Oroco Resource Corp V.OCO

Northeast Zone 3D-IP Analysis (part 4)

[GeneralGogol]

Figure 1 from Oroco’s January 27 press release represents a plan view of the IP data chargeability at an elevation of 100 m above sea level. Within the 2009 Grade Shell boundary, chargeability is shown to vary between 25.1 – 39.8 mV/V. The area external to and east of the Grade Shell with a similar range of chargeability is more than double in size. At elevations greater than 100 m above sea level, the Grade Shell extends a bit further east than the solid red line boundary shown in Figure 1, but it does not run as deep. This is apparent if you look at longitudinal cross sections p17 through p20 in the Santo Tomas technical report (“ST report”).

The 2011 historical resource estimate was focused on the North and South Zones, and many discussions on this stock-watch forum have included much speculation on the Brasiles Zone. A very interesting revelation with the release of the January IP data is the apparent potential addition of a new zone just northeast of the historical North Zone. If you follow the Rio Fuerte East of drill hole location STE-01, the land forms a miniature peninsula with respect to the river. That entire area is shown to have chargeability of at least 20.1 mV/V.

Figure 2 from the January press release represents the IP data along longitudinal cross section p20, which intersect the east edge of the 2009 Grade Shell. The Grade Shell becomes thinner and closer to the surface as it extends east. But the ore resource contribution to the 2011 historical resource estimate from that portion of the Grade Shell further east from section view p20 is not as significant in relative terms because it is a thinner volume.

We don’t have vertical cross sections of IP data further to the east, but Figure 2 is helpful in determining some approximate dimensions of the mineralization depth. Figure 1 shows the locations of nine historical drill holes to the east. Table 8 in the ST report includes assay data from seven of those, providing additional data on the measured depth of mineralization further to the east and away from the Grade Shell.

Drill holes STD-41 and STD-42, shown the furthest north on Figure 1, intercepted grades close to the surface of 0.53% Cu and 0.74% Cu respectively. These grades started at elevations of 263 m and 221.8 above sea level for the two holes in that order. This average value is 242.4 m above sea level, which I will refer to as “E1.” At an elevation of 100 m above sea level, the chargeability in that area is shown to range from 25.1 – 50.1 mV/V according to Figure 1.

Drill hole STE-01 is located mid-point between STD-41 and STD-42 (I calculated it to be 59 m from STD-41 and 55 m from STD-42). According to Figure 2, a chargeability of 20.1 mV/V extends to a depth of 400 m below sea level at the STE-01 location. STE-01 terminated in a grade of 0.46% Cu at an elevation of 171.5 m above sea level. Consequently, we do not have an assay sample from 400 m below sea level. I will refer to this elevation depth as “E2.”

Given that other drill holes intercepted grades of > 0.40% Cu where measured chargeability was a modest 10 mV/V, it is a reasonable presumption that a greater measured chargeability of 20.1 mV/V below the decent grades at STE-01 represents mineralization (see my part 3 post on February 25). Mineralization depth just to the northeast of the Grade Shell where STD-41 and STD-42 are located can therefore be calculated as: E1 – E2 = 642.4 m. I will refer to this calculated depth as “E3.”

Drill hole location STD-13 is located 831 m south of STE-01. It intercepted a grade close to the surface of 0.43% Cu, starting at an elevation of 456.1 m above sea level. Although we don’t have a vertical cross section of IP data through this area, we know from data in Table 8 of the ST report that various grades of Cu were intercepted along a length of 215.7 m at STD-13, but with some gaps in continuity. This takes us to an elevation of 240.4 m above sea level. But we also know from Figure 1 in the press release that a chargeability of at least 20.1 mV/V was measured at an elevation of 100 m above sea level at this location. So the depth of mineralization here is at least: 456.1 m – 100 m = 356.1 m. I will refer to this calculated depth as “E4.”

Drill hole locations STD-16 and STD-19 are located within an area shown to have chargeability of 50.1 mV/V, which is at the upper limit of reported data (see white-pink colored area on Figure 1). STD-19 intercepted a 68.2 m grade close to the surface of 0.52% Cu, starting at an elevation of 263.6 m above sea level and finishing at 195.4 m above sea level. Figure 35a on page 97 of the ST report shows negligible measured Cu along the remainder of that drill hole to where it terminates at 19.3 m below sea level. The drill hole was advanced through the 100 m elevation above sea level where Figure 1 reported the high chargeability to be 50.1 mV/V. Drill hole STD-16 started at 293 m above sea level, was advanced to a total depth of 358.50 m and terminated at 65.5 m below sea level. Table 8 in the ST report does not include any data regarding Cu composite intervals for STD-16. To merit mention in Table 8, the composite samples had to meet a minimum threshold of 0.40% Cu for at least 10 m distance.

