Archer’s thoughts on Oroco Resource TSX.v -OCO Q-ORRCF

http://www.orocoresourcecorp.com/

I absolutely love people sharing their Oroco stories, it is happening more often than ever. This is a compilation of tweets from Archer https://twitter.com/Archer76250300

“The problem is, people are being hated when they are real, and being loved when they are fake”

-Bob Marley

Ah $OCO, you rascal. Sentiment is at an all-time low and I want to share some thoughts.

I got involved in 2020 when it was about 30 cents. Back then, it was still just a story, a dream. It was a small team, a mine (just recently won in a long, complicated legal battle) and some limited historical drill results. All things considered; it was a risky play.

Over the next year or so, things progressed quite impressively, if one paid attention. The company raised some money and started delivering drills to the property. We got a 3D IP. I learned a ton about the mining industry.

The hype was tangible, and word got out thanks to the work of long-time holders like

@ClassicValueInv and @calichebahada . The stock price exploded to 3.60. Sentiment was nuts. I caught the $OCO fever and told my friends and family about the stock, which I rarely do.

You know, if the stock price increased in a gradual and stepwise fashion from 0.40 to 1.25 where it is now, I don’t think people would be nearly as upset with the company. When $OCO tagged its 52W high, not one hole had been drilled. Not ONE.

The stock price got a little ahead of itself and we got into a frenzy. It was never going to go straight up. $OCO wasn’t ready for those prices, plain and simple.

However, as the stock price was falling, management was moving… like a team with skin in the game. They built an impressive camp and infrastructure, confirmed a substantial portion of the historical drill results, and continued to drill the property for 24hrs a day.

You can see this progress by checking out

@ClassicValueInv‘s video series of his visits to the property, which spanned about a year.

Here is what I am going to argue in the remainder of this thread: This management team is not perfect, but know what they’re doing.

In today’s volatile market, investors have access to instantaneous information, obtained predominantly from platforms that profit off our emotions. Unfortunately, strong emotions rarely benefit an investor, and brokerages love it because it means more moves and more commissions.

Our addiction to constant information leads us to expect it from the industries and companies we own. If a company is radio silent for too long, investors are programmed to suspect that something is wrong, especially when it comes to the microcap space.

Articles pop up projecting a declining price of copper, the market tanks, China locks down, other opportunities look better, etc etc. emotions build, and we slam the sell button. We are programmed to respond to our fear.

Maybe management could have done a better job recognizing this. After responding to some investor activism, the company now releases weekly updates, no matter how ultimately pointless this may be to the outcome.

Then there was the option issue. The market didn’t like this, but to my eye, it looks more like an honest mistake than a dishonest play. You can read a bit about it here.

caesarsreport.com

Sometimes a company only has the best intentions, but messes up in the process. That’s what happened wi

If these are the worst mistakes this management team makes, so be it. Name me one management team that’s been 100% perfect and I’ll eat my words, but I keep asking myself… what does everyone expect?

With regards to assays… do you think this happens overnight? This is a huge property. There are other mines in Mexico who want lab results. Do you think a team who holds over 25% of equity in this company is purposely holding up releasing assay results, trying to screw us?

Do you think the company should spend time and money managing its shareholders emotions? I would hope that they’re far too busy to worry about that…

I’ll tell you though, if I picked up the phone right now and called Adam Smith, he would take my call. What’s more is he treats each shareholder like a member of the team. He doesn’t try and bullshit me, he doesn’t try and sell me, he just tells me what’s going on.

Junior miners are notorious for lies and deceit, yet everything this company said they would do, they have done. It has taken a little longer than expected, granted, but doesn’t everything in mining? $FIL.TO had to drill over 40 holes before they got something good.

I recently spoke to a lawyer who works in the mining space. I told him a bit about Oroco and what was going on. The first question he asked me; “what about infrastructure?” I find it interesting that this is rarely talked about.

People tend only to care about grade, but if you find 10% copper in the middle of Alaska, 500 miles from a road/water/electricity… it’s not as great as it sounds. Quite simply, junior miners in accessible or favorable jurisdictions are rarer than you think.

When I told the guy about where Santo Thomas was situated, and how it has easy access to power, a nearby town, and road + rail access to a port only 100 miles away, he was pleasantly surprised. Apparently, few juniors can say the same.

When I told him that Oroco has been building its reputation in the community for years; installing computer labs, sponsoring soccer teams, and using a local workforce to drill the mine, he got serious.

