LOM comments on metallurgy and drilling Friday, March 02, 2012
Clifton Star Resources Inc. (CFO-TSXV)1
Under Review
July 25/11 closing price: $2.90
Michael Fowler, M.Sc MBA
Loewen, Ondaatje, McCutcheon (LOM)
416-964-4440
Clifton Star Reports Some Excellent Drilling and Gold Recovery Test Results At Duparquet- Very Positive : The company reported the results of their 2011 drilling campaign. These results were not included in the recently tabled NI 43-101 report. The 2011 campaign targeted the North and South Zones of the Beattie Donchester intrusion. The target of the drilling was to see if the North and South Zones continue to depth and this was proven. The company reported on 85 holes drilled and a good 50% could be considered as economic. Normally this figure would be 30% in the Abitibi region. Typically the holes showed 5 to 25 metres of between 1 to 4 grams per tonne gold. These results will be included in a resource estimation by InnovExplo scheduled for completion in April. These results are very encouraging and additive to the resource base.
The news on the metallurgy of the ore is excellent. By using the pressure oxidation technique, tests showed that the average recovery was 93%. In addition, arsenic (there has been a lot of negative rumours in that regard) levels are low and should not cause environmental concerns. The added rumours of metallurgical recovery problems at Duparquet should be put to bed with these test results.
There have been three very good news releases in three days- possibly a record for a junior exploration company! In our opinion, the company has the potential of proving up a resource of plus 5 million ounces at a 0.5 grams per tonne cut-off grade at Duparquet. The company has over $14 million in working capital, is continuing to drill the Beattie and Donchester properties and it has the ability to access a $22.5 million credit facility from Osisko, convertible into Clifton stock at a price of $3.12 per share. We are assuming the stock will start trading again very soon and we fully anticipate a dive in the stock, as frustrated investors flee the stock for emotional reasons. However, the fundamentals remain very strong. The announcements today are very positive and we recommend buying.
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