The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Investments help project-generating junior seek new gold projects in tough financial times
When Greg Beischer and Phil St. George teamed up to form Millrock Resources Inc. early in 2007, they set out to make big discoveries that would attract the interest of the world's mining giants. The Millrock team has the background to know what global mining companies are looking for and the geological expertise to find it.
Beischer, the Vancouver B.C.-based junior's president and CEO, spent two decades working for Inco Ltd., now a subsidiary of global mining giant Companhia Vale do Rio Doce. Vale Inco has more than 12,000 employees worldwide and posted US$8 billion-plus net sales in 2008.
St. George, Millrock's vice president of exploration, was involved with the discovery of the Pebble copper-gold-molybdenum deposit in Southwest Alaska while working with Teck Cominco early in his career. Later, as vice president of exploration at NovaGold Resources Inc. he made key discoveries that increased the size and grade of the huge Donlin Creek gold deposit in the Yukon-Kuskokwim region of Southwest Alaska.
Built on a project generator model, Millrock is using this experience to find new large gold and copper projects in Alaska and Arizona.
"We come up with the ideas, we do the initial ground work and if we like what we see in the field, we will stake claims. At that point we will take the project to other companies and have them earn an interest by paying for the exploration," Beischer told Mining News. "We know what big mining companies are looking for. Our goal is to find deposits that are of interest to Newmont, Barrick and Anglo," he said.
In 2009 Vale, Kinross and Altius put their money into Millrock. These investments have allowed the project-generating junior to advance its current projects and seek out new prospects during a tough financial market.
Key investments
Kinross Gold Corp. and Altius Resources Inc. made key investments in Millrock in 2009. Paying a premium to the junior's share price, the combined C$1.28 million cash infusion provided exploration funds as well as bolstering the explorer's stock price in a tough investment market.
Paying a modest premium to Millrock's share price, Kinross spent C$350,000 in May to purchase around a 5.5 percent interest in the Alaska explorer. The Fort Knox gold mine owner can increase its stake in the junior to more than 9 percent if it chooses to exercise the warrants that went with the deal.
"That gives them a sort of an inside edge on anything that Millrock may discover. Automatically they would own 10 percent of it by virtue of their ownership in our company," Beischer told Mining News. "To me it is the start of a good relationship. They will be looking at projects we already have and others that we might develop."
Following Kinross' lead, Altius, a project generator and royalty business, invested C$930,000 into Millrock in June, giving the Newfoundland Labrador-based company about an 11 percent ownership of the junior.
The two companies, which share a similar business model, have forged a strategic alliance in five specific "areas of interest" in Alaska. Using funds supplied by Altius, Millrock is seeking out new gold prospects in these designated areas. Altius will receive a 1 percent royalty on gold projects and a 0.5 percent royalty on base metal projects-generated by the strategic alliance.
"They (Altius), like us, anticipate that there is going to be a real surge in the price of gold, and that is going to create a great deal of opportunity for project generator companies," Beischer told Mining News.
Two zones at Estelle
Though Millrock's primary focus in 2009 has been to accumulate new gold projects it, did find the time to explore the Estelle high-grade gold property in Alaska's Rainy Pass district, about 160 kilometers, or 100 miles, northwest of Anchorage.
"Estelle is where we see the potential for the gigantic multimillion-ounce deposit. It has a lot of the earmarks of Donlin Creek. All the right checkmarks that go along with the things you look for in a giant deposit are present," Beischer said.
Following up on indications of two intrusive-hosted gold occurrences at Estelle, geologists returned to find the source of the widespread hydrothermal alteration and abundant high-grade vein-style gold discovered in the talus fines and rocks at Shoeshine and Oxide Ridge.
The work completed at Shoeshine in 2008 outlined an anomalous zone, measuring about 300 meters by a kilometer. The average grade of 49 samples taken from Shoeshine is 0.585 g/t gold. The company reports that one sample of porphyry rock cut by sheeted quartz veinlets assayed 13.13 g/t gold. Numerous talus samples assaying in the 3 g/t to 5 g/t range also were collected.
Sampling at Oxide Ridge has outlined a zone measuring 200 meters by 300 meters. The junior said the talus fines are representative of bedrock immediately uphill from the sample site. The average of 24 talus fines samples taken from Oxide Ridge is 2.32 grams per metric ton gold.
The Millrock president said the 2009 exploration at Estelle has found the bedrock source of the gold-bearing talus and geologists are sampling and mapping the outcrops.
Arizona for the winter
When the cold, dark months of winter descend on Alaska and a blanket of snow covers Millrock's Alaska prospects, the junior shifts its focus to its three high-grade porphyry copper-gold-molybdenum deposits in southeastern Arizona.
"It was stunning to find such exciting targets available for staking in such close proximity, and directly on trend from the Safford and Morenci mining camps," Beischer said. "Arizona is an excellent balance for the seasonality of Millrock's work in Alaska."
In March, Vale Exploration Canada Inc. entered into a joint venture agreement on Millrock's Galiuro copper-gold-molybdenum project north of Tucson, Arizona.
"Vale had been looking for copper projects in North America for almost two years and they picked this one first," Beischer said. "And I really like the structure of the deal."
In exchange for cash payments of US$850,000 and exploration expenditures of US$3.25 million by the end of 2012, the Brazil-based mining giant can earn a 60 percent stake in the giant porphyry deposit. Vale can raise its stake to 70 percent by completing a feasibility study.
The JV partners, led by Millrock, completed preliminary mapping on the project in March, followed by an airborne Z-Axis Tipper Electromagnetic and magnetic survey of the enormous porphyry prospect.
"Our philosophy is: If we restrict ourselves to looking for giants like porphyry copper-golds or pluton-hosted gold deposits like Donlin Creek; then owning 30 percent of one of those still helps us meet our corporate objective, which is to sell our project or sell our company at some incredible profit."
What's next?
Of Millrock's three remaining gold properties in Alaska, the 6,560-acre Fortymile property in eastern Interior Alaska is the only one that received any exploration in 2009.
Without work commitments on its two gold properties near Nome, the junior chose to hold off on exploring the Divide property and the large land package it has optioned from the Bering Straits Native Corporation.
"Millrock already has a solid portfolio of gold projects, but we intend to expand that significantly and we will make joint ventures with other junior, mid-tier and/or major companies that want to earn into our projects," Beischer explained. "That is the game plan going into 2010. We have got six core projects that we have started to make joint ventures on. You will see more joint ventures, you'll see more properties staked in 2010 and Millrock will do a great deal of drilling on its projects with the price of gold up over $1,000."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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