Certain statements contained in this investor update may be considered as forward-looking. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated or implied results. While Cornerstone anticipates that subsequent events may cause its views to change, it expressly disclaims any obligation to update the forward-looking statements contained herein.|
Since my June update things have moved unsatisfyingly, but perhaps predictably, slowly in Ecuador. The government has yet to enact the Mining Regulations (although promised for the end of the month) and while some companies have received the necessary interim environmental permits required to recommence field work, none yet have the final approval of the Minister of Mines and Petroleum (MMP). As a result there are no companies who have resumed project activities despite the government's lip service to expediting the re-initiation of field programs. Understandably, there is a lot of frustration and impatience within the industry. I can confirm from my July visit to the country that the government is under considerable pressure from both the senior mining companies and explorers like Cornerstone to break the bureaucratic logjam and issue the long-promised approvals. Also noteworthy is that Canada's Minister of International Trade, Stockwell Day, was in Ecuador at the end of August and raised mining issues with his Ecuadorian counterpart. He also announced that outgoing ambassador Christian LaPointe will head up a new regional Canadian foreign investment office in Quito to promote bilateral business between the two countries.
In summary, while the go-ahead for projects seems imminent, with political foot-dragging and bureaucratic inertia the final "green light" remains uncertain.
In our case, we have done everything required under the Instructivo issued in May to acquire our back-to-work permits. We understand that our environmental management plans have been internally approved by the Ministry of Environment for all properties; the penultimate step to receiving final approvals. We lastly need a sign off from the MMP following the positive recommendation from the Ministry of Environment to re-start work on our concessions. In the case of our Gama prospect where we are permitting a 60 hole drill program we also have the additional hurdle of obtaining a water use permit from the new water agency, Senagua. We have met with the head of the agency and have also initiated this process.
In the meantime we continue to seek joint venture partners for Shyri and our other properties. A number of companies have carried out field visits as well as reviewed the data package. Last month we arranged meetings in Quito for an interested company in order to complete its political and legal due diligence. The positive response to Shyri has been encouraging and we believe that we will be able to attract a partner with operating expertise to the property.
While awaiting the re-start of work on our properties, reconnaissance exploration is continuing on behalf of the Newmont strategic alliance within the Macará area of interest. Field work is following up high gold values in stream sediments obtained from our earlier surveys. Preliminary field results have been very encouraging and we are optimistic that recently discovered surface mineralization will prove to be the source of the geochemical anomalies. The field work is expected to continue through the next 2 to 3 months, following which Newmont will evaluate the results and decide whether to exercise their option to spend a further $3 million to earn a 51% interest in the project.
We also completed the sale of our interest in the La Plata base metal property. The original vendor of the property Sultana del Condor, SA re-purchased our earned interest for $US 500,000, a consideration which included certain amounts owed by Cornerstone to Sultana. The sale raised our cash balance to about $Cdn 1.3 million as reported in our second quarter results.
Little Deer Copper
Cornerstone and partner Thundermin completed 7156 m of drilling in July on the approved first phase 2009 program. The program went very well and we completed more drilling than originally planned while remaining under budget. All but the final four holes were incorporated in a NI 43-101 mineral resource estimate prepared by Micon International Ltd. These were the subject of our August 27 news release.
The mineral resource estimate met our current expectations (total about 3 million tonnes) but, as noted by Micon in their Technical Report, there remains excellent untested potential to enlarge the deposit. Micon concluded, "The strike limits and depth extents of the mineralization have not been clearly defined by the current level of drilling and Micon believes that potential exists for the discovery of mineralization in these areas. As well, the up-dip limits of the mineralization in the western reaches of the domain model (i.e. between the upper limits of the drilling and surface) have not been defined, and Micon believes that potential exists for the discovery of mineralization in this area." Micon recommended further drilling to both expand the deposit and upgrade the current inferred resources to the indicated category.
Micon Mineral Resource Estimate, Effective July 7, 2009:
||Copper Grade (%)
While gold continues to trade within a fairly narrow range, many gold watchers are still calling for a major breakout in price later this year. Regardless, the Canadian price is still above $1000/oz, an attractive and apparently resilient level. Cornerstone is continuing to seek partners for its Newfoundland gold properties and recently added 30 claims to the El Strato property to protect the strike extensions of the El Strato and Voodoo prospects. The property has numerous gold targets along a 15 km mineralized trend. Many of these are high grade and have yet to be adequately tested. It lies at the south end of the productive Baie Verte area where gold is currently being mined at the Pine cove property and treated at the nearby Nugget Pond mill. Cornerstone is soliciting interest in the property and recommending an initial drilling program of 4000 m to test existing targets.