Cornerstone Capital Resources Inc.

Cornerstone Capital Resources Inc.

August 23, 2005 13:37 ET

Cornerstone and Phelps Dodge Corporation of Canada, Limited to Explore for Sediment Hosted Copper Deposits

MOUNT PEARL, NEWFOUNDLAND--(CCNMatthews - Aug. 23, 2005) - Cornerstone Capital Resources Inc. (TSX VENTURE:CGP) ("Cornerstone") is pleased to announce an agreement with Phelps Dodge Corporation of Canada, Limited ("Phelps Dodge") to explore for sediment-hosted, stratiform copper deposits (SSC) in the Bay St. George sedimentary basin of southwestern Newfoundland.

Cornerstone recently initiated the Codroy Project by staking several claim groups covering approximately 250 sq km in the Bay St. George Basin. (A map showing the properties is available on the Cornerstone Web site at The properties are underlain by Carboniferous sedimentary rocks considered highly permissive for the development of SSC-type copper deposits. Similar geological environments elsewhere in the world, such as the Kupferschiefer in Poland, host world-class SSC-type copper deposits. The Dzhezkazgan Basin of Kazakhstan is a Carboniferous-aged sedimentary basin in a similar geological setting.

The Bay St. George Basin was explored briefly for salt and uranium in the 1970's. Numerous uranium occurrences were discovered during that period and, while no systematic base metal exploration was conducted, the work documented copper showings in association with uranium mineralization. Shell Minerals documented several copper showings with grab samples assaying up to 4.1 % copper. The basin is also currently being explored for hydrocarbons.

The agreement is structured in two phases. In Phase I (Year 1), Phelps Dodge and Cornerstone will jointly evaluate the mineral potential of the project area on a reconnaissance basis. In this first phase, Phelps Dodge will make a cash payment to Cornerstone of US$25,000 and the two companies will jointly fund an exploration program to which Phelps Dodge will contribute US$100,000 and Cornerstone US$75,000. On completion of Phase 1, Phelps Dodge may elect to enter into an option/earn-in agreement (Phase II) whereby it can earn 51% by spending US$3,000,000 on exploration and making cash payments to Cornerstone totaling US$225,000 over three years. During the earn-in period, Cornerstone will be the operator. Upon earn-in, Cornerstone may elect to retain the right to participate at 49% or give Phelps Dodge the option, under certain conditions, to increase its interest to 75%.

The proposed first year work program will involve geological mapping, basin analysis, prospecting and sampling. Copper is the metal of primary interest but the work will also document results pertaining to other metals, such as uranium and gold, for which the Bay St. George Basin may also be prospective. The Phase I work program will start immediately and will be operated by Cornerstone.

This exciting new project again demonstrates Cornerstone's ability to generate grass roots projects and advance them in partnership with other companies. This is the thirteenth such joint venture agreement that Cornerstone has entered into since it was established in 1997, and the second with Phelps Dodge. Cornerstone currently has several other joint venture projects targeting nickel, gold and VMS base metal deposits with Falconbridge, Thundermin, Inmet, Agnico Eagle, Moydow and Kermode as partners.

This press release was prepared by Mike Basha, P.Eng., P.Geo., Vice President, Exploration for Cornerstone, Qualified Person for this project, as per National Instrument 43-101.

In other news, as announced April 15, 2005, certain insiders have been retained to provide ongoing management, consulting and legal services. At the option of the consultants, Cornerstone may issue shares, on a quarterly basis, as compensation for the services rendered. All these consultants have agreed to accept shares as partial compensation and Cornerstone has recently issued 190,146 common shares at a deemed issue price of $0.34, as set by the TSXV, for services rendered during the second quarter.

Cornerstone has also issued a total of 100,000 options to purchase common shares to insiders. In accordance with company policy, the options will have an exercise price of $0.37, based on the share price at close of trading on August 3, 2005 plus $0.01. The vesting period for all options is 1/3 immediately, 1/3 in nine months and 1/3 in eighteen months.

In other developments, the agreement with Grandich Publications (Peter Grandich) to provide investor relations and public awareness services, announced on April 19, 2005, is being terminated effective August 31, 2005.

On Behalf of the Board of Directors

Glen H. McKay


The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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