In what appears to be among the most profound labour shortages ever, in a time where many mines face severe conflicts with indigenous local communities, $OCO has developed a sterling reputation in the area. This is huge for selling to a major.

Look, I’m not trying to sell anyone on this stock. All I’m saying is major looking at a property like Santo Thomas is going to like it, and that’s really all that matters. Feel free to drill some holes in the $OCO thesis, so to speak.

@OrocoCorp: keep up the solid work!

Don’t let short-term fear and noise make decisions for you.


Some real thoughts put down tonight by Ponch73 about his (and my) investment in Oroco Resource OCO.v ORRCF



Ponch73 — Today at 7:05 PM

Just wanted to share some top-line thoughts. I’ve written them primarily to remind myself why I’m invested here. If others find them useful, then excellent. If not, no problem.

1. The thesis here is that ST is a unique deposit that will hold appeal to a major in a supply-constrained copper world. Nothing in that thesis has changed. We may have had unrealistic expectations about grade, but what really makes ST unique is that there is a clear line of site to becoming a functioning mine. There is local community support, manageable permitting, proximate infrastructure and manageable strip ratios.

2. Many of us (and I am most guilty of this) are taking cues from minute-to-minute, hour-to-hour moves in the stock market. That’s a recipe for disenchantment. We can’t expect management to react to short-term stock price movements. But what if the short-term price movements aren’t anything, but noise or short-term voting (as opposed to weighing)? There might be a case to be made that a second firm in the PP was shorting the stock up to 5/14. Canada doesn’t have an uptick rule, so it looks like we’re dying from a thousand paper cuts.

3. What has changed with Oroco since we got involved. They won the legal battle. They got registered. They secured permits to start mining. They secured more permits on a promising part of the deposit. I think they’ve drilled 24-25 holes already. We would all love the assay results to be reported more expeditiously, but in the greater scheme of thing, does it matter if we get a press release in 2 days or 2 weeks?

4. I think management is pretty astute to be pushing to a PEA as quickly as they are. I was very surprised by the pace of today’s timeline, and I’m surprised that we’re burying the lede. Oroco is moving f’n fast. And they’re able to do it with 4 drills. They don’t need a 5th or a 6th like some are speculating. They’re much further along in NZ than the market presumes (because of the backlog in reporting assays). When they finish NZ, they can then reallocate 3 other rigs to Brasiles and SZ (maybe 2 and 2?)

5. I am floored that copper has remained relatively flat this year while the stock market has fallen out of bed. That’s an interesting signal that we perhaps don’t spend enough time considering. Every day that copper is above $4 is another day that ST gets more valuable. Plain and simple.

6. I think a case can be made using a couple of different valuation methodologies (NPV, 3% of contained CuEQ value, etc.) that ST will be worth $1 bil+ to an acquirer. The list of alternate copper projects of size and line of sight are few and far between. We can cross Pebble off the list. Filo has awesome grade, but it’s going to be a cap ex monster (and it’s already priced for perfection). Solaris has community and permitting issues that may not be priced in. Casino has severe community resistance from First Nations authorities. Unlike many of its peers, I think ST can return a NPV to cap ex ratio above 1.

7. Put yourself in the position of management. They’re not perfect, but they’re now at the point where they can do no right in the eyes of some. They’re damned if they do, damned if they don’t. CEO makes a presentation today after getting crushed by COVID. He puts out an aggressive timeline, but perhaps isn’t quite as crisp or quick on his feet as he normally would be, and then gets lambasted for being low energy?

8. Instead of drilling down and reading the tea leaves, the knee-jerk response to the presentation is that I don’t trust management’s timeline. All because the septuagenarian former CEO is uncomfortable and unpracticed at saying I don’t know.

9. I think I, for one, need to take a step back and revisit why I’m an investor in Oroco. This is a long-term play. It’s not going to skyrocket overnight. It takes time at cultivating an asset like this. I got greedy and stupid after the run-up post-Covid through last summer. I confused brains for a bull market. I’ve done this before.

10. I might be absolutely wrong about Oroco and ST, but there’s not enough evidence of that yet. The stock market is not fundamental evidence. It wasn’t at $3.50 CAD and it isn’t now.

11. But, for the life of me, I can not fathom how a delayed press release pertaining to a zone that has had no historical drilling changes the value of a deposit with significant historical data. I don’t begrudge others for throwing up their hands and saying investing in this is too hard. But the potshots at management and the constant citing of the stock price is a bridge too far.

