Phosco Project, South Africa

Location

The Phosco project covers four phosphate exploration projects in South Africa, namely Duyker Eiland, Phillips Kraal, and Lamberts Bay in the Western Cape and Bierkraal in the Northwest Province (see maps on left sidebar). Exploration drilling has been completed on Duyker Eiland and Phillips Kraal. Resource definition on Duyker Eiland has been completed and an NI43-101 compliant resource report has been compiled by an independent consultant, AMEC Americas Limited.

History

The phosphate deposits located around Saldanha Bay were known for many years by the local population, but more detailed studies were conducted starting from the early 1900's. A phosphate deposit was mined until recent years by Samancor at Langebaanweg, about 25 km southeast of the Duyker Eiland property, 12 km east of Phillips Kraal. This phosphate was sold for direct use as fertiliser, although some upgrading was done by mixing with other components, such as ammonium sulphate.

The Duyker Eiland project area has historical prospecting results of approximately 30Mt of phosphatic sands. In the 1940's and 1950's, AMCOR conducted mineral exploration on the property. During the 1960's, African Explosives and Chemical Industries Limited (AECI) conducted drilling and pitting on a 3.0 km by 0.5 km area extending over the property. Historical records of the exploration drilling program have been lost. AECI conducted flotation tests, and obtained a concentrate with 33.0 % P2O5 (87 % collophane). These estimation and flotation results are historical in nature, and do not comply with NI 43-101 definitions. Historical prospecting results are also published for the area of the Phillips Kraal project though the records have also been lost. On October 18, 2010 a subsidiary of the Corporation entered into an amended binding term sheet agreement providing for the right to acquire Eurozone Investments Limited (“Eurozone”). Celtic Trust Company Limited and its subsidiaries hold interests in four phosphate exploration projects in South Africa (the “Phosco assets”). The Corporation paid $100,000 to the vendor in consideration for receiving an exclusivity period to conduct due diligence.

The purchase price for the Phosco assets is the issuance of 2,500,000 shares of Montero. In addition, Montero is required to complete an initial exploration program on one (the Bierkraal Project) of the four projects within 18 months of closing, which includes drilling. A further 1,000,000 shares of Montero shall be issued to the vendor within 18 months of the closing date if Montero delivers a NI 43-101 Report identifying a phosphate resource on all or part of the Bierkraal Project, or if Montero otherwise elects to maintain the Bierkraal Project. If the Bierkraal Project is not maintained by Montero it is to be returned to the vendor. Upon closing, Montero will have 100% ownership of the other three projects and there is no further obligation to the vendor with respect to those projects after closing.

Geology

TAt the Western Cape projects, the regional geology is marked by the presence of Tertiary/Quaternary sediments consisting of calcareous and aeolian sands, calcretes and phoscretes.

At Duyker Eiland, a portion of the Vredenburg granitic pluton is overlain by sediments of the Varswater formation, which is part of the Miocene-Pliocene Sandveld group, and limestones and calcarenites of the Pleistocene Langebaan formation.

At the Property, sands, clayey sands and gravels of the phosphate-bearing Varswater formation sediments are partially overlain by limestones of the Langebaan Formation, which is exposed on top and along the shoulders of the small hill that dominates the topography of the area. The phosphate mineralization occurs as rounded and sub-rounded,polished collophane grains. A similar geologic setting is observed at the Phillips Kraal project. Desktop studies indicate that historic targets at Lamberts Bay also occur in the Varswater Formation. The Bierkraal project area is located in an apatite rich layer of the Bushveld Igneous Complex.

History

On October 18, 2010, the Company's subsidiary, Montero Projects Limited entered into a binding term sheet agreement with Celtic Trust Company Limited, whereby Montero Projects has the exclusive right to acquire the shares in Celtic's subsidiaries which hold interests in 4 phosphate exploration projects in South Africa (the ―Phosco assets‖). Montero Projects paid $100,000 to be granted an exclusivity period of nine months, expiring on July 18, 2011, to complete due diligence on the Phosco assets. On or before the expiry of the exclusivity period, the Company must allot and issue 5 million common shares of the Company if it plans to proceed with this acquisition. The current agreement expired on July 18, 2011 and the Company is currently in negotiations to extend the agreement.

Exploration Programs

During the exclusivity period, the compilation of the historic data, desktop studies, field visits and mapping continues. RC/Aircore drilling commenced at Duyker Eiland and at Phillips Kraal during the 2011 exploration campaign.

In November 2011, an Initial Inferred Mineral Resource of 32.8 M tonnes grading 7.15% P2O5, capable of producing an acid-grade phosphate concentrate of 33% P2O5 to 35% P2O5 at the Duyker Eiland Project in South Africa, one of the phosphate assets Montero acquired was announced. (see news release 10/11/2011)