Maurice Jackson: Joining us for a conversation today is Gregory
Beischer, the president, director and CEO of Millrock
Resources Inc. (MRO:TSX.V; MLRKF:OTCQX), along with Chris Van Treeck,
senior project geologist.
Glad to have you both on the program to discuss an important announcement
that may be quite significance for Millrock Resources. But before we begin,
Mr. Beischer, for first time listeners, who is Millrock Resources?
Gregory B: Millrock is a project generator company. Alaska is home
base for a lot of us and so we explore there and we also explore in Sonora
state in northwestern Mexico, as well as the state of New Mexico and the
southwest U.S. At Millrock we come up with early-stage exploration projects
and then we make agreements with other exploration and mining companies to
share the risk that's involved in early-stage drilling. And the whole
objective is to keep a systematically exploring continuous early exploring
company that over time will make big discoveries that drives up Millrock's
share price without continuously diluting shareholders as with most
exploration companies.
Maurice Jackson: Mr. Beischer, beginning in Mexico, please
introduce us to the Millrock project portfolio.
Gregory B: In Sonora state, which is the northwestern part of
Mexico (click here to view), Millrock holds advanced exploration
projects, primarily focusing on Orogenic gold deposits, of which Sonora hosts
some great examples, such as the Herradura multimillion ounce, probably
around 9 million ounces, one of which is Newmont's leading mine. We are in
the right part of the world to be looking for these large gold deposits.
Additionally, we target copper there, in particular porphyry coppers like the
world-class Cananea-La Caridad belt, just south of the Arizona porphyry belt,
probably a southern extension of the same cluster of the porphyry deposit.
So, we like these types of deposits that can be exceptionally large and great
metal producers.
We also explore in the state of New Mexico (click
here to view), which is opened up as a much more open jurisdiction to
mining. We acquired several years ago a uranium deposit in that state; we've
sat on it to for these years without doing much work, biding our time until
the uranium price improved. It turns out this year the uranium deposit also
has a lot of vanadium in it, and potentially both metals could be mined
together. We're starting to get calls as people learned that we own this
project. So, I'm pretty sure we'll be able to make an agreement on it
sometime soon. We also have a gold project in New Mexico and are lining up
partners as we speak. But home base is Alaska, where we've got quite a number
of gold and copper projects that have active exploration ongoing right now.
Maurice Jackson: And, gentlemen, let's stay in Alaska, shall we?
And, in particular, I want to focus on seven claim blocks owned by Millrock
Resources, which may be direct beneficiaries regarding the press release
issued on Feb. 12 by neighboring Northern Star Resources where it just
released some exceptional exploration results on its Pogo gold mine. Chris,
you are the senior project geologists on the Pogo West. Please take us to the
Pogo gold mine and show us where it is in relation to Millrock resources,
Pogo West.
Chris Van T: We are going to be in interior Alaska right next to
the Pogo mine. Literally right next to the Pogo mine as photos from our
property, you can see the mill, right here and this is for the last drilling
campaign by the junior company that had it prior to Millrock. So we are right
across the river from Pogo proper. Current exploration on the mine property
is getting closer and closer to the Pogo mine, which was very recently
purchased from Northern Star at a fair price, but it ended up equaling about
$69 an ounce that they had to find already.
But it's been a great asset for Sumitomo and now Northern Star, 12 years
of production, nearly 4 million ounces produced and easily another 4 million
ounces that they have in their reserve and resource prior to the update that
they said they'd be releasing later this year based on their new drilling and
the latest press release. So things are really ramping up there. And it's
been a great asset for those two companies. And Northern Star felt very
highly of it and some of their promotional material they placed it as the
third highest grade mines in North America. And they felt it was the eighth
largest gold mine in the United States, based on its production and contained
ounces.
Millrock’s Pogo West is located in Tintina Gold Belt in Alaska, which has
some of the more prolific deposits in Alaska right now. The Pogo mine has
about 8 million ounces contained gold. The Mother's Fort Knox is up at 13
million ounces and, of course, the gargantuan Donlin Creek at 45 million
ounces, as well as some smaller deposits that are still being explored
heavily in the Yukon that I'm sure you're aware of there, Coffee and White
Gold and Brewery Creek.
