TORONTO (miningweekly.com) – Potash project developer Karnalyte Resources inked an engagement letter with an Indian financial institution in October last year to help arrange $700-million to develop the Wynyard carnallite-sylvite project, in Saskatchewan.

The company said on Friday that the investment capital was expected to come from a syndicate of financial institutions, which were currently busy conducting due diligence. Structuring discussions were under way.

Karnalyte noted that it had entered into project-financing discussions well before a group of dissident shareholders, under leadership of company founder Robin Phinney, had requested a special shareholder meeting.

The group called for a special shareholder meeting to consider the removal of certain existing directors from office and the election of nominees submitted by Phinney to the board.

Phinney currently owned about 14.6% of Karnalyte's outstanding common shares and had formed a group of concerned shareholders representing about 22.16% of the outstanding common shares of Karnalyte. Phinney had retained Norton Rose Fulbright as counsel.

Karnalyte on Friday announced that the special shareholder meeting would take place on May 12, confirming that the board’s constitution, the financing package (if and as applicable) and other customary annual general meeting matters would be on the agenda.

The company noted that the meeting date was designed to provide the corporation with the necessary time to further advance the proposed financing and, if possible and if required by regulatory authorities, place it before shareholders and avoid the time and unnecessary expense of two meetings in quick succession.

The firm warned that a potential change in the make-up of the board at this time could put the proposed financing arrangements at “substantial risk”. It explained that should it be able to finalise a deal before the special meeting, it would seek to hold the meeting at an earlier date.