Millrock Resources (MRO.V): Undervalued on the market, highly valued in the boardroom

Millrock Resources (MRO.V), helmed by former Inco Veteran, Greg Beischer, is a true prospect generator.

Yeah yeah, I know a lot of you hear ‘prospect generator’ and your eyes cross.

But Millrock has generated projects.

In fact, at the time of writing (and this may change tomorrow or the next day because, wows) the company has an astounding portfolio of 27 active exploration projects spread across North America. Nine of these are in Alaska, where Beischer finds rich pickings, three are in British Columbia, fourteen are located in Mexico, and there’s a loner in New Mexico. Of particular note: the large Alaskan West Pogo property, situated next to Sumitomo’s Pogo gold mine which has estimated reserves and resources of 4.873 million troy ounces of gold.

Millrock has also positioned itself amid the storied Stewart gold camp in Northwestern British Columbia. The “Golden Triangle”, as it is often referred to, has been a mining exploration target since the late 1800s, playing host to the legendary Premier, Snip and Eskay Creek gold mines. There was a lull of activity in the late 90s due to uncertainty in gold pricing, but times have changed and explorers are streaming back with Pretium’s Brucejack Project scheduled for production in 2017, as well as the installation of a 344 km-287 kilovolt power line to the producing Red Chris copper-gold mine.

Focused on gold and copper, Millrock de-risks its ventures through joint venture agreements with recognized industry leaders like Centerra Gold, First Quantum, Teck, Kinross, Vale, Inmet and Altius. No, really, that’s the all-star lineup that picks up the phone when Beischer calls with a new opportunity.

Even in the commodity downturn, Millrock kept busy building its portfolio, and has benefited greatly from Beischer’s determination to acquire properties before the upswing made itself clear. On a call last week, Beischer told me he made a decision to start playing as if the upswing was in motion while the market was still in the doldrums, betting that a new year would bring new activity. While others waited to be certain before utilizing their treasure, Millrock moved aggressively and came away with enough projects to fill the English Premier League, without putting itself in financial peril, and timed perfectly to come out of the down years at full speed.

The company’s constant news flow regarding joint ventures and exploration has attracted some of the biggest institutional investors involved in mining. In fact, the company closed a Sprott-led financing of $3.09 million last June at $0.29 with warrants at $0.44 which are in the money.

Let’s get back to joint ventures for a moment: Millrock’s recent JV with Centerra Gold (CG.T) covers its Los Chinos and Los Cuarentas gold projects in Sonora State, Mexico. The Los Cuarentas property is 160 kilometers northeast of Hermosillo with the Mercedez Mine, a gold mine owned and operated by Yamana Gold Inc., situated on claims immediately adjacent to the south. Los Chinos is south of the San Franscisco gold mine.

The JV gives Centerra the opportunity to earn up to 70% interest by completing US$5 million in exploration expenditures at Los Chinos and US$2 million at Los Cuarentas, over a five-year period.

In September of this year they announced that they were commencing a 10-hole approximately 2,000-metre drill program at Los Chinos. Initial assays were released less than a week ago with the best intersections coming from hole 16-04 which returned 0.69 grams per tonne gold over 4 metres and hole 16-09 which returned 0.185 grams per tonne gold. No significant mineralized intervals were encountered and Centerra and Millrock are currently considering options for further exploration at the property.

So how are the markets treating Millrock? Its five-year chart is indicative of the junior mining downturn in general. however, even with all the JV action and news flow, MRO’s share price still hasn’t appreciated like some of its industry peers and, to me, looks ripe to move.

Cashflow is always the big dark horse of doom in mining juniors, but popping the hood on Millrock’s books reveals the company had $3.3m cash in the bank as of September 30, which gives them a lot of room to move and little to no risk of emergency financing needs in the near future.

There are only 47 million shares out, and at a $22 million market cap (or $700k per project after you take cash in hand out of the equation), there’s some mighty value to be had.

I’m not the only one giving Millrock a second look: Brien Lundin and Jay Taylor both point to this company as being a buy, and I share that opinion.

Of course, as always, do your own due diligence before making any investment decision.

–Gaalen Engen

http://twitter.com/gaalenengen

 

 

 

 

 

 

 

 

 

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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