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    MRO   CA6011322022

MILLROCK RESOURCES INC.

(MRO)
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Management Discussion and Analysis: 2021 Q2 Report

09/17/2021 | 03:42am EST

Management Discussion & Analysis

For the Six Months Ended June 30, 2021

MILLROCK RESOURCES INC.

Management Discussion and Analysis

For the Six Months Ended June 30, 2021

Introduction

This is Management's Discussion and Analysis ("MD&A") for Millrock Resources Inc. ("Millrock" or the "Company") and should be read in conjunction with the condensed interim consolidated financial statements for the six months ended June 30, 2021 and supporting notes on www.sedar.com. These condensed interim consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS").

Readers should note the following:

  • This MD&A has been prepared based on information known to management as of August 30, 2021.
  • All currency amounts are expressed in Canadian dollars unless otherwise noted.
  • Gregory A. Beischer, a Director of the Company and its President and Chief Executive Officer, is the qualified person (as defined in NI 43-101) who approved the technical information in this MD&A.

Description of Business

Millrock Resources Inc. ("Millrock" or the "Company") is engaged in the acquisition and exploration of mineral properties prospective for gold, copper and other metals. The principal mineral exploration targets include intrusion-related gold and copper-gold porphyry deposits and vein style gold-silver deposits.

Millrock is active in multiple geologic terrains and mineral districts with four mineral exploration projects in Alaska, USA and Sonora State, Mexico.

The Company follows a Project Generator - Joint Venture business model that capitalizes on Millrock's knowledge and ability to identify high quality exploration targets and execute exploration programs under the terms of earn-in option agreements. This business model shares risk by forming agreements with other companies that invest capital to move exploration projects toward development and production.

Millrock trades on the TSX Venture Exchange under the symbol MRO and is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Nunavut. The Company also trades on the OTCQB marketplace in the United States under the symbol MLRKF.

Forward Looking Statements

This document may contain "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). These forward-looking statements are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources, mineral exploration programs, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage.

In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain

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MILLROCK RESOURCES INC.

Management Discussion and Analysis

For the Six Months Ended June 30, 2021

actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology.

By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; and other risks of the mineral exploration and mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Going Concern

The condensed interim condensed financial statements for the six months ended June 30, 2021 on www.sedar.comwere prepared on the assumption that the Company will continue as a going concern, which contemplates that the Company will continue in operation for the next twelve months and that it will be able to realize its assets and meet its liabilities in the normal course of operations. Realization value may be substantially different from carrying value as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values, classification of assets and liabilities should the Company be unable to continue as a going concern. As of June 30, 2021, the Company had not yet achieved profitable operations, and had an accumulated deficit of $45,997,139 (December 31, 2020 - $44,750,111). Management has carried out an assessment of the going concern assumption and has concluded that the Company may not have sufficient cash and cash equivalents and other financial assets to continue operating at current levels for the ensuing twelve months. The Company's forecast indicates the existence of uncertainty that raises significant doubt about the Company's ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. The Company's ability to continue as a going concern is dependent upon its ability to raise additional equity, continue some of its existing partnerships, partner additional exploratory prospects, generate overhead recovery fees, and receipt of option payments.

Additional Information

Financial statements, MD&A documents and additional information relevant to the Company and the Company's activities can be found on SEDAR at www.SEDAR.com, and/or on the Company's website at http://www.millrockresources.com.

General

The Company continued to advance its business objectives through 2021. During the six months ended June 30, 2021, Millrock spent $1,321,653 on exploration work on properties during the period, of which $1,982,718 was supplied by companies earning an interest in Millrock's projects. Additionally, the Company spent $59,147 on generative exploration during the six months ended June 30, 2021.

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MILLROCK RESOURCES INC.

Management Discussion and Analysis

For the Six Months Ended June 30, 2021

Highlights for the Three Months Ended June 30, 2021

  • Building on the Strategic Alliance efforts with Felix Gold in the Fairbanks gold district, leases on three large properties were acquired by Millrock and Felix Gold: The GST, Bank and Vault claims blocks. The properties add significantly to the acreage upon which Millrock will be entitled to a royalty in the event of commercial gold production.
  • Felix Gold funded and Millrock executed a very large soil sampling program across the Treasure Creek, GST, Bank and Vault claim blocks.
  • Millrock announced a commitment letter agreement with Tocvan Ventures Corp. (CSE: TOC) ("Tocvan") whereby Millrock gained a royalty interest by reinstating its option on the underlying concessions and assigning the option to Tocvan.
  • Partner Resolution Minerals carried out a reverse circulation drilling program at the East Pogo block of claims.

Outlook

Throughout the past two years Millrock has generated projects that attracted substantial funding from partner companies. The Company formed a strong new partnerships on the 64North Project and the Fairbanks Project in Alaska. Both projects have robust budgets and the Company is very active exploring. New partnerships are emerging and new projects are being developed.

Operations Review

United States Properties

Millrock owns and operates four mineral exploration projects in Alaska.

