AIF - Sprott Resource Corp.

Exploration, Development and Operating Risks
The exploration for, and development of, mineral deposits involve significant risks that even a combination of careful
evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial
rewards, few properties that are explored are ultimately developed into producing mines. There is no assurance that
Stonegate Agricom’s mineral exploration activities will result in any discoveries of commercial bodies of ore. Major
expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct
mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development
programs planned by Stonegate Agricom or any of its joint venture partners will result in a profitable commercial mining
operation as the economic viability of the project would depend on obtaining favourable exploration results and commodity
prices. The commercial viability of a mineral deposit, if discovered, depends upon a number of factors including, amongst
others, the particular attributes of the deposit (principally size and grade); the proximity to infrastructure; the impact of
mine development on the environment; government regulations, including regulations relating to prices, taxes, royalties,
land tenure, land use, importing and exporting of minerals and environmental protection; and the competitive nature of the
industry which causes mineral prices to fluctuate substantially over short periods of time. The effect of these factors
cannot be accurately predicted, but the combination of these factors may result in Stonegate Agricom not receiving an
adequate return on invested capital. No assurance can be given that the minerals will be discovered in sufficient quantities
to justify commercial operations or that funds required for development can be obtained on a favourable basis. Locating
mineral deposits depends on a number of factors, not the least of which is the technical skill of the exploration personnel
involved.
Stonegate Agricom’s exploration activities will be subject to the availability of third party contractors and equipment.
Western Peru is located over the intersection of three geologic plates which are actively colliding, producing thrust faults
in the near-surface earth’s crust. These thrusts cause energy to be released which may produce earthquakes which are
sometimes sufficient to produce significant damage to property and infrastructure. Normally, these larger magnitude
earthquakes are focused along the coast, far from mining centers, but there is no certainty that a seismic event could not
cause physical damage to the Mantaro Project. There are also physical risks to the exploration personnel.
If any of Stonegate Agricom’s properties are found to have commercial quantities of ore, Stonegate Agricom would be
subject to additional risks respecting any development and production activities. Mining operations generally involve a
high degree of risk. Stonegate Agricom’s future operations would be subject to all the hazards and risks normally
encountered in the exploration, development and production of phosphate rock, including unusual and unexpected
geologic formations, seismic activity, ground failure, rock bursts, cave-ins, flooding and other conditions involved in the
drilling, blasting and removal of material, any of which could result in damage to, or destruction of, mines and other
producing facilities, damage to life or property, environmental damage and possible legal liability.
Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure.
Reliable roads, bridges, power sources and water supply are important determinants that affect capital and operating
costs. No surface water is available on the Mantaro Project and measures to ensure adequate water supply for operations
will be required in order to place the Mantaro Project into production. Unusual or infrequent weather phenomena,
sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect
Stonegate Agricom’s operations, financial condition and results of operations. Potable water is supplied from local wells.
Development of suitable water catchment basins and/or a pipeline to bring water from the Mantaro River will be required
for mineral processing operations.
There is no certainty that the expenditures made by Stonegate Agricom towards the search and evaluation of mineral
deposits will result in discoveries of commercial quantities of ore. Stonegate Agricom’s ability to execute its planned
exploration programs on a timely basis is dependent on a number of factors beyond Stonegate Agricom’s control including
availability of drilling services, ground conditions, weather conditions and permitting.
Uncertainty in the Estimation of Mineral Resources
The figures for mineral resources contained in this AIF are estimates only and no assurance can be given that the
anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that mineral
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