Maurice Jackson: Chris, can you provide us with some additional
context on the geology at the West Pogo Goodpaster region?
Chris Van T: Geologically, the Goodpaster district, which contains
Pogo, is a nice chunk of the crust that's broken up by a number of very large
faults that are all related to the Tintina gold belt faults. And so, the
Denali fault would be down here, that's the southern boundary of the Tintina
gold belt and the Tintina fault is up here. And so, it's in an area of
metamorphic rocks that has some very nice granitic intrusions in them, which
would be the source of the fluids for the Pogo mine, as well as the other
deposits in the district there.
Maurice Jackson: Chris, what can you share with us about the
existing infrastructure?
Chris Van T: It's fantastic access and infrastructure with the Pogo
mine road running through the claim block. We have the permit to travel on
that road. The nice claim block, which size is 7,500 hectors and, as I
mentioned, it's adjacent to the Pogo mine. Taking a look at what the Pogo
mine looks like in a geologic model, specifically in a schematic cross
section. The Pogo mine itself is exploiting and beneficiating low angle
quartz veins, as well as high angle veins. So, the theory is that the fluids
from the plutons travel up those steep faults and enter into the shallow
dipping faults. And that's where they have the gold veins in both the steep
faults in the shallow faults.
And there are quartz veins with a small amount of sulfide minerals,
arsenopyrite and as well as some bismuth minerals. And so, arsenic and
bismuth along with gold are the fantastic pathfinder elements that we have at
the surface. Those allow us to look at the soil samples and the rock samples
at the surface and try to zone in on where the mineralization would be at
depth. The surface features would be these high angle steep faults
intercepting the soil profile.
These are the projections of the Pogo veins from the subsurface brought up
and displayed on the surface. Northern Star Resources are mining these areas:
South Pogo, Liese, North Zone and East Theits. There are large faults that
break up the rocks and move them around.
Looking at this cross section towards the northeast are some high angle
steep veins and they're interpreted mineralized halo. Both these and the
shallow dipping faults contain veins that are being mined right now at the
Pogo mine. And an important thing to point out on are the steep faults tend
to move the northwest side of the fault up relative to the southeast side,
which would then bring this mineralization in the low angle faults closer to
the surface, and that's been repeated throughout the district and has a real boon
to the Millrock properties.
Here's a picture from the mine and we're looking down the trace of the
mine. The latest exploration on Pogo is across the river and right adjacent
to our claim block.
In 2017, they made a fantastic discovery of another vein of minable width.
And on the other side of the river. The Goodpaster vein had very nice
thicknesses and it dips in the same direction of previous veins. Northern
Star Resources made this discovery based on reinterpretation of its
subsurface imaging that uses a resistivity method called CSAMT, (Controlled
Source Audio Magnetotellurics), the image conductive properties of the rocks.
The company decided that the break rate here and the conductive properties of
the rocks represented the base of a vein and the drilling in 2017 revealed
this low angle vein that the 2007 drilling didn't reach because they didn't
have this reinterpreted imaging.
The vein that they intercepted, a low angle vein Quartz gold Arsenopyrite,
and it had a very nice minable width of 5.3 meters at 60 grams. So,
this is very similar, nearly identical to what was being mined already in the
Liese veins South Pogo, east steeps north zone on the eastern side of the
river. Now on the western side of the river, they have nearly identical
mineralization with the exact same orientation. So they're very excited that
the vein system that they've been mining for 12 years exists on the west side
of the river.
The Fun Zone is this area in here on their plan map, so this would be looking
down over the mine. The river is a visible in the satellite imagery from a
northeast view, as we look this cross section. Once again, these high angel
steep faults bring the northwest western side up.
Maurice Jackson: Chris, if I may interrupt you with the shift in
the fault zones, how does it benefit Millrock?
Chris Van T: It brings the mineralization closer to surface. This
area here is a big part of their latest press release; Northern Star
Resources is calling it the Central Lode System and it feels that it's a
significant extension of both the Liese zone and Fun zone vein sets within
the same overall large, mildly dipping faults that contain these veins. And
so, this same process that's bringing things up all throughout the district
is that work on the western side of the river adjacent to the Millrock
claims.
