Clifton Star Resources: Gold resources set to soar at Duparquet Gold Project

Clifton Star Resources (TSX-V:CFO) is the developer of the Duparquet Gold Project, located in South Western Quebec. The large size and potential of the project attracted Osisko Mining (TSX: OSK) as a 50% joint venture partner, and includes a 3 year drilling and development program of $70 million and loan advances of $38 million to CFO for a total of $107 million. This arrangement will assist CFO to meet staged payments due to the vendors of the project in 2012 and 2017 for $53 million. OSK is now the operator of a very substantial drilling and development program set to complete between 2010 and 2013.

OSK committed $15 million and deployed 10 rigs to complete the 2010 drilling campaign of 122,800 meters, consisting of 69,800 meters for 219 holes on the Beattie Property, 20,300 meters for 69 holes on the Duquesne Property and 32,700 meters for 96 holes on the Donchester Property and Central Duparquet . This covered a distance of 3,200 – 3,300 meters on the major strike line.  

The Duparquet Gold Project covers a strike length of 6.5 kilometers over historical gold production of 1.473 million ounces from mines at Beattie, Donchester, Central Duparquet and Dumico. This same south-easterly strike line continues across Quebec for approximately 90 kilometers, where it hosts very significant gold deposits containing more than 50 million ounces at Rouyn-Noranda, Bousquet, Vald’Or and OSK’s Malartic Mine. Malartic will become Quebec’s largest gold mine, and one of the biggest in Canada with reserves of 8.9 million ounces and resources of 11 million ounces. Both Malartic and Duparquet host gold in porphyry, and represent an ideal opportunity to re-deploy OSK’s highly skilled mine building team, to a project that carries major production potential as both an open pit and underground bulk mine operation.  

The biggest producer on the Duparquet Gold Project was the Beattie Mine with 1.265 million ounces won at a grade 0.115 oz/t from underground workings. The main ore body extended over a length of 352 meters and was mined down to a depth of 381 meters. Some workings reach a depth of 600 meters with CFO tracing mineralized strike of 8,400 meters around the ore body. A tailings dump exists near the mine and may yield up to 220,000 ounces when it is reclaimed. The Beattie Mine is part of a 6.5 kilometer strike line that carries three major mineralized zones running from east to west. The North and South zones have both been drilled over 2.6 kilometers and are still open down dip and along strike. The RW zone has been drilled for 1.3 kilometers and remains open and may carry the highest potential. An additional 8 parallel zones have been identified open to the west. According to CFO the Beattie Mine area may host a resource expansion target of 3 to 6 million ounces. Significant intersections on the Beattie included 49.3 meters @ 2.05 g/t, 70.5 meters @ 1.94 g/t, 96 meters @ 1.21 g/t, 73 meters @ 1.70 g/t and 132 meters @ 0.94 g/t.

The Donchester Mine produced 208,000 ounces of gold. The main ore body was mined over 1,000 meters down to a depth of 381 meters and connected to the workings at the Beattie Mine. This area carries a NI 43-101 compliant resource of 12.7 million tonnes at 2.8 g/t for 1,102,766 ounces. Both mines may host a resource expansion target of 5 million ounces. Drilling on the Beattie / Donchester line included 19.8 meters @ 1.29 g/t, 15.2 meters @ 7.69 g/t,  25.2 meters @ 7.54 g/t, and 24 meters @ 3.96 g/t.

Central Duparquet is part of a recent acquisition carrying 4 kilometers of strike and a historic resource of 567,000 tonnes at 5.11 g/t for 93,000 ounces from 283 drill holes. The area is largely unexplored and will be drilled in 2010 to confirm and expand the historic resource. The Dumico Mine produced 7,500 tonnes of ore at a grade of 3.3 g/t and lies along the same fault structure as is found in the Donchester Mine. Two shafts were sunk to 305 meters, where a 2.3 meter wide mineralized zone averaging 10.7 g/t gold with minor molybdenite and silver values was traced in 84 drill holes over a distance of 700 meters. The strike line at Dumico runs for 900 meters and is identified as having a resource target potential of 1 million ounces.

The Duquesne Mine property produced 60,000 ounces at an average grade of 10.5-11.5 g/t. CFO completed 55 drill holes over a 250 meter strike length and depth of 932 meters. The drilling outlined resources on westerly extensions and at depth, 4 parallel high grade gold veins, and wider mineralized zones. The 3,000 meter strike line here has a target resource potential of up to 5 million ounces. Recent results on the Main Zone include 19.5 meters @ 4.22 g/t, 15.2 meters @ 2.6 g/t and 11.0 meters @ 5.81 g/t.

The current round of drilling is expected to be completely logged by the end of 2010. Approximately half of the drilling assays have been completed, with remaining assay results flowing into the market over the next two months. Drill data will be converted into 3D modeling to allow both open pit and underground   potential to be fully evaluated. The next round of drilling will resume in the coming year.

CFO completed a NI 43-101 in late 2009 for a measured, indicated and inferred resource at Beattie, Donchester, Central Duparquet and Duquesne of 2,642,758 ounces, which is dwarfed by the total resource target potential that CFO now identifies at 11 million ounces. OSK understands the potential and has committed $70 million for the chance to own 50% of the project. Assuming that this potential is realized the finding cost will be an extremely low $6.36 per resource ounce. The current median enterprise value per resource ounce for OSK and CFO peer group is around US$158 per ounce, so ongoing and hefty additions to resource inventory would be very bullish for Clifton Star.

The Board of Directors has also approved the adoption of a Shareholders’ Rights Plan, to allow shareholders to purchase shares at a discounted price, in the face of a hostile takeover bid for the company.  The Rights Plan is similar to plans adopted by other Canadian companies and will be presented for ratification at the next Annual General Meeting set down for December 13th.