Millrock Resources Audio Interview Transcript, with Greg Beischer, President and CEO

Harry Norman:    Hello, this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview. Today is the 27th October 2010 and I'm talking with Greg Beischer, President and CEO of Millrock Resources, listed on the TSX Venture Exchange, metals and mining sector.

Stock ticket MRO, share price 67 Cents Canadian, market cap 39.07 million Dollars Canadian. Millrock Resources is also listed on the Over the Counter Bulletin Board in the United States. Web address: www.millrockresources.com. Greg, thank you very much for joining us for this interview.


Greg Beischer:    Hi Harry, thank you for inviting me.


Millrock Resources operates a project generator business model. How does this model work for Millrock and its shareholders?


It's a bit different model than most junior explorers. In essence I think of us a publicly listed prospecting company. The identifier is of high mineral potential, we do early stage exploration to prove that potential but then we bring in a partner to fund the more advanced exploration, such as core drilling.

I think the real advantage is the model allows us to explore numerous projects simultaneously, thereby increasing our chances of making a significant mine discovery.

Instead of using our shareholder’s money we're using funding from other exploration and mining companies. In this way we avoid constantly diluting our shareholder’s interest in the company by selling more shares....yet we still expose our shareholders to potential large share price gains by making discoveries.

So far we've been really quite successful in coming up with projects in which other companies are willing to invest. Some of our partners include household names in the mining industry like Vale, Teck, Kinross and Inmet. You know it's really quite a great group of companies and I think it proves our credibility.  Our record shows that we can generate high quality exploration projects.


Why is Millrock focused on prospecting for gold projects in Alaska and copper gold projects in Arizona?


Well we focus on Alaska and Arizona because it's home. We know these states very, very well and we know that they have a great endowment in gold and copper. And they are very safe  jurisdictions in a global context. We've had exploration success in these jurisdictions with other companies in the past and we think the projects we've now assembled have an excellent chance of exploration success.

We'll generate projects on a variety of metals but we feel particularly strong on the prospects for increases in the prices of gold and copper, making the projects that target these metals really attractive.


How pleased are you with the drilling results from the Bluff Gold Project which is on the Seward Peninsula which you announced a few days ago? And what are the terms of the Joint Venture with Valdez Gold for the Bluff Property?


Well we tripled the strike length of the known gold zone making the deposit at least 900 metres long, and discovered an entirely new, parallel zone that in one hole graded 3.8 grams per tonne over 32 metres.  So we are definitely pleased with those results and so is our funding partner Valdez Gold. They had put up the 1.2 million for the drilling programme. So I think you can watch for more great results coming out of this project next summer when we get going again.


What are your thoughts on the results from your 2010 early stage exploration programme at Council which is also on the Seward Peninsula in Alaska and what are the terms of your Joint Venture with Kinross for Council?


Well to be perfectly frank, Harry, we were hoping for better drill results at this project. I would say the results are quite interesting but they don't constitute a new gold discovery.

But we did learn a lot and we developed many more targets for next year. And Kinross is a patient explorer; they understand that it often takes many drill holes to make a discovery.

My guess is they'll fund the project at a similar level next year, approximately one million. And that's really the beauty of this business model; we're risking their money, not our shareholder’s.

And as far as the deal goes, if Kinross puts up a total of six million and pays Millrock 400,000 dollars, they'll end up owning 75% of the project. And if there's a major discovery made we'll sell that remaining 25% to Kinross or to a rival company to the great benefit of our shareholders.


You recently signed an earn-in agreement with Crescent Resources for your Uncle Sam property located in the Tintina Gold Field in Alaska. What is the rationale for this step and what are the terms of this agreement?


Well, you know, previously a lot of our projects have been funded by major mining companies and that was helpful to Millrock because it really proved our credibility. But now with the improving markets juniors can raise a lot of venture capital and so we're going to try and take advantage of that.