From this data at STD-16 and STD-19, I interpret that this particular location of exceptionally high chargeability represents something other than Cu grades. Moving further away from this area of 50.1 mV/V to other drill hole locations within areas of lower measured chargeability, greater amounts of Cu intercepts were documented through historical drilling. For example, drill hole locations STD-12, STD-13, and STD-15 yielded assay data that merited mention in Table 8 and these locations are further from the area with measured chargeability of 50.1 mV/V. Although I think that STD-15’s proximity is similarly affected by whatever is delivering the exceptional chargeability. The area represented in white-pink on Figure 1 where STD-16 and STD-19 are located suggests some sort of anomaly. Additional future data may disprove my theory. Perhaps the recent magnetics and gamma-ray spectrometer surveys mentioned in the March 3 press release can help solve this riddle. For now though, I will discount that area and not include it in the calculation below.

Drill hole location STD-05 is located 516 m from STE-01. It encountered a 69.9 m composite close to the surface of 0.41% Cu grade starting at an elevation of 391.4 m above sea level, and a second intercept of 0.40% Cu grade starting at 172.7 m above sea level, finally terminating at 131.6 m above sea level. We know from Figure 1 that a chargeability of 25.1 mV/V was measured at an elevation of 100 m above sea level at STD-05. So the depth of mineralization here is at least: 391.4 m – 100 m = 291.4 m. I will refer to this calculated depth as “E5.”

In estimating the area east and northeast of the 2009 Grade Shell I established a threshold of 20.1 mV/V from the IP data shown on Figure 1 from the press release because the higher chargeability values are more likely associated with greater depths of mineralization. While other areas with chargeability at more modest levels of 10 mV/V may very well hold additional economically viable resource, the mineralization may not run as deep in those peripheral locations. In establishing known depths of mineralization at the STE-01 location where both chargeability and depth is significant, for example, it may not be reasonable to assume that this significant depth of mineralization extends uniformly to areas where low chargeability is represented on Figure 1. Without additional vertical cross sections of IP data, I have had to make a few engineering assumptions and I tend to do so on the conservative side. Establishing a higher threshold of 20.1 mV/V seems to be a more cautious route.

I did not include the 50 mV/V area on Figure 1 (represented in white-pink color), because the available data suggests that it could be an anomaly. I included the “peninsula area” northeast of STD-41 and the segment of the Rio Fuerte running directly North of STD-41 because the 2003 Bateman report discussed the possibility of diverting the river. I didn’t include areas on the other side of the river because that is in the Brasiles zone. With these criteria, I estimated an area of 575,000 square meters from the Figure 1 plan view.

I calculated an average mineralization depth thickness of 430 m from the three data points E3, E4, and E5 discussed above. The average = (E3 + E4 + E5)/3 = (642.4 + 356.1 + 291.4)/3

Keep in mind that the calculated depth of mineralization runs deeper in many areas because the Figure 1 plan view represents data at just an elevation of 100 m. In the absence of historical drilling data below that elevation, my calculations above couldn’t establish greater depths of mineralization.

If one were to include some of the peripheral areas shown in Figure 1 where chargeability is below 20 mV/V, then additional volume would increase the estimates calculated below. Given these data constraints, a volume can be estimated as follows:

(575,000 square meters area)(430 meters depth) = 247,250,000 cubic meters

Assuming a bulk ore density of 2.7 tonnes / cubic meter, this converts to 667,575,000 tonnes. Some percentage of the potential 667,575,000 tonnes ore volume may not prove economically viable. Presented below is a range of average grades, % ore volume economically viable, and the corresponding Cu resource representing the potential additional Northeast / Peninsula Zone resource. Keep in mind that the 2011 historical resource estimate calculated average North Zone grades of 0.461% Cu measured and 0.429% Cu indicated.

Northeast Zone
Cu resource estimate in millions of pounds
% Cu    20% ore viable   40% ore viable   60% ore viable   80% ore viable
0.55     1,472                   2,943                 4,415                  5,887
0.50     1,325                   2,649                 3,974                  5,298
0.45     1,177                   2,355                 3,532                  4,710

This range of resource estimates does not take into account credit for Au, Ag, or Mo.