These red lines represent those steep folks that make and bring the
northwestern side up relative to the southeastern side. And this red line
represents that Goodpaster Structural Zone. The Goodpaster Prospect that has
been explored aggressively by Pogo in the last two years is in between two
other of these large steeply dipping faults. And so, it's a fairly contiguous
block and it's about the same distance between the Goodpaster Structural Zone
and the South Pogo Zone. And so, this matches very well geologically with
what we would expect to see on these high angle faults. Northern Star
Resources claim boundary and the latest exploration road is very close to our
claim boundaries within 420 meters of our claim boundary now. Not only at an
exploration road but also some of its large drill pads and it is drilling in
the area.
Maurice Jackson: Does Northern Star Resources have any drilling
planned this year near Millrock's claim blocks?
Chris Van T: Northern Star Resources are exploring very close. It
has got some drill holes planned for this year in the summertime within 90
meters of the claims boundary right here in the north. And so, Pogo is
knocking at the door of the Millrock claims of their exploration. Their
Central Lode and that's what was in the press release (click here) that came out Feb. 12. And so, this area
right in here is where they have released their new spectacular results and
subsequent definition of resource coming this August from the press release.
From a real estate standpoint, Millrock is very well placed within what's
going on with the Pogo mine exploration. And we feel that the rest of our
geologic knowledge in the area as well as the information purchase from other
parties leads me to believe that those veins extend onto the middle rock
properties.
Maurice Jackson: Northern Star Resources had an active drill
program near the Millrock claim blocks last year. Do we know any of the results?
And also, do we know what their aspirations are in the area for 2019?
Chris Van T: Here are some photos in September of their exploration
in that area. Very large drill pads, large rigs drilling, multiple drill
holes. Northern Star Resources 2019 planned holes which are to start in
February so they could well be underway as we speak. They are drilling off
what appears to be a substantial resource of those low angle veins. Once
again, just to remind you of 5.3 meters at 60 grams per tonne drilled
and released in this area here. No other drill results or any of this
drilling has been made public as of yet, but they are getting closer and
closer to our claim boundary in this trajectory right here.
This is a photo from our claims looking back to the mine and here is that
Goodpaster Structural Zone that they've named it. And so right now they've
defined their new Central Lodes would be filling this area basically from
their road here to this structural zone where they've defined basically a new
extension of the mine right up to this fault and they're getting ready to go
and move some headings into there and continue to explore that from
underground. So they're moving mine infrastructure from the Liese zone, right
up to this Structural zone. And as I mentioned, the Goodpaster Prospect is
just the other side of that and is actually had the veins that are being
explored for in the area brought closer to the surface because of the faults
and how they always bring the northwestern side up, very close to our claim
boundary.
Let’s take a look at a magnetic survey image that the state survey ran in
2000. Here are the Pogo veins brought to surface. Note these veins occur
outside of this purple magnetic high, within a magnetic low relative to the
rest of the area. There are more of these on the other side of this large
high angle fault throughout the Millrock claim boundary as well as here in the
Goodpaster Prospect.
This is the area they're drilling and right now, predominantly in this
magnetic low that's very similar to what they have on the north side of their
mine. They've got a diorite within the mine that's magnetic and there's one
on the Millrock claims that's magnetic as well with the same magnetic lows
surrounding it. So, from a geologic standpoint, these are nearly identical
features. The fact that they're drilling and this one here as well as this
mag lode to the north, lead me to believe that the geologic model at the mine
is readily applicable on the other side of that high angle, steep fault
called the Goodpaster Structural Zone. So I feel that the Millrock claims are
very highly prospective for the extension of the vein. Placing our soil and
rock samples on top of the magnetics, they illustrate how in those areas of
magnetics, we have great gold samples and they are oriented more or less in a
northeast, southwest fashion, which is the same as what's going on over here
on the mine property.
They have a northeast southwest orientation to their gold and soil sample.
We have the same orientation on our property. These are most likely caused by
unmapped equally dipping fault such as this one here, which helps those
fluids from the magmatic intrusion at depth, get them to the surface into the
soil profile. Arsenic has a coincident anomaly and so does bismuth. And so
our pathfinder elements that match the Pogo mineralization of gold in our
arsenopyrite with bismuth minerals are all present on the Millrock properties.
