Cornerstone Capital Resources (TSX.V:CGP) CEO Interview

Cornerstone Capital Resources
(TSX.V:CGP)
(OTC: CTNXF)
-18
Colin McKenzie, CEO & President
[display_podcast]

Transcripts:

WSR: Good day from Wall Street, this Juan Costello Senior Analyst with Wall Street Reporter and joining us today is Brooke MacDonald the CEO and president for Cornerstone Capital resources. The company trades on the TSX Venture, ticker symbol is CGP as well as the over the counter ticker symbol CTNXF. Thanks for joining us today Brooke.

Brooke MacDonald: Thank you Juan.

WSR: Great, now starting off, give us a brief history and overview of Cornerstone for some of our listeners that are new to your story.

Brooke MacDonald: Thanks Juan, for those investors who are not familiar with Cornerstone; we’re a mineral exploration company based in Newfoundland, Canada. Our business model is that of a prospect generator, meaning we identify prospective early stage gold and copper projects, we spend about a year on them; identifying drilling targets through, geological, geophysical and geochemical work and then we seek a larger mining company as a JB partner to fund a 100 percent of further exploration while we retain a minority interest in the project. This business model allows us to explore more properties while limiting dilution to the share holders, ‘cause all the money we raise comes by a way of equity financing. Right now we’re focused on two flag-shipped properties: ‘the Little Deer’ underground copper projects in Newfoundland and the Cherry gold-copper property in Ecuador. We’re also conducting exploration on two highly prospective properties in Chile

WSR: Well great, Start off by talking about the Little Deer copper deposit?

Brooke MacDonald: Sure, Little Deer is the company’s most advanced asset. It is a Cypress VMX copper deposit underground project and it has a strong potential to be developed into a new mine. Along with our 50 percent joint venture partners Thundermin resources, we have increased the resources, at Little Deer to indicated mineral resources, totaling almost £100 million of copper, and in third resources of an additional £175 million of copper. The property includes two packs producing underground copper mines, the Whalesback and Little Deer mines which operated during the 60’s and 70’s. Since 2007 we’ve completed more than 48,000 meters of diamond drilling and spent over seven and a half billion dollars of exploration. Metrological tests show that a high grade copper concentrate grading over 28 percent copper with over 97 percent copper recovery can be produced at relatively low milling costs and free of any deleterious elements. A scoping study was completed last November, at the base-case shows an initial capital cost of $110 million over two years with the pay back in three and a half years. The average operating cost is about a dollar and sixteen to a pound of copper; total revenue is $829 million over a nine and a half year mine life, and then after tax NPV of $87 million and a 21and a half percent internal rate of return, also after tax. The work plan for 2012 on the Little Deer includes the continuation of drilling at the adjacent Whalesback deposit, and definition drilling at Little Deer in order to move some of the inferred resource, in to the indicated category, and move us closer to a decision point for a pre-feasibility study.

WSR: Certainly, and so moving over to Ecuador, perhaps you could talk about the Cherry prospect.

Brooke MacDonald: The Cherry property is located in southern Ecuador, about ten kilometers to the west of IAM Gold’s, Multi-million Ounce gold deposit. Ecuador is believed by many geologists to have the potential for undiscovered elephant size, gold and copper deposits similar to those discovered in Peru and Chile, and we believe we have one of the best firm packages in the country. Cherry is optioned to intrepid mines of Australia, who are spending six million dollars over five years on the property to earn at 60 percent interest. And Intrepid has already spent 2.8 million dollars completing a phase one drilling program on the gamma prospect, located in the North West portion of Cherry. Gamma is one of four interest target areas on Cherry.

And we got some good results from the, this one program, which had 11 holes per three thousand meters, and we seam to have discovered an extensive gold enriched copper mining puffery system. All two intersected 45 meters at point seventy one grams per tone; gold within a broader zone of 101 meters at point 21 grams on gold, and hole 11 intersected 26 meters at point four five grams per tone gold. Late last year we began a $1.8 million phase two drilling program at Gamma, focusing on puffery targets. Environmental permits for drilling the, two of the other interesting targets on Cherry, which are on the southern portion of Cherry, are expected to be received towards the end of the second quarter 2012, following completion of community consultations. And I would note that on December 5th, the [Audio] mining company announced that they had agreed, reached an agreement in principal with the Ecuadorian government regarding a development agreement for their [Audio] deposits, containing over six million ounces of gold and reserves. We believe this is a very positive development for junior explorers like Cornerstone, as it will reduce perceived country risk of Ecuador as a destination before our mining or investment.

