Osisko has left the Building!VANCOUVER, BRITISH COLUMBIA--(Marketwire - 06/17/11) - Clifton Star Resources Inc. (TSX-V:CFO - News)(Frankfurt:C3T - News)Clifton Star (The "Company") wishes to advise its shareholders that atthe last Joint Venture meeting, Osisko presented a detailed budget forthe current year that was not in keeping with its obligations under theJoint Venture agreement in that it did not meet the minimum spendingrequirement set-out therein for 2011.
Clifton had asked Osisko forclarification of its intentions because no drilling had beencarried-out on the property since last summer while the 43-101 reportprepared by SGS was being finalized and no clarification had beenforthcoming.
The Company had asked for the halt in trading toaddress rumors that were circulating that Osisko had chosen to withdrawfrom the project. We can now announce that we have received officialnotification from Osisko that it is terminating its agreement withClifton Star with the required thirty days notice.
In the interim, Clifton is taking the following steps:
-- It has asked that the drillers remain on-site so that if Clifton must
re-assume operatorship of the project it may immediately proceed with
drilling;
-- It has retained an independent mining engineer to evaluate the proposed
drilling program in light of the current resource;
-- It has retained the services of a management search firm to find a
replacement for Harry Miller as the Company's C.E.O. Mr. Miller's
management contract with the Company expires on December 31 2011 and Mr.
Miller has advised the Board that he does not intend to extend his
contract with the Company as C.E.O. when it comes to a term at the end
of the year preferring to assume a different role with the Company once
a replacement with mining specific experience has been identified.
-- It is seeking to deepen and solidify its geological team.
Clifton is well funded with approximately $15.15 Million in its treasury at the present time.
In December 2009, Osisko issued a commitment letter to Clifton Star agreeing:
toadvance for a period of 24 months up to an aggregate principal amountof $22.5 million (the "$22.5 Million Loan") at the rate of interest perannum of 5% calculated on the outstanding principal amount compoundedmonthly from and including the dates that funds are advanced to andincluding the date of payment. The principal amount and interest owingpursuant to the $22.5 Million Loan shall be due and payable on the 24month anniversary of the date of execution of the loan agreement withthe option exercisable by Clifton to repay the full amount of principaland interest owing thereunder at any time prior to maturity.
The $22.5 Million Loan will be unsecured, will be the subject of a loan agreement and will be evidenced by promissory note.
TheLoan from Osisko to Clifton is to facilitate the next payment to theunderlying property owners which is due in December 2012 and will assistClifton in securing full title to the property. In the event that atany time Osisko determines that it will not proceed to fund the earn-inpayments under the Joint Venture prior to expiry of the Option Periodand abandons its interest in the Project, Clifton, at its sole option,may elect to convert the entire amount of principal of the Loan intocommon shares of Clifton at a conversion price per share equal to $3.12and the amount of the interest at the prevailing market price ofClifton's shares at that time, provided such conversion shall be subjectto prior approval of applicable regulatory agencies and stockexchanges. This loan would have to be made prior to the next propertypayment which is due on December 1, 2012 and would have to be repaid byClifton, at its option in either cash or Clifton shares in November2014. The Loan Agreement shall provide for the customary anti-dilutionand conversion rights protection for the lender.
The Companywishes to thank Osisko for the professional manner in which it carriedout its obligations under the joint venture agreement and for advancingthe project. The Company looks forward to the opportunity of improvingthe projects viability.
This news release may containforward-looking statements which address future events and conditionsand therefore involve inherent risks and uncertainties. Actual resultsmay differ materially from these currently anticipated in suchstatements.
On behalf of the Board,
Harry Miller, President