets. The North American market is primarily an import market and is currently paying a premium to account for the costs of shipping from existing suppliers in Europe and Asia. As a North American producer, the cost for shipping product across North America is significantly lower than other producers.

The Project will start producing hydromagnesite in Year 3 of operations when the Phase 2 potash plant comes online. Hydromagnesite production will ramp up over the first few years of operation to balance with current North American demand and to keep up with the forecast annual market growth.

Karnalyte will maximize sales into the North America synthetic market and will sell the balance of production into the natural market at a price premium to forecast prices. Over time as the synthetic market grows, more product will be sold into the synthetic market and less into the natural market.

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19.2.7 Magnesium Chloride Brine

The 2016 technical report included the production and sale of 100,000 t/a of 32% MgCl₂ brine. The MgCl₂ brine is a diluted form of the MgCl₂-rich end brine from the production of KCl. The Project generates a large volume of MgCl₂-rich end brine but only a portion would be considered for sales into the MgCl₂ brine market. MgCl₂ brine is typically used for road applications for de-icing or as a dust suppressant for gravel roads.

MgCl₂ brine is derived from the MgCl₂-rich end brine from potash processing and has a marginal operating cost close to $0/t. There are some costs associated with dilution of the MgCl₂-rich end brine and storage, but these are minimal compared to the transportation costs. Given the high water content of MgCl₂ brine, transportation costs are the limiting factor when determining the target market.

PW Consulting provided a long term forecast price of US$174/t. This price defines a maximum radius of approximately 900 km from the Project site for truck transportation while still maintaining a reasonable gross margin. Shipping by rail may increase the economic radius for sales.

MgCl₂ brine has not been included in the project economics due to insufficient market data within 900 km of the Project to determine a reasonable expectation of attainable revenue. Once in operations, Karnalyte can market MgCl₂ brine in the target area to determine the market demand and make a determination of whether or not to include MgCl₂ brine in the product offerings.

19.3 QP Comment on Section 19

QP Krushelniski has reviewed the market studies and Offtake Agreement supporting the forecast KCl and hydromagnesite price analysis and assumptions regarding the sale and transportation of these products, and the results support the assumptions in the Report.

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20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

20.1 Summary

A comprehensive Environmental Impact Statement (EIS) was prepared and submitted in October 2011. An updated EIS based on responses to information requests from regulators and other interested parties was submitted to the Ministry of Environment (MOE) in September 2012. The Project received approval from MOE on February 7, 2013.

The 2012 EIS was for the development of an underground potash solution mine with a design capacity to produce approximately 625,000 tonnes of saleable KCl per year. The anticipated mine life of the original project was approximately 28 years, although it was expected that further exploration and planning could potentially expand the mine life and capacity, subject to governmental approvals that may be required.

The initial project was to include surface facilities (processing plant and rail loadout facility) as well as a large number of solution mining wells and associated underground caverns and a small number of process water extraction and waste brine injection wells. During project operation the final potash product was to be transported over a dedicated spur line and rail car loading facility to the CP Rail Mainline west of Wynyard.

Current Project plans include two subsequent phases of 750,000 t/a each, taking total production up to 2.175 Mt/a. Current Phase 2 plans include a proposed hydromagnesite plant, which was not included in the 2012 EIS.

Correspondence from MOE to Karnalyte in early April 2022 indicated that the existing EIS approval was still in effect; however, it was also noted that if there were changes to the Project from how it was described in the 2012 EIS (i.e., a change in development), it may require approval under Section 16 of the Saskatchewan Environmental Assessment Act. Given there are modest design changes since the EIS was approved, such as relocation of rail loading to the plant and increased production rate, it is expected that an administrative amendment will be necessary. The expectation is that Karnalyte could prepare, and submit to MOE, an amendment to the EIS as per Section 16 of the Saskatchewan Environmental Assessment Act for Phases 2 and 3, which are functionally similar to Phase 1.

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20.2 Baseline Studies

A wide range of environmental baseline studies were completed to support the 2012 EIS and are summarized in Table 20-1.

There has been limited baseline work completed beyond the original 2012 EIS except for:

Groundwater Monitoring – Groundwater monitoring was completed in 2013 (Dillon, 2014) and 2016 (Dillon, 2016). Karnalyte requested and received from MOE permission to discontinue monitoring until activities are initiated at the site.
Pre-Construction Survey – A pre-construction survey was completed in mid-July 2013 (Dillon, 2013) to confirm existing environmental site conditions and to evaluate the presence/absence of breeding birds and rare plants.

As the Project moves forward it is expected that additional work may be completed, as appropriate, to confirm and update baseline information. The 2012 EIS noted that prior to the development of well pads and associated infrastructure, site specific surveys would be completed to evaluate the terrestrial environment including the presence of rare plants, presence of significant species, and other features or issues. This approach will help mitigate potential environmental impacts through the design process; infrastructure scheduling, and the determination of appropriate set-backs to avoid conflicts or critical life-cycle requirements of particular species of interest.

20.3 Site Management for Operations and Closure

Unlike other potash mines in Saskatchewan, Karnalyte's proposed mining process for the Wynyard site would not require the construction of tailings piles or tailings ponds and waste brine would be disposed by injection to appropriate locations within the deep Deadwood Formation, as well as, in spent caverns. The proposed production process would use brackish groundwater deep below the Project area (i.e., the Blairmore Formation) as process water.

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Table 20-1: Summary of Environmental Baseline Surveys Completed for the Wynyard Carnallite Project

Study	Years Completed	Author / Lead	Description	Key Findings and Conclusions
Climate	2009	-	Existing data (1971-2000) was analyzed from the Wynyard Climate Station, located approximately 2 km north of the Project area.	• The area is characterized as continental semiarid to subhumid, with significant seasonal variability and extreme temperatures.
• Precipitation data indicates an average annual precipitation of 414.5 mm, with approximately 74% occurring as rainfall between April and October.
• Predominant wind directions are from the west and south, with average wind speeds of 16.3 km/h.
Air Quality	2009; 2011	Clifton Associates	Detailed assessment of air emissions associated with the Project. Air emissions from the proposed processing and rail loadout facilities were estimated using equipment and designer information as well as emission factor methodologies. Air dispersion modelling of the estimated emissions was conducted using AERMOD software.	• The total predicted maximum concentrations for carbon monoxide, sulphur dioxide, nitrogen dioxide, total particulate matter, PM2.5, and particulate deposition are all below the ambient objectives for all scenarios evaluated. The analysis indicates that the plant emissions will conform to applicable ambient air quality standards and objectives.
• Fugitive dust generated from roadways is not expected to be a concern during the construction and operational phases of the Project.
Noise	2011; 2012	Dillon	Detailed acoustic assessment of potential noise sources associated with the Project. The assessment included a background noise monitoring program conducted at nearby receptor locations, noise source characteristics and sound levels for dominant noise sources, acoustic modelling, and development of noise mitigation measures.	• The existing sound environment at the receptor locations is characterized by vehicular and rail traffic noise, farm-related activities, and sounds of nature.
• The noise effects assessment concluded that the project would result in increased noise levels in the local area; however, with the implementation of appropriate noise mitigation measures, the predicted receptor sound levels associated with the worst-case noise generation scenario during operations are expected to be within permissible levels. Overall, no significant residual noise effects are expected to be associated with the Project.
Geology			The regional and local geological setting was evaluated.	• The surficial geology in the Wynyard area consists of glacial till, alluvial lacustrine, glaciofluvial, and alluvial parent material.
• The geologic sequence underlying the region is divided into two layers, with the upper boundary formed by the Pierre Shale, a thick regional aquitard. This aquitard overlies a sequence of mainly low permeability rocks, including limestone, dolomites, siltstone, and shale.
• The overburden consists of glacial deposits, primarily till, which is a compacted mixture of clay, silt, sand, and gravel.
• The local geology also includes the Empress Sand and Gravel Aquifer and the Lower Wynyard Formation, which are difficult to distinguish from each other.
• The potential exists for ground subsidence to occur in the area of the brine field due to solution mining activities.
Soils	2009; 2011	Clifton Associates	Review of background information. In addition to characterizing the soils found within and around the Project area, soil sampling was conducted. Included evaluation of agricultural capability.	• Chemosemic soils are the most common soil type in the Project area.
• Soils in and around the Project area are generally productive with only moderate to moderately severe limitations to the production of field crops. The Project area likely contains productive soils given historic and present agricultural use.
Groundwater	2011; 2012
2015; 2016	GeoEngineers
Dillon	Hydrogeologic assessments included Phase 1 and Phase 2 studies, which involved the installation of monitoring wells, hydraulic testing, and groundwater flow modelling to assess water-bearing zones and aquifers.	• The study identified key aquifer systems, including the saline Blairmore-Mannville Aquifer and the fresh groundwater resources within unconsolidated aquifers like the Empress Group and Lower Wynyard Formation.
• Groundwater flow patterns showed a general northward flow direction.
• Fresh groundwater resources are confined to shallow aquifers.
• The assessment concluded that potential contaminant travel distances would be short and travel times extremely long due to the low hydraulic conductivity of the glacial till and adsorption characteristics of clay minerals.
• Over time, gradual ground subsidence could result in changes to the local groundwater system; however, changes are expected to have minimal effect on groundwater flow and aquifer integrity.

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Study	Years Completed	Author / Lead	Description	Key Findings and Conclusions
Aquatic Habitat	2008; 2011	CanNorth	Aquatic environment assessments were conducted focusing on hydrology, surface water quality, fish communities, and fish habitat.	- The hydrologic regime is driven by the snowmelt freshet in the spring, and many streams dry up and remain dry throughout the winter months in the absence of large precipitation events.
- Surface water quality was generally good, with most metal concentrations low and within guidelines.
- The Project area does not contain highly sensitive fish species or habitat. Where fish communities were found, they were limited to small-bodied species (fathead minnows, brook stickleback, and lake chub). No large-bodied fish species were observed.
- Project surface development activities are not expected to result in significant impacts to the surface water environment, including potential impacts to water quality, resident fish communities, and fish habitat.
- Predicted ground subsidence is expected to result in some localized changes to drainage patterns within watercourses in the Project area; however, the extent and implications of these changes are difficult to predict and assess as they would take place over a very long period of time.
Terrestrial Environment	2008; 2011		Terrestrial environment assessments were conducted, with key components including database searches for rare or at-risk species, vegetation assessments, breeding bird surveys, wetland classification, amphibian acoustic surveys, mammal surveys, and bird surveys. Habitat classification and mapping were also completed.	- Five major habitat types were identified within the Regional Study Area: cropland/hayland, grassland, woodland, water/wetland, and disturbed areas. Cropland/hayland and grassland were the most common habitat types.
- The Project area does not contain highly sensitive wildlife species or habitats.
- Rare plant surveys identified three rare plant species: red elderberry, western red lily, and striped coral-root.
- Amphibian surveys detected boreal chorus frogs, wood frogs, and plains spadefoot toads.
- No nesting colonies of waterbirds or sharp-tailed grouse leks were observed, and no bald eagle nests were confirmed.
- Potential impacts to terrestrial vegetation are expected to be low to moderate. There are no expectations of any permanent loss of terrestrial habitat and/or associated vegetation associated with surface development.
- Significant impacts to wildlife are expected to be avoided through good project planning, such as avoiding important habitat areas and scheduling to avoid critical time periods like nesting.
Heritage		Heritage Resource Impact Assessment Results Letter		- No archaeological resources were identified in the Project area and as a result potential impacts are considered low.
- The project area has been subject to previous disturbance, and the likelihood of encountering significant heritage resources is minimal.

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Following the 2012 EIS approval a detailed site-specific Environmental Management Plan (EMP) was prepared by Karnalyte for the Project. The EMP included 10 detailed discipline/topic specific sub-plans to protect the biophysical and social environments within and surrounding the project including:

Air Quality Management Plan
Biodiversity Management Plan
Community Relations and Communications Plan
Erosion and Sediment Control Plan
Heritage Resource Management Plan
Noise Management Plan
Soil Management Plan
Spill Prevention, Control, and Countermeasures Plan
Waste Management Plan
Water Management Plan.

Site management would also include the development and implementation of selected monitoring programs, which would be detailed, as appropriate within the Management Plans noted above. Potential monitoring programs are described further in Section 20.3.1.

20.3.1 Monitoring Programs

When the Project proceeds, detailed monitoring programs, would be developed in consultation with regulatory agencies. The monitoring programs would be used to ensure compliance to EIS conditions, as well as to confirm EIS predictions and the adequacy of proposed mitigation measures.

Anticipated monitoring would fall under the following categories:

operational and compliance monitoring (includes containment system monitoring, waste management monitoring, and operation and maintenance inspections)
environmental monitoring (includes noise, air quality, surface and groundwater quality, vegetation, wetlands, wildlife, and reclamation monitoring)
socio-economic monitoring (includes community engagement)
post-closure monitoring (includes subsidence and groundwater).

