Millrock Resources (TSX-V: MRO) CEO Greg Beischer on New Strategic Alliance in Alaska and Plans for 2021
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Millrock Resources, Mr. Greg Beischer. Greg, how are you this morning? I suspect cold, given that I lived in Anchorage for 17 years and it's the 12th of January.
Greg Beischer: Well, it's actually pretty nice here, Gerardo. We've got blue skies. The Chinook wind blew in, and so the temperatures may be just around freezing. Quite pleasant, actually. And happy new year, by the way. It's been a kind of a rough start to the new year on a number of fronts, but for Millrock, we've got a big new announcement that came out this morning and I'm very pleased about it.
Gerardo Del Real: Well, happy new year to you as well. Let's get right into it. You formed a strategic alliance with Felix Gold and you vended three projects in Fairbanks, in the Fairbanks Gold District, of course, in Alaska. A lot of layers to the deal. I will let you provide the context.
Greg Beischer: Sure thing. Just a bit on the history here, Gerardo. Fairbanks the gold was discovered there in the early 1900s Gold Rush and one of the first places it was discovered after the prospectors and miners went to the Yukon and then got to Alaska and made discoveries there. So a lot of placer or alluvial gold has been mined at Fairbanks over the years and more or less a flagship mine for Kinross Gold Corporation, the Fort Knox Mine, probably a 13 million ounce gold deposit. So far they've mined over 8 million of it and made very good money for Fort Knox. So there's high-grade vein deposits, there's low grade disseminated deposits. But amazingly, despite the long history, I think the district really hasn't been properly explored. And so Millrock has started to build a position in Fairbanks over the years.
So about five years ago, we started picking up claims from prospectors at low cost, various deals that we put together to just kind of keep a proper position in a holding pattern, knowing that one day better days would come and that we'd be able to finance these projects. And then last year in earnest, we really started to stake up land and build beefier, more cohesive land positions, knowing again, that that should be attractive to bigger companies. But out of the blue, I'm not sure how they found out about us, but a group out of Australia approached us concerning our Treasure Creek project, which is just on the north edge of the city of Fairbanks. And then they started to investigate the Fairbanks area generally and got really excited and realized, "Wow, there is gold everywhere in this district. And it really hasn't been explored very well. There's open ground," and so that's when it was hatched that we would form a strategic alliance, putting our heads together with theirs.
They're a very strong technical team. They really have seen the types of gold deposits like occur at Fairbanks all over the world. And we're looking forward to working with them and the technical horsepower that they can bring. They're very well funded. They command the respect of the financial groups in Australia. And so they've decided, it's a private company, but they decided they would spin out a brand new Australian Securities Exchange listed company and put our assets into that company. And so that's what's about to happen. They will do an initial public offering or IPO within the next couple of months.
And at that point, after they've raised at least US $7 million that would be destined primarily for Millrock's three projects, we, Millrock will become a 10% shareholder of this brand new, well-funded company. So those shares could become extremely valuable upon a gold deposit discovery to the benefit of Millrock's shareholders. But additionally, there'll be royalties assigned to each of the projects. And each of the royalties has an advanced minimum royalty provision that starts at $50,000 and then grows by $50,000 each year. And this has been a big part of Millrock's goal, is to build, create cash flowing royalties that help the bottom line of the company. And so those advanced minimum royalties or AMRs will be triggered fairly soon probably, when Felix Gold hits a certain milestone.
So a good deal for Millrock, significant shareholder-moved company, cash flowing royalties soon, and we'll operate exploration collaboratively with Felix Gold and receive some cash income through management fees as a result. So again, we like to have a little bit of income to offset our overhead, key so that we don't have to do financings too often. And we continue to put our money in the ground, developing projects that build the company up further through ownership of assets like paying royalties.
Gerardo Del Real: How quickly do you anticipate field work commencing at the projects by Felix Gold?
