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Paris Hills Phosphate Project

Stonegate Agricom has announced the positive results of a Feasibility Study for the development of an underground mine in the Lower Phosphate Zone of the Paris Hills Phosphate Project. Stonegate is in the process of obtaining the necessary permits and approvals to begin construction and production at the mine. Details of the Feasibility Study and an update of Mineral Resources and Reserves for both the Lower Zone and Upper Zone are provided below and in a news release dated December 10, 2012. Additional information is available in a 43-101 Technical Report dated January 18, 2013 that has been filed with SEDAR and posted on this website.

Overview

The Paris Hills Phosphate Project is located in Bear Lake County, Idaho, just west of the towns of Paris and Bloomington and includes the former Bloomington Canyon, Consolidated (Little Canyon) and Paris Canyon (McIlwee) mine sites (see map below). The Paris Hills Project encompasses an area of approximately 2,495 acres ( 1010 hectares). Property holdings consist of three patented lode mining claims and 21 contiguous fee parcels (some with federal mineral reservations). It is located approximately 72 kilometres south of active phosphate mining and processing operations at Soda Springs and Pocatello (mine operators include Agrium Inc., Monsanto Company and J.R. Simplot Company).

Paris Hills Property Location Map
Paris Hills Property Location Map

The Paris Hills Project is located near the centre of the western phosphate field which constitutes the most extensive phosphorite beds in the United States. Phosphate beds of the western phosphate field occur within the phosphoria formation of Permian age.

Phosphate mineralized beds occur in the upturned limb and the horizontal limb of the Paris Syncline. Grades and thicknesses in both the western upturned limb and the eastern horizontal limb of the anticline are similar. The vast majority of potential mineralization occurs in the horizontal limb which underlies most of the Paris Hills Project. The horizontal limb comprises an Upper Phosphate Zone and a Lower Phosphate Zone.

Paris Hills Phosphate Mineralization
Paris Hills Phosphate Mineralization

Mineralization in the upturned limb has a strike length of over two miles (three kilometres) and extends from the surface to a depth exceeding 1,000 feet (300 metres) depending on location along the north-trending strike of outcrops. Depths of the horizontal limb range from surface along the north side of Bloomington Canyon (at the south end of the property) to estimated depths of 3,000 to 3,400 feet (915 to 1,035 metres) at Paris Canyon (at the north end of the property). Additional technical information on the Paris Hills Phosphate Project is contained in the Company's annual information form dated March 29, 2012.

Lower Phosphate Zone

At the Paris Hills Phosphate Project, Stonegate has conducted a bankable Feasibility Study including a mine plan and Mineral Reserves estimates for the Lower Phosphate Zone with results published on December 10, 2012. The Company has commenced permitting activities and expects to begin production by Q4 2014.

Mineral Resource and Reserve estimates for the Lower Zone were prepared as of December 10, 2012 by Agapito Associates Inc., an independent geological and mining engineering consulting firm based in Grand Junction, Colorado. Leo J. Gilbride, P.E., Vanessa Santos, P.G., Gary L. Skaggs, P.E., P.Eng., Susan B. Patton, Ph.D., P.E., and Eric Dursteler, P.E., C.F.M., are independent qualified persons under the standards set forth by National Instrument 43-101. The Mineral Resource and Mineral Reserve calculations are completed using Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Best Practice Guidelines for Industrial Minerals. Mineral Reserve estimates are included in Measured and Indicated Mineral Resource estimates.

The following tables set forth the Mineral Reserve and Measured, Indicated and Inferred Mineral Resource estimates in the horizontal limb of the Lower Phosphate Zone as of December 10, 2012 based on diamond core drilling results from 39 holes drilled September 2010 to July 2012. Drill holes show that the Lower Zone thickness ranges from 0.8 to 2.9 metres with composite grades ranging from 24.5% to 34.2% P2O5. The Lower Zone typically ranges between 1.6 and 2.0 metres thick in the area of interest for mining, and averages 1.7 metres thick across the entire property.

Mineral Reserve of the Lower Phosphate Zone -- Horizontal Limb (effective Dec. 10, 2012)
 
 
 
P2O5
Fe2O3
Al2O3
MgO
CaO
CaO/P2O5
Tonnes ,
Thickness
Grade
Grade
Grade
Grade
MER
Grade
Ratio
(meters)
(wt %)
(wt %)
(wt %)
(wt %)
(wt %)
 
 
 
 
 
 
 
 
 
 
Proven
7,956,329
1.57
29.9
0.53
0.95
0.41
0.06
45.53
1.52
Probable
8,747,371
1.55
29.2
0.53
0.87
0.50
0.07
45.54
1.56
Reserves
16,703,700
1.56
29.5
0.53
0.91
0.46
0.06
45.54
1.54
                   
Average in-situ bulk dry density of 2.6 t/m3.
Minimum mining height of 1.5 m + 0.15 m dilution.


