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Cornerstone Capital Resources looks ahead to a fall trigger event

Kitco News

The expiry of a major miner's stand-still agreement could unlock shareholder value at Cornerstone Capital Resources (CVE:CGP), said CEO Brooke Macdonald during a video interview earlier this month.

Both SolGold and Cornerstone have stakes in Cascabel. Cornerstone describes the project as the largest gold-enriched copper porphyry in the world discovered in the last 10 years.

Nearly two years ago, interest in the project by the majors led to the world's number one miner, BHP Billiton, investing in SolGold. BHP owns 13.6% of SolGold. It is currently subject to a “standstill” agreement preventing it from acquiring any shares in Cornerstone without SolGold’s consent unless a third party makes a move to acquire control of Cornerstone before October 19, which would allow BHP to bid. A separate standstill also expiring October 19 prevents BHP from acquiring additional shares of SolGold or colluding with anyone to acquire control of SolGold.

After October 19th, BHP will be free to make a move on Cascabel, which could potentially result in a takeout of Cornerstone at a much higher share price than that of today’s.

SolGold has made two hostile bids for Cornerstone in the past 18 months, both of which have been rebuffed.

Cornerstone is critical of a US$100 million net smelter royalty agreement that SolGold signed with Franco Nevada in May and closed on September 11th, claiming it diminishes the value of the project.

"After October 19th BHP will be free to talk to Cornerstone about our 21.4% interest and to join us in our efforts to create a SolGold board that will act in the best interest of all shareholders," said Macdonald.

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