Greg Beischer: We're going to start probably as early as late May with a rotary air blast drilling program to test beneath places where we know gold has been detected at surface at Treasure Creek. There's, for example, some, the last round of any drilling or any activity on Treasure Creek was in the early 1990s, and a fellow dug a series of pits along about a half kilometer line, every maybe 25 meters. And there was good grade gold at the bottom of each of those pits. At the time, it was pretty hard going, still permafrost beneath the surface, but he got down to bedrock and sampled it. And, well, there's strong gold numbers. Nobody's been back since, and so we'll drill a series of RAB or rotary air blast holes, a fence to provide continuous geologic information below those pits. And if they're any indication of what's below, we could tie into something significant right there. It seemed to be mineralization spread over a pretty broad interval.
There's some quite good drill intersections from that 1990s work that was never followed up and we intend to do that. This group that we've partnered with, very aggressive. They want to drill holes and they understand the drill bit's the key to discovery. But the rush right now for us is to really assemble all that historic data, synthesize it, interpret it, understand it, and make sure that we do the best possible targeting job with our drill holes.
Gerardo Del Real: You mentioned aggressive, you mentioned the technical competence of the group, and you mentioned their understanding that some of the most accretive value comes from discovery via the drill bit. I can't let you go without asking you about the 64 North Gold Project. Obviously, we all always hope that we make a discovery in the first couple of holes. That hasn't happened yet. I know we have assays pending for, I believe, two holes right now. How did that program end up working out, given the COVID restrictions and the tough winter conditions that you and I discussed last time? And when do we anticipate an update on that front?
Greg Beischer: Yeah, you'll get an update really soon, but we did drill two further holes. That drilling effort went all the way up towards mid-December. And that was pretty darn cold at that time, especially at that little bit of a higher elevation, but we did manage to get those two holes in. Yeah, the whole program was a bit of a struggle. Resolution Minerals, our partner, expended in excess of US $5 million to do the work. It was a bit of a on-again, off-again thing because the money didn't flow just exactly the way it should have, which makes logistics planning difficult. But Millrock, as operator, did manage to pull off the full program that would have been laid out between the two parties. And it took some doing, let me tell you. Credit to our staff; if it wasn't for their ability, it may not have happened at all.
We do have results pending on the last two holes of the program. I can't tell you what they are, but expect to see them here pretty soon. I can tell you that Resolution Minerals has, well, first of all, met the initial requirement to spend a minimum US $5 million in the past year. They've met that requirement. They've indicated they wish to make the payments to Millrock that are necessary for them to convert their investment to a 30% ownership of the project. So Millrock anticipates this week, receiving 10 million Resolution Minerals shares and a $50,000 cash payment.
Gerardo Del Real: Excellent.
Greg Beischer: Yeah. And oh, and better yet, they've indicated it's their full intention to proceed with the project another year and raise the $5 million they need to move their ownership forward to a 40% interest. It's a four-year deal, $20 million expenditures over those four years for them to earn 60%. So step by step, and it's a huge project. We've developed several great targets outside of West Pogo this year and I suspect that Resolution and its financial backers will want to test some of those targets next. We'll be having a series of meetings over the next weeks with them to see where they would like to deploy their cash resources to test prospects.
Gerardo Del Real: Excellent. Excellent. Greg, I want to thank you for the thorough update on both fronts. I know there's other projects in the portfolio. I know you're also always busy looking and vetting projects. How are things on that front?
Greg Beischer: Yeah. Well, I think we're actually getting low on project inventory at this point, Gerardo. And so we're very actively adding new projects, things we've had our eyes on for a while. You can anticipate announcements of more partnerships soon. So a very, very active year coming up with almost all of our projects funded and moving towards drilling, if not actual drilling this year. So this is the time we've been waiting for, the time we struggled through but as contrarians, took the chances to build our portfolio. Well, it's paying off now.
Gerardo Del Real: Wonderful. Greg, a lot to get done. I'll let you get to it. Thank you again for your time.
Greg Beischer: Thank you, Gerardo, always a pleasure.