In this case the company, Crescent Resources, has been given the option to purchase 100% interest in the project but if they get that far Millrock will end up with 18% of the outstanding shares of Crescent.

They'll have to raise and expend two and a half million dollars and pay us 300,000 dollars to make the purchase. And if they make a discovery those Crescent shares will be worth a lot of money –  especially in a hot gold market – and Millrock shareholders will share in that wealth.


You have a Joint Venture with Teck Resources for the Estelle Project in Alaska and recently announced results that included 9.1 grams per tonne of gold over 27.4 metres. What can you say about these results and the Joint Venture with Teck?


Well over all, Teck was quite intrigued with Estelle when we presented it to them last winter. But of course in the winter in Alaska is not a good time to do a field examination, but they went ahead and made an agreement with Millrock without stepping foot on the property.

At the same time, they became shareholders in Millrock; they purchased about 6% of the company's shares through equity financing. But now that they've been on the property I think they really like what they see, it's an excellent gold project with potential for a really large deposit. So I would look for Teck next year to fund a major drilling programme.

The chip sample results that we recently announced really are quite interesting, they're a good grade and a good width, but you know there are many targets on this property. The general area is just north of the giant Pebble deposit in Alaska, a huge copper/gold project. And you know that's why Teck's so keen; the prize really could be huge. But it's an expensive place to work and we're really glad that Teck is footing the bill on this one.


As the exploration season has wound down in Alaska you'll be focusing more on your prospects in Arizona. Bring us up to date with Millrock's Joint Venture projects with Inmet and Vale in Arizona and the work that is underway.


Well it's an exciting time right now Harry, we're ramping up in a big way our Arizona copper projects. Both our partners, Vale and Inmet, are very pleased with the first round of exploration that we conducted earlier this year and have pulled in a lot of their remaining 2010 discretionary exploration dollars to fund drilling on our projects in November and December. So we'll have drills turning just within a few days and we'll be running flat out through the remainder of the year on two projects.

And these are really compelling targets. We've used some cutting edge geophysical surveys in combination with some well thought out geological concepts and so I feel quite good about these targets and you can look for news on them in December and January.


Who are Millrock's major shareholders and in particular who are Altius Minerals? And how supportive are your major shareholders Greg?

Interestingly some of our major shareholders are other mining companies: Teck, Kinross, they own about 6% each of the company and Altius Minerals owns around 17%.

Altius I would comment on in particular; they arguably are the most successful project generator business model company of all time. And they started just like us....as a few geologists with bright ideas. They generated projects and convinced other companies to spend money on them but made very excellent discoveries in a hot uranium market; as a result made their shareholders a lot of money.

And so all the companies have been very supportive, Altius in particular has sort of become like a big brother, providing us with direction and advice. And indeed one of their founders recently retired from the company and has joined Millrock's board. So we're getting a lot of help from them, they're very supportive.


What is Millrock Resources' financial situation going forward Greg?


Well at this point Harry I think we feel somewhat comfortable. We've built a solid foundation. We've got 3.6 million dollars in the bank at the moment but we're really not spending much of our own money anymore.

We've achieved the idea of a fully sustainable exploration company that's constantly drilling through the year, we're well funded, we're cash-flow positive and that's you know a very rare thing for a junior company to be able to say.

We get income from option payments on each one of our projects and we're the manager in all cases so we take a management fee, about 10% of every dollar that goes in the ground. And so with that income we cover off all our overhead.  So I think we're in a good financial position for the coming years.


What can investors expect from Millrock Resources over the next 12 to 18 months Greg?

Well you can definitely expect a lot of drilling. I'm looking forward at our preliminary exploration budget for 2011 and it looks like we'll probably spend between 15 and 17 million dollars exploring in Alaska and Arizona next year. And that will include a great deal of drilling on probably seven projects.

And so that's a lot of news and that's a lot of potential discoveries, all of which can take our share price from its current spot at around 65 cents up substantially higher.