This year has been a historic year economically, financially, and from a well-being standpoint. COVID-19 has created a new reality that seems to be here for good, revolving around a digital economy.
However, central banks worldwide continue trying in desperation to keep their inflation expectations in line by creating capital out of thin air through quantitative easing to keep economies alive by being the backstop of debt markets.
As pointed out numerous times on our Twitter account, central banks are monetizing the majority of new debt issuances through local treasury markets to keep government stimulus flowing with ease. Like our new reality, quantitative easing is here to stay as well.
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As showcased in this chart, Morgan Stanley Research put together a graphic showcasing G10 central banks’ expected average monthly QE purchases in 2021, and I frankly believe they were conservative in their assertions. I believe it will be more, but even their projections are startling:
Fed = 120 billion
BoC = 0.2 billion
ECB = 118.7 billion
BoJ = 25.7 billion
BoE = 18.3 billion
Riksbank = 3.6 billion
RBA = 8.1 billion
RBNZ = 1.8 billion
= $315 Billion ALONE MONTHLY
On an annualized basis that is almost 4 TRILLION in financial support.
There are many tailwinds for commodities, which I will cover in my extensive year-end report, but in my opinion, elevated commodity prices are here to stay. But to give two simple direct tailwinds:
- Green energy initiatives and mandates being implemented by governments globally
- Currency debasement hedges
And a macro tailwind:
- Governments are being forced to fix yield curves and keep real rates NEGATIVE for years to come to make servicing all this debt feasible.
These three themes alone should power commodities for years to come, that is resulting in a significant rotation of capital back into the mining space. In fact, this week, the Bloomberg Commodity Spot Index broke through its six-year high, although many mining companies still have lackluster valuations.
Cornerstone Capital Resources is well-positioned for this type of sentiment change within the space.
The company is a premier project generator with a diversified portfolio of gold, copper, and silver projects in Ecuador and Chile.
Cornerstones Projects:
- The Cascabel Project (21.4% owned)
-Tier-one asset which has been endorsed by BHP, Newcrest and Franco-Nevada
-World-Class Resource:
- 21 billion pounds of copper
- 21 million ounces of gold
- 92 million ounces of silver
**in the M&I resource category with almost two-thirds of that in the measured category**
2. Ecuador State Mining Company “Enami”- Cornerstone Strategic Exploration Alliance (SEA) (Option to Earn 84%)
3. Vetas Grandes (100% owned)
- Gold/Silver Epithermal Low to Intermediate Sulphidation mineralization
- Extensive surface sampling, trenching and geophysical surveys completed
- Several large, 3m to 7m veins and quartz vein/vein breccia/stockwork forming swarm striking east-northeast over 1.4 km
- Excellent correlation between mapped veins, rock assay results, soil geochemistry
- Bonanza style mineralization: 4m trench grading 53.4 g/t Au and 641.0 g/t Ag
4. Caña Brava (Option to earn 100%) – Farm in with Newcrest funding 100%
- Gold/Silver/Copper Porphyry and Epithermal styles of mineralization
- Drill ready targets identified
- Right to own 100% ($80,000 a year option payment until decision to exercise option by paying $350,000)
5. Bramaderos JV with Sunstone Metals (87.5% Sunstone / 12.5% Cornerstone carried to production)
- Gold/Copper Porphyry and Epithermal styles of mineralization
- Espiritu drilling has so far returned bonanza grades of 1.1m at 1064g/t silver, 0.2g/t gold, 5.5% zinc and 1.3% lead Pb, in one of multiple lodes
6. Bella Maria (100% Owned)
- Target: Gold/Copper Porphyry and structurally controlled (veins and breccias) styles of mineralization
- Exceptionally high gold content in stream sediment and free gold panned samples over the entire property
- Soil geochemistry surveys have outlined a large (3 km x 2 km) coincident gold — copper +/- molybdenum in-soil anomaly associated to porphyry-style mineralization in the central portion of property
- Two significant zones of Gold mineralization
- Hosts seven mineralized prospects that never have been drill-tested
- The project borders the NE corner of Lumina Gold’s Greater Cangrejos gold property which has a resource of 10.4 m oz Au in the indicated category and 6.3 m oz. Au in the inferred category
- Cornerstone plans to drill the property for the first time in 2021!
