Clifton Star Res Inc CFMSF

GMP report: potential for CAPEX savings

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03/28/13	Clifton Star Resources	Andrew Mikitchook
FLASH Clifton Star Resources (CFO-V) BUY Last: $0.69 Target: $1.75 Potential for Significant Capex Savings from Concentrate Production Event: Floatation testing suggests potentially saleable concentrate • Clifton Star has announced the results of a study on the production of high grade gold concentrate from mineralization at the Duparquet project. Six samples were treated with locked cycle cleaner floatation to produce a gold concentrate. • These tests were completed to evaluate the viability of producing a gold-bearing sulphide concentrate for toll smelting to eliminate the need of operating a POX circuit at Duparquet (evaluated in the PEA). • Gold concentrate grades ranged between 39g/t and 84g/t. Sulphur grades ranged between 21% and 36%. Such grades appear amendable to toll smelting at copper operations. Resulting gold recoveries averaged 89.6% vs. 93% with use of POX. Arsenic contents averaged 1.1% which is above the no-penalty 0.4% usually set by smelters but may still be at saleable levels. • The production of the high grade concentrate would potentially allow for lower capital and operating costs at Duparquet. In the PEA, $158mm out of a total of $270mm of capex was allocated to the POX circuit. Not operating a POX circuit would also offer costs savings with $6.67/tonne of opex in the PEA attributed to the POX out of the $36.65/tonne total from the PEA. • The company has commenced a pre-feasibility on Duparquet. A section of the study will look at the potential benefits of the two processing streams. • In the past few months, the company has extracted a 12 tonne sample of Duparquet mineralization that has been sent for metallurgical and environmental testing ahead of the PFS. This test work will involve a pilot plant testing for POX viability as well as for production of high grade concentrate. The testing is expected to be completed in Q2 2013. • The company will contact smelting companies as well as commodity brokers to determine the level of interest in the toll treatment of concentrate. Impact: Slight positive • The potential for toll smelting of gold concentrate from Duparquet presents an opportunity for capital and operating cost savings – the POX circuit comprised ~60% of the $270mm Duparquet capex outlined in the PEA and ~20% of the open pit $/tonne operating costs. • The company is completing additional testwork and will inquire into the level of interest in the toll treatment of concentrate. Recommendation: Maintain BUY, $1.75 target