AIF - Sprott Resource Corp.

Insurance and Uninsured Risks
Stonegate Agricom’s business is subject to a number of risks and hazards including adverse environmental conditions,
industrial accidents, labour disputes, unusual or unexpected geological conditions, ground or slope failures, changes in
the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such
occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental
damage to Stonegate Agricom’s properties or the properties of others, delays in mining, monetary losses and possible
legal liability. Although Stonegate Agricom maintains liability insurance in amounts which it considers adequate, the nature
of these risks is such that liabilities might exceed policy limits, the liabilities and hazards might not be insurable, or
Stonegate Agricom may elect not to insure against such liabilities due to high premium costs or other reasons, in which
event Stonegate Agricom could incur significant costs that could have a materially adverse effect upon its financial
position.
Stonegate Agricom is not insured against environmental risks. Insurance against environmental risks (including potential
liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration) has not been
generally available to companies within the industry. Stonegate Agricom will periodically evaluate the cost and coverage
of the insurance against certain environmental risks that is available to determine if it would be appropriate to obtain such
insurance. Stonegate Agricom may be unable to maintain insurance to cover these risks at economically feasible
premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability.
Without such insurance, and if Stonegate Agricom becomes subject to environmental liabilities, the payment of such
liabilities would reduce or eliminate its available funds or could exceed the funds Stonegate Agricom has to pay such
liabilities and result in bankruptcy. Should Stonegate Agricom be unable to fund fully the remedial cost of an
environmental problem it might be required to enter into interim compliance measures pending completion of the required
remedial work.
Competition
The mining industry is intensely competitive in all phases of exploration, development and production and Stonegate
Agricom competes with many companies possessing greater financial and technical resources. Competition in the mining
industry is primarily for mineral rich properties that can be developed and produced economically; the technical expertise
to find, develop and operate such properties; the labour to operate such properties; and the capital for the purpose of
funding such properties. Many competitors not only explore for and mine phosphate rock, but conduct refining and
marketing operations on a global basis. Such competition may result in Stonegate Agricom being unable to acquire
desired properties, to recruit or retain qualified employees or to acquire the capital necessary to fund its operations and
develop its properties. There is no assurance that even if commercial quantities of minerals are discovered, a ready
market will exist for their sale. Factors beyond the control of Stonegate Agricom may affect the marketability of any
minerals discovered. These factors include market fluctuations, the proximity and capacity of commercial markets and
processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection. The exact 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 or issuing its investment capital. Existing or future competition in the mining industry could
materially adversely affect Stonegate Agricom’s prospects for mineral exploration and success in the future.
Legal Proceedings
Since substantially all of Stonegate Agricom’s assets are located outside of Canada, there may be difficulties in enforcing
any judgments obtained by Stonegate Agricom in foreign jurisdictions in Canadian courts. Stonegate Agricom may be
subject to legal proceedings and judgments in foreign jurisdictions. Similarly to the extent that Stonegate Agricom’s assets
are located outside of Canada, investors may have difficulty collecting from Stonegate Agricom on any judgments
obtained in Canadian courts and predicated on the civil liability provisions of securities legislation. Stonegate Agricom may
also be hindered or prevented from enforcing its rights with respect to a governmental entity or instrumentality because of
the doctrine of sovereign immunity.
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