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By Shane Lasley
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Millrock cuts $20M deal for Goodpaster

Aussie explorer with Alaska ties to option Pogo-area project

 

Last updated 10/25/2019 at 6:47am

Millrock Resources Inc.

David Wright, longtime Goodpaster District prospector and president of Aurora Resource Exploration, assesses the soil in anticipation of building a road to drill targets in the Aurora Creek valley on the West Pogo property.

Australia-based Northern Cobalt Ltd. has agreed to invest as much as US$20 million over the next four years to earn up to a 60 percent interest in Millrock Resources Inc.'s enormous land package covering highly prospective gold targets in Alaska's Goodpaster Mining District.

Goodpaster has gained a lot of attention since Northern Star Resources Ltd.'s 2018 purchase of the Pogo gold mine at the heart of the district. While it has been just over a year since the acquisition, the Australian mining company has already made two major high-grade gold discoveries – Central Veins and Goodpaster – on the Pogo property.

For Millrock, and now Northern Cobalt, the most exciting discovery is Goodpaster, a zone of Pogo-style gold mineralization Northern Star has traced to the border of West Pogo, one of nine blocks of claims that make up Millrock's much larger Goodpaster project.

Highlights from Northern Star's drilling in the Goodpaster zone include: 2.1 meters of 44.5 grams per metric ton gold; 2.2 meters of 28.1 g/t gold; 0.6 meters of 100.1 g/t gold; and 0.3 meters of 170.2 g/t gold.

With the stacked layers of high-grade gold tapped at Goodpaster trending towards West Pogo and geophysics recently completed by Millrock indicating the zones continue onto its claims, Northern Cobalt locked in its opportunity to enter into an option to joint venture Millrock's entire 160,000 acres of state of Alaska mining claims in the Goodpaster District.

This is not Northern Cobalt's first foray into Alaska. In February, the South Australia-based explorer picked up Snettisham, a magnetite-vanadium project in Southeast. The chance to earn a 60 percent interest in a district-scale gold project adjacent to an operating high-grade mine is a potential game changer for the company.

"The potential camp scale of the gold system in evidence across the property from my recent field trip and the incredible results declared from neighbors Northern Star in recent announcements, puts this standout brownfields project head and shoulders above other opportunities assessed," said Northern Cobalt Managing Director Duncan Chessell.

Big project, big deal

With US$20 million in exploration spending, plus US$200,000 in cash payments and 38 million in Northern Cobalt shares issued to Millrock over four years, Northern Cobalt's option to earn a 60 percent joint venture interest in the Goodpaster project reflects the size and prospectivity of Millrock's land position in the Goodpaster District.

"Under the agreement terms, Millrock will become a significant shareholder of N27 (Northern Cobalt), giving great leverage if orebodies are discovered," said Millrock Resources President and CEO Greg Beischer.

Millrock's Goodpaster project is subdivided into nine separate claim blocks – West Pogo, Shaw, Eagle, LMS-X, South Pogo, East Pogo, North Pogo, Last Chance and Divide – and its deal with Northern Cobalt takes the entire package and the individual projects into consideration.

Upon earning a 60 percent joint venture interest on the entire Goodpaster project, Northern Cobalt will have the option to earn up to an 80 percent JV interest in one of the blocks by funding a feasibility study for the selected property and funding Millrock's portion of mine development, in the form of a loan.

While initial exploration under this agreement is expected to focus on the highly prospective West Pogo project, Northern Cobalt has agreed to invest at least US$2 million on exploration across the other eight claim blocks over the first two years. Any of the projects not explored over this period will revert to Millrock.

"N27 shares our view that the Goodpaster Gold District has the potential to become one of the world's great gold mining camps," said Beischer. "As well, over the next two years, at least US$2 million will be devoted to advancing other intriguing prospects we have developed."

While Northern Cobalt needs some time to do its legal due diligence, the deal has been structured in a way that ensures that drills can begin turning on the West Pogo property long before the snow melts in Interior Alaska.

Under the terms of the initial agreement, Northern Cobalt is paying Millrock US$250,000 to lock in its exclusive rights to option Goodpaster for 50 days, a period that allows the Aussie company to finish its due diligence. This can be extended by 50 days for an additional US$250,000 payment.

Millrock has agreed to use these up-front funds exclusively on the Goodpaster property, including preparing a three-mile long road to access drill sites on West Pogo, additional exploration and claim rentals.

These advanced payments are non-refundable but will be applied to Northern Cobalt's US$5 million exploration commitment for 2020 if the Australian explorer finalizes the option for Goodpaster.

