Positive economics points to early production
Oroco Resource Corp. [OCO-TSXV] is a junior gold explorer with two significant projects in Mexico. The most advanced is the Cerro Prieta Project in Sonora State, near the town of Magdalena, where I recently paid a visit. The second project is the Xochipala Project in Guerrero State, in an area of multi-million ounce gold deposits and a recent world classdrill intercept by New Strike Resources.
Oroco has been quietly working for the past five years to bring the Cerro Prieta Project forward. A news release dated December 15, 2010 announced outstanding economics for this modest gold production project in a Preliminary Economic Assessment. It modeled a base case gold price of US $1,000/oz and an US $18/oz silver price with a 5% discount rate which resulted in a Net Present Value of $45.75 million and a payback period for a modest capital expenditure of $22.2 million of only 0.84 years. In my experience, payback periods of three years or less are good, and a 0.84-year payback is as short as I can ever recall. The internal rate of return has been estimated at 92% which is also extremely good.
con't...
https://www.orocoresourcecorp.com/pdf/Resource%20World%209-6%20Oroco-2.pdf