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Millrock Resources (TSX-V: MRO) CEO Greg Beischer Gives an Update on 3 Fronts: Trench Results at La Navidad in Mexico, Drilling at Alaska Range Project, & Sale of Lithium Claims in New Mexico

June 26, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is CEO of Millrock Resources (TSX-V: MRO)(OTC: MLRKF), Mr. Greg Beischer. Greg, how are you this afternoon?

Greg Beischer:  Doing well, Gerardo. Everything's running at full steam here at Millrock.

Gerardo Del Real: Well, you had a busy week, and I always joke that you're always busy behind the scenes, but it actually materialized into a lot of news last week. There are three pieces of important news that I want to touch on. Let's just take them in order. You announced additional trench results at the La Navidad gold project, which of course is a partnership with Centerra Gold. So I wanted to ask you how things are coming along at La Navidad, and what can you tell me about the trench results?

Greg Beischer: Right, well you have seen the trench results, Gerardo, so you know that we've got some good grade intersections over some significant widths there. For example, trench number 6, which had 16 meters grading almost 0.6 grams per tonne. So we've got the right grade. We'd like to see better thicknesses of mineralization. It'd be great if that 16 was a 30- or 40-meter intersection or better, but you never know until you drill. But we're drilling now. You know, we had initially planned a 1,500 meter program with further drilling to be contingent on results, but upon review, these trench results and field reviews, Centerra's authorized us to go ahead with another 1,500 meters. So a 3,000 meter total program, and we're well into it at this point.

Gerardo Del Real: And just to be clear, the exploration work is being funded under an option to joint venture agreement by Centerra Gold. Right, Greg?

Greg Beischer: Yeah, that's correct. They're earning their way into an interest in the project by funding this exploration work. Millrock's the operator, which is good, because we receive some management fee income, which helps reduce and offset our overhead costs.

Gerardo Del Real: Now, when you mention the trench results, you talked about the widths and the grade. For most people, they hear 16 meters of you know, 0.59 grams per tonne, and that doesn't jump out as a blockbuster number. But can you explain the target type and why those grades in that part of the world near surface are permissive for mine operations? Lots of operations that have that grade in that part of the country in that part of Mexico in Sonora state. Can you talk a bit about that, Greg?

Greg Beischer: Yes, sure thing. The target is what us geologists call an orogenic gold deposit. The grade of rock, or the amount of gold contained in a tonne of rock, is not a large amount, but the economics hinge upon being able to mine and move large volumes of weakly gold mineralized rock. But the thing is the processing costs are very, very cheap. We use heap leach type operations, run-of-mine so there's no further processing, the rock is simply blasted, heat and the gold leached from it. And so 0.6 grams per tonne of gold is actually ore grade at mines in this part of Sonora state, Mexico. So we've got the grade, we just need to get better thicknesses of mineralization to make something that potentially could be economic.

Gerardo Del Real: Perfect, perfect. Now, Millrock of course is a project generator. You also have drilling underway at the Alaska Range project, of course in Alaska, which is being funded by PolarX. Now, Millrock owns I believe just shy of 10% of PolarX shares. Can you tell me a bit about the Alaska Range project and progress there, Greg?

Greg Beischer: Sure thing. Well, you’ll recall that there's a high-grade copper-gold skarn deposit upon which PolarX announced a maiden resource earlier this year. It's got well over 200,000 ounces of gold and quite a lot of copper as well. Of course, we're working this summer to extend and expand that deposit. But at the same time, look for the porphyry, the copper-gold porphyry source of that skarn. So that's the two-fold prong to this year's exploration program. I just actually returned from the site. Everything's up and running. Very enthusiastic, motivated and confident crew that we've assembled there. Both rigs are spinning, and it's just a beehive of activity.

Gerardo Del Real: Excellent, excellent. Now switching gears, and this one caught me off guard a bit. You announced the staking of a lithium brine project and the sale of claims in New Mexico. Give me some details, Greg, because I know lithium is not a commodity that's been on Millrock's radar in the past.

Greg Beischer: No, it's not, but we were presented with this opportunity target. It all made sense, and so we went for it, with very low risk to Millrock's treasury. You know, lithium brine projects are being pursued heavily by lithium developers and explorers in Nevada. This project was presented to us by a geologist, knowledgeable in lithium. It checked all the boxes. I wouldn't say that Millrock's highly knowledgeable about lithium, but we conferred with an expert and we found that the project had all the right parameters. No one's ever looked for lithium at this location before, but it's got all the geologic earmarks that one looks for and that are in high demand in Nevada. So why not New Mexico? You know, we're already familiar with New Mexico. We see that as a state that has opened up in the past few years, very open now to mining and mineral development projects.

