AIF - Sprott Resource Corp.

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Lower Oil and Gas Prices Increase the Risk of Write-Downs Under International Financial Reporting Standards (“IFRS”), when indicators of impairment exist, the carrying value of the Exploration and Evaluation (‘‘E&E’’) assets as well as each Cash Generating Unit (‘‘CGU’’), including goodwill attributed to the CGU, is compared to its recoverable amount. The recoverable amount is defined as the higher of the fair value less cost to sell or value in use. A decline in oil and gas prices may be an indicator of CGU impairment and may result in the estimated recoverable amount of an Energy Subsidiaries’ developed oil and natural gas properties being less than their carrying value on the balance sheet, resulting in a write-down of the CGU assets. While these write-downs would not affect cash flow from operations, the charge to earnings may be viewed unfavourably in the market. Impairments to goodwill and E&E assets are not reversed, however should the conditions that caused the CGU asset impairment reverse in the future the Company would be required to reverse all, or a portion of the impairment previously recorded. Unforeseen Title Defects The Company or the Energy Subsidiaries, as applicable, conduct title reviews in certain circumstances in accordance with industry practice prior to purchases of assets. However, if conducted, these reviews do not guarantee that an unforeseen defect in the chain of title will not arise and defeat title to the purchased assets. If this type of defect were to occur, the Energy Subsidiaries’ entitlement to the production and reserves (and, if applicable, resources) from the purchased assets could be jeopardized. Furthermore, from time to time, the Energy Subsidiaries may have disputes with industry partners as to ownership rights of certain properties or resources, including with respect to the validity of oil and gas leases held by the Energy Subsidiaries. Furthermore, from time to time, the Energy Subsidiaries or their industry partners may owe one another a contractual or trust related obligation which they may default in satisfying and which may adversely effect the validity of an oil and gas lease in which the either of the Energy Subsidiaries has an interest. The existence of title defects, unsatisfied contractual or trust related obligations or the resolution of any disputes with industry partners arising from same, may have a material adverse effect on the Energy Subsidiaries or their assets and operations and as a result adversely affect the value of the Company’s common shares. Risks Relating to the Agriculture Segment – One Earth Farms Limited Operating History One Earth Farms has a limited history of operations and is still in the early stage of development. As such, One Earth Farms is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenue. There is no assurance that One Earth Farms will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of its early stage of operations. The Availability of Land for Growth may be Limited One Earth Farms’ growth strategy may be constrained in the event that it is unable to secure a large amount of acreage. One Earth Farms’ current strategy is contingent upon securing a significant amount of new acreage each year to drive economies of scale. One Earth Farms’ business model is reliant on a high degree of lease renewals. It is possible that certain parties may not wish to renew land lease agreements at the conclusion of the lease term. One Earth Farms may suffer certain inefficiencies if it has made investments in infrastructure close to leased properties for which leases are not renewed. In addition, the optimal process for securing leases is through an INAC Permit. While some bands are currently following this process, other bands are not. Consequently, some of the leases currently under negotiation and/or signed are contingent on the band pursuing an INAC Permit or land designation process leading to a lease granted by the Minister and it cannot be guaranteed that such bands will achieve the internal approval for this to occur. Without an INAC Permit or a lease granted by the Minister, the legal remedies available to One Earth Farms are limited in the event of a breach of contract. 29
Regulatory Changes There have been many developments in the Canadian agriculture industry over the past number of years. Public opinion with respect to corporate farms may place pressure on regulatory bodies to stimulate small farm investment and/or deter corporate farming initiatives. There is a risk that future changes to the laws and regulations affecting One Earth Farms could have a negative impact on One Earth Farms’ business, financial condition and results of operations. Lack of Qualified Personnel One Earth Farms’ performance depends to a significant extent on its ability to attract and retain highly qualified and skilled management personnel with farming expertise. The loss of key persons or the inability to recruit appropriate personnel could have a negative impact on One Earth Farms’ performance. In addition, One Earth Farms will need to hire and retain qualified employees to work in various operational positions. The inability to fill such positions with qualified personnel could have a negative impact on One Earth Farms’ business and operational results. Poor Weather Conditions Poor weather conditions or climate change may adversely affect One Earth Farms’ operational results. The success