One of the key monitoring programs would be for subsidence. Potential subsidence would be monitored during operations and following decommissioning.

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20.4 Permitting

20.4.1 Environmental Impact Statement

The Wynyard Project is a development subject to the Saskatchewan Environmental Assessment Act and was reviewed as part of the Environmental Assessment Program administered by the Saskatchewan Environmental Assessment Branch (EAB). In 2009, the Canadian Environmental Assessment Agency (CEAA; now referred to as the Impact Assessment Agency of Canada [IAAC]) conducted a survey of federal departments to determine interest in the Project and to determine if there were potential federal triggers. At the time CEAA concluded that a federal review of the Project under the Canadian Environmental Assessment Act was not triggered based on survey responses from the federal departments.

A comprehensive Environmental Impact Statement (EIS) was prepared and submitted under the provincial process in October 2011. An updated EIS based on responses to information requests from regulators and other interested parties was subsequently submitted to the Ministry of Environment (MOE) in September 2012. The initial project for 625,000 tonnes of saleable KCl received approval from MOE on February 7, 2013.

The EIS evaluated potential Project effects on a wide range of valued components (VCs) which were selected as features of the regional and socio-economic setting that have an ecological, social, and/or economic value and are potentially affected by the Project. Selected VCs are summarized in Table 20-2.

Table 20-2: Project Valued Components

Biophysical VCs	Socio-Economic VCs
• Air quality	• Employment, business and training opportunities
• Noise	• Municipal services
• Soils
• Terrain (focus on potential subsidence)
• Groundwater
• Terrestrial vegetation (including rare plants)
• Wetlands (including listed species)
• Raptors
• Water birds (including listed species)
• Upland Birds (including listed species)

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Each of these VCs was evaluated in detail to identify and predict the nature, extent and significance of potential impacts related to the Project. The assessment also took into account potential differences during specific project phases and activities.

The 2012 EIS assessment concluded that there would be no significant adverse effects to biophysical VCs as a result of the Project. In most cases, overall impacts from Project activities were expected to be confined to local occurrences and were expected to be reversible upon Project closure. In addition, it was also expected that with good project planning, impacts could be avoided, or at the very least substantially minimized through the proper implementation of appropriate mitigative measures and best management practices.

The evaluation of socio-economic VCs concluded that overall, the proposed Project would generate significant positive economic impacts due to the creation of employment and business opportunities for local and regional residents, businesses, and suppliers. In addition, municipal, provincial, and federal governments would all be expected to gain substantially through project tax revenues.

Potential changes could include, but are not necessarily limited to:

Changes in the proposed rail line and loadout layout and/or location
Changes in production level.

Under Section 16, if a proponent wishes to make a change not covered by their existing ministerial approval, they must inform the minister before proceeding. The minister then has the discretion to approve the change, refuse it, or direct the proponent to seek approval through the procedures outlined in the Act. A proponent cannot proceed with a change without obtaining ministerial approval.

As the Project moves forward it is expected that additional discussions will take place between Karnalyte and MOE to determine the appropriate course of action with regards to the existing EIS Approval, including a review of existing conditions (may require an update to baseline information), finalization of supporting management and monitoring plans, and other permitting requirements.

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20.4.2 Provincial Permitting

Following EIS approval in 2013 there were preliminary discussions with regulators regarding permitting requirements including extensive discussions with MOE regarding the use and transportation of diesel fuel for use as blanket oil during cavern development. MOE's diesel transportation stance was summarized in a letter provided on September 13, 2013. They concluded that the proposed use of above-ground pipelines for transporting diesel fuel for blanket oil during cavern development and returning used blanket oil for treatment and re-use would require an application under the Hazardous Substances and Waste Dangerous Goods Regulations, requiring secondary containment.

Project-related permitting activities were discontinued in early 2014 due to disruptions and instability in the international potash market and changes in Project economics.

It is expected that once the project is ready to move forward, discussions will be initiated with regulators to finalize permitting requirements. Potential key permits required for the Project are summarized in Table 20-3 and Table 20-4.

20.4.3 Site Audits

A site compliance audit was completed in early October 2019 by the Environmental Protection Branch of the MOE. The audit covered all activities and infrastructure at the site near Wynyard from February 2013 to October 2019 and included a site visit to confirm that the hazardous materials storage area was decommissioned. Prior to the audit, Karnalyte provided copies of a range of documents such as existing management plans, monitoring program details, and information from ongoing monitoring.

The Audit found no serious concerns requiring immediate action (Type III); however, the audit identified three findings: two Type II findings related to monitoring for rare plants and invasive species, and setbacks for wetlands, and one Type I finding related to the development of an Air Quality Management Plan. All findings were resolved to the satisfaction of the Ministry.

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Table 20-3: Summary of Key Potential Permitting Requirements for the Construction Phase of the Project

Specific Project Component	Permit Required
Processing Plant	Rural Municipality Development Permit
Water works (stormwater pond, associated infrastructure)	Permit to Construct Water Works
Sewage treatment plant (sanitary sewage works)	Permit to Construct Sewage Works
Site preparation	Permit to Construct – Pollutant Control Facility
Early Works – site preparation	Permit to Construct – Aquatics Habitat Protection
Process Plant and Product Storage Facility
(including waterworks, debrining, drying, screening and fines dissolution, fines compaction, stormwater pond, storage, handling, final screening, conveyors, and transfer towers, load out facility)	Permit to Construct – Pollutant Control Facility
Processing Plant	Permit to Construct
Waste Management Systems:
• domestic and industrial waste management
• hazardous waste management
• transfer stations	Permit to Construct – Pollutant Control Facility
Temporary/Permanent Fuel Storage
Fuel and Chemical Storage	Permit to Construct – Pollutant Control Facility
Temporary/Permanent Fuel Storage
	Hazardous Substances and Wastes Dangerous Goods Approval to Construct (Section 10)
	Hazardous Substances and Wastes Dangerous Goods Permit to Operate (Approval to Store – Section 9)
Specific to construction phase only
Site Drainage Control	Permit to Construct – Pollutant Control Facility
	Water rights Licence & Approval to Construct and Operate Works
Production and Disposal Wells	Drilling License
	Water Rights Licence
	Permit to Construct – Pollutant Control Facility

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Specific Project Component	Permit Required
Disposal Wells	Approval to Construct: Industrial Wastewater Works
	Approved Decommissioning & Reclamation Plan (related to Permit to Operate)
Production and Disposal Wells	Drilling License

Table 20-4: Summary of Significant Potential Permitting Requirements for the Operational Phase of the Project

Specific Project Component	Permit Required
Process Plant
(including tank farm, evaporation, clarification, crystallization, debrining, drying, screening and fines dissolution, fines compaction, and stormwater pond)	Permit to Construct – Pollutant Control Facility
Product Storage Facility
(including storage, handling, final screening, conveyors and transfer towers)
Processing Plant	Operating Approval
	Permit to Operate
Water Treatment:
• domestic and industrial waste management (on and off-site disposal)
• hazardous waste management (on and off-site disposal)
• landfill and land farm (if applicable)	Permit to Operate – Pollutant Control Facility
Fuel and Chemical Storage Facility	Permit to Operate – Pollutant Control Facility
Site Drainage Control	Permit to Operate – Pollutant Control Facility
Water Works	Permit to Operate – Waterworks
Sewage Works	Permit to Operate – Sewage works

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20.5 Social and Community Relations

The proposed Project is located entirely within the Rural Municipality (RM) of Big Quill No. 308. Once the Project moves forward, Karnalyte will pay applicable resource production taxes to the province as well as local taxes with regards to the proposed production plant in the RM of Big Quill and an office building in Wynyard.

The Project is expected to create a large number of jobs for the region. The 2012 EIS noted that Karnalyte employment forecasts indicate the potential creation of approximately 70 new full time operating jobs at the brine field, production plant, rail loadout, plus administrative and management positions at the Wynyard Karnalyte office. In addition, a range of contractors would be needed to support site operations (e.g., drilling and service operations in the brine field). The 2012 EIS noted that during Phase I construction, there would be on average between 250-300 people working at the site for a period of up to two years.

The 2012 EIS included extensive consultation/engagement with government and regulatory agencies, First Nations and Métis communities, local communities, and other stakeholders. This included various meetings with interested parties, public information sessions, and media notices. The consultation program was developed to convey project information in a timely and consistent fashion, and to identify and understand project issues early, build strong relationships, and foster long-term partnerships with interested parties.

As the Project moves forward, consultation will continue to be a key component of Project development.

20.5.1 Indigenous Groups/Communities

As part of the 2012 EIS, Karnalyte engaged with several First Nations and one Métis community as part of their consultation program from 2009 to 2011. Groups engaged with included:

Beardy's and Okemasis First Nation
Kawacatoose First Nation
Muskowekwan First Nation
Fishing Lake First Nation
Day Star First Nation
George Gordon First Nation
Métis Nation of Saskatchewan, Eastern Region II

The discussions primarily focused on potential employment and training opportunities, as well as potential related business opportunities. Karnalyte committed to advising First Nations and

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Métis of available job opportunities and ensuring fair and equitable access for opportunities. There were also specific discussions related to traditional land use and potential Project impacts.

In addition, the Touchwood Agency Tribal Council (TATC) Labour Force Development Program was also consulted, and several meetings took place between Karnalyte and the TATC to discuss potential employment opportunities.

20.5.2 Local communities and Other Stakeholders

Project consultation activities as part of the original Project were initiated in the summer of 2008 when Karnalyte engaged representatives of the RM of Big Quill. Consultation activities with local communities have included Public Information Sessions held in October 2009 and again in June 2011 in Wynyard. A public review of the EIS took place between December 30, 2012 and January 29, 2013.

Common themes from engagement activities included:

Project engineering and design (e.g., transportation plans, anticipated project scheduling, and process details)
Employment opportunities (e.g., anticipated numbers of jobs, types of jobs, and training considerations)
Social issue-related questions (e.g., housing needs and potential interaction with other operations)
Local road maintenance (e.g., need for Karnalyte support for local roads affected by Karnalyte).

20.6 Reclamation and Closure Activities

The 2012 EIS submission included a section which provided the conceptual basis for the Project Decommissioning and Reclamation (D&R) Plan. Over the planned lifetime of the operation, the brine field will be developed, and caverns will be mined out. When all caverns from a drilling pad are mined out and have been backfilled the caverns would be securely sealed and upper casings would be removed. This progressive reclamation of drilling pads has been considered in the financial model. The plan considers when the brine field infrastructure is removed, the land would again be used for agricultural purposes. At the end of operations, the area of the remaining brine field, the plant site with rail loading facility would be decommissioned and the associated land reclaimed. Appropriate financial assurance, based on discussions with regulators, would be provided for the site reclamation activities. D&R costs for the Project are discussed in Section 21.

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The intent is for the development of a complete D&R Plan to be submitted to regulators for review and approval in advance of the operational phase of the Project. The plan will be based on the final project design and discussions with regulators. The overall goal of the closure plan will be to support the eventual return of the project area to productive agricultural use when solution mining activities were completed, consistent with local land use needs at the time of closure.

To date a full D&R Plan has not been developed, as the Project has not yet advanced to the operational phase. It is expected that once the D&R plan has been approved it would be updated every five years.

Since Project approval in 2013, various activities have occurred at the Project site primarily related to initial site preparation (e.g., site clearing and earth moving activities) and proof-of-concept related project components (e.g., the 2016 Solution Mining Test Program). An updated D&R Plan and Financial Assurance (FA) Plan was prepared in 2018 (Dillon, 2018). The updated D&R Plan was requested by MOE and intended to address site works completed to date for the Project. The updated D&R Plan was approved by MOE in early December 2018 and discussions were initiated regarding any required updates related to the FA amount.

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21.0 CAPITAL AND OPERATING COSTS

21.1 Summary

The capital cost estimate for the Project was prepared with an accuracy expected to be within $\pm 15\%$ including contingency. The total capital cost associated with the three phases of the potash processing facility and the magnesium processing facility is $4.19 billion.

The LOM average cost for the potash project will be $134.01/t and $318.04/t for the magnesium processing facility.

21.1.1 Potash Processing Facilities

Costs associated with the potash portion of the Project were updated from the 2016 FS with revised vendor quotations which included pricing from existing vendors, new vendors and select suppliers based in India. Costs are expressed in Q2 2025 Canadian dollars. Conversion rates that were used are summarized in Table 21-1.

Table 21-1: Currency Exchange Rates

Currency	C$ per Unit
United States (US$)	1.41
European Union (EUR)	1.48

The total capital cost associated with the potash processing facility is $3.96 billion over three phases as illustrated in Table 1-3. Phase 2 capital costs represent the expansion of the process facilities and associated infrastructure with the commissioning of an additional production line in Year 3. Phase 3 capital costs represent the expansion of the process facilities and associated infrastructure with the commissioning of a third production line in Year 5 to increase total production capacity to 2,175,000 t/a MOP. The installed cost per tonne of $2,479 for Phase 1, $1,553 for Phase 2 and $1,496 for Phase 3 are in the range of comparable sized projects.