Preparing for winter drilling

Millrock has been busy preparing West Pogo for a winter drill program that could begin as early as February.

While most Interior Alaska projects shut down drilling during the cold months of winter, West Pogo and Millrock have a couple of advantages that make this possible – a road that cuts across the property and experience with winter drilling in the area.

"The all year mine-road access available to this project, is a huge logistical and cost saving advantage over typical summer only, helicopter supported projects in Alaska," said Chessell.

The winter drilling experience comes with Chris Van Treeck, Millrock's Goodpaster project manager. Prior to joining Millrock, Van Treeck oversaw successful numerous winter drill programs at the Peak Gold project about 100 miles to the southeast, providing him with the experience needed to prepare and execute winter drilling at West Pogo.

In preparation for the potential early 2020 drilling at West Pogo, Millrock recently completed 13 kilometers (eight miles) of controlled-source audio-frequency magnetotellurics geophysical surveys on two lines running north-south across the property. This is the same geophysical technique used to identify buried structures that commonly host gold veins on Northern Star's Pogo property, including the Goodpaster discovery.

This CSAMT survey has detected a high conductivity geophysical response beneath the south side of Aurora Creek, which is where the company expected to find extensions of the Goodpaster zone on West Pogo.

Millrock says the CSAMT conductors are coincident with a magnetic low – indicating gold-mineralizing fluids may have altered the rock – and is also associated with strong gold, arsenic and bismuth soil geochemical anomalies at surface.

The most intriguing target was identified on line six, which is 450 meters west and parallel to the Pogo property border. This strong conductor is only about 80 meters below surface and appears to be gently dipping, which is consistent with low-angle regional shear zones that host most of the roughly 10 million ounces of gold identified on Northern Star's Pogo property.

"We have developed a compelling drill target at West Pogo," said Beischer. "Numerous lines of evidence are pointing to the area along Aurora Creek, which is directly along strike to the southwest from a new, high grade discovery reported by our neighbors next door."

With the goal of drilling this target as early as February, Millrock has already applied for permits to build a three-mile-long road between the Pogo Mine access road and the West Pogo drill targets in Aurora Creek valley.

The company has also laid the groundwork to drill a well that would provide the water needed for drilling during the long winter months.

"We plan to construct a drill trail from the Pogo Gold Mine road to Aurora Creek and drill a well to provide a nearby, winter water source. This will give the flexibility to begin drilling in the winter months of 2020," said Beischer.

A great year coming

For its part, Northern Cobalt is excited to get drills turning on this district-scale gold project.

The Australian company is currently raising funds to begin what is expected to be a robust exploration program in 2020.

"The planned US$5 million exploration program for 2020 will provide funds for a thorough test of the compelling drill target we have developed at the West Pogo block of the project, which is immediately adjacent to the Pogo Gold Mine," said Beischer.

The company expects this initial year of exploration at Goodpaster to include 7,500 meters of core drilling, lidar surveys, mapping, sampling and CSAMT surveys at West Pogo; as well as regional exploration to identify additional drill targets across the district-scale Goodpaster project.

The first six holes are expected to test geological and geophysical targets in the Aurora Creek valley. All of these holes will be road accessible upon completion of the exploration trail connecting Aurora Creek with the Pogo Mine road.

Another five holes are planned to test two other prospective areas to the north of Aurora Creek.

The two lines of CSAMT geophysics already completed by Millrock are numbered three and six, a clear indication that further lines were planned. Northern Cobalt intends to fill in this grid with two north-south lines west of line three, two between lines 3 and 6, and one line on the West Pogo-Pogo properties boundary east of line 6. Additional lines are planned where the West Pogo property wraps around the north side of the Pogo Mine claims.

While Northern Cobalt will be manager of Goodpaster exploration during its five-year earn-in period, the Australian company has opted to hire Millrock Exploration Corp., an Alaska-based subsidiary of Millrock, to operate the 2020 program for a fee equal to 8 percent of exploration expenditures. Northern Cobalt has the option to re-appoint Millrock Exploration as operator over the balance of the option agreement.

With Goodpaster shaping up to be Northern Cobalt's flagship property, the Aussie explorer is planning to change its name to Great Northern Metals. The name change will be put before voters at the coming 2019 annual general meeting.

Considering that Northern Cobalt share more than doubled – from A40 cents per share to A83 cents per share – following the Goodpaster option agreement, it seems likely shareholders will approve the name change.

"2020 is shaping up to a be a great year," Chessell wrote in a LinkedIn post announcing the pending Goodpaster JV option.

 

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