So we saw the opportunity for a few tens of thousands of dollars. We acquired the claims, but immediately we turned around and sold them for more than we paid for them. We've become a 20% owner of Xinda Corporation, and we will be entitled to a 3% gross smelter royalty in the event that there ever is lithium produced from the project. And in the meantime, the incoming optioner, Xinda, assumed the obligations of the finder's agreement that we made with the geologist that brought the project to our attention to begin with. So very low risk for us, but some upside for Millrock shareholders.

Gerardo Del Real: Fantastic, fantastic. Well, Greg, busy on many, many fronts. What can we expect over the next couple of months? Obviously assays from La Navidad are important. We're looking at Zackly and seeing what comes back there. What else can we look forward to? I imagine you have your finger on the pulse on possible deals.

Greg Beischer: Yes, our team's been working really hard to find partners for our other Mexico projects. There's been a long list of companies doing site visits. I'm sure that something will materialize from some of them. Same thing here in Alaska. There's more drill targets emerging at some of our Centerra funded exploration projects outside of La Navidad. And finally, in British Columbia, it looks like our deal with Sojourn Exploration may be advancing.

So everything seems to be falling into place. It's taken a while over the last few months and, you're right, we've been busy behind the scenes, but it's all hands on deck right now. Drilling flat out and probably will be for the rest of the year. Lots of catalysts for the Millrock shareholder.

Gerardo Del Real: I know it's a tough market in the junior space right now, but I gotta say, Greg, you and the team are doing everything right to position shareholders for a better market. And I know when that turns, it'll be satisfying to be running full steam ahead. So congrats on that front.

Greg Beischer: Thanks very much, Gerardo. Those markets can't come soon enough for us, and I wonder if you've got any insights. Do you see things turning around soon?

Gerardo Del Real: You know, my hope – and we're on the record – but my hope is that we get a near-term drop in the gold price that finally scares the last of the weak hands. I think geopolitically, things are accelerating as far as geopolitical risk. And I'm hoping that we get that last final shaking of that gold tree to allow that energy to get a higher sustainable gold price. I've been on record multiple times saying that until we convincingly break through that $1,375 price target and then breach $1,400, I think we're just going to keep going back and forth. So I'm a fan of gold coming down to the $1,100 level and scaring the wits out of people so that we can get that out of the way and get back to what I believe is going to be a five, six, seven year raging gold bull market. I'm a commodity fan. I love copper, I like the base metals, but you know, the geopolitical tensions right now and potential for trade war escalation is definitely an issue that is first and foremost, I think on everybody's mind.

Greg Beischer: Yeah, you know it's been my experience that investor interest in junior exploration shares, junior mining shares, is controlled by the price of gold. It doesn't seem to matter whether you're a zinc explorer or a uranium explorer, the amount of capital available is dependent on that gold price. And so I'll be happy to see it move up. But I agree with you that consolidation probably is necessary before we're really going to see that. That's for the junior explorers, but clearly the major mining companies have bigger exploration budgets now. We’re seeing a steady stream of majors looking at our projects, and they've clearly got a bankroll and they're looking for places to deploy cash for exploration.

Gerardo Del Real: We're starting to see M&A picking up, and it's interesting, right? Because Orion the other day took an interest, I believe they took over Dalradian. I thought that was an interesting transaction that I believe will bode well for the industry. I think the last two or three deals that we've seen with Klondex, with Arizona, and with Dalradian, we've seen premiums of 50 to 60% of the market cap that investors and shareholders are assigning to these companies. So I think that speaks to the value that exists in the junior space, and you know there's a time to plant and a time to harvest, and this is definitely the time to do some due diligence and establish your portfolio. I think a year from now, we're going to look back and these prices are going to seem ridiculous to us.

Greg Beischer: Yes, I understand. You know, increase in M&A activity is usually a harbinger of a bull market coming into the mining business. So that's a good sign to me.

Gerardo Del Real: Fingers crossed, Greg. Thank you again for your time. I appreciate the insights.

Greg Beischer: Very good, Gerardo. Talk to you again soon. We'll have more news.

Gerardo Del Real: Looking forward to it.

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