12. I think there’s lots of promising signs under the surface. The blog update from last week was great. Management’s willingness to put out an aggressive timeline is great. The decision to move quickly to a PEA and compliant resource for the NZ is great.

13. Management has secured sufficient water rights to make the 4th rig operational. That’s great. Their willingness to continue to take my calls even when I haven’t acquitted myself as well as I should have is great.

14. The possibility that NZ, Brasiles and SZ are one continuous structure seems like pretty good news.

15. Could management’s engagement with the broad investor community improve? Absolutely, but they’re taking steps in the right direction. I’m really looking forward to calls with Richard, with Adam’s next TH presentation and with weekly blog updates.

16. I know some of you are losing faith and doubting yourself and wondering if you’re dooming your children. I hope this stream of consciousness posting helps you to step away from the ledge and consider the bigger picture. You’ve done your homework. You know why you invested. Are you going to let CIBC and a couple of fucking offshore hedge funds change your mind? It’s ok to determine that this investment isn’t for you and that you expected higher grades or a faster pace of drilling or whatever. Just don’t let short-term fear and noise make the decision for you.

If you still want to hold this investment, I would highly recommend, in your darkest hours, stepping away from the keyboard and resisting the temptation to vent. Instead, read old reports, crunch numbers, read Malte’s work (@malte_humpert) on twitter

And, to conclude this, I’m going to take my own medicine. I’ll be updating my ST model tonight and will share the results when I’m done. News flash: my NPV calculation will likely be going up.

Great Office Visit with Oroco

Went to go for coffee today with Adam and met up at the office. While there I also saw Craig and David. To say there is a major disconnect between the sentiment on the street and inside the office is an understatement. Everyone was busy, phones were ringing, and I think they were happy to see me, (I don’t know how many visitors they get these days.) The mood was upbeat and confident, with smiles all around.

Discussion inevitably came around to assays. Adam honestly said “I dont know”. I think that is great. Hear me out on this.

Standard procedure in companies of merit is for a “chinese wall” to be put up between technical staff and most, if not all of the rest of the company when material information is being worked on. That doesnt tell me anything expressly, but something is moving forward internally. Take what you will from those observations. Obvi no dates were given for news

Meetings in Europe were very well received with face to face between Adam , current shareholders, prospective shareholders, some funds and at least one well known un named major. He is travelling again soon and interest in seeing him is very high. (his dance card fills up quick when he’s on the road)

Drill 3 is on site and being prepped to start work at Brasiles!

There is no doubt news is on its way.. (the news drought is about to break) things are moving forward and to quote an old friend “stop looking 3 inches in front of your face”

RFC Ambrian research on Oroco Resource. Estimated M&A target price $8.6 to $11.55 Cad!

M&A Potential Supports a Strong Valuation: We have tried to consider
what Oroco could be priced at in an M&A situation as we believe it has an
asset that may be attractive to a top tier copper producer. Based on previous
work, we have applied a takeover value US$193/t resource for a feasibility
stage project on a resource of at least 3-4x the historical resource calculation.
This gives a takeover target share price for Oroco of C$8.66-11.55/share.
Assuming share price represents a takeover price including a 30% premium,
we place an 18 to 24-month trading price range of C$6.66-8.88/share on
Oroco, a significant premium to the current share price.

My Q1 Q2 timeline estimate for Oroco

they mentioned at the agm the permit office opens jan 8 and they are ready to submit which to me says surface rights are done and they will move forward asap
also they will drill south zone and brasiles first 
bids were in for selecting a drill contractor before christmas so by the time permits are recieved they should have awarded the contract 

i say (hope) one month to get permits approved 
2 weeks to mobilize (possibly less if they use an available in country contractor)
no idea of drill plan but doubt they will go for a super deep hole first so 1 week to drill first 2 holes
6 weeks at assayers 
2 weeks buffer time.. my hope is for assays mid april to early may

lots of IP to release before then, we have north then brasiles then they will move back to the south and trace the extent of the new extention 

normally i wouldnt think ip that important but the fact we have drill data to support and confirm what the ip shows speaks volumes about the potential size and inferred grade.  I guarantee lots of calculators will come out between the time we finish IP and the first assay..

