Technical Report Another Game Changer for Oroco

by | Jun 8, 2019 | General | 0 comments

June 7, 2019 is a day that represents another game changer for Oroco. The company announced receipt of a draft technical report for the Santo Tomas Copper Project. On it website, the company also uploaded a new investor presentation that includes some incredible drill data.

This is the first time that prospective investors and major mining companies have something that they can look at to evaluate the value of the property. Before there was not much available. When the final report comes out, they will be able to take the individual drill data and plug it into their software and see the size of the resource and what it means to their profitability.

The part that is significant from the press release is the following:

“The Technical Report author recognizes that the Cambria 2009 Grade Shell provides a geological validation for the continuity of mineralization and indicates a target volume of approximately 280 to 315 million tonnes and a target grade of 0.45% to 0.55% copper.”

Here is what this means. With a production of 100,000 tonnes per day (or 35 million tonnes per year), 280 to 315 million tonnes would last for 10 years of production. With grades between 0.45% to 0.55% this is huge amount of profits.

As you can see, a yearly profit of between $465 and $675 million per year for ten years just from the high grade shell is some serious money. This is $4.6 to $6.8 billion of profit during the first ten years. WOW. Remember this is just the high grade portion of the deposit. The low grade portion will last at least 20 years after the original 10 years. In 10 years, copper price should be a lot higher and the low grade will be considered high grade. This means that a miner will continue making huge profits not just for the original 10 years but entire life of mine.

Very soon, the majors are going to start lining up to buy Santo Tomas. The only question that remains is whether they will pay $500 million or $1 billion for the project. Currently, the market is valuing Oroco as if Santo Tomas was worth $120 million. We have a long way to go.

Disclosure: Long Oroco  

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About Mariusz Skonieczny

Mariusz Skonieczny is the founder of Classic Value Investors.