The grade and quality of the Lower Zone Mineral Resources are sufficient to support a direct-ship mining operation. Laboratory testing of core samples from the Lower Zone demonstrated that merchant grade phosphoric acid and granular fertilizers - diammonium phosphate (DAP) and monoammonium phosphate (MAP) - could be produced from the Lower Zone material without beneficiation.

Mineral Resource of the Lower Phosphate Zone - Horizontal Limb2,8(effective Dec. 10, 2012)
 
 
 
P2O5
Fe2O3
Al2O3
MgO
CaO
CaO/P2O54
 
In-Place
Tonnes1,2
Average
Thickness
Grade
Grade
Grade
Grade
MER3
Grade
Ratio
 
(millions)
(metres)
(wt %)
(wt %)
(wt %)
(wt %)
(wt %)
 
 
 
 
 
 
 
 
 
 
Measured5
15.4
1.8
30.4
0.50
0.93
0.38
0.060
45.9
1.51
Indicated6
14.4
1.7
29.6
0.49
0.83
0.49
0.061
45.9
1.55
Total M&I
29.8
1.7
30.0
0.50
0.88
0.43
0.061
45.9
1.53
Inferred7
4.6
1.6
29.9
0.48
0.81
0.56
0.063
45.8
1.53
 
1 Average in-situ bulk dry density of 2.6 t/m3.
2 Zone thickness cut-off 0.5 m, composite grade cut-off 24.0% P2O, excludes out-of-seam dilution.
3 Minor Element Ratio, MER = (Fe2O3 + Al2O3 + MgO)/P2O5, <0.10 desirable for phosphate rock.
4 CaO to P2O5 ratio; <1.60 desirable for phosphate rock.
5 Measured Mineral Resource located within a 200-m radius of an exploration hole.
6 Indicated Mineral Resource located between a 200-m and 400-m radius of an exploration hole.
7 Inferred Mineral Resource located between a 400-m and 800-m radius of an exploration hole.
8 Mineral Resources include Mineral Reserves.
 


  • Feasibility Study and Fertilizer Test Results for Lower Phosphate Zone

    On December 10, 2012, Stonegate announced positive results of its Feasibility Study for the development of an underground mine in the Lower Phosphate Zone of its Paris Hills Phosphate Project in Idaho. The following are highlights.

  • Life of mine production and Mineral Reserves of 16.7 million tonnes of direct-ship, concentrate-quality phosphate rock (no beneficiation required) with an average life-of-mine grade of 29.5% P2O5
  • Average annual rate of production of 904,000 tonnes of saleable concentrate
  • Mine life of 19 years
  • Initial project capital of $121.0 million (to commercial production)
  • Cash operating cost of $69.49 per tonne of saleable concentrate (FOB mine site)
  • Assumed average product price of $165 per tonne (FOB mine site)
  • Pre-tax Net Present Value (NPV) of $477.5 million
  • Pre-tax Internal Rate of Return (IRR) of 45.9 %

The Feasibility Study was compiled by Agapito Associates Inc. of Grand Junction, Colorado, with design, planning, and cost estimating directed by the Company's wholly-owned subsidiary Paris Hills Agricom, Inc., and technical contributions from Agapito Associates Inc. mining consultants, Sunrise Engineering Inc. civil consultants, Whetstone Associates hydrologic consultants, and Brown & Caldwell environmental and permitting consultants. Leo J. Gilbride, P.E., Vanessa Santos, P.G., Gary L. Skaggs, P.E., P.Eng., Susan B. Patton, Ph.D., P.E., and Eric Dursteler, P.E., C.F.M., are independent qualified persons under the standards set forth by National Instrument 43-101.

Fertilizer Tests

The Feasibility Study results include the positive fertilizer test results for the Lower Phosphate Zone deposit at Paris Hills announced in August 2011. A 105-kg composite sample of Lower Zone phosphate material from 15 different diamond drill core holes was used in the fertilizer test without the material first being beneficiated (processed), which is a significant departure from the norm since the beneficiation of mined material into a concentrate (with a P2O5 content of at least 28%) is typically required in the phosphate industry. The composite sample assay from the Lower Zone averaged 32.33% P2O5 with a minor element ratio (MER) of 0.057 and a CaO:P2O5 ratio of 1.52. This sample was used under laboratory conditions to successfully produce merchant grade phosphoric acid and both Diammonium phosphate (DAP) and Monoammonium phosphate (MAP). The DAP and MAP fertilizers manufactured during the testing exceeded industry specifications. The successful fertilizer test was a key milestone for the Paris Hills Project as it supports the technical viability of Stonegate's plan to initially develop an underground mine in the Lower Phosphate Zone producing concentrate-quality phosphate material shipped directly to fertilizer producers (without the need for beneficiation).

