Ms. Courtney Shearer of Cornerstone reports
CORNERSTONE SIGNS LOI TO ACQUIRE SIX COPPER PROPERTIES IN NEW MEXICO AND ARIZONA
Cornerstone Metals Inc. has signed a letter of intent to acquire all of the shares of Copper One USA Inc., a private company that holds six copper properties located in New Mexico and Arizona, with the principal property being Lone Mountain, N.M. The LOI is subject to due diligence, which the company will commence immediately, while it proceeds to finalize a definitive agreement to be executed upon completion of successful due diligence.
Pursuant to the terms of the LOI, the company has agreed to issue to Copper One Inc. (vendor) 1.5 million shares on closing of the transaction. Additional consideration is tied to specific properties as follows.
Lone Mountain, New Mexico
Within 30 days of a definitive feasibility study, the company will:
- Issue two million shares;
Pay $1-million in cash or shares (at the vendor's discretion);
Grant to the vendor a 0.5-per-cent net smelter return capped at $5-million, which may be
repurchased for $1-million, payable in cash or shares (at the vendor's
West Jerome, Arizona
Within 30 days of a definitive feasibility study, the company will:
Issue 500,000 shares;
Pay $750,000 in cash or shares (at the vendor's discretion);
Grant to the vendor a 0.5-per-cent NSR capped at $4-million, which may be
repurchased for $800,000, payable in cash or shares (at the vendor's
Remaining four Arizona and New Mexico properties
Within 30 days of a
definitive feasibility study, the company will:
Issue 350,000 shares;
Pay $375,000 in cash or shares (at the vendor's discretion);
Grant to the vendor a 0.5-per-cent NSR capped at $3-million, which may be
repurchased for $350,000, payable in cash or shares (at the vendor's
The company paid the vendor an exclusivity fee of $10,000 on execution of the LOI. The company also agreed to pay the costs of updating the current National Instrument 43-101 report on the Lone Mountain property and, assuming successful due diligence results, on or before April 1, 2013, the company will finance a property payment owing on the Lone Mountain property of $55,000.
This transaction will be subject to standard closing conditions for a transaction of this nature, including, but not limited to, board and regulatory approvals, as well as shareholder approvals, if required.
The Lone Mountain property will become Cornerstone's principal copper project in the United States. Located near Silver City, N.M., the Lone Mountain property is situated in a well-known mining district, 11 kilometres southwest of the Santa Rita-Chino mine and 16 kilometres northeast of the Tyrone mine; both of these mines are large open-pit copper operations owned by Freeport-McMoRan and both currently produce copper using the solvent extraction and electrowinning technology.
Landholdings on the Lone Mountain property consist of two New Mexico state mineral leases and 40 unpatented federal mining claims, comprising 619.17 hectares (1,530 acres). Cornerstone will have an undivided 100-per-cent interest in the claims and leases. The company will retain, through Copper One USA, a state-issued, level-4-exploration-level permit for up to 176 drill sites and three holes per site.
The Lone Mountain property covers a large-tonnage porphyry copper system with about 25,500 metres of historic drilling in 56 drill holes. It represents a broadly explored (drill hole spacing was approximately 250 metres), well-mineralized porphyry-skarn system with multiple stacked mineralized targets. Three distinct targets are present: a near-surface zone of copper-oxide mineralization underlain by a mixed copper-oxide-chalcocite zone and finally a lower copper-zinc skarn zone. Copper-oxide mineralization begins approximately 60 metres below surface and continues to over 250 metres below surface. The copper-oxide and mixed-oxide-chalcocite zones will be the primary focus for Cornerstone, with the aim to infill and justify an NI 43-101 resource as quickly as possible.
The mineralization is open in three directions. Drilling in 2011 by Copper One intersected 135 metres of 0.36 per cent copper on a portion of the property that had never been tested and extended the known western zone mineralization to the south, tripling its length.
The West Jerome property, near Jerome, Ariz., will be Cornerstone's second priority, consisting of approximately five square kilometres of claims on the west side of Freeport McMoRan patented lands. The property, in a volcanogenic massive sulphide camp, is a high-grade, massive sulphide target located 2.4 kilometres south of the past-producing United Verde (32 million tons grading 4.4 per cent copper, 1.5 ounces per ton silver and 0.04 ounce per ton gold). The West Jerome property has attractive untested transverse electromagnetic geophysical targets.
The Mimbres property consists of 45 unpatented lode claims and 2,040 acres of New Mexico state mining leases over a potential porphyry-copper-molybdenum deposit and higher-grade copper-zinc-gold-silver-bearing skarns. It has a large airborne magnetic signature similar in size and magnitude to the neighbouring Chino copper mine operated by Freeport McMoRan, eight kilometres away.
The Twin Peaks property near Wickenburg, Ariz., is a partially drilled, copper-oxide deposit that has excellent infrastructure and potential for a large open-pit copper-oxide body with very low strip ratio. A surface area measuring 750 metres by 520 metres exhibits veins, veinlets and stockworks of chrysocolla, and secondary malachite, tenorite, cuprite and chalcocite hosted by a pyrite-poor Laramide-age quartz monzonite.
According to the U.S. Geological Survey, the Safford district is the biggest undeveloped copper district in the world with multiple world-class porphyry-copper deposits. The district is dominated by Freeport McMoRan mining operations. The West Safford and Teague Springs properties are two well-positioned projects in the district.
The West Safford property is 11 kilometres west from the producing Dos Pobres mine. It consists of approximately 2,860 acres of claims and a 640-acre Arizona state mineral exploration lease. The target at West Safford is a large-tonnage Resolution-type porphyry copper target, buried beneath younger alluvium, in the Safford mining district.
The Teague Springs property consists of 1,920 acres of claims located further west of Dos Pobres. The target area is a large-tonnage, buried Laramide porphyry-copper-molybdenum-silver-gold system associated with a large, untested induced polarization anomaly and a Mo-Cu-Zn biogeochemical anomaly.
Courtney Shearer, interim chief executive officer, remarked: "We are very pleased to have the ability to acquire a regional group of copper projects in this portfolio. We will now have a predominantly copper-focused company, and the clustering of these projects geographically and strategically will provide technical and logistical efficiencies to explore and develop these projects using our core competencies."
We seek Safe Harbor.
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