Millrock Resources (TSXv: MRO) – A Double "A" Focus – Alaska and Arizona

Back in November, 2007 when I attended the Hard Assets Conference in San Francisco I was introduced to a junior firm called Millrock Resources and its President Greg Beischer. When Greg explained to me that he had spent his career with Canadian mining heavyweight INCO, I was immediately intrigued. I thought to myself – here is a guy who knows what he is doing.

When I meet a typical junior company involved in Gold and Copper exploration, I usually expect to hear that it is busy in some far flung part of Africa or some politically charged part of South America. But, Greg Beischer and his team at Millrock have taken a path seemingly less traveled and have opted to focus their Gold exploration efforts in the State of Alaska and their Copper exploration efforts in Arizona. Both safe locations. Both locations with excellent potential. This has intrigued me so, and I have since been watching Millrock closely.

Millrock has no fewer than six properties in various parts of Alaska as the following map shows.

In order to fully understand what a junior exploration company is all about, it helps to put together a simplified overview of its properties. The following is a such an overview of Millrock's various Alaska properties.

Divide Property: Quartz veining in rocks is certainly something to look for when exploring for gold mineralization. And the Divide Property certainly has this veining. Soil geo-chem samples have indicated that there is some kind of a gold anomaly on the property that may extend for up to 3000 meters in length and several hundred meters in width. Five holes have now been drilled on the property and results show assays of 1.0 gram/tonne to 4.6 grams/tonne over widths typically less than 1 meter. The most spectacular result shows 10 grams/tonne over 3.05 meters. Are these results reason to get excited? You bet they are. These results clearly show that this property has some serious potential. Millrock has a joint venture agreement on this property with Alix Resources and this agreement will eventually see Millrock and Alix each owning 50%. A significant exploration program will be carried out over the balance of 2008. Watch for some interesting news flow.

FortyMile Property: The FortyMile district has a history of over 300,000 ounces of placer gold mining. Somewhere in this district there is an underlying geological source for this placer gold.. Millrock owns just under 20,000 acres in 3 claim blocks. The next step in this area is to carry out some geo-chem surveys, mapping and trenching to get better handle on the geology. Watch for some news flow surrounding these activities.

Iliamna Property: The Iliamna Property consists of 2 claim blocks – Bonanza Hills and King Tut. Millrock is excited by the potential of this property because some 65-70 million years ago magmatic (volcanic) material came up from the depths and intruded into the sedimentary host rocks. This is very similar to what has happened at the 29 million ounce Donlin Creek gold deposit owned by NovaGold and Barrick in southwest Alaska. Millrock owns the King Tut claim block 100% and can secure a 60% ownership in the Bonanza claim block by spending $3.5 million over the next 3 years and issuing 1 million shares to Liberty Star Uranium.

Ketchem Property: The Ketchem Property is located in the Circle Mining District, northeast of Fairbanks, Alaska. This district has produced over 1 million ounces of placer gold since 1893. This district is part of a well known belt of gold mineralization called the Tintina Belt that extends across central Alaska. Ketchem consists of 5000 acres of mineral rights and by paying $3 million over 5 years, Millrock can acquire these mineral rights from Spectrum Resources.

Estelle Property: The Estelle Property is located about 100 miles northwest of Anchorage and consists of 168 mining claims covering 39 square miles. Millrock can earn a 70% interest in the project by spending $5 million by the end of 2011. The gold mineralization in this area is again associated with magmatic material coming up from the depths and intruding into the host rocks. A program of grab samples taken to date has produced some extremely encouraging results. Pay attention to this property for once drilling starts, I expect to see some interesting news flow.

Bering Straits Native Corporation Lands: Millrock has made an exploration agreement with the Bering Straits Native Corporation on 3 blocks of land (Bluff, Council, Ungalik) covering 395 sq. kilometers. The potential on these blocks is very significant. A reported 1 million ounces of placer gold has been recovered over the past 100 years on these lands and in 1991 mining giant BHP identified an approximate resource of 500,000 ounces over 3 zones on the Bluff land block. The most significant of these zones (Daniel's Creek Zone) was shown to contain 300,000 ounces grading 3.43 grams per tonne. BHP in its summary report indicated that potential exists for up to 2.5 million ounces of gold. Watch for news flow over the coming months on the Bluff land block. Millrock intends to compile all the old BHP data, identify new drill targets to expand the resource and to carry out an expanded geo-chem survey in the area.

Now, here is what really intrigues me. Greg Beischer is clearly not the type of individual to sit still. Recently he was approached with opportunities to acquire properties in Arizona and he jumped at the chance with a reflex that would make a diamondback rattlesnake envious.

San Jose & Dry Mountain Properties: The San Jose and Dry Mountain properties are located at the junction of 2 major porphyry copper trends that host the Safford and Morenci copper mines. To give an idea of just how significant this area is, consider that the Morenci mine has copper reserves totaling up to 10 billion tons and the Safford mine has copper reserves of up to 6 billion tons. The acquisition of this property has happened so fast that Millrock has had scant little chance to further examine its winning prize. 2009 will see some focus on this area and I suspect the news flow will be something to behold.

Galiuro Property: This property is located about 80 kms southeast of the Resolution deposit currently being drilled off by mining giant Rio Tinto. Early reports suggest that Rio Tinto may be sitting on up to 2 billion tons of ore grading between 1% and 2% copper. Galiuro is located on the San Manual-Copper Creek porphyry system, as is the Rio Tinto project nearby. 2009 will see a drilling program on this property, the results of which I suspect will turn a few heads.

We at The Market Traders shall be following the Millrock story closely. We are intrigued with Alaska as a whole, but especially so with the Bluff Property and its approximated resource as identified by BHP a number of years ago. We wonder if BHP would have opted to retain this property had they known that gold prices would be $900/ounce in 2008? Millrock currently has 30 million basic shares outstanding (41.5 million fully diluted) and at current prices this equates to a market cap of a paltry $9 million. If I make the assumption that the Bluff property in fact has a resource of 500,000 ounces and if I value these in-situ ounces even at $50/ounce, I am faced with the proposition that I could buy out Millrock Resources for between $9 and $12 million and end up with an in situ resource valued at over double the acquisition price. And then there is the huge potential of the Arizona copper properties. Clearly the markets have completely overlooked Millrock Resources and have not stopped to properly think about the inherent value represented at current prices. We are initiating a speculative buy rating on Millrock Resources. Start to build a position in Millrock stock now before Greg Beischer and his team get rolling on a concerted marketing campaign to tell their story. As developments unfold further and as news starts to flow, we will be providing further updates.

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