Operating costs for the potash processing facility were estimated to be $134.01/t over the life of mine.

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Table 21-2: Potash Process Facility Capital Cost Estimate Summary

Note: EPCM – engineering procurement construction management. Figures may not sum due to rounding.

21.1.2 Magnesium Processing Facility

The prefeasibility study completed by Lyntek (2012) provided the basis for an updated capital cost estimate for the magnesium processing facility at an accuracy of ± 25%. The magnesium processing facility includes the ability to produce 100,000 t/a magnesium chloride brine and 104,000 t/a hydromagnesite. The estimate was developed as described in Section 21.2.2.

The production of magnesium chloride brine requires minimal capital equipment since the saleable product is essentially diluted MgCl₂-rich end brine from the potash processing plant. For the purposes of the project economics, the sale of magnesium chloride brine is not considered due to insufficient market data for markets adjacent to the project site.

Development of the capital cost estimate is predicated on the potash process facility being in operation as the two are integrally linked, not only in terms of the availability of feedstock, but also to provide ongoing administrative and support functions.

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The total capital cost for the magnesium product facility expressed in Q2 2025 dollars is $231 million as summarized in Table 21-3.

Total operating costs to produce hydromagnesite is $318.04/t.

Table 21-3: Magnesium Process Facility Capital Cost Estimate Summary
| Description | Cost ($M) |
| --- | --- |
| Direct Costs | |
| Process Equipment and Installation | 94.1 |
| Building | 7.2 |
| Structural | 8.1 |
| Plant Electrical, Instrumentation and Piping | 11.9 |
| Mobile Equipment | 0.6 |
| Subtotal Direct Costs | 121.9 |
| Indirect Costs | |
| EPCM | 16.5 |
| Other Indirect Costs | 16.4 |
| Owner's Cost | 34.2 |
| Subtotal Indirect Costs | 67.0 |
| Contingency | 42.1 |
| Total | 231.0 |

Note: Figures may not sum due to rounding.

21.2 Capital Cost Estimate

21.2.1 Potash Processing Facilities

The capital cost estimate for the potash processing facilities includes the wellfield development and surface infrastructure.

21.2.1.1 Basis of Estimate

The basis of the estimate and quantity development is the 2016 FS with revised vendor quotations which included pricing from existing vendors, new vendors and select suppliers based in India. The quantity development incorporates the updated mechanical equipment list with all other quantities taken from the 2016 FS estimate. Updated quotes for stick built, construction type buildings were obtained as design, supply, and install contract packages.

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Material pricing was based on updated budgetary quotations or recent in-house project data. In instances where information was limited, historical costs from the 2016 FS estimate were escalated to Q2 2025 dollars.

Subcontractor unit rates from previous projects were used to price supply and install items and include contractor indirect costs, mobilization, demobilization and contractor temporary facilities as well as the actual cost to install.

21.2.1.2 Direct Costs

Labour

Composite all-in contractor wage rates were developed for each discipline based on historical crew mixes and Construction Labour Relations Association of Saskatchewan (CLRA) collective labour agreements. Construction crew rates are based on a craft mix comprised of foremen, journeymen, apprentices, skilled labour and unskilled labour. Productivity factors were applied to the various disciplines reflecting recent and ongoing projects in Saskatchewan.

Labour work hours and blended labour rates were based on 10-hour days with a rotation of two weeks on the job site and one week off. Labour rates are inclusive of base rate, overtime premium, benefits and burdens, government assessments, contractor overhead, contractor profit, living allowance and indirect field costs.

The execution phase of the Project will average approximately 1,100 workers in direct and indirect roles during the six years of constructing potash phases 1, 2 and 3, and the hydromagnesite plant.

Process Equipment and Facilities

Quantities and technical specifications from the engineering design were used. Updated budgetary pricing was obtained for process equipment and the main building packages. Current pricing was applied for remaining structural, piping, electrical and instrumentation equipment and materials.

Infrastructure

Quantities and technical specifications from the engineering design were used. Current pricing was applied to all material quantities.

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Utility Equipment and Facilities

Quantities and technical specifications from the engineering design were used. Current pricing was applied to all material quantities.

Rail Loading Facilities

The product storage facility was changed from a dome to a tension fabric structure as a value engineering measure. A budget quote was obtained for the building. Other quantities and technical specifications are according to the engineering design. Current pricing was applied to these material quantities.

Solution Mining Facilities

Quantities and technical specifications from the engineering design were used. Current pricing was applied to all material quantities.

21.2.1.3 Indirect Costs

Indirect costs consider:

Construction indirect field costs were factored and include items such as freight and logistics, temporary fuel storage and distribution, fuel consumption, temporary facilities, equipment, laydown areas and roads, vendor representatives, spare parts, first fills and sewage and waste disposal.
Engineering and procurement services including efforts required to pre-commission the Project and construction management which have been factored based on historical cost build ups by position and duration.
Provincial sales tax (PST) of 6% applied to all labour, materials and equipment needed to construct the Project including construction management services. PST is also applied to 30% of the cost of engineering and procurement services.

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Owner's Cost

Owner's costs are factored at 5% of the total field costs of the project based on in-house project metrics. The obligations typically within Owner's costs include the following:

Owner's project management salaries and benefits
Pre-start-up labour, supplies, and training
Insurance
Taxes, duties and liabilities (other than the PST specifically identified elsewhere in the estimate)
Owner's risk and contingency.

21.2.1.4 Contingency

Contingency is a monetary provision intended to cover items that are included in the scope of work but cannot be accurately defined at this stage. This is due to the normal range of variability of quantities, productivity, unit rates, the current level of engineering and other factors that could affect the accuracy of the expected final cost of the Project. Contingency should be considered as expenditure that is predictable but not definable at this stage of the Project, therefore contingency is expected to be spent.

Contingency does not include any project scope change, nor does it exist to cover any exclusions. Contingency is calculated on all costs in the estimate, except for escalation. Any escalation applied is calculated on contingency.

Contingency has been included based on a deterministic analysis. This means that a single point estimate was used to determine the most likely percentage needed for the Project. Contingency has been carried at 10% of the total measurable cost.

21.2.2 Magnesium Processing Facility

The capital cost estimate for the magnesium processing facility includes the plant, reagent unloading and product loading and assumes that MgCl₂ feed brine and some infrastructure are provided by the potash process facility. Capital allowance is included for tie-in and expansion for infrastructure in the Owner's costs. Power and natural gas distribution is assumed to be available on site and is included in the cost estimate of the potash process facility.

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21.2.2.1 Basis of Estimate

The basis of the capital cost estimate for the magnesium processing facility is the 2012 prefeasibility study (Lyntek, 2012) with costs escalated using FRED indices to Q2 2025 by Wood. Where feasible, budget level pricing for all major equipment was obtained in 2012. All other costs are included as factors based on the equipment costs. Factors have been determined from industry standard figures as well as data extracted from Wood databases.

This portion of the project cost has an accuracy of ±25%. Its contribution to the accuracy of the total project capital cost is within the overall ±15% accuracy.

21.2.2.2 Direct Costs

Mechanical Equipment

The mechanical equipment costs are based on budget quotations obtained for most of the major pieces of equipment. Standard process equipment such as tanks and pumps were interpolated from costs for similar sized equipment.

Building

Building costs are based on the plant layout and were estimated from R.S. Means handbook data and Lyntek's database.

Structural

Structural costs consider concrete foundations and piles for inside and outside the facility as well as an allowance for structural support, pipe racks and access platforms.

Electrical and Instrumentation

Electrical and instrumentation costs are estimated based on factors developed from projects where Lyntek was the construction management contractor. The factors were then used to calculate the costs based on the installed capital equipment.

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Mobile Equipment

Mobile equipment costs consider light equipment including trucks for the use of supervisors, maintenance personnel and operators for errands during a shift for light equipment, and heavy equipment such as forklifts needed for maintenance activities and other material handling in the magnesium process facility.

21.2.2.3 Indirect Costs

All Indirect costs are based on factors and consider:

Engineering and construction management costs are a percentage of the total direct capital costs.
Project insurances are a percentage of the total direct capital costs.
Construction equipment rental is calculated as a percentage of capital equipment installation costs and represents the cost for contractor small tools and consumables.
Contractor mobilization and demobilization is a percentage of the capital equipment installation costs.
Commissioning and start-up are based on experience with metallurgical processing facilities of similar complexity and cost.

Owner's Cost

Owner's costs are derived from the Owner's cost of the potash processing facility.

21.2.2.4 Contingency

A contingency of 25% on all direct and indirect costs and 10% on Owner's costs were used.

21.3 Sustaining Capital

Sustaining capital costs are included beginning in Year -1 with cavern preparation to sustain Phase 1 recovery beyond the initial set of well pads. LOM sustaining costs are summarized in Table 21-4 for the following:

Drilling new wells over the LOM, as described in Section 16
Wellfield installed assets including drill pads, piping, valving, electrical and controls for the new wells
Maintenance and replacement of equipment and materials in the processing plants

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Incremental decommissioning of well pads at their end of life, while the overall mine is still producing.

Table 21-4: Sustaining Capital over the LOM
| Item | LOM Cost ($M) |
| --- | --- |
| Wellfield | 6,877.9 |
| Potash process plant | 697.3 |
| Magnesium process plant | 40.5 |
| Total | 7,615.8 |

Note: Figures may not sum due to rounding.

21.4 Decommissioning and Reclamation Costs

Progressive reclamation of well pads occurs when they are at the end of their production and begins in Year 12 and extends to Year 58.

The potash and magnesium process facilities and the remainder of the wellfield are considered not to have any residual value. They will be demolished and the land restored to farmland conditions at the end of the mine life.

Costs for decommissioning and reclamation are summarized in Table 21-5.

Table 21-5: Decommissioning and Reclamation Costs
| Item | Cost ($M) |
| --- | --- |
| Well pad decommissioning | 23.75 |
| Potash plant decommissioning | 184.90 |
| Magnesium process facility | 10.90 |
| Total | 219.60 |

Note: Figures may not sum due to rounding.

21.5 Operating Costs

21.5.1 Potash Processing Facilities

The operating costs for the potash project have been estimated based on the utility requirements from the material balances and equipment consumption in the plant and brine

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field in full operation. Representative operating cost estimates for each Phase are given in Table 21-6. Phase 3 shows higher operating costs as maintenance costs increase as equipment and facilities age.

Table 21-6: Potash Project Operating Costs

Category	Phase 1 – 675,000 t/a		Phase 1, 2 – 1,425,000 t/a		Phase 1,2, 3 – 2,175,000 t/a
	($M/a)	($/t)	($M/a)	($/t)	($M/a)	($/t)
Labour	10.51	15.81	19.16	13.88	24.92	11.46
Natural Gas	39.43	59.29	81.81	59.28	128.91	59.27
Power	18.54	27.88	38.37	27.80	60.41	27.77
Water	0.03	0.04	0.06	0.04	0.09	0.04
Reagents	2.43	3.66	4.79	3.47	7.36	3.39
Maintenance Materials	6.03	9.07	14.79	10.72	35.86	16.49
Blanket Oil	3.71	5.59	8.17	5.92	12.63	5.81
Wellfield	1.80	2.71	3.48	2.52	4.91	2.26
Contingency and Others	5.00	7.44	10.24	7.42	16.51	7.59
Total	87.44	131.49	180.87	131.06	291.60	134.07

Note: Figures may not sum due to rounding. Total costs are representative of costs incurred in Year 2, Year 4 and Year 10 for Phase 1, Phase 2 and Phase 3, respectively.

21.5.1.1 Labour

A total of 71 persons are required to run the brine field and the plant operation continuously for Phase 1, with 61 and 42 persons added for Phase 2 and Phase 3 respectively. Labour costs include an 8% overtime allowance and salaries include a 25% overhead for benefit plans, employment insurance, workers compensation etc.

21.5.1.2 Natural Gas and Power

Requirements for natural gas and electricity have been discussed in Sections 18.14 and 18.15 respectively.

21.5.1.3 Reagents

Reagents were priced for the potash plant. Ongoing operating costs with Q2 2025 delivered costs were included in the operating expenses. Section 21.5.1.7 outlines the additional cost to initially fill the reagent tanks in first year of operation.

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21.5.1.4 Maintenance Materials

Maintenance costs were calculated as 4% of mechanical equipment and tanks. This cost ramps up during the first eight years of operation, as new equipment requires less maintenance than at steady state.

21.5.1.5 Blanket Oil

The distillate oil used as a blanket must be replaced as its properties change over time. Additionally, it is not possible to completely recover all the blanket material from a cavern. It is assumed that about 7% of the total volume of blanket oil consumed annually has to be replaced. This amounts to approximately 4,200 m³ of distillate oil per year for Phase 1 and 5,040 m³ each for Phase 2 and Phase 3. A special oil mixture is used for this purpose at a price of $0.88/L.

