I have been thinking for some time on how to best explain the opportunity offered by Oroco shares at this moment. As a reference, I don’t think there is a better graph than Brent Cook’s “life cycle of a junior explorer”
The normal path is the concept to discovery; A very early time, where risk is greatest and only the most foolish or those that have drunk the cool aid would dare to go in big. With little more to go on than the companies word they are on to the next big thing.
Discovery; The geo’s had it right! The concept is proven and risk is slightly reduced. Fantastic gains can be had here as the discovery is expanded and is hopefully open in a direction or two and at depth.
Feasibility; It’s a good ride during discovery but the music stops at some point and the company changes gears into showing the engineers how big it is and they tell the company how and IF it can be mined. By now the spec money is gone and the true believers stick it out for several years while a lot of smart people poke and prod the deposit to see what it’s worth. Risk is reduced with every report generated and as this happens new eyes are on the project, the institutions and possible acquirers. Big money will come in as the project is de-risked. They will pay more per share, but are willing to pay up since most of the risk has been mitigated.
Now back to the opportunity Oroco represents. They are untangling litigation that has held the property off the market for decades. It appears the process is nearing an end. They have secured 77.5 % interest in the surrounding properties and the southern part of the main deposit and are currently negotiating to buy the company that has purchased rights to the main concession.
Once the purchase is complete Oroco will control a majority percentage of a billion ton copper deposit called Santo Tomas. The beauty is that the pre discovery risk is GONE. It is already classified as a world-class deposit by the USGS! The only risk is left is that the litigation is further to being done than the market believes. If you think as I do, that the market is telling us it is nearly done, with a more than 100% increase in the share price in the last weeks we should be in for a very profitable summer.
Looking back at Mr. Cooks chart Oroco will leap-frog from the pre-discovery phase (where the share price is now) to the feasibility and pre-development stage. This is the point the big money takes a look. There is a large enough data set for institutional investors and those looking to acquire projects of scale (of which there are few) to become involved.
There is a major disconnect between the share price now and where the project they are acquiring is at in the cycle. Oroco, with a few pen strokes and a decision from the court will jump forward in time and I believe the share price will make leaps and bounds to catch up.
At that point