WSR: Sure and, so in terms of your whole Leon subsidiary, Minera Cornerstone, Chile Limitada; Can you talk about the two operations there in Chile?

Brooke MacDonald: Yes, our two most recent acquisitions that we acquired in the first quarter of 2011 are located in Central and Northern Chile. La Fortuna is the, a mantle style copper-silver project, located immediately east of the Cerro Negro copper-silver mine, and approximately 30 kilometers south of the [Audio] epithermal gold district. La Fortuna is about a two hour drive north of Santiago and you can drive right up to the property on existing roads. We’ve got some interesting channel sample results at La Fortuna which returned nineteen and a half meters at 1.33 percent copper and 58 grams per tone silver. We’ve also completed over 200 live kilometers of ground magnetic surveys and that data is currently being processed to an interpreted. We also plan to carry out some induced polarization surveys, in prospective areas, there are already some obvious targets, in which some further trenching and integration of data, we should be able to be ready to drill that property in the first quarter 2011.

The other property is a large area play; it’s a 300 square kilometer Mycin project, which is located just north of the Maricunga magmatic belt, which hosts a number of world class porphyry and epithermal oil deposits. The Maricunga belt terminates at the La Coipa mine near in Chile which is a gold-silver mine. And we believe that the, some similar geology to the Maricunga belt and they expand north underneath the Mycin area. I would add the both, both of those properties in Chile are available for joint venturing with partners, and we’re currently in discussions with a number of companies, with a view to signing confidentiality agreements and having them make sight visits to do what we do with, in our business model, which is to bring the properties to a certain stage and then bring in a partner to fund the further exploration.

Interviewer: Right, well you obviously have a pretty big portfolio and some other joint ventures. What are some of the trends that you’re seeing right now in the sector and how is Cornerstone positioned to capitalize on them?

Brooke MacDonald: Juan, I think the biggest challenge right now for most of the junior explorers is the state of the capital market. In spite of the great fundamentals for producers, many of the juniors are trading near 52 week lows and having difficulty raising capital. Of course from close to financing like September and has about $3.4 million in the treasury so we are in relatively good shape. The market is always termed and eventually marked will accord more reasonable values to juniors like Cornerstone properties, having settled that I think that we are in the midst of one the biggest gold markets from medals and commodities in history, you will buy them in from emerging economies for based medals and investor demand for gold due to the excessive printing of money by governments. That paved the way for exploration around the world and the opportunity to bring lower grade deposits into production; it would not have been economic at lower medal prices. Medal producers will eventually have to replace their reserves and they will look to juniors like Cornerstone to help them till the development pipe line.

WSR: Sure, and so what else would you say makes the company unique from some of the other players in their sector?

Brooke MacDonald: I think we have a good mix of early stage grassroots properties on the way, all the way up to advanced exploration properties such a Little Deer, we have you know at Little Deer we have established a substantial mineral resource and completed a scooping study that indicates that an economic mind can be established. At the Cherry project we have just began exploration and we’ve already discovered what appears to be a large copper mildly gold enriched puffery, these two projects alone should support a price much higher than the current one to Cornerstone. And then we have the other properties in the portfolio that include a very interesting looking gold cup property in Northern Ecuador and the Columbian border called Cascabel and the two to Chilean Copper Silver Properties that I mentioned. I would also add that in spite of the challenging market conditions in 2011 and generally declining price levels for a lot of companies in our sector Cornerstone has made pretty good, maintained pretty good liquidity in the market and so people have been able to get in and out of the stock because it trades pretty well.

WSR: Certainly and perhaps you can walk us through your back ground and experience Brooke and talk a little about the management team there.