of grain operations is highly dependent on favourable weather conditions during the growing season. In particular, a lack of adequate rainfall, extremely high moisture levels, or incidents of frost may adversely affect crop yield and therefore revenue and operational results. One Earth Farms intends to insure its crops against such weather risks and mitigate its risk through geographical diversification. However, insurance coverage and geographical diversification may not completely mitigate the negative impact of poor weather conditions. A Drop in Pricing for Agricultural Commodities Produced and Sold by One Earth Farms The price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, planting intentions, government farm programs and policies, changes in global demand and changes in global production. One Earth Farms has limited ability to influence price levels for its products and it is therefore subject to changes in price levels. Adverse changes in price levels for commodities One Earth Farms sells may adversely impact One Earth Farms’ business, financial condition and operational results. A Rise in the Price of Inputs used by One Earth Farms Profitability in the farming industry is subject to significant input price volatility. One Earth Farms is susceptible to significant input cost uncertainty, which may adversely impact One Earth Farms’ business, financial condition and operational results. Livestock Disease One Earth Farms has cattle operations. Cattle are vulnerable to viral infections and other diseases and there can be no assurance that One Earth Farm’s livestock will not be infected. A serious outbreak of disease amongst One Earth Farms’ cattle may result in losses or costs, and have a negative impact on One Earth Farms’ reputation, which could adversely affect One Earth Farms’ business, financial condition and operational results. In addition, an outbreak of such disease in the cattle industry generally, even if it does not directly infect One Earth Farms’ cattle, could impact the cattle industry negatively and result in losses which could adversely affect One Earth Farms’ business, financial condition and operational results. Livestock Fertility Rates One Earth Farms’ cattle operations is largely dependent on maintaining adequate fertility rates amongst its cows. A significant decrease in fertility rates amongst One Earth Farms’ cows may lead to a decrease in the herd size and the quantity of beef and cattle for sale and, consequently, may adversely affect One Earth Farms’ business, financial condition and operational results. 30
Page 1 and 2: SPROTT RESOURCE CORP. Annual Inform
Page 3 and 4: TABLE OF CONTENTS (continued) Page
Page 5 and 6: GENERAL INFORMATION This is the ann
Page 7 and 8: • fluctuations in foreign exchang
Page 9 and 10: Intercorporate Relationships Includ
Page 11 and 12: (3) The term, vesting period and ex
Page 13 and 14: holder to acquire one Stonegate Agr
Page 15 and 16: investment purposes. The Company ma
Page 17 and 18: duration (to a maximum of 25 years)
Page 19 and 20: The Government of Canada and the Pr
Page 21 and 22: One Earth Oil and Gas OEOG will foc
Page 23 and 24: Harvest Harvest times vary dependin
Page 25 and 26: Weaning The weaning phase occurs in
Page 27 and 28: Stonegate Agricom Stonegate Agricom
Page 29 and 30: deplete and, as a consequence, eith
Page 31: The Energy Subsidiaries are not ful
Page 35 and 36: Price Volatility Securities of mini
Page 37 and 38: compensate those suffering loss or
Page 39 and 40: Possible Failure to Obtain Non-Meta
Page 41 and 42: esources could be mined or processe
Page 43 and 44: Conflicts of Interest Certain direc
Page 45 and 46: Uninsured and Underinsured Losses r
Page 47 and 48: ENVIRONMENTAL POLICY The environmen
Page 49 and 50: Notes Name, Province/State and Coun
Page 51 and 52: of Royal Oak to file financial stat
Page 53 and 54: INTEREST OF MANAGEMENT AND OTHERS I
Page 55 and 56: defined in the Partnership Agreemen
Page 57 and 58: APPENDIX “A” STATEMENT OF RESER
Page 59 and 60: All values in this report are expre
Page 61 and 62: SUMMARY OF NET PRESENT VALUE OF FUT
Page 63 and 64: The following table sets forth the
Page 65 and 66: Alberta Sask Edmonton WTI Brent Edm
Page 67 and 68: PART 4 - RECONCILIATION OF CHANGES
Page 69 and 70: RECONCILIATION OF GROSS RESERVES BY
Page 71 and 72: UNDEVELOPED RESERVES (ONE EARTH OIL
Page 73 and 74: PART 6 - OTHER OIL AND GAS INFORMAT
Page 75 and 76: One Earth Oil & Gas One Earth Oil &
Page 77 and 78: Production Estimates The following
Page 79 and 80: Production by Important Field The f
Page 81 and 82: March 15, 2012 Sprott Resource Corp
Page 83 and 84:
APPENDIX “C” REPORT ON RESERVES
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Sprott Resource Corp. - Evaluation
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REPORT OF MANAGEMENT AND DIRECTORS
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MANTARO PHOSPHATE DEPOSIT SPROTT RE
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APPENDIX “F” PARIS HILLS TECHNI
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NI 43-101 Technical Report, Paris H
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SPROTT RESOURCE CORP. AUDIT COMMITT
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3 The Committee is responsible for
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5 The Committee is responsible for
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AIF - Sprott Resource Corp.

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