21.5.1.6 Wellfield

Operating costs for the wellfield include well workover service rig operation, blanketing oil consumption, and geophysical logging, as well as operating labour and energy usage for the well pad facilities.

21.5.1.7 Contingency and Other Costs

An estimating contingency of 5% of the operating cost for potash processing has been included. Other annual costs include:

Process Chemicals: An allowance of $242,400 based on "first-fill" costs for cooling tower treatments, flocculants, etc. to replenish chemicals required to operate the potash process facility.
Services from Wynyard: An allowance of $200,000 for potable water, wastewater treatment and solid waste disposal services provided by the Town of Wynyard.
Outside Services: An allowance of $48,300 for vendor services, office equipment services, consultants, janitorial, environmental testing.
Vehicle Operating Expense: Vehicle operating and maintenance expenses as 5% of the cost of vehicles and mobile equipment included in the capital cost estimate.
Other Expenses: An allowance of $35,100 for telephone, office supplies.

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21.5.2 Magnesium Process Facility

The operating costs for the magnesium process facility have been estimated based on the utility requirements from the material balances and equipment consumption in the plant and brine field in full operation (Table 1-6).

Table 21-7: LOM Magnesium Process Facility Operating Costs

Category	104,000 t/a
	Annual ($000s)	($/t)
Power	1,007	9.79
Maintenance	3,001	29.16
Natural Gas	3,573	34.71
Reagents	12,414	120.59
Process Water	6	0.05
Labour	9,762	94.83
Contingency	2,976	28.91
Total	32,739	318.04

Note: Figures may not sum due to rounding.

21.5.2.1 Power

Power requirements are based on 75% of the name plate motor power for all equipment. A unit power cost of $0.0604/kWh was used with the assumption that the potash facility would incur the basic monthly charge of $8,403.75.

21.5.2.2 Maintenance

The annual cost of routine maintenance has been estimated at 5% of the cost of the capital equipment. This is intended to cover material costs for normal inspections, preventative maintenance, replacement of wear parts and lubrication. Maintenance labour is included in the labour category.

21.5.2.3 Natural Gas

Natural gas is used for heat consuming operations in the hydromagnesite production process. The price for natural gas used is $3.19/GJ.

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21.5.2.4 Reagents

The hydromagnesite production process uses three purchased reagents; epsom salt (or as an alternative reagent, sodium sulfate), limestone and anhydrous (gaseous) ammonia.

21.5.2.5 Process Water

There is no naturally occurring fresh water source on site that is suitable as process water so brackish well water from the Blairmore aquifer must be treated to produce the necessary clean water. Water treatment for the brackish well water is done using several prefilters and five reverse osmosis units. Operational cost for the process water includes the electricity necessary to run the 320 hp booster pumps attached to each unit and the electrical cost of the well pump.

21.5.2.6 Labour

The magnesium process plant will require a total of 70 management, operators, labourers and maintenance personnel. Labour rates are the same as those used for the potash operation.

21.5.2.7 Contingency

Provision is made for the known unknowns. Contingency has been determined using engineering judgment for individual cost items dependent on usage and risk. The resulting overall contingency is 10% for the magnesium process facility operating costs.

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22.0 ECONOMIC ANALYSIS

22.1 Cautionary Statement

Certain information and statements contained in this section are forward-looking in nature and are subject to known and unknown risks, uncertainties, and other factors, many of which cannot be controlled or predicted and may cause actual results to differ materially from those presented here. Forward-looking statements include, but are not limited to, statements with respect to the economic and study parameters of the Project; mineral reserves; the cost and timing of any development of the Project; the proposed mine plan and mining strategy; dilution and extraction recoveries; processing method and rates and production rates; projected metallurgical recovery rates; infrastructure requirements; capital, operating and sustaining cost estimates; potash and hydromagnesite marketability and commercial terms; the projected LOM and other expected attributes of the project; the NPV, IRR and payback period of capital; future potash and hydromagnesite prices and currency exchange rates; government regulations and permitting timelines; estimates of reclamation obligations; requirements for additional capital; environmental risks; taxation and general business and economic conditions.

22.2 Methodology Used

The financial analysis was carried out using a DCF methodology. Net annual cash flows were estimated by projecting yearly cash inflows (revenues) and subtracting projected yearly cash outflows (such as capital and operating costs, royalties, and taxes). These annual cash flows were assumed to occur at year-end and were discounted back to the beginning of Year -2 (PP-2), the start year of construction. The annual cash flows were totalled to determine the NPV of the Project at selected discount rates. A discount rate of 8.0% was used as the base discount rate.

In addition, the IRR, expressed as the discount rate that yields a NPV of zero, and the payback period, expressed as the estimated time from the start of production until all initial capital expenditures have been recovered, were also estimated.

All monetary amounts are presented in real Q2 2025 terms.

A sensitivity analysis was carried out to identify potential impacts on NPV and IRR from variations in potash and hydromagnesite prices, capital and operating costs.

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22.3 Financial Model Parameters

The financial analysis was based on the mineral reserves tabulated in Section 15; forecast mine plan discussed in Section 16; the process plan and assumptions detailed in Section 17; the projected infrastructure requirements outlined in Section 18; the potash and hydromagnesite price assumptions and marketability in Section 19; the permitting, social and environmental regime discussions in Section 20; and the capital and operating cost estimates detailed in Section 21.

22.3.1 Potash and Hydromagnesite Prices

Granular potash prices are based on weighted average pricing considering pricing for US Corn Belt and India provided by Argus and the GSFC Offtake Agreement.

Hydromagnesite selling prices are based on weighted average pricing considering natural and synthetic hydromagnesite pricing for Canada and United States provided by PW Consulting.

The weighted average pricing for potash and hydromagnesite is in alignment with Karnalyte's market entry strategy.

22.3.2 Potash and Hydromagnesite Transport Costs

Granular potash shipping costs are based on weighted average costs considering shipping costs to US Corn Belt and India provided by Argus, and accounting for the duration of the GSFC Offtake Agreement.

Hydromagnesite shipping costs are based on weighted average shipping costs considering natural and synthetic hydromagnesite shipping costs to Canada and United States based on typical costs provided by PW Consulting and Argus.

The weighted average cost for potash and hydromagnesite shipping cost are in alignment with Karnalyte's entry market strategy.

22.3.3 Exchange rate

An exchange rate of C$1.43 = US$1.00 was used to convert shipping costs and the potash and hydromagnesite selling prices.

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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

22.3.4 Capital Costs

The potash processing facility was assumed to be constructed in three phases of two years each to reach maximum production capacity. Phase 1 construction from Year -2 to Year -1 with an initial production capacity reaching 675,000 t/a MOP by Year 3, Phase 2 construction in Year 1 and Year 2 with an intermediate production capacity reaching 1,425,000 t/a MOP by Year 5, and Phase 3 with a total production capacity reaching 2,175,000 t/a in Year 7 and maintained to Year 65 after which ramp down occurs. Year 1 corresponds to the first year of potash production.

The hydromagnesite processing facility was assumed to be constructed in two years, from Year 1 to Year 2. Year 3 corresponds to the first year of hydromagnesite production.

Total LOM project capital is $11.81 billion comprised of $4.19 billion in initial capital and $7.62 billion in sustaining. Capital costs are detailed in Section 21.

Capital costs were applied in the economic model excluding Goods and Services Tax (GST), as described in Section 22.3.7.

22.3.5 Operating Costs

Total LOM project operating cost is $43.45 billion comprised of $21.28 billion in on-site operating costs and $22.17 billion in potash and hydromagnesite shipping costs.

22.3.6 Royalties

The Project is not subject to commercial royalties.

The Province of Saskatchewan imposes royalties on the sale of potash extracted from orebodies in the province. These are discussed in Section 22.3.7.

22.3.7 Taxes

The taxation and royalties modelled within the financial analysis are based on the tax rates and taxation schemes that were validated by Karnalyte's independent taxation advisors. The following tax considerations have been applied:

The Project will be subject to the potash production tax system of Saskatchewan. The Potash Production System was introduced on January 1, 1990 and is set out in The Potash Production Tax Schedule of The Mineral Taxation Act and The Potash Production Tax Regulations and includes the following:

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24 December 2025

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Crown Royalty – 3% of gross revenue
Resource Surcharge – 3% of gross revenue
Potash production taxes (Base Payment and Profit Tax) apply to all potash that is produced from Saskatchewan lands:
Base Payment: The Base Payment is a monthly payment based on an estimate for the entire year. Producers pay net base payment as follows:
$$
\text{Net Base Payment} = \text{Gross Base Payment} - \text{Tax Credits (prior year)}
$$
Gross Base Payment is 35% of resource profits, subject to minimum and maximum payments:
Minimum: $11.00 × (total K₂O tonnes sold – Base Payment Holiday tonnes)
Maximum: $12.33 × (total K₂O tonnes sold – Base Payment Holiday tonnes)
A K₂O tonne is the quantity of potash that contains the equivalent amount of potassium as one tonne of potassium oxide.
All of the production from an approved new mine after January 1, 2005 is eligible for the base payment holiday.
No tax credits are applicable.
Profit Tax: Producers pay profit tax on a quarterly basis, based on an annual estimate. Producers can elect to pay this tax on profits of individual mines or on the consolidated profits of the producer’s Saskatchewan potash operations
$$
\text{Net Profit Tax} = \text{Gross Profit Tax} - \text{Base Payment Credits} - \text{Tax Credits}
$$
Gross Profit Tax is calculated by multiplying the profit per tonne by taxable tonnes in the year. Gross Profit Tax is determined by rates which increase with profits per tonne sold, with tax brackets indexed for inflation, as follows:

2025 Brackets Rate ($C profit per K₂O tonne sold)	Rate (%)
0.00 – 87.38	15.0
Over 87.38	35.0

Profit per tonne

The profit per tonne is calculated by dividing the resulting net profit by potash tonnes sold in the year. The following deductions apply for the purpose of the net profit calculation:
Corporate office employment allowance based on existing and expected new corporate office positions of the producer
Administrative allowance equal to 2% of the gross revenues of the producer in the year
Closure (reclamation) cost:

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24 December 2025
Economic Analysis
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

> Depreciation allowance based on the following deduction rates:
> - Automobiles used for marketing purposes at 35% annual straight line
> - Furniture and equipment used exclusively in sales offices and storage facilities at 20% annual straight line
> - Sales office other than head office at 10% annual straight line
> - Railcars at 7% annual straight line
> - Warehouses at 5% annual straight line
> - Approved remote capital at 35% annual declining balance
> - Net mine capital and accelerated capital at 35% annual declining balance with 20% deduction increase
> - No previous expenses are applicable

For the profit per tonne calculation, losses can be carried forward for a maximum of five years.

Taxable tonnes

Taxable tonnes are the greater of:
35% of the producer’s sales in the year; and the lesser of:
> - The producer’s Adjusted Base Tonnes in the year
> - The producer’s sales in the year
The producer’s Adjusted Base Tonnes are the producer’s Base Tonnes multiplied by the Common Industry Adjustment Factor. For a new producer the base tonnes are:
75% of the producer’s sales in the year if the annual sales were below 1,333,333 tonnes of K₂O; or
1 million K₂O tonnes if the annual sales were above 1,333,333 tonnes of K₂O
A Common Industry Adjustment Factor of 0.35 was used.

Base payment credit

Base payment credits carried forward for a maximum of five years.

Tax credits

No tax credits are applicable.
Currently, there is no royalty framework for magnesium in Saskatchewan; therefore, no specific taxation is applied to magnesium apart from federal and provincial income taxes.
Federal and provincial income tax in Saskatchewan at a rate of 15% and 12%, respectively. Allowable deductions and rates based on declining balance as follows:
Canadian Exploration Expenses (CEE) and Scientific Research and Experimental Development (SR&ED) at 100% annual

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24 December 2025
Economic Analysis
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

Canadian Development Expenses (CDE) at 30% annual
Capital Cost Allowance (CCA) at 25% annual, subject to maximum deduction of 50% of the value of the asset in year the asset was acquired
Foreign Exploration and Development Expense (FEDE) at 10% annual
All capital losses can be carried forward indefinitely, and carried back up to three years
Non-capital losses can be carried forward up to 20 years and carried back up to three years
No previous expenses are applicable.
Capital, operating and closure costs applied excluding Goods and Services Tax (GST) assuming these are recoverable against GST from sales.

22.3.8 Working Capital

A working capital allocation was included in the cash flow model. The following payment terms were assumed:

60 days in accounts receivable, including revenue
60 days in accounts payable, including operating costs, potash and hydromagnesite shipping costs, and royalty and potash production tax payable to the Saskatchewan government.

Working capital is assumed to be recovered at project completion. Thus, the sum of all working capital over mine life is zero.

22.3.9 Decommissioning and Reclamation Costs

Decommissioning and reclamation costs of $219.6 million were applied in the financial model.

