17:17:00 EDT Fri 02 Jun 2023
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Cornerstone Capital Resources Inc (3)
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Close 2021-12-02 C$ 4.15
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Cornerstone told judges uphold lower court decision

2021-12-02 17:57 ET - News Release

Mr. Brooke Macdonald reports


Cornerstone Capital Resources Inc. was notified late yesterday of a decision by Ecuador's constitutional court upholding a lower court ruling that invalidated the environmental registration granted by the Ministry of Environment (ME) to Ecuador's state mining company, Enami EP, for the initial (prior to drilling) exploration phase in the Los Cedros protected forest (Bosque Protector) at the Rio Magdalena project that forms three of the nine concessions within the Cornerstone Ecuador SA (CESA) -- Enami EP strategic exploration alliance (the Enami-CESA SEA) in northwest Ecuador, in which CESA has the option to earn up to an 84-per-cent interest.

Several prospective zones were defined at the Rio Magdalena project and initial results released on Feb. 27, 2020.

As noted in Cornerstone's March 4, 2021, news release, work was suspended at the Rio Magdalena block pending a decision in the constitutional court of Ecuador on a challenge filed by Enami to a lower court decision that purported to invalidate the environmental registration exploration permit granted by ME for the Rio Magdalena block of concessions, approximately two-thirds of which are located within Los Cedros.

The background to the case was summarized in the company's March 4, 2021, news release, as follows:

"By way of background, in 2019 the Municipality of Cotacachi in northwest Ecuador (province of Imbabura) brought an action in a local court requesting that the court order ME to revoke Enami's environmental registration on the grounds that no prior consultations with local communities had taken place. Enami defended the action on the basis that no such consultations were required. This position was supported by a friend of the court brief filed in the action by ME. The lower court ruled against Enami.

"Enami has challenged the lower court decision in the constitutional court (accion extraordinaria de proteccion) on the grounds that the lower court erred by seeking to impose a requirement for prior environmental consultation, when in fact the regulator, ME, currently does not require a public consultation process during early stage exploration phase (first four years), and only an environmental registration permit is required (including for scout drilling). Enami's position was supported by a friend of the court brief filed in the constitutional court by ME. It is not known when the constitutional court will render a decision in the Rio Magdalena case.

"A few facts: (1) Enami and CESA have all the legally required permits to be doing early stage exploration; (2) although not legally required, CESA did consult the communities beforehand, with ME representatives in attendance; (3) none of the Rio Magdalena lands are ancestral indigenous lands, so no consultation for indigenous peoples is required either under the constitution or under International Labour Organization (ILO) Treaty 169; (4) the lower court decision confirmed that the Los Cedros protected forest was not within a SNAP area and that there was no environmental damage found on the concessions caused by either Enami or CESA; and (5) Enami and CESA have the strong support of the local communities."

Cornerstone is consulting with its Ecuadorian legal counsel, with Enami and ME and the Chamber of Mines to determine what rights and remedies Cornerstone and Enami may have, including the possibility of the constitutional court decision allowing for a new application for an environmental registration subject to ME approved terms of reference for a public consultation process that could be undertaken in the future to continue exploration at Rio Magdalena.

Cornerstone will be filing a petition to the constitutional court next week for clarification of the effect of the decision.

Cornerstone will provide an update on Rio Magdalena after such consultations when the company has a clearer idea of the impact of the decision on the project.

This decision does not affect the Cascabel project, as Cascabel is not in a protected forest and is already in the advanced (economic evaluation) stage of exploration and has an environmental licence obtained after prior community consultations were undertaken pursuant to terms of reference approved by ME.

About the Enami EP -- Cornerstone strategic exploration alliance (SEA)

On June 14, 2016, Cornerstone announced that its Ecuadorean subsidiary, Cornerstone Ecuador SA (CESA), had signed a Spanish language agreement, or Acuerdo de Colaboracion e Inversion para el Desarrollo Conjunto de Proyectos de Exploracion Minera, with Ecuador's state mining company, Empresa Nacional Minera Empresa Publica, replacing a letter of intent announced April 14, 2015, and creating a structure to jointly prospect and explore for mineral deposits in Ecuador. The Espejo, Rio Magdalena and Playa Rica blocks were identified and ranked by Cornerstone in 2015 to 2016 as highly prospective after an exhaustive analysis of public and private information available at the time, reserved by CESA after the opening of the cadastral map and then the reservations were transferred to Enami for inclusion in the SEA. On March 6, 2017, Cornerstone announced that Enami EP had been granted a number of mineral concessions in Imbabura and Carchi provinces in the same area as the Cascabel (SolGold/Cornerstone) and Llurimagua (Codelco/Enami) concessions, for exploration by the Enami-CESA SEA. Nine concession titles totalling around 42,000 hectares were granted in 2017 by the Ministry of Mining (now the Ministry of Energy and Non-Renewable Natural Resources).

About Cornerstone Capital Resources Inc.

Cornerstone is a mineral exploration company with a diversified portfolio of projects in Ecuador and Chile, including the Cascabel gold-enriched copper porphyry joint venture in northwest Ecuador. Cornerstone has a 20.8-per-cent direct and indirect interest in Cascabel comprising (i) a direct 15-per-cent interest in the project financed through to completion of a feasibility study and repayable at Libor plus 2 per cent out of 90 per cent of its share of the earnings or dividends from an operation at Cascabel, plus (ii) an indirect interest comprising 6.86 per cent of the shares of joint venture partner and project operator SolGold PLC. Exploraciones Novomining SA (ENSA), an Ecuadoran company owned by SolGold and Cornerstone, holds 100 per cent of the Cascabel concession. Subject to the satisfaction of certain conditions, including SolGold's fully financing the project through to feasibility, SolGold PLC will own 85 per cent of the equity of ENSA and Cornerstone will own the remaining 15 per cent of ENSA.

Qualified person

Yvan Crepeau, MBA, PGeo, Cornerstone's vice-president, exploration, and a qualified person in accordance with National Instrument 43-101, is responsible for supervising the exploration program at the Rio Magdalena project for Cornerstone and has reviewed and approved the information contained in this news release.

We seek Safe Harbor.

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