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 2,195 acres ( 889 hectares). Property holdings consist of three patented lode mining claims and 16 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).


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.


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 31, 2011.

Lower Phosphate Zone

The Lower Phosphate Zone at the Paris Hills Project will be the focus of a pre-feasibility study expected to be published in the first quarter of 2012. The following table sets forth the estimated Measured, Indicated and Inferred Mineral Resource in the Lower Phosphate Zone, based on diamond core drilling results from 21 holes drilled starting in September 2010. Details were published in a Stonegate news release dated October 3, 2011 and in the Technical Report Paris Hills Phosphate Project (available in the Technical Reports section of this website). Mineral Resource estimates for the Lower Phosphate Zone were prepared as of November 17, 2011 by Agapito Associates Inc., an independent geological and mining engineering consulting firm based in Grand Junction, Colorado. Leo Gilbride, P.E., is the qualified person as defined in National Instrument 43-101. The Company intends to continue drilling at the property well into 2012, focusing on areas not yet drilled with the intention of expanding the Measured and Indicated Mineral Resource estimate.


Paris Hills Phosphate Mineral Resource Estimate dated as of November 17, 2011⁷

	Average Thickness (m)	Resource Area1(sq km)	In-Situ Bulk Density2 (tonnes/m3)	In-Place Tonnes (millions)	P2O5 (wt %)
LOWER PHOSPHATE ZONE3
Measured4	2.0	1.76	2.61	9.2	30.8
Indicated5	1.9	1.96	2.61	9.9	30.4
Total Measured and Indicated Mineral Resources	2.0	3.72		19.0	30.6
Inferred6	1.9	2.42	2.61	12.0	30.1

1. Total property area is 8.86 sq km.
2. Average in-situ bulk density derived from 60 laboratory bulk density tests on representative Lower Zone core.
3. Bed thickness cut-off 1.5 m, Lower Zone composite grade cut-off 28.0% P2O5, excludes out-of-seam dilution.
4. Measured Mineral Resource located within a 200-m radius of an exploration hole.
5. Indicated Mineral Resource located between a 200-m and 400-m radius of an exploration hole.
6. Inferred Mineral Resource located between a 400-m and 800-m radius of an exploration hole.
7. Numbers may not add up due to rounding.

Lower Zone Exploration Target

The above Lower Phosphate Zone Mineral Resource estimate is limited to the horizontal limb where the majority of exploration drilling up to September 30, 2011 had 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.

Mineral Resource and Drill Hole Status Map

The following map provides various information regarding the Paris Hills Lower Phosphate Zone as of October 3, 2011, including the status of the mineral resources and drill holes, and the location of the upturned limb.



Upper Phosphate Zone

Stonegate intends to update the previous Mineral Resource estimates for the Upper Phosphate Zone during 2012. The update will be based on assay results for core drilling conducted since September 2010. Until this update is completed, the Technical Report Paris Hills Phosphate Project dated November 17, 2011 (available in the Technical Reports section of this website) has designated the Upper Phosphate Zone as an Exploration Target.

The above-mentioned Technical Report estimates the Upper Phosphate Zone Exploration Target, including the horizontal and the upturned limbs, contains between 60 and 80 million tonnes of phosphate mineralization averaging between 21.0% and 25.0% P₂O₅, assuming a 20% P₂O₅ cutoff.

The Technical Report notes that the Upper Phosphate Zone 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 Upper Phosphate Zone Exploration Target is not being reported as part of any Mineral Resource or Mineral Reserve.

Recent Developments

In August of 2011, Stonegate announced positive fertilizer test results for the Lower Zone deposit at Paris Hills. A 105-kg composite sample of Lower Zone phosphate material from 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. Stonegate views the successful fertilizer test as a key milestone for the Paris Hills Project as it supports the technical viability of the preferred initial project development scenario of an underground mine producing concentrate-quality phosphate material shipped directly to fertilizer producers (without the need for beneficiation). The fertilizer test results will be incorporated into the Paris Hills pre-feasibility study, which is scheduled to be completed in the first quarter of 2012.

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.