Decommissioning and reclamation costs were applied based on the closure schedule, assuming that closure cost accruals are not required and closure obligations will be satisfied by a bank letter of credit or other financial instrument; however, the cost to maintain this financial instrument was excluded from the financial analysis.

22.3.10 Salvage Value

No salvage value was considered.

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24 December 2025
Economic Analysis
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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

22.3.11 Inflation

No escalation or inflation has been applied. All amounts are in real (constant) terms.

22.3.12 Financing

One hundred percent equity financing is assumed.

22.4 Economic Analysis

The Project is anticipated to generate a pre-tax NPV of $3.25 billion at an 8.0% discount rate, an IRR of 14.3%, and a payback period of 8.5 years. The financial analysis results show an after-tax NPV of $2.04 billion at an 8.0% discount rate, an IRR of 12.5%, and a payback period of 8.8 years. Table 22-1 presents a summary of the financial analysis results.

Figure 22-1 and Figure 22-2 show the cumulative undiscounted and discounted cash flows forecast for the Project. Table 22-2 presents the cash flow summary on an annual basis.

Table 22-1: Summary of Economic Results

Description	Unit	Value
Granular potash produced	Mt KCl	142.2
Hydromagnesite produced	Mt	7.0
After-Tax Valuation Indicators
Undiscounted cash flow	$M	35,754.9
NPV @ 8.0%	$M	2,042.7
Payback period (from start of operations)	years	8.8
IRR	%	12.5
Project capital (initial)	$M	4,191.2
Sustaining capital	$M	7,615.8
Decommissioning and reclamation cost	$M	219.6
Mining operating cost	$M	10,009.5
Processing operating cost	$M	10,158.3
Shipping costs	$M	22,170.4
G&A	$M	1,115.3

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24 December 2025
Economic Analysis
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Figure 22-1: Cumulative After-Tax Undiscounted Cash Flow

Source: Wood, 2025

Figure 22-2: Cumulative After-Tax Discounted Cash Flow

Source: Wood, 2025

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24 December 2025

Economic Analysis

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 22-2: Cash Flow Forecast on an Annual Basis

Item	Unit	LOM Total	Years
			-2	-1	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
Production
Potash production	kt KCl	142,202	0.0	0.0	407	665	977	1,380	1,633	2,157	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175
Hydromagnesite production	kt	7,000	0.0	0.0	0.0	0.0	70	80	90	104	104	104	104	104	104	104	104	104	104	104
Revenue	$M	116,685.4	0.0	0.0	270.9	460.8	801.5	1,104.2	1,304.4	1,713.3	1,726.7	1,727.1	1,727.6	1,728.0	1,728.5	1,729.0	1,729.6	1,730.1	1,730.7	1,731.2
Potash sales	$M	104,212.3	0.0	0.0	270.9	460.8	697.9	985.7	1171.1	1559.2	1572.2	1572.2	1572.2	1572.2	1572.2	1572.2	1572.2	1572.2	1572.2	1572.2
Hydromagnesite sales	$M	12,473.0	0.0	0.0	0.0	0.0	103.7	118.5	133.3	154.0	154.5	154.9	155.4	155.8	156.3	156.8	157.3	157.9	158.4	159.0
Operating Costs	$M	(43,453.5)	0.0	0.0	(142.2)	(205.2)	(333.5)	(455.7)	(531.0)	(673.9)	(682.9)	(686.9)	(687.7)	(687.4)	(687.5)	(687.5)	(687.8)	(688.0)	(687.5)	(686.9)
Mining	$M	(10,009.5)	0.0	0.0	(32.5)	(47.6)	(72.8)	(97.6)	(114.3)	(151.5)	(153.0)	(153.1)	(153.5)	(152.9)	(153.0)	(152.9)	(153.2)	(153.5)	(152.9)	(152.4)
Potash processing	$M	(7,932.1)	0.0	0.0	(25.1)	(34.6)	(55.1)	(72.1)	(88.7)	(113.8)	(118.1)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)
Magnesium processing	$M	(2,226.3)	0.0	0.0	0.0	0.0	(25.9)	(28.4)	(30.8)	(31.8)	(32.0)	(32.3)	(32.6)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)
G&A	$M	(1,115.3)	0.0	0.0	(3.8)	(5.2)	(8.5)	(11.2)	(13.4)	(16.8)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)
Potash shipping	$M	(20,962.5)	0.0	0.0	(80.8)	(117.8)	(159.1)	(232.6)	(268.3)	(342.0)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)	(344.9)
Hydromagnesite shipping	$M	(1,207.9)	0.0	0.0	0.0	0.0	(12.1)	(13.8)	(15.5)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)
Taxes and Royalties	$M	(25,450.4)	0.0	0.0	(16.3)	(27.6)	(41.9)	(59.1)	(70.3)	(93.6)	(94.3)	(248.8)	(308.3)	(330.9)	(355.2)	(364.8)	(372.8)	(370.2)	(379.0)	(381.6)
Potash Crown Royalty	$M	(3,126.4)	0.0	0.0	(8.1)	(13.8)	(20.9)	(29.6)	(35.1)	(46.8)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)
Potash SK Resource Surcharge	$M	(3,126.4)	0.0	0.0	(8.1)	(13.8)	(20.9)	(29.6)	(35.1)	(46.8)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)	(47.2)
Potash Production Tax	$M	(6,013.3)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	(14.4)	(38.2)	(54.9)	(77.0)	(83.5)	(88.2)	(87.6)	(91.9)	(93.1)
Income Tax	$M	(13,184.4)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	(140.1)	(175.8)	(181.7)	(183.8)	(187.0)	(190.2)	(188.2)	(192.7)	(194.2)
Capital Costs	$M	(12,026.5)	(669.3)	(1,064.7)	(649.1)	(898.7)	(553.7)	(799.3)	(148.4)	(106.1)	(81.4)	(117.2)	(134.8)	(109.8)	(102.8)	(117.1)	(106.8)	(178.3)	(89.2)	(120.9)
Initial Capital	$M	(4,191.2)	(669.3)	(1,003.9)	(558.3)	(837.5)	(448.9)	(673.3)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sustaining Capital	$M	(7,615.8)	0.0	(60.8)	(90.7)	(61.2)	(104.8)	(126.0)	(148.4)	(106.1)	(81.4)	(117.2)	(134.8)	(109.8)	(102.8)	(116.9)	(106.3)	(178.1)	(88.7)	(120.4)
Closure Cost	$M	(219.6)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	(0.3)	(0.5)	(0.3)	(0.5)	(0.5)
Working Capital
Change in Working Capital	$M	(0.0)	0.0	0.0	(18.5)	(19.0)	(32.6)	(26.8)	(18.7)	(39.9)	(0.6)	3.0	4.0	2.6	3.6	1.0	0.7	(0.1)	0.5	0.0
Net Cash Flow
Before Tax	$M	48,939.3	(669.3)	(1,064.7)	(555.1)	(689.8)	(160.2)	(236.8)	536.0	799.8	867.4	817.2	776.6	784.2	770.5	747.6	753.1	681.6	768.3	736.0
After Tax	$M	35,754.9	(669.3)	(1,064.7)	(555.1)	(689.8)	(160.2)	(236.8)	536.0	799.8	867.4	677.2	600.8	602.6	586.6	560.6	563.0	493.4	575.6	541.8

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24 December 2025

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 22-2 Cont'd

Item	Unit	LOM Total	Years
			17	18	19	20	21	22	23	24	25	26	27	28	29	30	31	32	33	34
Production
Potash production	kt KCl	142,202	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175
Hydromagnesite production	kt	7,000	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104
Revenue	$M	116,685.4	1,731.8	1,732.5	1,733.1	1,733.8	1,765.6	1,766.3	1,767.1	1,767.8	1,768.7	1,769.5	1,770.4	1,771.3	1,772.2	1,773.2	1,774.2	1,775.3	1,776.4	1,777.5
Potash sales	$M	104,212.3	1,572.2	1,572.2	1,572.2	1,572.2	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3
Hydromagnesite sales	$M	12,473.0	159.6	160.3	160.9	161.6	162.3	163.0	163.8	164.6	165.4	166.2	167.1	168.0	168.9	169.9	170.9	172.0	173.1	174.2
Operating Costs	$M	(43,453.5)	(687.1)	(687.4)	(687.2)	(687.3)	(653.6)	(653.7)	(653.7)	(653.5)	(653.5)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)
Mining	$M	(10,009.5)	(152.6)	(152.9)	(152.6)	(152.8)	(153.2)	(153.3)	(153.3)	(153.1)	(153.1)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)
Potash processing	$M	(7,932.1)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)
Magnesium processing	$M	(2,226.3)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)
G&A	$M	(1,115.3)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)
Potash shipping	$M	(20,962.5)	(344.9)	(344.9)	(344.9)	(344.9)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)
Hydromagnesite shipping	$M	(1,207.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)
Taxes and Royalties	$M	(25,450.4)	(383.2)	(387.5)	(389.4)	(386.9)	(410.9)	(417.2)	(414.6)	(416.7)	(417.7)	(416.8)	(413.8)	(416.8)	(417.7)	(412.6)	(416.1)	(414.2)	(415.0)	(415.4)
Potash Crown Royalty	$M	(3,126.4)	(47.2)	(47.2)	(47.2)	(47.2)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)
Potash SK Resource Surcharge	$M	(3,126.4)	(47.2)	(47.2)	(47.2)	(47.2)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)
Potash Production Tax	$M	(6,013.3)	(93.8)	(95.5)	(96.1)	(94.8)	(102.4)	(105.2)	(103.8)	(104.7)	(104.9)	(104.4)	(103.0)	(104.2)	(104.5)	(102.0)	(103.6)	(102.6)	(102.9)	(102.9)
Income Tax	$M	(13,184.4)	(195.2)	(197.7)	(199.0)	(197.7)	(212.3)	(215.8)	(214.6)	(215.8)	(216.6)	(216.2)	(214.6)	(216.4)	(217.0)	(214.4)	(216.3)	(215.4)	(215.9)	(216.3)
Capital Costs	$M	(12,026.5)	(121.1)	(96.2)	(106.8)	(138.5)	(131.5)	(73.8)	(135.0)	(103.3)	(106.8)	(121.1)	(142.1)	(99.7)	(110.3)	(161.0)	(99.7)	(138.5)	(120.9)	(124.2)
Initial Capital	$M	(4,191.2)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sustaining Capital	$M	(7,615.8)	(120.4)	(95.7)	(106.3)	(138.0)	(131.0)	(73.3)	(134.5)	(102.8)	(106.3)	(120.4)	(141.6)	(99.2)	(109.8)	(160.5)	(99.2)	(138.0)	(120.4)	(123.9)
Closure Cost	$M	(219.6)	(0.8)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.8)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.3)
Working Capital
Change in Working Capital	$M	(0.0)	0.0	0.2	(0.0)	(0.3)	(9.2)	0.4	(0.4)	(0.0)	(0.1)	(0.2)	(0.4)	0.1	(0.1)	(0.6)	0.1	(0.3)	(0.1)	(0.2)
Net Cash Flow
Before Tax	$M	48,939.3	735.5	759.2	748.7	718.5	772.7	837.8	778.0	810.2	807.2	794.2	775.4	817.8	807.8	760.1	821.4	784.2	802.9	800.7
After Tax	$M	35,754.9	540.4	561.6	549.7	520.8	560.4	622.1	563.4	594.4	590.6	578.0	560.8	601.4	590.7	545.7	605.1	568.9	586.9	584.4

