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!