The company currently has a $165 million market cap ($5.10/share), which is only lightly pricing in the companies’ interest in the Cascabel asset. For my new readers and followers, let me remind you that Cornerstone’s top 3 shareholders acquired their shares at $8.60/share, which shows that the company is heavily discounted to where the largest shareholders acquired positions.
The company’s top 3 shareholders are world-class names:
Maxit Capital/D. Bob Sangha owns 19% of the company.
Greg Chamandy (Chairman) owns 11% of the company.
Rosseau Asset Management owns 10% of the company.
The company recently closed a $7.7 million financing, $1.9 million of which was subscribed by insiders and management, and is now well-capitalized to advance its 100% owned assets to a point where they can bring in funding partners to assume the cost of the drilling under farm-in / joint venture agreements.
The beautiful thing about Cornerstone’s prospect generator business model is that the company leverages their exploration backgrounds and expertise to get their assets to a point where their partners fund the expensive and risky drilling programs and feasibility studies to potentially build the mines, which dramatically de-risks shareholders of extensive equity dilution while but still retaining significant exposure to the project’s success.
I recently caught up once again with the companies CEO, Brooke Macdonald, for a general update on upcoming plans for 2021:
Alex Deluce:
Thanks, Brooke, for taking the time once again to update the Gold Telegraph audience on the Cornerstone story.
As mentioned in the previous interview by Cornerstone’s Chairman, Greg Chamandy (click here to read), the company has its large portfolio of exciting assets located in Ecuador and Chile, many of which are being worked on by your funding partners.
What should investors and first-time readers of the story expect in 2021 from Cornerstone?
Brooke Macdonald:
Thank you Alex.
In addition to completion of a Pre-Feasibility Study (PFS) on our flagship Cascabel gold enriched copper porphyry project in which we have a 21.4% direct & indirect interest – please see the Cascabel project page on our website: https://cornerstoneresources.com/properties/ecuador/cascabel/, we expect to have more news in 2021 on the following projects:
We will continue exploring the Espejo block of concessions in NW Ecuador to the north-east of Cascabel, one of the blocks in the Enami-Cornerstone SEA, and expect to be able to define drill targets there by the end of the first quarter of 2021 and then once we secure a funding partner drill it later in the year. For more on Espejo, please see our news release dated February 27, 2020: https://cornerstoneresources.com/news-releases/20-05-high-potential-porphyry-cu-au-mo-targets-discovered-at-espejo-and-rio-magdalena-projects-within-the-enami-ep-strategic/
We expect continued drilling by our partner Sunstone Metals (ASX: STM) at our Bramaderos gold-copper porphyry and epithermal property near Loja in southern Ecuador in which we have a 12.5% interest carried through to commercial production. Drilling is currently ongoing at the Espiritu epithermal target where we are expecting more assay results in December – please see news release dated December 1, 2020: https://cornerstoneresources.com/news-releases/20-33-espiritu-drilling-bramaderos-project-ecuador-returns-bonanza-grades-of-1.1m-at-1064g-t-silver-0.2g-t-gold-5.5-zinc-and/
We also expect to see our Miocene gold project in Chile drilled during the austral summer by our funding partner Newcrest under a farm-in agreement – please see news release dated August 27, 2020: https://cornerstoneresources.com/news-releases/20-22-cornerstone-update-on-the-miocene-gold-copper-project-chile/
At our Caña Brava gold-silver-copper porphyry and epithermal project near Loja, Ecuador, we plan to begin a phase 1 scout drilling program in the second quarter of 202, which program also will be funded by Newcrest under a separate farm-in arrangement – please see the Caña Brava project page on our web site: https://cornerstoneresources.com/properties/ecuador/cana-brava/
Last but not least, we continue to explore at the Bella Maria gold project in Ecuador – please see the Bella Maria project page on our website: https://cornerstoneresources.com/properties/ecuador/bella-maria/
Alex Deluce:
A big driver of Cornerstone’s value proposition is its 21.4% interest in the tier-one Cascabel concession in Ecuador.
