Disclaimer: Cornerstone Capital Resources is a paying advertiser on the Gold Telegraph and the author owns shares in the company. Please see full disclosure at the bottom of the article.
Commodity prices continue to surge, led by energy.
I have covered extensively the ongoing energy crisis that is now developing as we approach the winter months. This is creating extreme tailwinds for persistent inflation, which should damper growth prospects all over the world.
In fact, for the last several weeks, I have been very vocal about the fact that I believe we are on the direct path to stagflation as growth expectations continue to be revised downward and inflation continues to roar.
This week oil climbed to more than $80 for the first time in three years, natural gas October delivery contract traded at its highest in 7 years, and the Bloomberg Commodity Index rose to its highest level in a decade.
Food prices also continue to soar as the benchmark UN index is up 33% over the past 12 months.
With all these inflationary tailwinds, I remain very bullish on gold as I believe these next 1-5 years will turn out to be very favourable for investors who have the patience as investors begin to circle back to a proven and reliable wealth preservation tool with thousands of years of history on its side.
Cornerstone Capital Resources:
For the last several months, I have been covering Cornerstone, which I remain very excited about as the company is the founding partner of Cascabel, containing the Alpala deposit, the only Tier 1 copper-gold asset in the world not owned by a global multi-national mining company.
The company has a vast portfolio of assets, as I have covered in depth the last several months, which I recommend visiting previous articles for a bit of a refresher. Still, the real value driver here is Cascabel, which will have a pre-feasibility study in the coming months.
The Alpala deposit at Cascabel hosts 21 million ounces of gold, 21 billion pounds of copper, and 92 million ounces of silver in the measured and indicated category, with almost two-thirds of that in the measured category, and the company currently holds an effective 21% interest in the project.
I am very pleased to be joined by the company’s CEO and President, Brooke Macdonald, to give the Gold Telegraph readers an update on this exciting story.
Hi Brooke, thank you for taking the time to give the Gold Telegraph readers another update on Cornerstone.
Since we last spoke, the Gold Telegraph audience has grown considerably. For those new to the story, can you walk them through the world-class nature of Cascabel and why it provides new investors with a better opportunity through Cornerstone instead of SolGold?
Thanks Alex. Cascabel is in Ecuador, and contains the Alpala deposit, considered to be a Tier 1 resource containing 21 million ounces of gold, 21 billion pounds of copper, and 92 million ounces of silver in the measured & indicated category, 2/3rds of which is measured. The high grade core alone contains 12 million ounces of gold and 8 billion pounds of copper. There is so much gold in the Alpala deposit, in January it was ranked by Mining.com as one of the world’s top 10 gold development projects.
Cornerstone owns a 20.8% interest, composed of 15% of the shares of the Ecuadorian company that holds the Cascabel concession, called “ENSA”, plus 6.86% of the shares of joint venture partner and project operator SolGold Plc. The 15% interest is “carried” (i.e., fully financed) by SolGold through to completion of a bankable feasibility study, and repayable out of 90% of Cornerstone’s 15% share of dividends or earnings from a mine.
Cascabel has been endorsed by BHP which owns 13.6% of SolGold, by Newcrest Mining which owns 13.5% (or ~11.5% of Cascabel each), and by Franco Nevada which provided SolGold with US$100 million in feasibility study financing in return for a 1% net smelter return (NSR) royalty calculated on Cascabel but payable out of SolGold’s share of the project.
We think buying Cornerstone is a better way to invest in Cascabel because we trade at a significant discount to SolGold despite sharing the same underlying flagship asset, a gap we believe will close up when a major mining company acquires both companies, which we think is only a matter of time. Cascabel is the only copper gold project of its size and scale not already controlled by a major mining company, and sooner or later it will end up in the project pipeline of a major looking for copper to meet the coming demand for electric vehicles and a carbon neutral future for the planet.
BHP’s weighted average cost of its 13.6% of SolGold would imply C$11.00 a share for Cornerstone, Newcrest’s last block of SolGold would imply C$13.00, and precedent transactions averaging 7 cents lb. copper equivalent (CuEq) resource in the ground would imply C$15.00 a share for Cornerstone (C$18.00 including value for the carried interest).
Is the Alpala Pre-feasibility Study still on track for delivery by end of 2021?
Yes. SolGold is looking at a slightly smaller, more selective operation they think can be brought into production faster than previously thought, mining 30% less material, while still producing the same amount of copper and gold in the early years of the project.
The focus of the PFS is on: (1) the high-grade core of 359MT grading 1.47% CuEq, with higher-grade material selectively cave mined in the early stages; (2) a lower initial capex; (3) re-assessment of the potential for near surface mining options at Alpala; and (4) drilling on satellite targets to investigate the potential for additional resources.
I noticed a recent news release from September 10th showcased some significant drilling results at one of the satellite targets on Cascabel that contained some long, high-grade intersections.
Correct Alex. Drill Hole 13 at the Tandayama-America (TAM) porphyry copper-gold target, located just 3 km north of the Alpala deposit intersected 1,010m @ 0.55% CuEq from 194m depth, including 392m @ 0.93% CuEq from 246m.
The Hole 13 results indicate the potential for significant depth extensions amenable to bulk underground mining methods at TAM, as the grades are increasing with depth. Mineralization forms a northwest trending corridor, occupying an area approximately 1,200m long, up to 750m wide, and extending from surface to a depth of over 1,200m.
TAM remains open to the south and east and at depth.
A few of my readers have recently asked me about Bella Maria.
Is the company still on track to drill this asset this year, and will it be drilling all of the seven mineralized prospects?
Bella Maria is drill ready with a pending scout drilling permit and we are still looking for a funding partner.
Finally, for the remainder of the year, Brooke, what are some catalysts investors should look out for?
Completion of the Alpala PFS is the big one Alex. M&A activity is picking up, large resources like Alpala remain in short supply to meet the coming demand for copper and for gold as a hedge against inflation caused by all the new money created in the last few years, as a result of which we believe that sooner or later both Cornerstone and SolGold will be acquired by a major mining company.
Thank you Brooke for the update Brooke, please be on the lookout for another update in the coming weeks as I will be interviewing the company’s Chairman, Greg Chamandy.
Please visit the company’s website, here.
Please visit the company’s corporate deck, here.
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