Maurice Jackson: Let's add some geometry to the discussion.
Chris Van T: This here is the location of that Goodpaster vein, the
5.3 meters at 60 grams. Northern Star Resources has stated the vein
was oriented with a strike of 240 degrees and the dip of 35 to the northwest.
Plotting that strike line is would be where the vein would be the same
elevation all the way across. It brings us very close to past drilling in our
area. Past drilling was situated in that area of fantastic gold, soil, and
rock anomalies that are all showing the interaction of those steep faults
that carried the fluids with the soil. The vein intercepted within these
drill holes have been narrow quartz arsenopyrite veins. And the assays
returned good arsenic bismuth silver. They have the same style of alteration
of Pogo there. And the angles intercept in there would indicate that these
veins are steeply dipping.
So, exactly along the model lines of the steeply dipping faults springing
the fluids up towards the surface. All of those faults have been intercepted
in these drill holes. The difference between here and what's going on at Pogo
is that these drill holes did not get deep enough to intersect those
shallowly dipping veins such as the hole reflecting 5.3 meters at 60 grams.
That's due to the higher elevation where are these drill holes where collared
as well as the dip along the vein. The deepest hole over here at the very end
of the hole, only got down to 350 meters above sea level. The vein was
intercepted at 230 meters above sea level. So when all things being
consistent, this hole ended 120 meters vertically above where we would expect
to see the flat and veins.
To bring this back into the Pogo model, the exact same thing happened on
the Pogo property in 2007. Norther Star Resources drilled and intercepted
steeply dipping veins that contain gold, arsenopyrite and bismuth; they did
not reach the flat line veins. The hole did not go deep enough. The same
thing went on the west Pogo claims.
The drilling so far at West Pogo has just gotten into the top of these
steeply dipping veins. I believe that the shallow dipping veins are there at
depth, that the soil and rock anomalies at the surface coupled with the
drilling show that we haven't reached the depth of those flat veins to date
and that a few holes of deeper drilling could readily intersect these veins
at the depth and an extension of the mine mineralization on the Millrock
Claims.
Maurice Jackson: What initiatives will Millrock take to de-risk the
West Pogo property?
Chris Van T: That would be to do that imaging along these black
lines here in order to do the same style imaging, the CSAMT or Resistivity
imaging over this mag low that also has the good gold and rock samples on top
of it. That would be one way to de-risk it. In order to know the depth you
need to drill to in order to find the extension of this mineralization that's
on the Pogo claims.
Millrock believes that the West Pogo property has not been explored
properly to depth. It's got the exact same magnetic signature as the mine
proper. The surface geochemistry and the drill hole geochemistry have all the
attributes to indicate that mine style mineralization is located on the
property. Northern Star Resources is currently exploring, right against our
claim boundary and we've got established access with the mine road running
right through the property. And so very positive factors for the West Pogo
property.
Maurice Jackson: Gregory, this may be premature, but should we
continue to have favorable outcomes such as this press release? How does this
impact Millrock’s strategy?
Gregory B: Well, I think one of the more remarkable things about
the statements from Northern Star is the exceptional grade of the drilling
intersections that they've discovered at this Central Lode's area. And we're
pretty sure they're finding similar things at their new Goodpaster discovery,
which is very close to Millrock's West Pogo project. If an ore body of that
grade does trend right onto Millrock's claims, I think it's going to make a
tremendous difference in the price of Millrock stock. We're trading today
around 10 cents Canadian. And I think, just fortuitously, if that deposit
comes onto our claims, it's going to make a big difference for our company
and for our shareholders.
We have stuck rigorously to our business model over the 12 years we've be
in the operation. We've always got a partner on a project before it got to
the drilling stage. Right now, we're faced with the possibility that our
neighbor, Northern Star at Pogo, has discovered an ore body that comes right
on to our claims. And so, we might take a different view at this point
since we presently have not made an agreement on the claims and we own it
100%. So, it's possible that we would actually pursue this claim ourselves,
but it's not determined yet. And in fact, right now our best strategy is to
wait and see what Northern Star has discovered. Eventually they'll tell us
more about their Goodpaster discovery.
