It has been a few months since I last did an update on Cornerstone Capital Resources.
I am personally very excited about the prospects of the company for many reasons, but it is certainly highlighted by the company’s 21.4% effective interest in the only Tier 1 copper-gold asset in the world not owned by a global, multi-national mining company. (Please visit infographic for more information)
I will be doing a pure commentary article on the company next month, highlighting its wide-ranging portfolio of exciting assets that have significant potential for discovery in addition to the mineral wealth already uncovered at Cascabel.
In saying that, I was fortunate to catch up with Cornerstone CEO Brooke Macdonald for an update.
Alex Deluce:
Hi Brooke, what’s new since we last spoke? What are some new developments that have transpired on the company’s exciting portfolio of assets?
Brooke Macdonald:
Hello Alex, in the first quarter of 2021, Cornerstone and its JV funding partner and Cascabel project operator SolGold announced a re-design of the project to be studied in the pre-feasibility study for Cascabel, Cornerstone announced the definition of drill targets on the Espejo project in our strategic exploration alliance (SEA) with Ecuadorian State Mining Company ENAMI EP, and Cornerstone and its funding partner and Bramaderos project operator Sunstone Metals announced preliminary early stage assay results on two separate targets on that property.
Alex Deluce:
The company’s core asset is its 21.4% interest in Cascabel, the only Tier one gold enriched copper resource of its size in the world not yet controlled by a major.
Can you describe the project re-design being looked at in the ongoing pre-feasibility study expected to be delivered by SolGold by the end of 2021?
Brooke Macdonald:
Sure Alex. But let me start by explaining for readers new to the Cascabel project in Ecuador, that the “Alpala” deposit on Cascabel contains a measured & indicated resource of 21 million ounces of gold, 21 billion lbs. of copper, and 92 million ounces of silver, two-thirds of which is in the measured category. There is so much gold in the Alpala deposit that in January it was ranked by Mining.com as one of the world’s top 10 gold development projects.
Cornerstone is the founding partner of Cascabel, and as you mentioned owns 21.4%, comprised of a 15% direct interest carried through to completion of a bankable feasibility study and repayable at Libor plus 2%, a very cheap source of financing, out of Cornerstone’s share of earnings or dividends from a mine, plus we own 7.5% of the shares of JV partner/operator SolGold.
Cascabel has been endorsed by BHP, the largest mining company in the world that owns 13.6% of SolGold, by Newcrest Mining, the largest gold producer in Australia, that owns 13.5% of SolGold (or ~11.5% of Cascabel each), and by Franco Nevada, the royalty company that last year provided SolGold with US$100 million in feasibility study funding in return for a 1 % net smelter returns (NSR) royalty on SolGold’s 85% share of the project.
As you mentioned, a pre-feasibility study or “PFS” is expected by the end of 2021. The Alpala deposit measures approximately 900m in height and 500m diameter. Given the size and geometry of the deposit, we are optimistic that the PFS will demonstrate that it is amenable to underground caving mining methods. SolGold the operator is now looking at a slightly smaller, more selective operation that they think can be brought into production much faster than the previously envisioned plan, mining 30% less material, while still producing the same amount of copper.
The focus of the PFS will be on: (1) the high grade core of 359 million tonnes grading 1.47% Copper Equivalent (CuEq), with higher grade material selectively mined in the early stages; (2) a shorter timeline to first production; (3) a lower initial capital expenditure; (4) re-assessment of the potential for near surface mining ops at the Alpala deposit; and (5) the drilling of satellite targets to investigate the potential for additional resources.
Alex Deluce:
One of your other assets is currently being drilled which is the Bramaderos project. How is that program going so far?
Brooke Macdonald:
Our 87.5% partner Sunstone Metals is funding and operating the drilling program at Bramaderos testing the Au-Ag-Base metals extensive epithermal system at the Espiritu target and testing porphyry Au-Cu mineralization at the Brama target. Sunstone is well financed and is doing an excellent technical job on this project. Cornerstone’s 12.5% interest is fully carried by Sunstone through to the start of commercial production, and repayable out of our share of earnings or dividends from a mine at Libor plus 2%.
Alex Deluce:
As I covered near the end of 2020, I am personally very excited about the company’s 100% owned Bella Maria property.