Project No.: 252512

24 December 2025

Economic Analysis

Page 22-10

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 22-2 Cont'd

Item	Unit	LOM Total	Years
			35	36	37	38	39	40	41	42	43	44	45	46	47	48	49	50	51	52	53
Production
Potash production	kt KCl	142,202	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175
Hydromagnesite production	kt	7,000	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104
Revenue	$M	116,685.4	1,778.7	1,779.9	1,781.2	1,782.5	1,783.8	1,785.2	1,786.7	1,788.2	1,789.8	1,791.4	1,793.1	1,794.9	1,796.7	1,798.6	1,800.6	1,802.6	1,804.0	1,807.0	1,809.2
Potash sales	$M	104,212.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3
Hydromagnesite sales	$M	12,473.0	175.4	176.6	177.9	179.2	180.5	182.0	183.4	184.9	186.5	188.2	189.9	191.6	193.5	195.3	197.3	199.4	201.5	203.7	206.0
Operating Costs	$M	(43,453.5)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)
Mining	$M	(10,009.5)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)
Potash processing	$M	(7,932.1)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)
Magnesium processing	$M	(2,226.3)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)
G&A	$M	(1,115.3)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)
Potash shipping	$M	(20,962.5)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)
Hydromagnesite shipping	$M	(1,207.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)
Taxes and Royalties	$M	(25,450.4)	(418.5)	(419.2)	(417.2)	(412.3)	(418.1)	(421.0)	(422.3)	(417.9)	(416.2)	(417.0)	(417.7)	(424.9)	(421.9)	(421.5)	(422.3)	(418.4)	(425.9)	(426.4)	(426.4)
Potash Crown Royalty	$M	(3,126.4)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)
Potash SK Resource Surcharge	$M	(3,126.4)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)
Potash Production Tax	$M	(6,013.3)	(104.2)	(104.3)	(103.2)	(100.9)	(103.4)	(104.5)	(104.8)	(102.6)	(101.8)	(102.0)	(102.1)	(105.2)	(103.5)	(103.1)	(103.2)	(101.2)	(104.4)	(104.2)	(103.9)
Income Tax	$M	(13,184.4)	(218.2)	(218.7)	(217.8)	(215.2)	(218.5)	(220.3)	(221.3)	(219.1)	(218.2)	(218.8)	(219.3)	(223.5)	(222.2)	(222.3)	(222.9)	(221.0)	(225.3)	(226.0)	(226.3)
Capital Costs	$M	(12,026.5)	(99.7)	(113.8)	(135.0)	(168.0)	(89.2)	(99.7)	(106.8)	(154.2)	(142.1)	(127.9)	(127.9)	(70.2)	(142.1)	(127.9)	(120.9)	(161.2)	(73.8)	(117.4)	(120.9)
Initial Capital	$M	(4,191.2)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sustaining Capital	$M	(7,615.8)	(99.2)	(113.3)	(134.5)	(167.5)	(88.7)	(99.2)	(106.3)	(153.4)	(141.6)	(127.4)	(127.4)	(69.7)	(141.6)	(127.4)	(120.4)	(160.5)	(73.3)	(116.9)	(120.4)
Closure Cost	$M	(219.6)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.8)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.5)	(0.8)	(0.5)	(0.5)	(0.5)
Working Capital
Change in Working Capital	$M	(0.0)	0.0	(0.2)	(0.4)	(0.6)	0.2	(0.1)	(0.2)	(0.6)	(0.4)	(0.2)	(0.3)	0.2	(0.6)	(0.4)	(0.3)	(0.7)	0.2	(0.4)	(0.4)
Net Cash Flow
Before Tax	$M	48,939.3	825.2	812.0	793.0	763.4	841.9	831.4	825.3	781.3	796.0	811.7	813.2	870.1	801.1	817.7	826.6	790.0	877.2	835.4	834.4
After Tax	$M	35,754.9	607.1	593.3	575.2	548.2	623.4	611.1	604.0	562.2	577.8	592.9	593.9	646.6	578.8	595.4	603.7	569.0	652.0	609.5	608.1

Project No.: 252512

24 December 2025

Economic Analysis

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Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Table 22-2 Cont'd

Item	Unit	LOM Total	Years
			54	55	56	57	58	59	60	61	62	63	64	65	66	67	68	69	70	71	72
Production
Potash production	kt KCl	142,202	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,175	2,025	1,582	1,382	1,138	531	0.0	0.0
Hydromagnesite production	kt	7,000	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	104	0.0	0.0
Revenue	$M	116,685.4	1,811.6	1,814.1	1,816.6	1,819.2	1,822.0	1,824.8	1,827.8	1,830.8	1,833.5	1,833.5	1,833.5	1,833.5	1,722.9	1,396.4	1,249.0	1,069.1	621.6	0.0	0.0
Potash sales	$M	104,212.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,603.3	1,492.7	1,166.2	1,018.7	838.9	391.4	0.0	0.0
Hydromagnesite sales	$M	12,473.0	208.3	210.8	213.3	216.0	218.7	221.5	224.5	227.6	230.2	230.2	230.2	230.2	230.2	230.2	230.2	230.2	230.2	0.0	0.0
Operating Costs	$M	(43,453.5)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(653.4)	(605.6)	(487.4)	(431.7)	(368.8)	(196.9)	0.0	0.0
Mining	$M	(10,009.5)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(153.0)	(141.3)	(110.0)	(95.9)	(81.3)	(37.7)	0.0	0.0
Potash processing	$M	(7,932.1)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(121.8)	(108.1)	(87.4)	(75.6)	(63.9)	(28.1)	0.0	0.0
Magnesium processing	$M	(2,226.3)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	(33.0)	0.0	0.0
G&A	$M	(1,115.3)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(17.0)	(16.0)	(13.1)	(11.7)	(10.1)	(4.3)	0.0	0.0
Potash shipping	$M	(20,962.5)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(310.7)	(289.3)	(226.0)	(197.4)	(162.6)	(75.9)	0.0	0.0
Hydromagnesite shipping	$M	(1,207.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	(17.9)	0.0	0.0
Taxes and Royalties	$M	(25,450.4)	(430.3)	(429.6)	(426.8)	(429.7)	(432.1)	(438.5)	(435.8)	(432.8)	(439.7)	(439.1)	(443.5)	(437.5)	(414.2)	(334.9)	(281.6)	(236.9)	(105.2)	0.0	0.0
Potash Crown Royalty	$M	(3,126.4)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(44.8)	(35.0)	(30.6)	(25.2)	(11.7)	0.0	0.0
Potash SK Resource Surcharge	$M	(3,126.4)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(48.1)	(44.8)	(35.0)	(30.6)	(25.2)	(11.7)	0.0	0.0
Potash Production Tax	$M	(6,013.3)	(105.4)	(104.7)	(103.2)	(104.2)	(104.8)	(107.3)	(105.6)	(104.0)	(106.8)	(106.3)	(108.3)	(105.5)	(99.8)	(78.9)	(70.7)	(58.5)	(16.5)	0.0	0.0
Income Tax	$M	(13,184.4)	(228.8)	(228.7)	(227.5)	(229.4)	(231.0)	(235.0)	(234.0)	(232.7)	(236.7)	(236.5)	(239.0)	(235.7)	(224.8)	(186.1)	(149.8)	(128.0)	(65.2)	0.0	0.0
Capital Costs	$M	(12,026.5)	(89.4)	(120.9)	(142.1)	(103.3)	(103.0)	(62.7)	(127.4)	(138.0)	(62.7)	(106.3)	(62.7)	(141.6)	(69.7)	(9.6)	(7.2)	(4.8)	(41.6)	(78.3)	(78.3)
Initial Capital	$M	(4,191.2)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sustaining Capital	$M	(7,615.8)	(88.7)	(120.4)	(141.6)	(102.8)	(102.8)	(62.7)	(127.4)	(138.0)	(62.7)	(106.3)	(62.7)	(141.6)	(69.7)	(9.6)	(7.2)	(4.8)	(2.4)	0.0	0.0
Closure Cost	$M	(219.6)	(0.8)	(0.5)	(0.5)	(0.5)	(0.3)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	(39.2)	(78.3)	(78.3)
Working Capital
Change in Working Capital	$M	(0.0)	(0.2)	(0.5)	(0.7)	(0.3)	(0.3)	(0.1)	(0.8)	(0.8)	0.0	(0.1)	0.3	(0.5)	8.3	27.6	12.3	15.5	97.2	0.0	0.0
Net Cash Flow
Before Tax	$M	48,939.3	867.1	838.4	821.2	862.0	864.3	905.2	844.4	838.5	914.5	871.3	913.3	836.4	866.5	778.1	690.5	602.1	440.4	(78.3)	(78.3)
After Tax	$M	35,754.9	638.3	609.7	593.7	632.6	633.2	670.2	610.4	605.9	677.8	634.7	674.3	600.7	641.7	591.9	540.8	474.1	375.2	(78.3)	(78.3)

Project No.: 252512

24 December 2025

Economic Analysis

wood.

Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

22.5 Sensitivity Analysis

A sensitivity analysis was carried out to identify potential impacts on the after-tax NPV and IRR of variations in potash and hydromagnesite selling prices, capital costs and operating costs. Results of this analysis are presented in Figure 22-3 and Figure 22-4.

Figure 22-3: After-Tax NPV @ 8% – Sensitivity

Source: Wood, 2025

Figure 22-4: After-Tax IRR – Sensitivity

Source: Wood, 2025

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24 December 2025

Economic Analysis

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Karnalyte
RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

The Wynyard Project is most sensitive to fluctuations in potash selling prices. It is less sensitive to changes in operating costs and capital costs, and least sensitive to changes in the hydromagnesite selling price.

22.5.1 Potash Only Reference Case

In addition to the base case analysis, a potash only reference case excluding hydromagnesite production and associated costs and revenue is presented in Table 22-3.

Table 22-3: Summary of Economic Results of Potash Only Reference Case

Description	Unit	Value
Granular potash produced	Mt KCl	142.2
Hydromagnesite produced	Mt	-
After-Tax Valuation Indicators
Undiscounted cash flow	$M	29,362.7
NPV @ 8.0%	$M	1,496.1
Payback period (from start of operations)	years	9.3
IRR	%	11.6
Project capital (initial)	$M	3,960.2
Sustaining capital	$M	7,575.3
Decommissioning and reclamation cost	$M	208.7
Mining operating cost	$M	10,009.5
Processing operating cost	$M	7,932.1
Shipping costs	$M	20,962.5
G&A	$M	1,115.3

Project No.: 252512
24 December 2025
Economic Analysis
Page 22-14
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

23.0 ADJACENT PROPERTIES

Located approximately 10 km to the west of the Project, is the BHP Group Limited (BHP) Jansen Potash Project. BHP holds 100% of the rights to the contiguous dispositions of the Potash Lease Special Agreement, KLSA 011, where potash production is set to begin in mid-2027 producing 8.5 Mt/a of potash (BHP website, August 2025). According to the prefeasibility study reported in their 2024 S-K 1300 technical report summary (BHP Group Limited, 2024), BHP also exclusively holds rights for potash leases KL 206, KL 210 and a pending lease, KP 331. QP Stirrett has been unable to verify the information, and the information is not necessarily indicative of the mineralization on the Karnalyte property that is subject to this Report.

Approximately 22 km southeast of the Project is 101211205 Saskatchewan LTD, a subsidiary of North Atlantic Potash Inc which holds 100% of the rights to the contiguous dispositions of potash leases KL 252, KL 253, KL 236, and KL 237 (GeoAtlas Saskatchewan, 2025). Publicly available drill hole data indicates approximately 10 drill holes between 2011 and 2012 were drilled and abandoned as potash test holes reviewed in GeoSCOUT, a geoLOGIC Systems Ltd. mapping and analytics software that provide public data. QP Stirrett has been unable to verify the information, and the information is not necessarily indicative of the mineralization on the Karnalyte property that is subject to this Report.

There are no current potash disposition holders directly north of the Property and further north of the Property lie the Quill Lakes. To the south are First Nations, Beardy's and Okemasis and Muskowekwan where there are currently no active dispositions. Figure 23-1 illustrates an overview of the adjacent properties surrounding the Property.

Project No.: 252512

24 December 2025

Adjacent Properties

wood.

Karnalyte

RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

Figure 23-1: Adjacent Properties Surrounding the Karnalyte Project Area

Source: RESPEC, 2025

Project No.: 252512

24 December 2025

Adjacent Properties

wood.

Karnalyte RESOURCES
Wynyard Project
Wynyard, Saskatchewan
NI 43-101 Technical Report on the Feasibility Study

24.0 OTHER RELEVANT DATA AND INFORMATION

There is no additional information or explanation necessary to make the Report understandable and not misleading.

Project No.: 252512
24 December 2025
Other Relevant Data and Information
Page 24-1
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Karnalyte RESOURCES

Wynyard Project

Wynyard, Saskatchewan

NI 43-101 Technical Report on the Feasibility Study

25.0 INTERPRETATION AND CONCLUSIONS

25.1 Summary

The Prairie Evaporites have supported successful potash mining operations in Saskatchewan for many decades both by conventional underground mining and solution mining. Carnallite has generally been avoided due to the negative influence its $\mathrm{MgCl}_2$ content has on a sylvite optimized process route however, with a carnallite optimized process it is has been successfully mined by conventional underground mining in Europe and Laos and by solution mining in Europe. The Project mining and processing designs have utilized the knowledge gained from these successful operations.

25.2 Mineral Tenure and Surface Rights

Saskatchewan has a well-established mineral tenure system and the government information on mineral tenure holders is in the public domain. A title opinion obtained by Karnalyte supports their ownership in the mineral leases governing the area of mineral resources and mineral reserves. Karnalyte has purchased surface rights in the Project area; however, they will need to obtain agreements from land owners for a portion of the drilling/production pads.

25.3 Geology and Mineralization

Saskatchewan hosts one of the largest and richest potash deposits in the world, making it a global leader in potash production and export. Key aspects of these deposits include:

Saskatchewan's potash deposits are part of the Prairie Evaporite deposit, formed around 400 million years ago from the evaporation of an ancient inland sea.
These deposits stretch from central to south-central Saskatchewan, extending into Manitoba and North Dakota.

