Re: Friday, November 21, 2008

Cornerstone Update

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Certain statements contained in this investor update may be considered as forward-looking. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated or implied results.

Dear Subscriber:

Most of us are painfully aware of the current turbulent economic conditions and the horrendous destruction of market value that occurred in October. The bad news continues both on a macro-scale and in specific sectors; witness the deep, systemic weakness in the North American auto sector and closer to home, the debt problems at the senior base metals producer, Teck. Not only junior exploration companies are trading at their cash value or less, mid-tier producers such as Hudbay Minerals and Inmet also receive little or no market value for their operations and growth projects. There are many other examples of equity valuations at historically low levels; prices which under "normal" conditions would be seen as great buys. Unfortunately these days are anything but normal and investors large and small are going to cash either due to fear or financial necessity.

With predictions that the global economies will suffer recession and deflation throughout much of next year and share valuations ground down to the lowest levels in recent memory, is there room for optimism in junior mining sector? Firstly the exploration business is by its very nature optimistic so a "hope for the best" attitude is pretty well part of our industry's DNA. However, in these times the flip side of looking for the silver lining is to "prepare for the worst". At Cornerstone we are doing our strategic planning while staying positive about the future.

On the preparations side, we continue to cut costs and minimize expenditures to the extent possible. We have further reduced staff in both Canada and Ecuador as well as limited other overhead costs. Our current burn rate on exploration programs is mitigated by sharing costs with partners and accessing government support programs. Budgets for next year have been designed to conserve cash while maintaining the company's viability. We are also aggressively seeking joint venture partners for a number of our projects from various interested parties.

On the positive side of the coin, we are drilling on the Little Deer copper prospect with joint venture partner Thundermin Resources. Dr.

Jim Franklin, an expert on volcanogenic base metals deposits, recently visited the property to evaluate the exploration results and was impressed with the scale of the copper mineralized zone. Good grade copper has been intersected over a total strike length of 900 m and is still open to the west and at depth, leaving lots of room to expand the known mineralization. We continue to be encouraged by results and expect to release updated project information in the near future.

One sector which may provide some early relief to mining equities is precious metals. Once the world realizes that it is awash in US dollars, I believe we will see stronger gold and silver pricing as these metals regain their traditional monetary role for investors seeking a stable store of wealth in preference to paper backed by shaky financial institutions. A rebound should be good for gold miners and exploration companies with excellent discovery opportunities.

Cornerstone has those opportunities -- the caveat being that they are in Ecuador.

So what do we see happening with our prospects there? Well finally there is real progress with the new mining law. President Correa sent the final draft to the legislative body on November 14th with instructions to pass it quickly while maintaining the spirit of the document. It seems clear the law will be enacted before January 3rd which is the deadline for the Mining Mandate. The law Correa has approved is not all the industry could have hoped for but should provide a workable framework for companies already established in the country. The law has several important features; it declares mining a strategic sector, it is an organic law which means it is not secondary to laws such as environment and water resources and it explicitly ends the Mining Mandate, a legal necessity to prevent future application of the mandate's provisions. Less favourable are the high royalty rate (5% minimum), the continuing uncertainty surrounding exploitation contracts and the high land holding costs during exploration ($5/ha escalating to $10/ha after the fourth year). Nevertheless, the government has shown a willingness to adapt and work with the industry.

The law in its current form is a much better document than its earlier versions following consultation with public and industry stakeholders.

In short, we believe the government will support and encourage resumption of exploration and mine development as quickly as possible.

Best regards.

Colin

Colin B McKenzie, President & CEO

Cornerstone Capital Resources Inc.

Excellence in Mineral Exploration

"People, Process, Projects"

TSXV - "CGP" / OTC - "CTNXF"

F - "GWN" / B - "GWN"

Email: mckenzie@crigold.com

www.cornerstoneresources.com

Toll Free 1-877-277-8377

Fax 1-709-747-1183