I have been writing about Oroco for more than a couple of years. Now the question that pops to people’s minds is how Coronavirus will impact Oroco. In the long term, I don’t think this will have much impact. But in the short term, it is harder to say.
Copper already went down from almost $3 per pound to $2.50 per pound. Consequently, Oroco’s stock declined from $0.50 to $0.30. Can copper go down more? Sure. Does this mean that Oroco will go down? Who knows.
Just because copper is down does not mean Oroco’s stock will be down because Santo Tomas is a very unique asset. I said before that it is the best copper asset in the world not in the hands of the majors.
When I first started buying Oroco, the price of copper was around around $3 per pound. Oroco’s stock was $0.04. Now the price of copper is $2.50 and Oroco’s stock is almost ten times higher. So copper price declined but Oroco’s stock increased by a lot. This is because the fundamentals of the company increased so much that the decline in copper did not matter that much.
So for this reason, it is not wise to say that if copper declines more that Oroco’s stock will decline too. There are several fundamental drivers that are coming like 3D IP and drilling that can be far more positive than any damage caused by the Coronavirus.
Disclosure: Long Oroco