Northern Miner June 17, 2013 Clifton keeps advancing Duparquet
Clifton Star (CFO-V) is getting busy at its Duparquet gold property in northwestern Quebec, with plans to table a resource update by July, followed by a prefeasibility study in early 2014.
The Duparquet project is located in the Abitibi region along the Destor-Porcupine fault, a 450-km-long geological structure that extends from Timmins, Ont., to Val D’Or, Que. The gold-bearing structure has produced over 100 million oz. gold to date.
The project lies within 2 km from the town of Duparquet and 50 km northwest of the city of Rouyn-Noranda, making it easily accessible. It covers 7.7 km of strike length along the Destor-Porcupine fault and consists of several contiguous properties including Beattie, Donchester, Central Duparquet and Dumico.
The Beattie and Donchester properties each contain a past-producing underground mine. Together, these mines have produced roughly 1.5 million oz. gold from 1930 to 1954 from an on-site mill before shutting down due to low gold prices.
After nearly three decades of little to no activity on the property, exploration and drilling resumed in the late 1980s. From 1987 to 2007, the project’s owners completed 125 holes. A year later drilling accelerated as Clifton signed an option agreement to earn 100% of Duparquet from its underlying owners. Currently, the junior has earned into 10% of the property and is working to own the rest by 2017.
From 2008 to 2012 another 961 holes were put into Duparquet, with a chunk of those completed by Osisko Mining (OSK-T), which signed an option to earn up to 50% of the project from Clifton in December 2009. But after spending over $15 million at Duparquet in 2010, Osisko walked away from the property in mid-2011 to focus on the Hammond Reef gold project near Thunder Bay, Ont., which it acquired from Brett Resources, says Michel Bouchard, Clifton’s president and CEO.
Bouchard, formerly the vice-president of exploration and development at North American Palladium(PDL-T), joined Clifton in late 2011 to reorganize the company, putting in place a new management and kicking off technical studies to advance Duparquet.
“It is one of the very few projects that was not restarted in the last 20 years because of the refractory nature of the ore. It was seen as a problem. Now we’ve solved that with the testing we did at [SGS Minerals in] Lakefield,” Bouchard explains.
The company boosted gold recoveries to over 90% by using POX— a pressure oxidation technique— on the material before leaching it.
Along with the challenge of overcoming the project’s metallurgy, Clifton’s CEO adds he found the deposit’s size and history attractive. “It is a big deposit with several million ounces which makes it unusual. It already had produced 1.5 million oz. so it is real, there’s no question about it. And I knew that solving the metallurgy and getting it through a preliminary economic assessment and then [starting] a prefeasibility there was a real chance that we could start a project there and I do believe that. I think it will be a mine, it's just a question of time.”
While it’s too early to say if and when that will happen, Clifton is concentrating on enhancing the resource. It is adding the final touches to the new resource estimate that will include another 97 holes from the 2012-13 drill program as well as 19 holes that were re-logged and re-sampled from the Dumico property.
Bouchard anticipates the upcoming estimate could convert another 5–10% of the in-pit inferred ounces into the measured and indicated category.
Currently, the in-pit resource contains 1.9 million oz. grading 1.59 grams in measured and indicated, and another 991,494 oz. at 1.15 grams in inferred.
When the ounces from the underground and the Beattie tailings are included, the overall measured and indicated resource totals 46 million tonnes grading 1.62 grams gold for 2.4 million contained oz. gold. It has another 32 million at 1.43 grams for 1.5 million oz. gold in inferred. That estimate is based on 739 holes drilled until September 30, 2012.
Along with the new resource, the company anticipates releasing results of its metallurgical and environmental pilot tests soon. During the first quarter, it shipped a 12 tonne sample that was representative of the project to SGS Minerals in Lakefield, Ont., to confirm the gold recoveries estimated in a January 2013 preliminary economic assessment (PEA).
The study envisioned Duparquet as an 8,000 tonne-per-day operation, producing 104,400 oz. gold a year for 16 years. Gold recoveries were pegged at 93.2% if POX was applied before leaching. However, the company is currently exploring the option of eliminating POX and simply using floatation to produce high-grade gold concentrates to sell directly to smelters, says Bouchard in a mid-June interview.
Preliminary testing has indicated that the gold recovery for the alternative process is less than 90%, but on the plus side it could potentially knock $100 million off Duparquet’s projected $370-million start-up cost and save another $5 to $6 per tonne in operational costs.
“The project is scheduled to produce 8,000 tonnes per day — 2.8 million tonnes per year— if you cut five to six dollars on 2.8 million tonnes it is a lot of dollars that you save at the end of the year,” Bouchard comments. “So it will probably give you a much higher return on investment.”
The PEA calculated the internal rate of return at 19% and net present value at $382 million before taxes using a 5% discount rate and a gold price of $1,472 per oz.
Bouchard believes the economics will improve in the forthcoming prefeasibility as it optimizes Duparquet’s ore processing.
On the drilling front, Clifton intends to wrap up a 15,000-metre program in late August. The latest 30 holes from that program were published on June 6. The results showed the zones within the pits had promising grades and continuity, with notable intercepts containing 6 metres of 7.06 grams gold, 20.4 metres of 1.34 grams gold and 19 metres of 1.46 grams.
The true thicknesses of the intercepts are usually 60% to 80% of the core lengths, the company explains.
Gold on the property occurs in wide altered mineralized zones controlled by the structure, Bouchard says, adding there’s several main zones on the property, including the North, West, RW-RS and the South zones.
“Now we have a very good handle on the structural model,” he says, adding the company has traced some of the zones for over 2.5 km along strike, which can be up to 80 metres wide.
Clifton has roughly $5 million in cash on hand and says it is more than enough to finish off the prefeasibility. It recently closed at 33¢, within a 52-week range of 26¢–$1.29. The junior has a market capitalization of $12.7 million.