Lateral continuity of potassium and magnesium mineralization in the form of sylvite and carnallite is identified in the Patience Lake, Belle Plaine, and Esterhazy Members of the Prairie Evaporite Formation. Seismic data provides an indication as to the location of collapse features that can be avoided during mining. It also allows for the qualitative mapping of carnallite mineralization. Dissolution test work has shown that both rock types are amenable to solution mining.

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25.4 Data Collection in Support of Mineral Resources

The core material of one historical well and 11 exploration wells drilled by Karnalyte was sampled. The samples were analyzed in the laboratory for K, Mg, Ca, Na, as well as for SO₄ and insoluble content for all samples and Cl content for most samples. The analytical results are plausible and allow the determination of a carnallite and sylvite grade distribution in the exploration wells. Based on this data carnallitite horizons of the Belle Plaine and Patience Lake Member and up to two sylvinite horizons of the Esterhazy Member have been identified as having the potential for solution mining.

Seismic investigation shows that the Belle Plaine and Patience Lake Members are generally continuous and contain carnallite mineralization. The continuity of the Esterhazy Member is also established; however, the seismic investigations do show that the mineralization is not carnallite but cannot distinguish between barren rock or sylvinite. The continuity of all members is locally disturbed over significant areas. These areas are attributed to post evaporite dissolution of the salt, resulting in collapse of overlying strata into the level of the evaporites.

Except for areas with seismically identified disturbances, attributed to a later local dissolution of the salt rocks, the geological interpretation of the exploration data suggests that continuity of grade and thickness of the sylvinite and carnallitite horizons are sufficient to allow for the estimation of mineral resources.

25.5 Mineral Resources

Given the long-term potash price for the US Corn Belt, QP van der Klauw has determined that reasonable prospects for eventual economic extraction is met for solution mining of the minerals sylvite and carnallite from the Esterhazy, Belle Plaine and Patience Lake Members of the Prairie Evaporite. Bench scale testing has shown it to be feasible to produce BMC products from the MgCl₂-rich end brine of the MOP processing. The amounts that can be economically produced depend on the markets and not on the availability of the MgCl₂-rich end brine from KCl production.

Mineral resources are reported in accordance with 2014 CIM Definition Standards using a cut-off grade equivalent to 55% carnallite in carnallitite and 20% sylvite in sylvinite, a forecast long-term MOP price of US$516/t, process recovery, and mining, process and G&A costs. The classification of mineral resources considers the results of the 3D seismic survey, and geotechnical and mineral tenure boundary considerations.

Factors that could influence the mineral resource estimate have been identified.

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25.6 Metallurgical Test Work and Recovery Methods

The metallurgical test work completed to date shows the deposit is suitable for producing a high quality potash product. The dissolution test work indicates that the Wynyard deposit is consistent with other carnallite deposits that are currently used for the production of a soluble potash product using crystallization and evaporation processes. The OLI model developed as part of the test work showed lower recovery but did not contain recycle streams that would typically be used to increase plant recovery.

Bench scale processing test work, focused around the creation of hydromagnesite, indicates that the chosen process can produce a high quality marketable product. Initial test work concluded that hydromagnesite is produced instead of the original hypothesis of magnesium carbonate. Subsequent tests confirmed and refined the plant design to determine reagent rates, final product quality, and overall recovery.

25.7 Mine Plan and Mineral Reserves

Rock mechanical modelling using data from samples of some exploration wells has been used to define a pattern of dual well caverns and pillars between caverns. For each exploration well the theoretical mineable volume of a standard size cavern has been estimated for up to four potash seams identified in the Patience Lake, Belle Plaine and Esterhazy Members at the exploration wells and transformed to tonnes using the density of the potassium bearing member estimated from the mineralogical composition of that member.

For the sylvinite of the Esterhazy Member and the carnallitite of the Patience Lake Member and the Upper Belle Plaine Member the average production brine compositions have been estimated. The solution mining concept at each well pair develops:

Up to two sylvinite brine producing caverns in the Esterhazy Member using cold non-selective leaching
a single large cavern through the Belle Plaine and Patience Lake Members using hot non-selective leaching.

The total volume of production brine from the standard cavern in each seam has been estimated for all exploration wells considering the potential of unidentified anomalous zones, irregular cavern shape and incomplete production brine replacement.

Average flow rates for sylvinite and carnallitite caverns are based on dissolution test work and the pilot operation and, with the estimated production brine volumes, allows a monthly cavern

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brine production profile to be developed, while also considering the time required for cavern preparation.

The LOM plan consists of 1,653 caverns across the three production phases and considers a ramp-up of each phase. To ensure optimal plant operation, the mine plan is designed to maintain a sylvinite:carnallitite brine ratio between 25:75 and 10:90.

Measured and Indicated mineral resources were converted to mineral reserves by applying appropriate modifying factors and are reported in accordance with 2014 CIM Definition Standards. Mineral reserves are defined for the minerals carnallite and sylvite that can be processed to MOP fertilizer and part of the MgCl₂-rich end brine resulting from this process can be processed to a magnesium-bearing product. The amount of magnesium-bearing brine that would be processed is limited by the market capacity for the hydromagnesite product.

Factors that could influence the Mineral reserve estimate have been identified.

25.8 Project Infrastructure

The Project is easily accessible via existing provincial roads. Utilities including power and natural gas are available close by and will be delivered to site via the construction of appropriate infrastructure. Process water requirements will be sourced from the Blairmore aquifer and potable water from the Town of Wynyard. The infrastructure required for solution mining and processing is commercially available. The nearby CP Rail main line allows the transportation of products to their destination. Injecting waste brines into the Deadwood Formation results in no waste piles left on surface.

25.9 Market Studies and Contracts

Market study analysis was completed for potash and hydromagnesite by Argus, PW Consulting, and Karnalyte, which provided commodity prices and market entry strategies for these products.

There is an Offtake Agreement with GSFC for a portion of the potash production that has been considered in the economic analysis.

25.10 Environmental Studies and Permitting

The approved 2013 EIS has variances from the current Project plans. The Project team will provide justification for the changes during execution of the Project indicating the beneficial nature of the deviations from the approved EIS. Changes may require approval under Section

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16 of the Saskatchewan Environmental Assessment Act. It is expected that Karnalyte would prepare and submit to MOE an amendment to the EIS for the additional phases which are functionally similar to Phase 1.

25.11 Capital and Operating Costs

The Project's capital cost estimate has been prepared to a feasibility level with an expected accuracy to be within ±15% including contingency. Costs for the potash facility are based on revised vendor quotations which included pricing from existing vendors, new vendors and select India-based suppliers. The costs for the magnesium processing facility are based on escalating costs of a 2012 pre-feasibility study. The magnesium process facility contributes around 5% of the total Project initial capital cost.

25.12 Economic Analysis

Results of the economic analysis show the Project to be economically viable with the Project most sensitive to the potash selling price and less sensitive to changes to the hydromagnesite selling price. The Project remains economically viable without the production of hydromagnesite.

25.13 Conclusions

25.14 Opportunities

25.14.1 Geology

The following exploration potential has been identified:

Exploration potential on disposition KL 246 exists to the east of the Project area. Additional seismic and drilling in this area would further delineate the potassium-bearing members. Positive results could support an increase in the current mineral resource and reserve estimates, which in turn may contribute to an extension of the projected mine life.

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25.14.2 Mineral Resources and Mineral Reserves

Opportunities for mineral resources were identified in Section 14.7 and for mineral reserves in Section 15.4.

25.14.3 Market Studies

The following opportunities relating to the marketing of products have been identified:

Selling a MgCl₂ brine for road dust suppression or de-icing directly to municipalities or through a distributor. The current plant has the ability to supply up to 100,000 t of MgCl₂ brine annually. If market conditions are favourable, MgCl₂ brine production can be increased with minimal capital investment.
Ongoing market disruptions due to world events may improve opportunities for North American potash producers to access the US Corn Belt market, which imports a portion of its consumption from Russia.
The hydromagnesite market study shows rapid growth in the demand for hydromagnesite particularly in North America where supply currently relies on imports. If market supply remains restricted as indicated in the market study, hydromagnesite production can be increased and sold into the world market to help reduce supply limitations.
The synthetic world hydromagnesite market is supply limited. Karnalyte may capture a portion of the world synthetic market resulting in increased revenue.
Investigating alternative magnesium-based products to determine economic production and potential markets. Any new magnesium products would utilize excess MgCl₂-rich end brine and would be in addition to planned hydromagnesite production.

25.15 Risks

25.15.1 Mineral Resources and Mineral Reserves

Risks for mineral resources were identified in Section 14.7 and for mineral reserves in Section 15.4.

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25.15.2 Metallurgical Test Work and Recovery Methods

There is a risk that the hydromagnesite processing plant will not perform as designed based on bench scale testing at a prefeasibility level. A larger scale test should be performed (e.g., pilot plant) to confirm its process design and capital cost. This risk has been mitigated with the inclusion of a higher percent contingency for this part of the overall project capital cost.
There is a risk that the brine sent from the potash facility to feed the magnesium facility may have higher than designed impurities (sulphates, calcium). This is a small risk to operational costs of the hydromagnesite plant and would require a small increase in water and reagent usage.

25.15.3 Market Studies

There is a risk that Karnalyte's ability to capture a share of the existing potash market for the new potash supply provided by the Project could be impacted given local emerging competitors. New planned production was taken into consideration for the establishment of long-term pricing.
There is a risk that Karnalyte's entry into the hydromagnesite market could affect pricing due to the scale of production relative to current market size.

25.15.4 Financial

There is a risk that the likely introduction of a royalty framework for magnesium will directly impact the Project NPV.

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NI 43-101 Technical Report on the Feasibility Study

26.0 RECOMMENDATIONS

26.1 Summary

The QPs make the following recommendations to advance the Project.

26.2 Geology and Mineral Resources

Conduct additional density testing of 18 samples within the main mineral resource intervals by testing two samples per potash member across three existing wells. This will enhance confidence in the calculated density values and subsequent KCl production. The estimated cost is less than $50,000.

26.3 Magnesium Study

The current project utilizes less than 10% of the MgCl₂-rich end brine from potash processing. The following work is recommended to better define the project opportunities for magnesium:

Identify market opportunities for the alternate magnesium products identified in the Report.
Develop preliminary process designs for each potential product and establish preliminary economics.
Evaluate alternatives and determine if alternate magnesium products should be included in the Project.

The estimated cost is $200,000.

26.4 Metallurgical Test Work

The following test work is recommended for aligning the potash and magnesium facilities and advancing the design of the magnesium processing facility:

Develop a full process model with all relevant recycle streams for the potash and hydromagnesite plants. Estimated cost is $250,000.
Conduct a larger pilot scale with hydromagnesite production run to prove out the bench scale testing. Estimated cost is $500,000.
Complete hydromagnesite drying and dewatering test work to determine drying and centrifuge/filter press sizing. Estimated cost is $50,000.

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26.5 Summary of Costs

The estimated costs for completing work recommended by the QPs is summarized in Table 26-1.

Table 26-1: Estimated Costs for Recommended Work
| Item | Cost ($M) |
| --- | --- |
| Geology | 0.05 |
| Magnesium study | 0.20 |
| Metallurgical | 0.80 |
| Total | 1.05 |

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27.0 REFERENCES

ALSTOM Power Raymond Operations Test Report Pilot Test Facility, (2011): Test Number RM-2014 for Karnalyte Resources Inc., dated October 28 2011, 5 pages.

ALSTOM Power Raymond Operations Test Report Pilot Test Facility, (2011): Abrasion and Grindability Test Report Test Number RMS-1814 for Karnalyte Resources Inc. dated October 24 2011, 3 pages.

ALSTOM Power Raymond Operations Test Report Pilot Test Facility, (2011): Abrasion and Grindability Test Report Test Number RMS-2028 for Karnalyte Resources Inc., dated December 28 2012, 4 pages.

Amec Foster Wheeler, (2016): Update of CAPEX and OPEX of the Potash and Magnesium Operation of the Wynyard Carnallite Project, prepared for Karnalyte Resources Inc.

Autenrieth H., (1955): Neue für die Kalirohsalzverarbeitung wichtige Untersuchungen im quinären, NaCl-gesättigten System der Salze ozeanische Salzablagerungen. – Kali Steinsalz 1, 18-32.

Bannatyne, B.B., (1983): Devonian Potash Deposits in Manitoba. – Open File Report OF83-3 of Manitoba Department of Energy and Mines, Mineral Resource Division, 20 pages.

Bechtel Civil & Minerals, Inc., (1985): Manvest Magnesium Project Preliminary Cost Study, prepared for Manvest Ltd., Calgary, Canada

BHP Group Limited, (2024): SEC S-K 229.1300 Technical Report Summary Prefeasibility Study Jansen Potash Project Saskatchewan, Canada

Boyd, (2008): 2008 Wynyard 3D Seismic Interpretation Draft Final Report, Wynyard, Saskatchewan, prepared for Karnalyte Resources Inc., dated November 1, 2008. Calgary, 68 pages.

