-- Posted Wednesday, 19 January 2011 | | Source: GoldSeek.com
Dear GoldSeek.com Reader,
Millrock Resources [TSX-V: MRO] has recently been featured in The Gold Forecaster as a “New Buy” recommendation in the ‘Junior and Exploration Stocks’ category. We would like to take this opportunity to introduce you to the company and why we think it’s a unique investment opportunity.
Millrock is an exploration company with Gold and Copper projects in Alaska and Arizona. They follow a precise reduced risk business approach known as a Project Generator Model. What this model does for shareholders is increase the chances of discovery by spreading the risk of exploration over a number of projects with a number of different partners. In turn, these partners fund drilling of the projects and pay cash to the company in return for a majority share of the project. This business model creates something that is rarely seen in the junior mining space: a cash flow positive exploration company that is sustainable over the long term.
Currently, Millrock has 12 projects and 8 partners. These partners include Vale, Teck, Altius, Kinross, Inmet, Ryan Gold, Crescent Resources, and Brixton Metals. The value for shareholders is far beyond financial leverage and reduced risk; the hidden value in Millrock is the fact that these partners grasp mining and perform the due diligence required to optimize exploration success. This means that an investor can rely on the partners to make the proper geological decisions on which projects to explore.
This is only the start of the value that has been demonstrated over the last year. Attached, you will find a Corporate Update which includes plans for the coming year. 2011 is truly looking like Millrock’s biggest year yet.
Millrock Provides Corporate Progress Report and 2011 Growth Outlook
Millrock Resources made significant advancements during 2010. The company established itself as a premier project generator company adhering closely to the business model and its strategic growth plan. Throughout 2010, our shareholder value increased more than four times. The company had exciting exploration success, generated four new projects, made new exploration agreements with five different companies and continued to build an outstanding exploration team. The company has now positioned itself for further gains in 2011. This document reviews the company’s 2010 achievements and outlines exploration plans for 2011.
The share price of the company began 2010 at approximately 20 cents, and closed the year at around 90 cents; more than a four-fold increase. The share price also significantly outperformed other gold investments as measured by the popular HUI Gold Stock Index by over 3 fold!
Millrock (MRO.v) share price from 2010 to present; below MRO.v versus HUI gold stock index.
Millrock made five agreements with other companies in 2010. There are now eight companies making exploration expenditures to earn an interest in Millrock’s projects. The list of business partners includes:
The value of the earn-in deals Millrock has made, if all moved to maturity, would result in a minimum of US$46 million worth of exploration. Attesting to the quality of the projects Millrock has created, all exploration agreements formed in 2009 and 2010 and are expected to move forward in 2011.
Millrock, with funding provided largely by its business partners, expended approximately $ 7 million on its exploration efforts in 2010 and had substantial exploration success. Of particular note was:
Bluff Project, Alaska 
Estelle Project, Alaska 
Galiuro Project, Arizona 
Millrock dramatically improved its financial position in 2010. The company currently has cash resources of approximately US$4 million (US$11 million fully diluted). Market capitalization is now approximately US$59 million (US$70 million fully diluted), with 65 million shares outstanding (85 million fully diluted). During the year, Millrock established a revenue stream from option payments and management fees. The income more than offset overhead costs in 2010, and the same will happen in 2011. Additionally, the company received shares in other exploration companies as partial payment for its projects. These shares have potential to increase substantially in value in 2011, further strengthening the company’s financial position. The foundation of a cash-flow positive, sustainable mineral exploration company has been built.
Millrock’s 2011 budgets are yet to be finalized. However, at this point we can project that a minimum of US$12 million will be expended. Drilling will be done on at least four projects. With these expenditure levels, Millrock shareholders are exposed to the possibility of substantial share price increase through mineral deposit discovery. The chart below illustrates the proportion of expenditures coming from partner companies. The leverage for Millrock is very strong. Of the planned $US12 million expenditures, Millrock’s share is only US$1.5 million (US$900K is funded from Altius through a Strategic Alliance in which Altius bought shares in the company with the funds to be used for the specific purpose of exploration in 2011).
Millrock plans the following exploration for 2011:
Galiuro, Arizona: Drilling will continue in the early months of the year. Three holes totaling 5,000 m are planned to test ZTEM-MAG geophysical targets adjacent to porphyry copper mineralization and alteration discovered in 2010. Funding for this work comes from partner Vale Exploration Canada.
San Jose and Dry Mountain, Arizona: A drilling program consisting of five holes totaling 4,800 m is planned to test ZTEM-MAG geophysical targets identified in 2010. A large geochemical anomaly overlies the geophysical indicators along trend from the Safford copper porphyry deposits being mined by Freeport McMoran. The earn-in partner on these projects is Inmet Mining Corporation.
Bluff, Alaska: Plans are for a high-resolution airborne mag survey to be flown. Gold mineralization appears to be associated with a weak but distinct magnetic unit. Structural mapping will be done and drilling may follow. Ryan Gold Corp is the funding partner on this project.
Council, Alaska: Additional soil sampling, mapping and prospecting is planned to develop and refine drill targets for the 2012 season. Kinross is funding this work.
Cristo, Alaska: Brixton Metals Corp is earning in to this project and will operate exploration. A minimum US$1.25 million program is needed to keep the project in good standing.
Estelle, Alaska: A 2,400 m drilling program consisting of five holes is expected to be carried out along with additional mapping, sampling and geophysical surveys. The Oxide Ridge and Shoeshine targets will be the focus of the drilling effort. Teck American Inc. is funding the work.
Humble, Alaska: At this new project, which has attributes similar to those at the Pebble copper-gold deposit 130 km to the northeast, additional soil sampling and IP geophysical surveys are planned in anticipation of a 2012 drilling program. Depending on budget, a modest drilling program will be planned for in 2011. Kinross is funding this work.
Uncle Sam, Alaska: A winter 2011 auger drilling program is planned to provide geochemical coverage in lower-lying areas. Along with a high resolution magnetic survey, drill targets will be developed for a summer 2011 drilling program.
Millrock plans to continue on its strategic growth path, and intends to stick closely to its business model and jurisdictions of concentration. With strong drilling budgets for quality projects, the company will maximize the chances of discovering ore bodies to the great benefit of its shareholders.