Can you touch on Cascabel’s next steps and when followers of the story can expect the pre-feasibility study update for the project you referred to earlier?
Brooke Macdonald:
Sure Alex. Our JV partner and Cascabel project operator SolGold announced on September 1, 2020 that as a result of COVID-19 restrictions, they had had limited physical access to the site in Ecuador for a number of months and restrictions and limited staff at laboratories we use in Chile, all of which resulted in delays in gathering and processing critical geotechnical data required to meet the original study plan and schedule.
Also, assessment of new geotechnical information has required a redesign of certain underground infrastructure to a location outside of the block cave footprint, changes to the mine design and development, and mining production schedules. This work is nearing completion with preliminary financial modeling expected to be undertaken during December.
The Apala Project Committee review of the PFS is expected to be completed by the end of January 2021, followed by a recommendation to the Board of SolGold. SolGold and Cornerstone will update the market on the PFS shortly thereafter.
Alex Deluce:
A property I feel people should also keep a close eye on is your 100% owned Bella Maria (gold-copper) project, which is located in the southern part of a NNE oriented Late Oligocene – Early Miocene Porphyry Belt hosting the Gaby-Papa Grande (NI 43-101 compliant resource of 308 Mt at 0.63 g/t Au) and Cangrejos (NI 43-101 compliant resource of 10.4 Million Ounces Gold in the indicated category and 6.3 Million Ounces Gold in the inferred category) porphyry systems.
That is quite the neighbor.
Can you touch on the excitement you and the team have for this prospect that has never been drilled?
Brooke Macdonald:
Following the planned exploration programs described below in our September 17th news release to define drill targets to test the most prospective targets and anomalies at Bella Maria, Cornerstone will apply to amend the environmental registration to allow for scout drilling in 2021.
The planned program includes a 192 line-kilometre ground magnetic survey, 3D magnetic data processing, extensive 50m by 50m soil sampling program, detailed geology and rock sampling on the Las Pavas Breccia (LPB), Tourmaline Breccia (TB), Vega Rivera Porphyry (VRP), Vega Rivera Breccia (VRB) y Central Breccia (CB) targets, trenching and channel sampling, data integration and modeling. The objective of this program is to define drill targets within the large, 2 by 3 km, previously defined Au-Cu-Mo in-soil anomaly located in the central part of the concession and to test the most prospective targets and anomalies. This program is currently being started and will last 3 to 6 months.
In the meantime, we will be looking for a partner to fund the drilling. We continue to be very excited about this project that hosts exceptionally high gold content in stream sediment and free gold panned samples over the entire property. And as you mentioned, Bella Maria has never been drilled before.
Alex Deluce:
On another note, Brooke, what are your general feelings about the copper and gold market at the moment?
With gold still above $1800 and copper at seven year-highs, it seems this is the perfect environment for Cornerstone as its portfolio of projects specialize in these two commodities.
This is strictly speculation, but do you share my enthusiasm for these two elements to continue trading higher in the years to come?
Brooke Macdonald:
I don’t think anyone can accurately predict the short term price of gold because unforeseen events have a way of not cooperating with analysts’ predictions. Having said that, I think it the price will stay higher for longer because of all the money that has been created by Central Banks due to the COVID-19 pandemic, and will stay above the all-in operating costs of many gold producers.
With regard to copper, I saw a story published in Reuters on December 3rd where a senior executive of BHP was reported as saying that copper production must double in the next 30 years to meet demand driven by global trends towards decarbonization and electrification. Electric vehicles are the future of transportation, so I see a very bright future for the copper price and companies that find economic deposits that can produce the red metal.
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