Lower Zone Exploration Target - Upturned Limb

The above Lower Phosphate Zone Mineral Resource and Mineral Reserve estimates are limited to the horizontal limb where the majority of exploration drilling has been focused. The upturned limb is projected to contain substantial mineralization based on limited historical mining and surface trenching. The upturned limb is regarded as an Exploration Target, separate from the Mineral Resources, potentially containing seven to 10 million tonnes of phosphate mineralization with an average grade of 28.0% to 32.0% P2O5. The Exploration Target is conceptual in nature and there has been insufficient exploration to define it as a Mineral Resource, and it is uncertain if further exploration will result in the determination of a Mineral Resource under NI 43-101. The Exploration Target is not being reported as part of any Mineral Resource or Mineral Reserve.

Lower Zone Mineral Resource and Drill Hole Status Map

The following map provides various information regarding the Paris Hills Lower Phosphate Zone including the status of the mineral resources and drill holes as of August 15, 2012, and the location of the upturned limb.



Upper Phosphate Zone

The Mineral Resource estimates for the Upper Zone as of August 15, 2012 are based on chemical analyses on core samples from 29 of the exploration holes drilled in the horizontal limb of the property. The Upper Zone thickness ranges from 2.6 to 5.7 metres with composite grades ranging from 20.2% to 31.4% P2O5.

The grade and quality of the Upper Zone Mineral Resources are not sufficient, on average, to support the possibility for mining a direct-ship product and some processing (beneficiation) will be required to produce a marketable phosphate rock concentrate. Laboratory testing of core samples from the Upper Zone demonstrated that beneficiation (involving grinding and flotation) could produce a marketable phosphate rock concentrate with a grade of at least 30% P2O5 and an acceptable (low) CaO/P2O5 ratio and MER and that it would be suitable for producing phosphoric acid and downstream phosphate products.

The following table summarizes the Upper Zone's Horizontal Limb Mineral Resource estimates as of August 15, 2012.

Mineral Resource of the Upper Phosphate Zone - Horizontal Limb2(effective August 15, 2012)
      P2O5
  In-Place Tonnes1,2 Average Thickness Grade
  (millions) (metres) (wt %)
       
Measured3 28.4 3.8 22.8
Indicated4 31.8 3.7 22.6
Total M&I 60.3 3.7 22.7
Inferred5 9.4 3.5 22.6
1 Average in-situ bulk dry density of 2.6 t/m3.
2 Zone thickness cut-off 1.5 m, composite grade cut-off 20.0% P2O5, excludes out-of-seam dilution.
3 Measured Mineral Resource located within a 200-m radius of an exploration hole.
4 Indicated Mineral Resource located between a 200-m and 400-m radius of an exploration hole.
5 Inferred Mineral Resource located between a 400-m and 800-m radius of an exploration hole.

Upper Zone Exploration Target - Upturned Limb

The above Upper Phosphate Zone Mineral Resource estimates are limited to the horizontal limb where the majority of exploration drilling has been focused. The upturned limb is projected to contain substantial mineralization based on limited historical mining and surface trenching. The upturned limb is regarded as an Exploration Target, separate from the Mineral Resources, potentially containing 14 to 20 million tonnes of phosphate mineralization with an average grade of 21% to 25% P2O5. The Exploration Target is conceptual in nature and there has been insufficient exploration to define it as a Mineral Resource, and it is uncertain if further exploration will result in the determination of a Mineral Resource under NI 43-101. The Exploration Target is not being reported as part of any Mineral Resource or Mineral Reserve.

Upper Zone Mineral Resource and Drill Hole Status Map

The following map provides various information regarding the Paris Hills Upper Phosphate Zone including the status of the mineral resources and drill holes as of August 15, 2012, and the location of the upturned limb.



Infrastructure

Access is provided by county-maintained roads in the canyons of Bloomington Creek and Paris Creek. These are all-weather roads that are cleared of snow throughout the winter. From these roads, access onto the Paris Hills Project site is gained via two-track unimproved trails, used primarily by ranchers to manage grazing of cattle.

Montpelier is 19 kilometres north of Bloomington. Montpelier has the largest population and commercial centre in Bear Lake County. Bear Lake County Regional Airport serves the general aviation needs of the local communities. The airport is located between Paris and Montpelier, with commercial air service available in Pocatello and Idaho Falls to the northwest, Jackson, Wyoming to the northeast, and Salt Lake City, Utah, to the south.

The Union Pacific Railroad provides freight services to Bear Lake County from an office in Montpelier. The track through Montpelier connects into the Union Pacific Railroad system at Pocatello, Idaho and Green River, Wyoming.

Electric power for the Paris Hills Project could be available either from the Rocky Mountain Power distribution system feeding the local communities three kilometres east of the site or the transmission line approximately eight kilometres west of the site. Adequate rights have been obtained to support mining operations at the Paris Hills Project, but additional rights may need to be acquired for processing facilities, waste management and infrastructure. The Paris Hills Project water needs, encompassing mine, process and potable water, will require securing water rights through a purchase or exchange transaction with a local water rights holder. Experienced mining personnel are available in the immediate area. Many of the local residents have worked in the phosphate mining and processing operations presently active to the north in Soda Springs, Idaho.

Paris Hills Overview Map
Paris Hills Overview Map