What they announced on Feb. 12 was really interesting. I think they're
going to make a fortune from their purchase of the Pogo mine. They're great
miners and great explorers clearly. And they've had some great success of
finding the new Central Lode's area, but we know there's more, further to the
northwest and there's likely to be gold on our claims too. So our strategy
for now is to stand pat and a wait for more information, which is not our
usual way of doing things. Usually we're charging ahead full steam, but we're
at now we're going to bide our time and watch, wait and see what happens.
Maurice Jackson: Germane to this discussion, how do the prices of
gold, silver, copper and uranium fit into this narrative?
Gregory B: Well, certainly Millrock has exposure to all of these
metals. I know that the price of gold seems to have a large effect on
availability of capital for junior explorers. When the price of gold is
strong, there's lots of capital available. It doesn't matter if you're looking
for copper, it often seems to have a lot to do with the price of gold.
Millrock has seen good increase in the gold price lately. Everything I'm
reading says that gold's going to march up even higher and silver we'll go
with it. I hope they're all right about that. And that will soon have a
really favorable market in the coming years for those metals. Longer term,
I'm a huge believer in copper. I just know it's going to be a metal in huge
demand and we're happy to be looking for copper now too, for the future. And
a uranium, well, it's a beaten a down cycle a long time, but I've sure seen
some active of bull markets in that metal over the years. And if there's
another one coming, Millrock and its shareholders are really going to benefit
by virtue of the uranium deposit we own in New Mexico.
Maurice Jackson: Switching gears, Gregory, what do you see as the
biggest challenge for Millrock resources and how do you mitigate that
situation?
Gregory B: Our biggest challenge is a financing. We're in a short
cash position. How do we mitigate that? Well, the best way we can do it is to
get more funding partners on our projects. And so we're on a real push to get
that done right now. We've got deals that look like they're imminent in
Sonora and Alaska. So that's the best way. Ultimately we may have to raise
funds through an equity financing again soon. So those are Millrock's
challenges right now, but I think there's good solutions for them. Millrock
presently has a pretty low share account all of which was in quite solid
hands. There's 67 million shares outstanding at present.
Maurice Jackson: Finally, what did I forget to ask?
Gregory B: Well, I don't know if it's something you forgot to ask,
Maurice, but maybe something I forgot to mention. Millrock had acquired several
great properties in British Columbia some years ago, and last year we rolled
them all into a new company called Sojourn Exploration and found a great
management team for that company. It has its own projects and so Millrock's
is a big shareholder of Sojourn Exploration. Those shares are worth the money
right now, which helps Millrock shareholders, and we own royalties on three
of those projects. So, we've reviewed internally what's Sojourn all those
projects recently and that it's just a great portfolio and I know that team
is going to have great success attracting other companies to fund drilling on
them and make discoveries. So, this could be a real winner for Millrock and
its shareholders.
Maurice Jackson: Mr. Beischer, for someone listening that wants to
get more information on Millrock Resources, please share the contact details.
Gregory B: millrockresources.com and Melanee Henderson at
604-638-3164, in charge of investor relations, will be glad to talk to you or
put the shareholders in direct touch with me.
Maurice Jackson: And as a reminder, Millrock Resources trades on
the TSX.V, symbol MRO. Now, in the OTCQX, symbol, MLRKF.
Millrock Resources is a sponsor of Proven and Probable and we are proud
shareholders of Millrock Resources for the virtues conveyed in today's
message. And last but not least, please visit our website, provenandprobable.com,
where we deliver mining insights and bullion sales. You may reach us at contact@provenandprobable.com.
Gregory Beischer and Chris Van Treeck of Millrock Resources, thank you for
joining us today on Proven and Probable.
[NLINSERT]
Disclosure:
1) Gregory Beischer: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: Millrock
Resources. I personally am, or members of my immediate household or family
are, paid by the following companies mentioned in this article: Millrock
Resources.
2) Maurice Jackson: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: Millrock
Resources. I personally am, or members of my immediate household or family
are, paid by the following companies mentioned in this article: None. My
company has a financial relationship with the following companies mentioned
in this article: Millrock Resources is a sponsor of Proven and Probable. Proven
and Probable disclosures are listed below.
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