Mining News: Kinross signs JV pact to explore claims

Gold producer joins Millrock Resources in targeting grassroots prospects on Seward Peninsula; drill program scheduled for 2010

Shane Lasley

Mining News

Kinross Gold Corp. has agreed to team up with Millrock Resources Inc. to explore more than 900 square kilometers, or 222,000 acres, of gold properties in the Council Mining District about 60 miles, or 100 kilometers, east of Nome, Alaska.

The area of interest covered under the agreement includes Millrock’s Council property and the adjacent Albion property, plus surrounding mining claims staked by the junior.

Millrock said the three properties that make up the area of interest “form a large, comprehensive land package covering the upland lode source areas from which the prolific gold placers of the Council Mining District must have been derived.”

To earn a 55 percent joint venture interest in the Council properties, Kinross has agreed to spend US$3 million in exploration, including at least US$500,000 in 2010, and to pay Millrock US$260,000, including US$65,000 up front. Kinross can increase its stake in the venture to 75 percent interest by spending another US$3 million on exploration.

The agreement also includes a provision for a private-placement financing of C$250,000, in which Kinross will purchase shares of the junior explorer based on a 20-day moving average of Millrock’s market price. 

Kinross, which owns the Fort Knox gold mine near Fairbanks, already holds about a 5 percent interest in Millrock as well as warrants that, if exercised, would increase its stake in the junior to more than 9 percent.

“Millrock is pleased to expand its business relationship with Kinross. Excellent gold targets exist on the properties, and we look forward to an initial drilling program in 2010,” said Millrock President and CEO Gregory Beischer.

Two targets

Millrock has agreed to pay the owner of Albion 500 ounces of gold bullion in installments between now and 2017. The owner also will retain a 2.5 percent net smelter royalty on gold and silver produced at Albion. A payment of 2,000 ounces of gold bullion would reduce the NSR to 1 percent.

According to Millrock, Ophir Creek and the surrounding tributary creeks that comprise the Council Mining District has produced more than half a million ounces of placer gold. A placer operation at the head of Albion Creek historically mined what appears to be a residual lode deposit.

The junior said a 900-meter-by-2,000-meter gold-arsenic anomaly surrounds the old placer workings and is centered on a northwest trending structure. The explorer believes the size of the geochemical anomaly and the geological setting indicates potential for a large deposit.

Millrock said a parallel structure and soil geochemical anomaly of even larger proportions exists to the northeast on the Bering Straits Native Corp.’s Council land block.

“The Council Mining District has historically produced a great deal of placer gold. With the addition of this claim block, Millrock controls the mineral rights that cover the most probable lode source areas for this placer gold. A large, strong soil geochemical anomaly is situated at the headwaters of Albion Creek immediately upslope from a historic placer mine. Drilling to test the targets is planned for 2010,“ Beischer said.

He told Mining News the company identified the large anomaly through stream sediment, vegetation and soil sampling programs carried out in 2008 and 2009. Prior to this field work, very little exploration had been completed on the Council property.

“It is pretty amazing when you consider there has been half a million ounces of gold, probably, that has been mined in Ophir Creek. You know that gold had to come from somewhere nearby, probably those hills adjacent to the creek,” Beischer said. “That is what I like about Alaska. There is so much that has been looked at so little.”

Millrock will be the operator of the 2010 drill program, which will target the prospective structures.