Clifton keeps advancing Duparquet

Clifton Star Resources (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 geological structure that extends from Timmins, Ont., to Val-d’Or, Que. Miners tapping into the gold-bearing structure have produced over 100 million oz. gold to date.

The project lies 2 km from the town of Duparquet and 50 km northwest of Rouyn-Noranda. It covers 7.7 km of strike length along the Destor-Porcupine fault and holds several contiguous properties, including Beattie, Dorchester, Central Duparquet and Dumico.

The Beattie and Dorchester properties each contain a past-producing underground mine. Together, these mines have produced 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. The junior has earned into 10% of the property so far and is working to own the rest by 2017.

From 2008 to 2012 another 961 holes were put into Duparquet, with a chunk 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, PAL-N), joined Clifton in late 2011 to reorganize the company, putting new management in place and kicking off technical studies to advance ­Duparquet.

“It is one of the few projects that was not restarted in the last twenty 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 a pressure-oxidation technique (POX) on the material before leaching it.

After overcoming the project’s metallurgy, Clifton’s CEO says that he found the deposit’s size and history attractive. “It is a big deposit with several million ounces, which makes it unusual. It had already 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’s adding the final touches to a new resource estimate that will include another 97 holes from the 2012–2013 drill program, as well as 19 holes that were re-logged and re-sampled from the Dumico property.

Bouchard says the upcoming estimate could convert another 5–10% of the in-pit inferred ounces into the measured and indicated category.

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.

After including the ounces from the underground and Beattie tailings, 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. The estimate is based on 739 holes drilled up to Sept. 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 project sample 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 per year for 16 years. Gold recoveries were pegged at 93.2% if POX was applied before leaching. However, the company is exploring the option of eliminating POX and using flotation to produce high-grade gold concentrates to sell directly to smelters, Bouchard says 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 knock off $100 million from Duparquet’s projected $370-million start-up cost, and save more in operational costs. 

“The project is scheduled to produce 8,000 tonnes per day — 2.8 million tonnes per year — if you cut $5 to $6 [per tonne] on 2.8 million tonnes, which is a lot 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 US$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 show the zones within the pits have promising grades and continuity, with notable intercepts including 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 60–80% of the core lengths, the company explains.

Gold on the property occurs in wide, altered mineralized zones controlled by the structure, Bouchard says. There are several main zones on the property, including the North, West, RW-RS and the South zones.

“Now we have a good handle on the structural model,” he says, adding that the company has traced some of the zones — which can be up to 80 metres wide — for over 2.5 km along strike.

Clifton has $5 million in cash-on-hand, which it says is more than enough to finish the prefeasibility. It recently closed at 33¢, within a 52-week range of 26¢ to $1.29. The junior has a $12.7-million market capitalization.