Brien Lundin Offers Favourable Review of Millrock
Millrock Resources (MrO.V; MlrKF.pK; c$0.23) has begun its 2012 drilling program at Estelle, one of the company’s more promising holdings in Alaska. Millrock has set up a joint venture agreement with Teck resources to explore this project for porphyry-hosted gold deposits. The current program will drill five new holes on the Oxide ridge target, an area of mineralization that yielded long (albeit low-grade) intersections of gold during last year’s drilling program.
The 1,500-meter program will seek to outline a bulk mineable, intrusion- related gold deposit on one of the several geochemical anomalies previously identified at Estelle. in addition to Oxide ridge, those targets include Shoeshine, rpM and Stoney. Optimism for the gold-potential of these targets stems from their location within the same assemblage of rocks that hosts pebble, the vast copper-gold-moly project in southwest Alaska held jointly by Northern dynasty and Anglo American.
Millrock’s option agreement with Teck allows it to control the cash burn it will experience during the 2012 campaign at Estelle. To finance its portion of this year’s drilling, the junior has borrowed $800,000 from Teck, via a 6% short-term loan payable at the end of 2012. if MrO elects to maintain its current 45% interest in the project, it will repay that loan. if it opts not to repay the loan, the junior’s interest in Estelle will drop to 35%.
We made a lot of money on Millrock when we bought it during the 2008 credit crisis at a fire-sale price. Buying now promises similar returns, and therefore Millrock remains a buy on weakness.