Boyd, (2010): 2009 Wynyard 3D Merge Seismic Interpretation Final Report, prepared for Karnalyte Resources Inc., dated March 23, 2010. Calgary, 42 pages.

Boyd, 2011. 2009 Wynyard 3D Collapse Boundary Review, prepared for Karnalyte Resources Inc.

Canadian Institute of Mining, Metallurgy and Petroleum (2014): CIM Definition Standards for Mineral Resources & Mineral Reserves, prepared by the CIM Standing Committee on Reserve Definitions

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References
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Colorado School of Mines Research Institute, (1984): Magnesium from Carnallite CSMRI Project NP-842076-88.

Colorado School of Mines Research Institute, (1985): Carnamag Project Proposal to Recover Carnallite in a Single-Well Test and Surface-Recovery Facility

Core Lab Petroleum Services, (2013): Core Analysis Report, prepared for Karnalyte Resources Inc. for well Karnalyte WYNYARD 2-24-32-16, dated February 7, 2013, 3 pages.

Crain, E.R., and Anderson W.B., (1966): Quantitative Log Evaluation of the Prairie Evaporite Formation of Saskatchewan. Journal of Canadian Petroleum Technology, Quebec City and Edmonton, July-September

Costello, A., and Edgecombe, R., (2010): 2009 Wynyard South 3D Operations Report, prepared for Karnalyte Resources Inc., March, 2010

Danyluk, T.K., Phillips G.D., Prugger, A.F, and Pesowski M.S., (1999): Geophysical analysis of an unusual collapse structure at PCS Potash, Lanigan Division. Proceedings of the CIM Meeting, Calgary

D'Ans J., (1933): Die Lösungsgleichgewichte der Systeme der Salze ozeanischer Salzablagerungen. 254 pp. Kali-Forschungsanstalt

Dillon Consulting Limited, (2013): Wynyard Carnallite Project Pre-Construction Environmental Survey Report, July 2013

Dillion Consulting Limited, (2014): 2013 Annual Groundwater Monitoring Report, April 2014

Dillon Consulting Limited, (2016): 2016 Annual Groundwater Monitoring Report – Wynyard Carnallite Project

Dillon Consulting Limited, (2018): Wynyard Carnallite Project – Decommissioning and Reclamation Plan and Financial Assurance Plan, prepared for Karnalyte Resources Inc., May 2018

ERCOSPLAN, (2009): Core assay evaluation and modeling of dissolution brine composition, Memorandum to Karnalyte Resources, 11 pages.

ERCOSPLAN, (2011): Dissolution Tests on Carnallitite, Carnallite Sylvinite Samples. Issued 10 June 2011 prepared for Karnalyte Resources Inc., 68 pages.

ERCOSPLAN, (2016): Report: Plan and Operating Procedures for the Karnalyte Pilot Solution Mining Operation, prepared for Karnalyte Resources Inc., 32 pages.

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Eugster H.P., Harvie C.E., and Weare J.H., (1980): Mineral Equilibria in a six-component seawater system, Na-K-Mg-Ca-SO4-Cl-H2O, at 25°C. Geochemica et Cosmochemica Acta 44, 1335 - 1347.

Food and Agriculture Organization of the United Nations, (2015): Current world fertilizer trends and outlook to 2018. 30 pages.

Foster Wheeler and ERCOSPLAN, (2011): Feasibility Study Report for Wynyard Carnallite Project, Wynyard, Saskatchewan, Canada, October 2011, prepared for Karnalyte Resources Inc., 82 pages.

GeoEngineers Inc., (2013a): Deadwood Disposal Well 91/11-16-032-16W2M Well License # 13B033 Injectivity Testing Report for the Wynyard Carnallite Project at Wynyard, Saskatchewan, Canada, prepared for Karnalyte Resources Inc., dated July 15, 2013, 14 pages.

GeoEngineers Inc., (2013b): Blairmore Water Supply Well 121/2-16-16-0312-16W2/00 License # 09I175 Production Testing Report for the Wynyard Carnallite Project at Wynyard, Saskatchewan, Canada, prepared for Karnalyte Resources Inc., dated August 16, 2013. 27 pages.

GeoEngineers Inc., (2013c): Blairmore Water Supply Well 1-21, 121/01-21-032-16W2/00 Well License # 13C112 Production Testing Report for the Wynyard Carnallite Project at Wynyard, Saskatchewan, Canada, prepared for Karnalyte Resources Inc., dated December 20, 2013. 17 pages.

GeoLOGIC Systems, (2011): GeoScout, July 28th 2011

Gunn, B.H., and Storer, D.K., (1975): Experimental Studies on Carnallite Processing, A Report for the Department of Industry and Commerce, Province of Saskatchewan

Halabura, S., and Hardy, M., (October 8-9, 2007): An Overview of the Geology of Solution Mining of Potash in Saskatchewan: Solution Mining Research Institute Technical Conference

Hardy, M.P., and Halabura, S.P., (2008): Technical Report Concerning Subsurface Mineral Permit KP 289, Findlater Area, Saskatchewan. 77 pages.

Holter, M.E., (1969): The Middle Devonian Prairie Evaporite of Saskatchewan, Saskatchewan Department of Mineral Resources, Report No. 123

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Institut für Gebirgsmechanik GmbH Leipzig, (2011a): Rock Mechanical Investigations for the Dimensioning of Solution Mining Caverns in the Elk Point Basin, Saskatchewan, Canada. August 2011. 51 pages.

Institut für Gebirgsmechanik GmbH Leipzig, (2011b): Rock mechanical modelling for planning and dimensioning of solution mining caverns in the KP 360 Permit Area, Saskatchewan, Canada, November 2011. 44 pages.

Institut für Gebirgsmechanik GmbH Leipzig, (2013): Prediction of convergence and subsidence rate in the case of a violation of the surrounding barrier, taking into consideration pressure build-up within the caverns after sealing. July 2013. 32 pages.

J. M. Pryde Company Ltd., (1984): An Overview Magnesium from Carnallite

Karnalyte Resources Inc., (2012): Wynyard Carnallite Project Environmental Impact Statement. Submitted to the Saskatchewan Ministry of Environment, September 2012

LYNTEK Inc. (2012): Magnesium Preliminary Feasibility Report, Wynyard, Saskatchewan, Canada, prepared for Karnalyte Resources Inc.

Mackintosh, A.M., and McVittie, G.A., (1983): Geological anomalies observed at the Cominco Ltd. Saskatchewan potash mine: Proceedings of the First International Potash Technology Conference, "Potash '83": Potash Technology - Mining, Processing, Maintenance, Transportation, Occupational Health and Safety, Environment, edited by R.M. McKercher, Pergamon Press, Toronto, pp.59-64.

Manvest Ltd., (1985): Carnamag: A Proposal to Dow Chemicals Inc., for the Production of Magnesium from Carnallite Ore

Mars Mineral, (2013): Test no. 5040-12 Karnalyte Resources Inc. Summary. 4 pages.

March Consulting Associates Inc., (2021): NI 43-101 Technical Report summarizing detailed Engineering and Mine Life Review Milestone Phase I Project, (Subsurface Mineral Lease KLSA 008), effective date November 30, 2021 for Western Potash Corp.

Piche, L., Rauche, H., and van der Klauw, S., (2011): Technical Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, August 30, 2011, prepared for Karnalyte Resources Inc.

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References
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Rauche, H., (2015): Die Kaliindustrie im 21. Jahrhundert. Stand der Technik bei der Rohstoffgewinnung und der Rohstoffaufbereitung sowie bei der Entsorgung der dabei anfallenden Rückstände. Springer-Verlag Berlin Heidelberg, dated October 2015, 580 pages.

Rauche, H., van der Klauw, S., Molavi, M., Gebhardt, E. Halabura, S.P., and, Shewfelt, D., (2010): Technical Report Preliminary Assessment Study, Wynyard Carnallite Project, Subsurface Mineral Permit KP 360, Saskatchewan, Canada, effective date August 26, 2010

Rauche, H., van der Klauw, S., and Piche, L., (2011): Technical Report Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, prepared for Karnalyte Resources Inc., October 21, 2011

Rauche, H., van der Klauw, S., Piche, L., and Balakrishnan, A., (2012): Technical Report Amended Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, prepared for Karnalyte Resources Inc., March 30, 2011

Rauche, H., van der Klauw, S., Piché, L., and Buckner, E., (2016): Technical Report KCl and MgCl₂ Mineral Reserve and Resource Estimate for the Wynyard Carnallite Project, Sub-surface Mineral Leases KL 246, KL 247 and KLSA 010, Saskatchewan, Canada, effective date June 23, 2016

Rauche, H., van der Klauw, S., Piché, L., Balakrishnan, A., and Maxwell, D.K., (2012): Technical Report KCl and MgCl₂ Reserve and Resource Estimate for the Wynyard Carnallite Project, Subsurface Mineral Permit KP 360A and Subsurface Mineral Lease KLSA 010, Saskatchewan, Canada, effective date June 27, 2012

Surjik, D.L., (1974): Magnesium Chemicals Plant – Study 1

SRC, (2014): Basic Magnesium Carbonate Production Laboratory Test, prepared for Karnalyte Resources Inc., dated October 2014, 12 pages.

J Majors Swenson Technology Inc., (2011): Test report on Crystallization of Potassium Chloride from Brine, prepared for Karnalyte Resources, Inc., T2010-08, dated March 21, 2011, 17 pages.

TRANSGAS, (2016): Conceptual Estimate Wynyard – Karnalyte – our file: 2016-02-014. to Ron Olchowski, prepared for Karnalyte Resources Inc., 3 pages.

Voigt W., (2001): Solubility equilibria in multicomponent oceanic salt systems from T = 0 to 200 °C. Model parameterization and databases. Pure Applied Chemistry 73, pp 831-844.

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Whiting, (2013): Update on PFD's and Mass Balances for the Evaporation and Crystallization Section of the 625,000 tpy Karnalyte Potash Plant

W&T GeoIngenieure, (2011): Mathematical Cavern Temperature Modelling using Computational Fluid Dynamics

Warren, J.K., (2006): Evaporites, Sediments, Resources and Hydrocarbons, Springer, Berlin Heidelberg, New York

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AI assistant

Karnalyte Resources Inc. — Audit Report / Information 2025

46675_rns_2026-01-07_bb5da11c-8960-4531-8621-9a48662f32e9.pdf

NI 43-101 Technical Report on the Feasibility Study of the Wynyard Project, Saskatchewan, Canada

Important Notice

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CONTENTS

4.0 PROPERTY DESCRIPTION AND LOCATION ... 4-1

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ... 5-1

6.0 HISTORY ... 6-1

7.0 GEOLOGICAL SETTING AND MINERALIZATION ... 7-1

8.0 DEPOSIT TYPES ... 8-1

9.0 EXPLORATION ... 9-1

10.0 DRILLING ... 10-1

TABLES

FIGURES

1.0 SUMMARY

1.1 Introduction

1.2 Terms of Reference

1.3 Location, Mineral Tenure, Surface Rights and Royalties

1.4 History

1.5 Geology and Mineralization

1.6 Exploration, Drilling and Sampling

1.7 Data Verification

1.8 Metallurgical Test Work

Mineral Resource Estimate

Mineral Reserve Estimate

1.11 Mining Methods

1.12 Recovery Methods

1.13 Project Infrastructure

1.14 Market Studies and Contracts

1.15 Environmental Studies, Permitting and Social or Community Impact

1.16 Capital Costs

1.17 Operating Costs

1.18 Economic Analysis

1.19 Conclusions

1.20 Opportunities

1.20.1 Geology

1.20.2 Mineral Resources and Mineral Reserves

1.20.3 Market Studies

1.21 Risks

1.21.1 Mineral Resources and Mineral Reserves

1.21.2 Metallurgical Test Work and Recovery Methods

1.21.3 Market Studies

1.21.4 Financial

1.22 Recommendations

2.0 INTRODUCTION

2.1 Terms of Reference

2.2 Qualified Persons

2.3 Site Visits

2.4 Effective Date

2.5 Information Sources

3.0 RELIANCE ON OTHER EXPERTS

3.1 Legal Status

3.2 Taxation

3.3 Environmental

3.4 Marketing and Commodity Pricing

4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 Property Location

4.2 Mineral Rights in Saskatchewan

4.3 Surface Rights in Saskatchewan

4.3.1 Karnalyte's Mineral Rights

4.4 Surface Rights

4.5 Royalties, Agreements and Encumbrances

4.6 Environmental Obligations and Permitting Considerations

4.7 Significant Factors and Risk

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

5.2 Climate

5.3 Local Resources and Infrastructure

5.4 Physiography

6.0 HISTORY

7.0 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional and Local Geology

7.2 Property Geology

7.2.1 Structure and Stratigraphy

Karnalyte Resources Inc. Audit Report / Information 2025