Has the company zeroed in yet as to when drilling will commence? Also, how many metres are targeted for the first program?
Brooke Macdonald:
We continue to prepare the Bella Maria porphyry Au-Cu project for drilling (see news release dated September 17, 2020). Bella Maria is contiguous to the Greater Cangrejos project where Lumina Gold has outlined a 16+ Moz resource (10.4 Moz in the Indicated category and 6.3 Moz in the Inferred category).
Bella Maria is located along the NE extension of Cangrejos (regional NE mineralized trend) and shows extensive Au-Cu anomalies at surface. It never has been drilled, and has more free gold in steams than our geologists have ever seen before.
Detailed geological mapping, geochemical sampling and ground magnetic surveys should be completed in a few months by mid-summer 2021 and drill targets defined. We are currently looking for a funding partner to join Cornerstone in drilling Bella Maria later this year or early in 2022. The phase 1 drill plan/ # metres has not yet been finalized.
Alex Deluce:
Any updates on your other projects?
Brooke Macdonald:
Yes. For the last 3 years we have been exploring our Rio Magdalena porphyry Cu-Au and Espejo porphyry Cu-Mo projects in northern Ecuador, where we have the option to earn up to an 84% interest. Our partner is Ecuadorian State Mining Company ENAMI EP.
At Rio Magdalena we identified very significant Cu-Au targets at surface that are comparable and even larger in size and higher in intensity than what we discovered at Cascabel at the same exploration stage in 2012 and 2013. 3D magnetic modeling fits very well with the geology and geochem results and indicates that the size of the most prospective anomaly is probably more than two times the current size.
Espejo is located within a younger geological belt and shows similarities to the world class Llurimagua (Codelco-Enami) Cu-Mo deposit. We identified several Cu-Mo target areas at Espejo from surface work and 3D magnetic modeling. Preliminary modelling has been performed and a phase 1 drilling program defined. We still need to carry out some more field work to refine targets and get drilling permits. Please see Cornerstone news releases dated February 27, 2020 and March 4, 2021.
We are also restarting exploration on the Cana Brava/Tioloma project with Newcrest as our funding partner under a farm-in arrangement. Cana Brava hosts several well defined porphyry Cu-Au targets. Some are drill ready on the Cana Brava concession and some need to be further explored on the adjacent Tioloma concession. Permitting is progressing and we anticipate to drill Cana Brava in Q4 this year, and Tioloma sometime next year depending on surface exploration results. We and Newcrest are very enthusiastic about this project and the overall potential of the belt. As for any project, drilling is the “truth serum” that will tell us the next chapter of the story.
Alex Deluce:
Aside from corporate developments, what are your current thoughts on the copper and gold markets?
Brooke Macdonald:
Although the current spot copper price hovering around US$4.00 a lb. is a great improvement, for projects like Cascabel what is more important to potential acquirers of Cornerstone and SolGold is where the copper price will be once Cascabel can be brought into production and during the initial capex payback period, and all indications I see are that the price will be higher because there will not be enough new copper supply to meet the demand for copper from the electric vehicle revolution we will see in the next 10 years. The fact that President Joe Biden’s proposed infrastructure plan contemplates building 500,000 charging stations across the U.S. and tax credits for EV buyers tells you that this is real and coming at us fast. Every week it seems I receive another analyst report on the higher long term copper price forecast, the most recent one dated March 23rd by Morgan Stanley entitled “Copper and Renewables – the red metal is key to the green revolution”.
I don’t think anyone can accurately predict the price of gold over the short to medium term, but all of the monetary and borrowed fiscal stimulus tells me that while interest rates may creep upwards a bit if inflation goes above 2% per year in the U.S., rates will stay lower for longer and gold will do well in such an environment.
Alex Deluce: It sounds like there are many compelling reasons for an investor to think about adding Cornerstone to their portfolio of junior resource stocks.
Anything else?
Brooke Macdonald:
Yes, investors should check out the Fact Sheet in the following link, that explains how Cornerstone is undervalued:
https://cornerstoneresources.ca/site/assets/files/5538/presentations_cgpfs.pdf
Alex Deluce:
Thank you very much Brooke for the time. I will be interested to catch up with you in the near future for another update.
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