Oroco – I Can Feel the Change

by | Jun 24, 2019 | General | 0 comments

Sometimes there is a disconnect between investors (stock market) and the company. Over the last month, investors in Oroco have been feeling down a bit because they see the stock price move down from over $0.70 to under $0.50. I would not worry.

I can literally feel the change that is taking place from day to day. I continually talk with several people the get the pulse on the company and I can tell you what is happening with the stock price over the last four weeks complete opposite to what it happening with the company.

When you compare the interests that there was in Oroco when the legals were still not resolved to now that the legals are behind, it is night and day. All sorts of people are crunching the numbers where before they didn’t even want to look. “Call me when the legals are done.”

In his post, Caliche said, “… once done [legals], valuation will be taken over by numbers guys with sharp pencils and you can bet it will be significantly higher than prices today.”

This is so true. Now I receive various calculations by people that I didn’t even know 6 months ago. The question that comes to my mind is how many people are crunching the numbers without us knowing about it? How many majors are crunching the numbers?

The other day, someone sent me a cash flow analysis and NPV calculation that included very very conservative numbers, and the NPV was very impressive.

Even though the NPV was high, this is nothing. The resource is likely to increase because the historical drilling barely showed what Santo Tomas truly is.

Why will the resource increase? I will give you one of several reasons. 24 of 49 exploration holes that encountered mineralization in the North Zone ended in mineralization (page 22 of Investor Presentation). This means that let’s say the mineralization goes 200 meters deep, the drill finished at 100 meters deep. And this is on 50 percent of the holes in the North Zone which is where the high grade is located. They should have drilled deeper but 20 or 30 years ago, they were not looking for deep ore bodies. They were just looking for shallow deposits. So if you have 50 percent of holes that ended in ore, you know 100 percent that the resource will get bigger. The only question remains is how much bigger.

We already know that the high grade portion of the deposit has about 300 million tons of ore according to the most recent press release. If Oroco drills those holes, the resource size could increase substantially. If we get to 450 million or 50 percent increase, then Santo Tomas high grade portion only will be as big as Rosemont Copper Project which sold for more than $500 million. The NPV for the entire Santo Tomas including the lower grade will definitely surpass $2 billion. And that’s just infill drilling. What about exploration drilling outside of the North and South zones? I don’t think people realize just how big the potential here is with Oroco’s stock.

Anyway, people all over the globe are crunching the numbers while the bored investors are selling. I can feel the change. I can tell the happiness in the management’s voices. Everything is different. As Caliche said, the guys with the sharp pencils are crunching the numbers. I am definitely holding on to my shares with my fingernails. This thing is about to explode to the upside again.

Disclosure: Long Oroco

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About Mariusz Skonieczny

Mariusz Skonieczny is the founder of Classic Value Investors.