Andrew:
I sympathize with your viewpoint re: the shift in Clifton's strategy.
I recently had an opportunity to discuss the current plans with
Clifton management. They have come a long way since I wrote this
one up a long time ago. The mill is performing well, and they have added a leaching circuit so that they can produce silver/gold dore
bars. They had every intention to continue the business plan
as we had understood it. However, they were blind-sided by a
secretary of interior edict that hit lead smelters with a fine
purportedly for the purpose of cleaning up abandoned lead deposits.
Virtually every company that mines lead (including Clifton) is bonded
so that reclamation costs are theoretically covered with this bonding, as I understand it. So this edict seems excessive and redundant,
and is being challenged.
However, this has resulted in a sharply decreased price that Clifton
can obtain for the lead. As a result, the current situation is that mining the lead/silver ore is not profitable. From a business sense
and for no other reason , management has decided that for
this company to survive they are going to have to change their
plan. Coincidentally, they acquired the Cane Springs mine, which
had not been mined since the late 1940's. The mine was shut down
as a result of a War edict, and not for economic reasons. Clifton
has been aware of this property ( the mine is 500 yards from the
Clifton mill ) for a long time, but it finally became available
for purchase recently. There is a significant amount of high-grade gold ore at reasonable depths, and with the proximity to the mill, the mining costs will be relatively low. Remember that they retrofitted
the mill to accommodate a leaching circuit and can now produce Dore bars for which they have a ready market with resulting cash flow.
They have obtained pump to pump out water from the mine, so as
to evaluate the extent of the ore and begin to mine from the depths.
Also, they plan to punch a few selected holes to determine the strike
length of the deposit.
I have retained all of my shares, and as far as I know, the Moellers
have retained all of their shares as well. I have confidence that
these are honest managers, and I trust their accurate reporting
of the facts. Dr. Ken Friedman, who is president of Strathmore
Resources (Uranium), remains a director of Clifton, and he is fully
supportive of the company.
By the way, the last couple of days the stock has popped up, and if you compare its performance to say an Avino, the percent drop from recent highs is about the same.
I hope this helps. I bought some more shares on the Cane Springs announcement some time back.
Regrds
Dan |
