Glen McKay had been running his own drilling and blasting company in his home province of Newfoundland for more than 10 years when he decided to start a junior mining company. With this ambition in mind, he co-founded Cornerstone Capital Resources in 1997, with the company initially staying close to home with projects in Newfoundland and Labrador.
But McKay and his team wanted more – and started searching for other available mining prospects around the world. The company entered South America in 2005 and found the highly prospective Cascabel property in Ecuador, now described as one of the world’s most promising copper and gold discoveries in the past ten years. Cascabel is in northwestern Ecuador in an under-explored northern section of the Andean Copper Belt.
Cornerstone Capital Resources found a willing partner in SolGold, which currently owns 85% of the Cascabel property. Cornerstone owns 15% of Cascabel, plus another 8% of SolGold. The interest of BHP Billiton and Newcrest Mining, two of the world’s largest gold miners, has also attracted attention for Cascabel. BHP Billiton owns 11% of SolGold while Newcrest owns 14%.
But there were challenges operating in Ecuador. The government introduced what was essentially a mining moratorium in 2013, along with a hefty tax on mining profits. However, in 2015, the Ecuador government separated the mining ministry from its oil ministry and announced plans to promote 36 projects to produce gold, copper and molybdenum estimated to be worth US$200 billion.
McKay admits the acquisition of Cascabel was considered a risky move by some in the mining industry, especially during the moratorium years. “Many years later, it seems our decisions to stick with Ecuador, and the Cascabel project in particular, were correct,” McKay wrote in a recent blog.
McKay stepped down as CEO of Cornerstone in 2011 but maintained a significant share ownership in the company. He added more shares in 2016 when he helped Cornerstone through a short-term cash flow crunch.
As a shareholder, he keeps a close eye on news releases related to Cascabel, mostly exploration updates. So far, the news has been promising. Cornerstone President and CEO Brooke Macdonald said: “We are pleased that the increase in high grade resources has been added within or adjacent to the previous high-grade envelope suggesting a robust target for early extraction of higher-grade material. We are also confident that continued exploration on other Cascabel targets will add to the total mineral inventory.”
Still, McKay has no illusions. He notes that the mining industry is expensive and requires large amounts of cash to bring any major discovery to the production phase. In addition, the price of gold has been range-bound for the past couple of years and it might require a sharp uptick in bullion prices to light a fire under the gold mining industry.
But McKay remains optimistic, noting he is confident that company executives are thinking about ways to build and extract value from Cascabel. If that means selling the Cascabel discovery to a larger player in the mining industry, McKay says he would support that decision.