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Millrock Resources (TSX-V: MRO)(OTC: MLRKF) CEO Greg Beischer on Positioning Shareholders for Gold’s Next Leg Up
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, it's great to have you back on. How are you in snowy Anchorage?
Greg Beischer: Thanks, Gerardo. It's snowy indeed. We've had quite a bit over the last couple weeks, going into full winter mode, coming up on the shortest day of the year here in a few weeks and we'll be glad to be on the uptick on that front and others as well.
Gerardo Del Real: Excellent. Well, look, I wanted to have a conversation with you today. You had some news yesterday that I think is not being appreciated by the market and not just in the share price, which of course, both of us know that it's taken a bit of a hit. Tax loss selling season and the consolidation in the gold space have not been kind but that will pass, as it does. What I don't believe people are appreciating is the execution that you've been able to manifest here in the past 12 months. You've been able to negotiate, not one, not two, not three but a multitude of deals that position Millrock shareholders very, very well for 2022.
And if the gold price cooperates, the way I think it will in 2022, I think the current levels present a heck of a speculation but I want to talk about the most recent deal and I'll read the headline and let you provide the context. The headline reads:
“Millrock Partner Felix Gold Lodges Initial Public Offering Prospectus on the Australia Securities Exchange, Fairbanks Area Gold Projects, Alaska”
If this were a drill release type of news release, it would be very technical in nature. For a release on a deal that you've been able to negotiate, it’s very technical for those that maybe don't have that type of experience and I wanted to have you on to give you an opportunity to go over the structure and the upside potentially for Millrock shareholders.
Greg Beischer: You bet. I'd be really glad to do that, Gerardo. Often Millrock’s deal structure is what's called an earn in agreement where we've acquired the mineral rights, shown the geologic potential and then the partner earns in to typically a majority percentage ownership of the project by spending certain minimum levels on exploration and paying Millrock in cash, certain amounts of money. Those payments escalate over time to the end of the option period. So very standard sort of agreement in our space and very typical when Millrock does an agreement with say a major mining company. In the case of the Fairbanks projects, we've made a deal with a junior company. In fact, it was a deal that you saw last January with a private Australian company, a good one though, backed by sound geological people, sound financial people and so we were pleased to do the deal. We placed in that company, our Fairbanks area projects, of which we had two.
They were owned by prospectors and we had made agreements with those prospectors years ago, at low cost. And so, I think that Millrock probably invested maybe a total of $250,000 in those Fairbanks area projects and we've already made back more than that money through this year as the company, which is called Felix Gold, spent money working with us as operator, Millrock operating, making some management fees, getting some cash payments. So we've recovered all of our initial investment and more besides, so at this point, Millrock shareholders have nothing at risk but in return for signing our property rights over to Felix Gold, they promised to pay us 10% of their shares upon listing on the Australia Securities Exchange and so they've lodged the paperwork for that. It'll take about six weeks. If all’s successful under the current schedule, then in January, Felix Gold will become a free trading company on the ASX and Millrock will own 10% of the company after they've raised in excess of $10 million, that'll go towards those projects.
And the value of that stock, on the initial public offering day when they start to trade will be in the area of $1.8 million US at a share price of 25 cents. So I think just on the face of that alone, this is a great deal for Millrock shareholders but there's more. So let's say that the exploration that Felix Gold will do next year with that $10 million is successful, that they start to find gold. Well, it's not unreasonable to think of shares going from 25 cents to $2.50. So all of a sudden Millrock’s shareholdings were worth maybe 20 or 25 million dollars.
If we monetize that, we're setting our shareholders up for a good win. If it's a really great discovery that they make and you and I have both seen it before when a company, a 10 or 20 dollar share price and so, now we're talking a hundred or 200 million dollars worth of shares and then we've really done our jos for our shareholders at that point. And on top of all that, we get royalties on all the properties. So, if production starts to occur, we get Net Smelter Return Royalties but before that even we're entitled to receive advanced minimum royalties, which escalate over time and those we could get, at least we could get up to three streams of royalties from these projects. And within a few years that could be paying for all of Millrock's overhead alone. So I think it's a great deal. Different than what we usually do. I know it's a little hard to understand but I think you would understand that this is a great deal for Millrock shareholders.
Gerardo Del Real: And just to provide some context here, when we talk about the potential for a company and it happens, quickly in this space with a good discovery, right, to become a hundred, 200, 300 million dollar company, what's Millrock's current market cap, as it stands today?
Greg Beischer: We're around $10 million market cap. So, monetizing those shares at a higher share price is going to do a world of good for Millrock’s share price.
Gerardo Del Real: This of course is just one of the deals that you've recently executed. How are things coming along on the 64 North Side and the various other projects and partnerships in the portfolio?
Greg Beischer: Yeah, we've done a couple other similar deals like that. One with Coeur d'Alene Mines on the Apex project, the gold project in Southeast Alaska, that'll get drilled next year. Somewhat similar deals on two of our Mexico projects, one gold, one porphyry copper and everything marches ahead at 64 North. As you know, the initial exploration over the last year and a half hasn't produced the results we'd all hoped. But nevertheless the partner, Resolution Minerals, is still raising money, still spending it on the project.
Again, we're a big shareholder of Resolution, so we want them to succeed and they just completed a month or so ago, a trenching program on a prospect I've always liked, called Tourmaline Ridge, just to the west of the Pogo Gold Mine and those results probably are going to be received right around Christmas. They probably won't get published till early in the new year but who knows there could be something good there but over all, I think there's going to be drilling carried out by partners with their funding on at least five and as many as seven Millrock projects in 2022. So lots of opportunities for discovery success and Millrock share price increase.
Gerardo Del Real: Well, that's what the better management teams do during quiet markets and consolidations, is position for the next leg up. I have all the faith in the world that a significant next leg up is coming here at the end of the year and early 2022. I'm looking forward to it. Greg, anything else to add to that?
Greg Beischer: Just, that there's more projects in the pipeline that we'll be able to talk about in detail soon. As you know, we tend towards porphyry copper and copper gold type deposit models often because those are the huge things that major companies want to buy out. But we're also very interested in the various energy metals, nickel of course is got a brilliant future, coming in the next years. Copper continues to be great and we are always going to go after that but we also really like what often goes along with nickel deposits, which is platinum group elements and so we've got a project coming with those metals featured.
Gerardo Del Real: A lot to like. Looking forward to it. Thank you for that thorough update, Greg. Appreciate it.
Greg Beischer: My pleasure, Gerardo. Have a great Christmas.
Gerardo Del Real: You as well. Stay safe out there.
Greg Beischer: Will do. Bye.Click here to see more from Millrock Resources Inc.