Millrock Resource Inc.: project generators.

• Author: Hollander, Zaz
• Position: SPECIAL SECTION: Mining - Cover story

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Despite tough economic times for the industry, Millrock Resources Inc. rode high gold prices to what executives call a banner year in 2012.

This year, Millrock is spending about $11 million on mineral exploration--all but $1 million of it coming from major mining partners, such as Teck American Inc., Kinross Gold Corp. and Vale. Teck and Kinross are global mining companies active in Alaska. Vale is a giant, diversified miner headquartered in Brazil.

Formed in 2007, Millrock brings two strengths to the state's gold rush: a de votion to the project generative-joint venture business model and an experienced team of Alaskans who decided to headquarter in Anchorage and leverage capital from around the world rather than set up shop in Canada like most junior mining companies.

"We started the company with the belief in the strong geological potential of Alaska and the fact it's underexplored compared to other geological jurisdictions," says Sarah Whicker, Millrock's chief operating officer. "We're looking for those massive, world-class deposits that aren't as easy to find elsewhere in the world now."

Millrock also likes Alaska's relatively safe investment climate, Whicker says. Most junior mining companies rely on selling stock to raise venture capital for the purpose of handling the costly, high-risk exploration phase of mining. This dilutes share price. Millrock is also publicly traded, but its project generative-joint venture strategy lowers that kind of fiscal risk since its major investors become big mining companies.

Millrock puts its geological know-how to work on large packages of land to explore for deposits of copper-gold porphyries and pluton-related gold ore bodies. Typically, the company stakes claims on state lands. The company has accessed mineral rights through agreements with Alaska Native Corporations.

Millrock identifies prospects with potential early. Then it farms out the cost of front-end exploration to capital-rich mining companies that meet funding obligations in option-to-joint-venture agreements.

The upside: Millrock is off the hook for the millions of dollars needed to advance the project in its early stages. The downside: Millrock gives up a majority interest in the project once a partner exercises its option to joint venture and--if a major deposit is discovered--Millrock must share production revenues.

The Personalities

Bering Straits Native Corp. and Millrock made an exploration agreement on three separate blocks of land totaling nearly 250 square miles in 2008. Millrock is targeting gold in source rocks for placer deposits mined since the early 1900s.

"I like their business plan, I like their model--the project generator model. It's a good one for a junior to be involved in," says Matt Ganley, Bering Straits' vice president for resources and government affairs. "The big selling point--I'll be honest with you--is the personalities involved."

Two venerable Alaska geologists formed Millrock Resources Inc. five years ago to plumb the state's underdeveloped mineral resources.

Greg Beischer and Phil St. George took Millrock public in 200Z The next year, subsidiary Millrock Exploration Corp., exploring only in Alaska and Arizona, was created.

Beischer, the company's president and chief executive officer, spent seven years working for Bristol Bay Native Corp. on oil, gas and mineral resources. He came to Alaska in 1995 with...