Cornerstone Capital exploring Ecuador copper gold prospects

Cornerstone Capital Resources Inc. [CGP-TSXV; CTNXF-OTC; GWN-FSE] has been exploring in Ecuador since 2005, giving the company a first-mover advantage in this under-explored country where it has a portfolio of drill-ready projects targeting epithermal gold-silver and porphyry copper-gold deposits, in addition to a 21.4% interest in the exciting Cascabel copper-gold project at the pre-feasibility study stage.

Cornerstone is the founding partner of Cascabel, the only available Tier 1 copper-gold asset in the world not owned by a major mining company. Cornerstone’s 21.4% consists of a 15% carried interest in Cascabel (repayable out of Cornerstone’s share of production, at Libor + 2%) plus 7.6% of project operator SolGold [SOLG-LSE/TSX]. SolGold owns, subject to funding 100% of expenditures to completion of a bankable feasibility study, 85% of Exploraciones Novomining S.A. (ENSA) which holds 100% of the Cascabel concession (Cornerstone owns the remaining 15% of ENSA). BHP and Newcrest Mining each own 13.6% of SolGold, and Franco Nevada has conditionally agreed to provide feasibility study funding to SolGold in return for an NSR royalty on SolGold’s share of the project.

The 2019 Alpala PEA, the primary zone of Cascabel, outlines a 55-year life-of-mine block cave operation with after-tax NPV (at 8%) of US$4.3Bn and IRR of 25.9%, and initial capex of US$2.7Bn. Average annual production in the PEA is 207kt Cu, 438k oz Au and 1.4MM oz Ag for the first 25 years.

Cornerstone is currently trading at a significant discount to the C$8.60/CGP share that Cornerstone’s top shareholders acquired their shares at. BHP’s cost base of 33 pence/SOLG implies C$11/CGP share. Newcrest’s block purchase in December 2018 at 40 pence/SOLG implies C$13/CGP share.

Cornerstone says its 21.4% interest in Cascabel provides an attractive opportunity for a potential acquirer to secure a strategic position superior to any other SolGold shareholder.

In a recent development, Cornerstone has rejected as woefully inadequate an unsolicited hostile takeover bid from SolGold and announced its intention to formally requisition a general meeting of shareholders of SolGold to be held after October 27 to replace the entire SolGold board. SolGold shareholder BHP is subject to a “standstill” and other shareholder support restrictions under its share subscription agreement with SolGold until October 19, 2020. And Newcrest recently pulled its director off the SolGold Board due to its displeasure with how SolGold was financing development of the Cascabel Project. Cornerstone’s Ecuadorian projects represent outstanding opportunities at a time of increasing investor interest in exploration and development securities.