2021 is going to be a massive year moving Santo Tomas forward.. not only will they prove what i have known is there all along from the historical data (copper doesnt move) but i believe they will at least double if not triple the current tonnage!

once initial results come in there will be a steady stream of assays 60 to 80000 meters requires 6 or more rigs so the only problem i see is our volume of core slowing down the assayers 🙂

lets gooooooooooooo!

Oroco, Cashed Up and Ready to Go!

2020 will go down as a tumultuous year in history but for Oroco it has been one of growth and preparation. Oroco started the year as a company with massive potential but little in the way of bankable assets. The legal victory in 2019 was complete but the title to the world class copper deposit, Santo Tomas, was not transferred until early January of this year. All was well with the world, until it wasn’t.

As the world shut down, Oroco was just getting started. Copper prices dropped to multi-year lows, funding dried up and everything went quiet. Plans were already in place in rural Northern Mexico preparing for a year of work, the first on the property in decades. As a company with years of experience in mining, Oroco knew they needed to adapt and they did. They had some funds from previous private placements and warrant exercise, enough to begin site prep in anticipation of things getting better. Roads were improved, lines cut for the IP program, a camp was built and future drill sites surveyed.

Fiscally, Oroco knew funds were going to be needed. Warrants set to expire nearly worthless were extended by 6 months. A placement was in progress, taking many times longer than anticipated since the price was set as the share price was falling. Not the ideal scenario to raise money. Fortunately, Oroco is blessed with very loyal longtime shareholders who, as always, were able to partially fund the company as the worst of the global shutdown took hold.

Ian Graham was offered and accepted the position of CEO, taking over from Craig Dalziel, who skillfully led the company through decades of legal battles. The legal victory put Oroco in control of the #1 copper asset in the world in the hands of a junior. Ian’s experience as an exec at Rio Tinto is evident. The camp Oroco has constructed with the help of Ubaldo Trevizo, our representative in Choix, is worthy of anything a major mining company would build for their employees and contractors. Buildings are hard-walled and temperature controlled with a kitchen and room for 30. Anticipating the scale of work needed at a deposit of its size, an additional building is being constructed now to house another 15 workers.

The deposit is situated far enough from Choix as to not create a problem but still benefit from its workforce. The camp is far enough from Choix as to be able to quarantine contractors arriving in country to begin work. Choix was lucky and was able to avoid many of the problems affecting Mexico as a whole this year, thankfully. This fact has allowed Oroco to begin work on the property during the second half of the year. The 3D induced polarization survey has already given outstanding results, showing a massive chargeability anomaly (pink) under and to the east of the south pit effectively doubling the size of the known deposit.

Trillions of dollars in stimulus worldwide began to but a bid under the copper price. This together with shutdowns at several major copper operations worldwide has sent the copper price to multi-year highs. Structural supply issues already present before 2020 have been exacerbated and markets are well aware of the shortages on the horizon. With the rise in the price of copper, funding has returned to the mining space in general and copper in particular. Oroco has completed several placements including the one that had stalled at the beginning of the year.

In a rising price environment it is much easier to complete these financings. Once a company decides to raise money it applies to the exchange for a price reservation and an amount to be raised. This is to prevent market fluctuations from affecting the pricing of the placement. The exchange will accept the terms as given for a specified time. After that a new application must be made. Lately, Oroco has been the victim of its own success. Several have decried inequitable pricing with respect to the market. As the company builds its book, which takes time, the shares continue to rise and the placement becomes more popular. As per the terms of the application they can’t raise indefinite sums, only the amount agreed, at the specified price.

This year Oroco has raised 27.5 million dollars through placements and warrant exercise! That is an amazing sum for any junior. The fact they have been able to do this without a major mining company, a bank or some type of fund again highlights the loyalty and conviction of the shareholders. The fact they have raised this amount and the shares continue to rise attests to the value created by the company over years fighting for and winning Santo Tomas. That sum along with monies previously spent is enough to complete our earn in and secure 81% of this massive deposit. For context, 27.5 million is worth more than the market caps 1100 of the 1600 companies listed on the exchange!

As 2020 was a year of preparation, 2021 will be a year of execution. The IP program will continue to bear fruit into the New Year as drill permits are acquired. Camp is ready, money raised, and a drill plan decided. Just as Oroco management navigated the uncertain years during the legal battle, they have skillfully positioned us to massively benefit from the next 12 months. No matter what happens in the markets or around the world Oroco is fully funded, to do what they need to do to prepare Santo Tomas for ultimate sale to a major mining company for an amount that will surprise and delight many!