  1. Apex El Nido, Alaska, United States, High Grade Vein Gold: Millrock made an option agreement with the underlying owner. The option is good for five years and costs Millrock US$1,000 per year and is required to make annual rental payments to the federal government. There are historical underground mine workings on the project from which approximately 25,000 ounces of gold was extracted. No drilling beneath the workings has ever been done. Quartz veins of the mesothermal variety locally contain high grade gold mineralization. The veins may extend below the workings. Subsequent to the end of the quarter Millrock announced the Couer Explorations, Inc. had entered an agreement with Millrock. Millrock has assigned its option rights. If Coeur makes the necessary payments and exploration expenditures and exercises the option Millrock will be granted a Net Smelter Return royalty with an Advanced Mininum Royalty provision.
  2. 64North Gold Project, Goodpaster Mining District, Alaska, United States, Gold:
    In February 2021, the Company entered into an amended agreement to reduce the expenditure amounts for Resolutions earn in. In return, Millrock received accelerated and additional Resolution share payments (20,000,000 shares were received accelerated and additional Resolution share payments (received 25,000,000 shares (valued at $742,761), and paid 6,900,000 of those shares as a finders fee (valued at $192,549).
    Resolution carried out a reverse circulation drilling program during the quarter. Twelve holes totaling 1,663 meters were drilled to test geophysical anomalies with overlying geochemical support. Quartz veining associated with graphitic zones was intersected in some holes. Gold values were weak but pathfinder elements potentially indicating a gold deposit at greater depth were found to be present in the core samples.
  3. Chisna, Alaska, United States, Gold: Millrock purchased claim blocks from Corvus Gold in 2015. The claim blocks came with a large database of information that cost approximately $7 million to create. Upon review of the data Millrock has developed some strong targets for porphyry copper-

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MILLROCK RESOURCES INC.

Management Discussion and Analysis

For the Six Months Ended June 30, 2021

gold mineralization. Millrock is in discussion with a major mining company about a possible exploration agreement.

  1. Fairbanks District, Alaska
    In late 2020 the Company announced that it entered into an agreement whereby Felix Gold will have the right to secure a 100% ownership in the Treasure Creek and Ester Dome projects in accordance with the underlying option agreements for a future share payment, US$140,000 in cash, and retained royalties. Felix Gold is planning to undertake an initial public offering and listing on the Australian Securities Exchange ("ASX") in 2021. Upon successful listing and ASX approval, Millrock will vest with a circa 10% share ownership of Felix Gold (dependent on the final capital raising amount). Each of the three projects is subject to a production royalty in favour of Millrock: Treasure Creek 2.0% Net Smelter Returns ("NSR") and Ester Dome 1.5% NSR.
    Additionally, Millrock and Felix Gold entered a strategic alliance whereby other projects outside of the Treasure Creek and Ester Dome areas would be generated with funding from Felix. Millrock is entitled to a 1.0% NSR royalty on any project staked, and on claims secured from third parties. Felix Gold must fund a minimum of US$500,000 each year to extend the strategic alliance.
    Felix Gold has funded claim staking that added to the existing projects and to the land holdings in the Fairbanks gold district. During quarter, three large claim blocks were added to the portfolio. The GST claim were leased from Fairbanks Exploration Inc. by Millrock, then the lease assigned to Felix. The Bank and Vault blocks were leased by Felix Gold. In the event of commercial production Millrock will be entitled to a 1.0% Net Smelter Returns royalty.
    Felix Gold funded, and Millrock executed a major soil sampling program across Treasure Creek and the GST, Bank and Vault claims blocks. The work continued past the end of the quarter and results are presently being received.
    Grant Mine
    During Q1 2021, the Company entered into an option agreement to earn a 100% interest in the Grant Mine near Fairbanks, Alaska. To earn the interest, the Company must pay $2,000,000 over six years. This property will form part of the larger Ester Dome exploration project, which is subject to an agreement between Millrock and partner Felix Gold. In the event that Felix Gold assumes the option rights and proceeds to make the purchase of the Grant Mine, Millrock will vest with a 1.5% Net Smelter Return royalty on gold production with an advanced minimum royalty provision. Felix Gold has assembled all historic data and is reviewing it to calculate the grade and tonnage of gold known to be in the ground.

Mexico Properties

  1. On June 6, 2014 Millrock entered an agreement to purchase Pembrook Mexico Holdings and all of its assets, which include the shares of a wholly-owned Mexican subsidiary and nine 100%-owned mineral properties which include: Rio Sonora, Los Cuarentas Este, Los Cuarentas Oeste, Los Chinos, Ramard, Los Chivos, Villa Hidalgo, Violeta and La Union. Millrock changed the name of Pembrook Mexico Holdings to Millrock Mexico Holdings. The Mexico subsidiary was renamed Recursos Millrock. The mineral rights contained within the properties at the time of purchase were subject to a net smelter return royalty payable to Pembrook Mining Corporation, which subsequently sold the royalties to Sandstorm Gold Royalties. The royalty payable is 1.5% on gold and silver and 1.0% on other metals. The purchase also included two mineral properties under option. The first option was Coatan, under option from Riverside Resources Inc. The Coatan option was terminated prior to any costs being incurred. The second option was Guadalcazar, which was fully exercised by Millrock.

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Disclaimer

Millrock Resources Inc. published this content on 17 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2021 07:41:02 UTC.


© Publicnow 2021
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Financials
Sales 2020 0,12 M 0,09 M 0,09 M
Net income 2020 -1,37 M -1,07 M -1,07 M
Net cash 2020 1,17 M 0,92 M 0,92 M
P/E ratio 2020 -9,68x
Yield 2020 -
Capitalization 9,13 M 7,14 M 7,16 M
EV / Sales 2019 14,9x
EV / Sales 2020 106x
Nbr of Employees -
Free-Float 96,9%
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Managers and Directors
Gregory A. Beischer President, Chief Executive Officer & Director
David Allen Cross Chief Financial Officer
Roland W. Butler Independent Director
Peter J. Chilibeck Independent Director
Lawrence J. Cooper Independent Director
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