Botwood Basin

[johnlw]

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

NEWS RELEASE TRANSMITTED BY CCNMATTHEWS

Cornerstone Capital Resources Inc.

August 23, 2005 - 13:36:45 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
www.cornerstoneresources.com.) 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

President