How will Oroco be bought for billions?

I often get questions about my thoughts on a buyout price for Oroco and when I tell them many are surprised. Believe me, those of you that haven’t been through a metals bull market, things are about to get crazy!

There is widespread interest in porphyry copper deposits like Oroco’s because they are generational, meaning they can literally carry a company through many many cycles of up and down in the metals markets. Santo Tomas has at least 40 years of production as it is now, I believe this could double with the work program Oroco is about to start.

When I say widespread interest there are the usual suspects in the copper space looking to replace production but very large gold miners have tipped their hand they are looking for copper to add to the portfolio and I think an iron ore producer or two have also said they want in to the copper space!

Oroco has brought Santo Tomas back to the capital markets at exactly the right time. Copper is in deficit due to aging mines and dropping grades as well as shutdowns due to covid.

As you will know metals are in a bull market right now. This means senior producers that survived the latest downturn will have trimmed all the fat and are lean mean money making machines right now. Fortescue just distributed another 2 billion in dividends! All senior producers will be making gobs of money in the next few quarters as Oroco is drilling and expanding their deposit. When the seniors have a nice war chest built up they will begin acquiring projects to take them forward.

Happily, just as the big boys are cashed up Oroco will have the best deposit in the world up for bid.

So the combination of rising copper prices ~3.75 to $4.00 a cashed up group looking for scarce deposits and Oroco having a massive generational deposit ready for purchase all add up to why I think we sell for billions!

Looking for a no BS approach to investing in Oroco Resource? Watch this!

Buy OCO! Pennies don’t matter when we will sell for $5 or more

Copper gains from Oils pain

Our thesis for holding the majority of our portfolio in copper in general and Oroco Resource Corp OCO.v specifically has only strengthened in the last months.

SARS-CoV-2 has had a massive effect on the world economy, both in its scope and its velocity. Demand for oil literally dried up in a month. In most conversations on copper, oil will inevitably come up and vice versa as they are affected by the same macro economic factors. Copper is generally thought to lead the price of oil, I think thats about to change.

Supply of both copper and oil is finite and both are seen to be coming to a pivot point in terms of what is left to be discovered and the prices at which it is economic to extract each commodity. You always hear “peak oil” or gold but rarely hear of peak copper. At any rate my opinion is that there will always be oil, gold, and copper available as price will adjust for scarcity. The last drop of oil will never be produced since as price goes up substitutions will be found, shifting demand toward the cheaper option.

Thinking again of demand for copper and oil I will postulate demand for oil will be substituted by demand for copper. Of course they are not at all fungible as commodities but demand will shift from oil to copper as the shift to electrification takes place. I also postulate the SARS-Cov-2 demand shock will hasten the shift away from oil, somewhat counterintuitively. Supply/demand says that as prices fall demand increases. So will we go back to the 5 litre V8 engines of the 1970’s since oil prices have dropped? I think not. Will there be a Hummer 4? Yes, but its electric!

The oil shock of 1978-79 changed the landscape of the automobile industry forever. Higher prices increased the demand for smaller more efficient cars. Those already existed in Japan and were imported to the US, no need to reinvent the wheel, thus Honda etc became the huge multinationals they are today. When the taps were turned back on the more efficient engines didn’t disappear. The structure of the automobile industry had changed forever. This is happening again today but this time its the EV taking over demand formerly supplied by the internal combustion engine. The trend was already happening with every auto maker either having a full EV in its lineup or planning to unveil it shortly.

Electrification of the planet in terms of producing power (solar, wind) and consuming power (EV’s) both take significantly more copper than conventional methods. Demand for copper will increase on both sides of the equation with current supply of copper (both new mines and grades) falling rapidly and the cost of oil (not price) has been going up if you take into account environmental and social impacts. The double demand increases for copper and increasing environmental cost for oil lead us to believe oil will not follow copper in this recovery.

Oroco Resource Corp. OCO.v has one of 5 copper deposits world wide in the hands of a junior (arguably the #1 deposit) available for acquisition by a major. Santo Tomas currently has enough copper to supply the production of 45.5 million electric vehicles, thats one in 3 cars on the road in the US right now. Oroco is planning to expand the current resource with an upcoming drill program set to begin very shortly. The SARS CoV-2 shutdown has delayed the drill program by about 2 months but it has given us the opportunity to increase our position at prices i wouldn’t have thought we would see again.

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