Brooke MacDonald: Yeah, well my background Juan is as a lawyer in the in the mining business, I graduated law school at Queens University in Canada, in ’82 I got admitted to the British Columbia [Audio] up Vancouver in ’84 and I got admitted in New York 2002 and then between I was associate of the Caracas Venezuela office of Victory McKenzie of the four years and I was eight years with a large gold company called Placer Dome that eventually emerged with Barrick Gold and I did a lot of their exploration deals in Latin America and I worked on some projects financing stuff for the company including the liquid project financing back in 1980, ’89 and ’90. I’ve worked on exploration and joined venture deals and probably about 12, five American countries over the years and that’s like I understand that part of the business pretty well, I’ve been a director of couple of other juniors and I’ve been a director of Cornerstone now for about three years.

Our VP exploration Terry Brace is a professional geologist who has a lot of experience in Atlantic Canada as well as having spent some time in Cuba. Terry has a team of excellent professional geologists that work with him up in St John’s Newfoundland and Yvan Crepeau whose our the president of our Ecuador and Chilean sub series is a professional geologist who hasn’t spend over ten years in Latin America with different companies including the last five years in Ecuador, the other another five years between Peru and Chile. Both Yvan and Terry have worked with major mining companies in the past, they are both very experienced. Terry is sorry excuse me, Yvan has a team of geologist in Ecuador and well as in Santiago Chile and many good connections with prospectus throughout the region. So also we have a CFO named Dave Lavish who is very experienced and is an enormous help to the management team. So I think that we are we have a good part of experience for a relatively small company and a great pipe line project.

WSR: Certainly and so what are some of the goals and milestones that you and the team are hoping to accomplish over the course of next year?

Brooke MacDonald: Well in the next year it’s pretty simple, we are going to continue with the work at the Cherry project in Ecuador and in conjunction with our partner mines and to get the permits so that we can drill the other two areas that are next to drill at Cherry which are and we are going to look for joint venture partners for Cascabel, La Fortuna, some of their own properties, and we are going to work with our partner Thundermin Resources to advance the little of the project in Newfoundland completing the Whalesback drilling and eventually doing some equal definition drilling at Little Deer to move more of the inferred resource into the indicated category and possibly even increasing the size of the resource.

WSR: Certainly and so as you talk to investors as you’ll be participating at Cambridge Show, do you think that the company story and your message are completely understood and appreciated by them and if not what do you wish they better understood about Cornerstone?

Brooke MacDonald: I think the story is understood, we do have a lot of properties and some investors may not be aware that we know all of our properties and so when we when we present we try to focus on the key properties. But what anybody visiting our website at cornerstoneresources.com, can see that there is a pipe line of a number of other properties and in Atlantic Canada we also have exposure to other kinds of metals like Uranium or and even the Nickel property. But we went on the road quit a bit in 2011, met with investors in number of occasions in Montreal, Toronto, and in November in New York and so we will continue to get out there and tell the story and we are always available to answer questions. And so we would welcome people to visit our website, take a look and come see us at Cambridge, and if they can’t make it to Cambridge to visit us in Toronto at the Prospectus Developers Association Convention PDAC in March we will also have a booth.

WSR: Well, good and so once again joining us today is Brooke MacDonald, CEO and president for Cornerstone Capital Resources. The company trades on the TSX venture, ticker symbol CGP as well as the over the counter taker symbol CTNXF currently trading at 13 cents a share. And before we conclude Brooke, to briefly recap some of your key points, why do you believe investor should consider as a good investment opportunity today?

Brooke MacDonald: We are at a 52 week low and I believe the stock is greatly under valued. At Little Deer where our scooping study shows that this project could become an operating mine, an economic operating mine in the near future. At Cherry we are into what we believe is a huge gold enriched puffery system and we have only poked the few holes in it and what really amounts to Sculpt drilling program. We are looking for a discovery there, there are four target areas there. There is the possibility for multiple mineral deposits there. And so I think that is really our story in a nut shell and I’d invite investors to learn more about Cornerstone, follow the story and we should have an exciting stream of news flow in 2012.

WSR: Well we certainly look forward to continue track the company’s growth and report on your upcoming progress. And I’d like to thank you for taking the time to join us today Brooke and update our investors on CGP.

Brooke MacDonald: Thank you very much Juan, nice talking to you.

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