Gold is off to a great start to the week as it is back trading above $1900 in U.S denominated terms. Gold continues to showcase its resiliency and strength in times of economic uncertainty as COVID cases begin to tick up on a global basis, and the threat of an economic shutdown begins to persist in numerous economies globally.
Global monetary and fiscal expansion continue to be very aggressive, which will only serve as a catalyst for gold as fiat currencies continue to depreciate against each other rapidly. Gold continues to trade at or near all-time highs in all fiat currencies.
With gold creeping into the mainstream spotlight as a form of wealth preservation, the miners within the gold industry will need to quickly replenish reserves to keep up with current output in the years to come. In fact, according to consultants at Wood Mackenzie, the gold industry needs to commission 8 million ounces of projects by 2025 to maintain last year’s production levels. Mine production fell last year for the first time in more than a decade.
Most notably, high-grade gold deposits are becoming more difficult to find as the percentage of gold in ore reserves has dramatically fallen over the years, from more than 10 grams per ton in the late 1960s to barely more than 1 gram per ton today.
This presents a very exciting opportunity for Cornerstone Capital Resources (TSX-V: CGP) who has positioned itself to benefit drastically as commodities such as gold, silver, and copper continue to appreciate.
The company is the founding partner of the world-class Casabel asset, which is the only available tier 1 copper-gold asset in the world not owned by a global, multi-national mining company. Cornerstone owns 21.4% of the asset, which is joint ventured with SolGold.
The Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt, the entirety of which is renowned as the base for nearly half of the world’s copper production.
The Alpala deposit at Cascabel hosts a world-class resource:
View Cornerstone’s Infographic Here: http://www.goldtelegraph.com/company-spotlight-cornerstone-capital-resources/
We recently caught up with Brooke Macdonald, Chief Executive Officer of Cornerstone, to talk about current developments at the company, which include Cascabel but also a vast portfolio of exciting assets:
If you haven’t done so, we encourage our readers to review the first Q&A we did with Mr. Macdonald as we went in-depth on the Cascabel asset. To review, click here.
Alex Deluce: Thank you Brooke for taking the time to provide our readers with another update on Cornerstone. It is an exciting time for the company with the precious metals market heating up with all this global monetary and fiscal aid. As indicated in the above content, Cornerstone owns a 21.4% interest in the world-class Cascabel asset in Ecuador.
Can you elaborate a little bit on the standstill agreement that is set to expire on October 19th and the types of restrictions that will be lifted off BHP?
The standstill prevents BHP from acquiring any shares in Cornerstone without SolGold’s consent unless a third party makes a move to acquire control of Cornerstone prior to Oct. 19, which would allow BHP to bid.
A separate standstill also expiring Oct. 19 prevents BHP from acquiring additional shares of SolGold or colluding with anyone to acquire control of SolGold.
After that date, BHP will be free to speak to us about changing the composition of the SolGold Board, and free to make a move on Cascabel…that would potentially result in a takeout of Cornerstone at a much higher share price than it’s trading for today.
Alex Deluce: We touched on this in our first Q/A but can you quickly go over some of Cornerstone’s largest shareholders for some of our readers still familiarizing themselves with the story?
I think it’s incredibly assuring for investors and followers of the story to know that insiders and management have significant ownership in the company to show that management is aligned with all shareholder interests as the company works for a favorable outcome for the tier-one Cascabel asset.
Bob Sangha of Maxit Capital, the leading M&A advisor to the mining business on Toronto’s Bay Street, is our largest shareholder with nearly 20%; our second largest shareholder with 10.8% is our Chairman Greg Chamandy, who is the co-founder of Gildan Activewear and its former Chairman & CEO and the former Executive Chairman of Richmont Mines; Rosseau Asset Management, a highly successful group of funds run by Warren Irwin, owns 10.5%; and Sprott/Global and clients have around 5%.
Alex Deluce: In addition to Cascabel’s ongoing developments, Cornerstone also has a vast portfolio of highly prospective projects in Ecuador and Chile.
On September 11th, it was announced that drilling has commenced at the Bramaderos Gold Project in which Cornerstone owns a minority interest.
Can you go over the JV agreement terms alongside the exciting prospects on the project?
