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!
