Clifton Star Res Inc CFMSF

Metrics such as price per ounce of gold in the ground are silly

[materialsgirl]

CFO has only one headwind.  They agreed to pay circa $52m over 5 years to get to own the property.  They do not have that money and there is little chance that they could ever raise it with gold under $1600;  maybe no chance.

There will be no buyers either.  Yes the ore body seems quite rich but it is still small and we are two years away from a Feasibility Study which will cost several millions

A takeover company that paid 50 cents a share would get the asset for about $15m net of cash.  But then there would be anouther $50m due to previous property owners.  Then perhaps $300m to $400m for capital in order to produce 125,000 ounces per year.  Add $100m in actual or opportunity cost for interest expenses.

This company makes no sense at all.  They should walk away and use the $4m to partner in a new venture.

Look at Donner, also in Quebec.  They are a producer with a rich ore body and they are having awful trouble raising $5m

CFO is a totally hopeless case unless they can renegotiate the $50m payment schedule and delay it by 5 years.  This would provide more time to allow a big recovery in the gold price.

Right now the right thing to do is to sell.  The chance of zero price is looming.

What you have is a lottery ticket that bets gold will hit $1,900 again within a year.  It might happen but what are the odds?

Mat