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Monday, November 17, 2008

Millrock drills two Seward Peninsula gold prospects in 2008

wo longtime mineral prospectors known in Alaska mining have joined forces in a start-up junior exploration company that focused in 2008 on the Seward Peninsula.

Millrock Resources Inc. drilled two separate gold prospects on the Seward Peninsula this summer, spending just over $2 million on the company's 2008 exploration efforts.

Leading the exploration effort for Millrock is Gregory Beischer, president and chief executive officer, who most recently worked for Bristol Bay Native Corp., after spending 20 years with mining giant Inco.

Joining him is Phil St. George, another exploration geologist with substantial work experience with mining giant Cominco. St. George also worked for NovaGold Resources during its formative years and is credited with discovery of the initial Pebble copper-gold-molybdenum deposit in Southwest Alaska in the late 1980s.

"When we started up the business, it came on the market at 38 cents (a share) and things were great the first few months, but it's been a bit of a struggle lately," Beischer said. "Phil and I are a great teamewe have great people working for us and the company is in reasonably good shape even though our share price has declined substantially over the last three months in particular."

Venture capital financing for junior exploration companies has dried up, he said, since Millrock closed a financing arrangement in May, providing the company with funds for this year's work.

"We didn't spend it all, although it was tempting, because we were having good success, but we stuck to our guns," Beischer said. "We've got enough to hold on and survive and if it's not too protracted of a downturn, we'll still be in business next year."

The two geologists oversaw work this summer on several prospects throughout Alaska, including reconnaissance work on a high-grade gold prospect in the Alaska Range, called Estelle, and the 40-Mile prospect in eastern Interior Alaska.

But it was two separate gold projects on the Seward Peninsula that commanded the bulk of the company's exploration spending for 2008. As of mid-October, the company was still waiting for final assay reports from drilling work completed in August on both the Divide and Bluff properties, Beischer said.

Both gold prospects are located close enough to Rock Creek, in Nome, to potentially become satellite mines if geologists find enough mineralization in high-enough grades to cover trucking costs.

Divide is located north of Rock Creek, about 20 miles straight-line distance from the recently commissioned hard-rock mill, Beischer said. This summer, Millrock completed 23 exploration trenches at Divide, followed up by 10,000 feet of reverse circulation drilling in 23 holes.

"Our goal here is to find a large, multi-million-ounce deposit. The work this year will determine whether a deposit of this scope is present or not," he said.

Millrock is earning a 50 percent interest in Divide from Alix Resources Corp., paying half of the property's exploration costs and issuing 500,000 shares to Alix. Millrock was the operator for this summer's program.

Bluff is located 75 miles southeast of Nome, on the Bering Sea coast, part of a land package that Millrock Resources has optioned from the Alaska Native landowner, Bering Straits Native Corp.

According to an April 2008 announcement, Millrock and Golden Glacier Inc., a Bering Straits subsidiary, signed an exploration agreement covering approximately 153 square miles of Native-owned land highly prospective for gold exploration.

In that press release, Matt Ganley, Bering Straits' vice president of lands and resources, said the landowners "eare confident that this exploration agreement will expand our knowledge of the area's resources while enhancing the long-term economic base of the local communities."

The five-year exploration agreement between Bering Straits and Millrock calls for total spending of $4 million, with a first year work commitment of $300,000, for which Millrock receives exclusive rights to explore and develop mineral deposits on that acreage.

Annual option payments to the Native corporation will total $550,000 over the five years and Millrock will also contribute a total of $40,000 to the Bering Straits Foundation Scholarship Fund. Millrock will also issue up to 1 million shares of its corporate stock over the five-year period to the corporation.

A contracting preference is given to BSNC subsidiary companies that could provide service to Millrock, and shareholders of the Native corporation will also be given employment preference, according to the agreement.

Three prospects part of the agreement with Bering Straits include Council, Ungalik and Bluff, a coastal gold property that was previously drilled by mining giant BHP in the 1980s. BHP reported in 1991 that there was potential for a minimum 3 million tons at the Daniel's Creek prospect.

"They made some great discoveries there of gold mineralization," Beischer said.

This summer, Millrock drilled five diamond core drill holes, Beischer said. "The good news is that on a visual basis, every hole hit the altered mineralized zone that we were targeting," he said.

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