The Bramaderos project is owned 87.5% by Sunstone Metals Inc. of Australia and 12.5% by Cornerstone, Sunstone having incurred >US$3.4 million to earn its 51% initial interest, then increasing its interest to 87.5% in early 2020. Sunstone is the operator and is funding 100% of the costs.
As you mentioned, drilling is underway at the Espiritu epithermal gold-silver target. The first hole will test the depth extent of the gold-silver polymetallic system which assayed:
in trench channel samples: 21m at 82.4g/t silver, 0.3g/t gold, 1.4% zinc and 1.2% lead, including 4m at 415g/t silver, 0.9g/t gold, 6.9% zinc and 6% lead; and
in surface rock chip samples, 4.2g/t gold and 101g/t silver, 11.9g/t gold and 175g/t silver, and 11.6g/t gold and 2,962g/t silver
Espiritu is the first of many targets that Cornerstone and Sunstone intend to follow up in the current drill campaign at Bramaderos.
Cornerstone’s 12.5% interest is carried by Sunstone through to the start of commercial production and repayable at Libor plus 2% out of 90% of Cornerstone’s share of earnings or dividends from the project.
Alex Deluce: On September 17th, it was announced that the exciting Bella Maria Gold-Copper project, which is 100% owned by Cornerstone, will soon have boots on the ground and begin an exploration program.
Can you walk us through what the company is planning regarding exploration for the project in the coming weeks and in 2021?
The Bella Maria gold project borders the NE corner of Lumina Gold’s Greater Cangrejos gold property, where Lumina has announced a resource of 10.4 m oz Au in the indicated category and 6.3 m oz. Au in the inferred category. Readers should be cautioned that the mineralization hosted on Cangrejos is not necessarily indicative of what we may find at Bella Maria.
Bella Maria, which has never been drilled, has exceptionally anomalous gold in stream sediments draining the property. The soil sampling program carried out over the years has defined a 3 km by 2 km gold-copper-molybdenum anomaly located in the central part of the property.
An Environmental Registration was granted by the Ministry of Environment of Ecuador in January 2020. Under this registration surface exploration work is allowed on the entire property. Following the planned exploration programs described in our September 17 news release to define drill targets to test the most prospective targets and anomalies, Cornerstone will apply to amend the environmental registration to allow for scout drilling in 2021. We have not yet decided if we will raise funds to drill this one ourselves or will find a funding partner for it.
Alex Deluce: You also have a strategic exploration alliance with Ecuador’s state mining company, ENAMI EP. Tell us about that.
This is probably the biggest part of the “blue sky” in the Cornerstone story. We entered into the strategic exploration alliance or “SEA” with Ecuador’s state mining company ENAMI in June 2016, at a time when the local Cadastre or staking system was closed to private companies, but ENAMI had a preferential right under the Mining Law to obtain concessions. We identified the areas we wanted after an exhaustive study and ENAMI applied for the concessions for the benefit of the SEA. We are earning into an 84% interest in 9 concessions in the same general area of NW Ecuador as Cascabel. We had “pick of the litter” because the public bidding system for new concessions occurred after the grant of the concessions for the ENAMI SEA. This allowed us to also obtain more favorable earn-in terms than other companies obtained in the subsequent public bidding for concessions in 2017 and afterward.
We are still at an early stage, but the size and intensity of the anomalies and the outcropping mineralization are similar to those we identified at Cascabel back in 2012-2013 when Cascabel was at a similar stage of development. The anomalies are shown in our February 27, 2020 news release. As with Bella Maria, we have not yet decided if we will raise funds to drill this one ourselves or will seek to find a funding partner for it.
Alex Deluce: Any other drilling on the horizon near term?
In Chile we have the Miocene gold project targeting epithermal gold-silver and porphyry gold-copper deposits along the interpreted northern extension of the Maricunga magmatic belt which hosts several world-class gold deposits. This project is also the subject of a farm-in arrangement with Newcrest, details of which can be found on our website. It is anticipated that, subject to COVID-19, during the austral summer from November 2020 to March 2021 Newcrest will initiate a Phase 1 diamond drill program at Miocene.
As you can see Alex, there are a number of good projects that could form the basis for a SpinCo after we sell our interest in Cascabel.
Alex Deluce: Thank you very much, Brooke, for giving our readers a glimpse into the company’s exciting emerging development. We will follow up in about a month for another update.
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