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Pending drill results from Los Chinos project in Sonora Mexico could deliver a virgin, economic gold discovery
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Significant Golden Triangle portfolio in British Columbia could form the basis for a value creating spin-out
- Dominant land position near Alaska’s Pogo mine provides additional optionality
Gold producers are going out of business, continuously depleting their reserves to sustain production levels. Made worse, in the past five year gold mining bear market, there has been a dearth of exploration activity and new discoveries globally. According to a recent Goldcorp presentation gold reserves among the major producers have declined ~15% during the last three years. Moreover, production is set to decline further over the coming years as the majors exhaust mines which were discovered decades ago:
Examples include Kaminak Gold, acquired for $520 million by Goldcorp earlier this year. Osisko Mining developed its Canadian asset to a $3.9 billion merger with Yamana and Agnico Eagle last year. Fronteer Gold, acquired by Newmont for $2.1 billion in 2011. The list goes on.
Enter Millrock Resources (TSX-V:MRO), a roughly $22 million market cap prospect generator company focused on exploring Alaska, Mexico’s Sonora province, and British Columbia’s Golden Triangle area with major partners. Millrock’s exploration portfolio is arguably second to none in North America and Millrock is clear in its objective:
“Millrock is a pure exploration company. Our objective is to find a giant ore body and sell our interest to a major mining company, while at the same time greatly increasing shareholder value. We have formed the foundation of a premier Project Generator company that will be a leader in our subsector and the best in our jurisdictions.” (Millrock corporate presentation – October 2016)
Millrock increases its odds of finding an economic discovery by advancing multiple projects concurrently and bringing in major partners to help fund the drilling. It is a corporate goal to be always drilling at one project or another, providing shareholders with a steady stream of chances to deliver big.
The company is currently drilling its Los Chinos project in Sonora, Mexico, where it hopes to find a near-surface open pit gold deposit. Centerra Gold is Millrock’s partner at Los Chinos and helped pay for the drilling (Centerra can earn 70% by spending $5 million). Success could send Millrock’s market cap higher by multiples. Results are expected before year end.
Millrock has 8 projects in Alaska, including several near Sumitomo’s rich Pogo mine. Millrock is optimistic the Pogo area will ultimately become a mining district, and is benefiting from a dominant land position in the area. These projects are steadily moving forward and are expected to be a bigger part of Millrock’s story next year.
In British Columbia’s Golden Triangle, home to some of the world’s richest gold mines, Millrock recently acquired several large and promising projects as well as an operations facility. Millrock’s properties have seen historically rich results. Millrock may sell or option its BC properties to another company, or look to explore them internally in 2017.
The project generator model which Millrock utilizes allows the company to gain maximum leverage for every investor dollar and maximizes the possibility of making a new discovery:
