VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/21/13 -- Cornerstone Metals Inc. (TSX VENTURE: CCC) ("Cornerstone" or the "Company") is pleased to announce that it has signed a letter of intent ("LOI") to acquire all of the shares of Copper One USA Inc. ("CO USA"), a private company that holds 6 copper properties located in New Mexico and Arizona, with the principal property being Lone Mountain, NM. 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. (TSX VENTURE: CUO) (vendor) 1,500,000 shares on closing of the transaction. Additional consideration is tied to specific properties as follows:
i. Lone Mountain, New Mexico: Within 30 days of a Definitive Feasibility Study, the Company will:a. issue 2,000,000 shares;b. pay $1,000,000 in cash or shares (at the vendor's discretion); andc. grant to the vendor a 0.5% NSR capped at $5,000,000, which may be repurchased for $1,000,000, payable in cash or shares (at the vendor's discretion)ii. West Jerome, Arizona: Within 30 days of a Definitive Feasibility Study, the Company will:a. issue 500,000 shares;b. pay $750,000 in cash or shares (at the vendor's discretion); andc. grant to the vendor a 0.5% NSR capped at $4,000,000, which may be repurchased for $800,000, payable in cash or shares (at the vendor's discretion)iii.Remaining 4 Arizona and New Mexico Properties: Within 30 days of a Definitive Feasibility Study, the Company will:a. issue 350,000 shares;b. pay $375,000 in cash or shares (at the vendor's discretion); andc. grant to the vendor a 0.5% NSR capped at $3,000,000, which may be repurchased for $350,000, payable in cash or shares (at the vendor's discretion)
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 NI43-101 report on the Lone Mountain property and, assuming successful due diligence results, on or before April 1, 2013, the Company will fund 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, New Mexico, the Lone Mountain property is situated in a well-known mining district, 11 km southwest of the Santa Rita-Chino mine and 16 km 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 SX-EW technology.
Land holdings 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% interest in the claims and leases. The Company will retain, through Copper One USA Inc, a State issued Level 4 exploration level permit for up to 176 drill sites and 3 holes per site.