In summary, the potential additional ore volumes from each area as estimated in my four different posts are as follows (in units of tonnes):

South Zone: 400,950,000
North Zone – West of Historical Grade Shell: 121,500,000
North Zone – Below 2009 Historical Grade Shell: 183,600,000
Northeast Zone: 667,575,000

Total: 1,373,625,000 tonnes ore

The 2011 historical resource estimate for the higher grade ore (> 0.35% Cut) in the combined North and South Zones was 332,860,000 measured & indicated tonnes of ore (ST report page 6).

Combined estimates: 1,706,485,000 tonnes ore

In previous posts, I presented table ranges of estimates for each area in pounds of Cu, since there is some uncertainty as to the grades and percentage of viable ore that could ultimately be converted into measured and indicated resource above the cut-off grade. Selecting a mid-range value from each of those tables yields the following (includes the correction I identified in post #2 on February 15):

Additional Cu resource estimate (in millions of pounds)
South Zone: 3,857
North Zone – west of Historical Grade Shell: 1,105
North Zone – below 2009 Historical Grade Shell: 1,214
Northeast Zone: 3,974

Total: 10,150 million pounds Cu

The 2011 historical Cu resource estimate for the higher grades in the combined North and South Zones was 3,204 million pounds Cu.

Combined estimates: 13,354 million pounds Cu

In arriving at these estimates, I took a conservative approach in many areas. Summarized below are six areas where this conservative approach has potential upside to the calculated resource values.

The South Zone estimate (post dated February 8) was only for the presumed additional resource areas east of the 2011 historical South Zone measured and indicated resource, that were identified through IP surveys as revealed in the January 27 press release. That initial IP survey stopped roughly alongside a mountain ridge to the east. I don’t know how much further east the charged mineralization extends, because after all, the survey abruptly stopped at that location. The March 3 press release tells us that, “...the company has completed the deep, three-dimensional Induced Polarization geophysical survey (“3D IP”) over the south eastern extension to the project survey grid on the South Zone of the Project, closing off the eastern extension of the South Zone chargeability feature.” So there is additional potential resource further east beyond that.

I also did not include additional resource credit for areas at greater depth below the historical Grade Shell in the South Zone because I didn’t have a good methodology to calculate dimensions. I also did not estimate additional resource credit for newly IP surveyed areas to the west of the 2011 historical South Zone measured and indicated resource for the same reason. So those two directions (additional depth and west) can add greater resource volumes in the South Zone.

The January press release stated that for the South Zone, “Results show a chargeability-high and resistivity-low response spanning 1,000 m wide by 1,200 m long in horizontal plan view that correlates well with the 10 widely spaced historical drill holes…The responses define a wedge 200 to 400 m thick at the western limit, increasing to 600 m on the surveyed area's eastern fringe. The responses are open at depth and to the east...” In my calculations, I was conservative in using a 900 m distance for the north-to-south dimension rather than the 1,200 m distance mentioned in the press release. I also limited the depth thickness of the mineralization to a range of 275 – 325 m thick, even though the press release mentions that it increases to a depth of 600 m at the eastern fringe. I wasn’t certain if the reported 600 m depth was consistent along the entire 900 m distance used in my calculation.

The North Zone / West Side estimate (post dated February 15) was limited to areas shown on Figure 1 with chargeability of at least 25.1 mV/V. Subsequent to my post, I realized that some locations with lower measured chargeability ~ 10 mV/V have shown > 0.40 % Cu grades (see specifically drill holes STD-47 and STD-44). I was conservative in assuming that the depth of mineralization gradually thins to 100 m moving west. It’s possible that it may be thicker. In the absence of additional vertical cross sections of IP data further west from section view p20, I chose to be more conservative and limit the mineralization depth thickness estimate in the west direction.

The Northeast Zone estimate (this current post) relies upon the elevation data of 100 m above sea level shown on Figure 1 from the January press release as the basis for establishing vertical depths of mineralization at points where E4 and E5 were calculated. Mineralization very likely extends to greater depths at both locations, and this has the potential to increase the resource volume estimate.

None of the estimates include CuEq credit for Au, Ag, or Mo. This can only add upside to a resource estimate. If you read other companies’ 43-101 resource reports, you will note that they nearly always include CuEq credit in their calculations. I am working on a separate analysis to estimate a reasonable potential CuEq upside credit. But this will take some time.

Table 1 from the January 2020 RFC Ambrian report provides a ranking of 19 late-stage copper projects with resources >2.5Mt Cu. From this revised estimate, you can see how Santo Tomas has the potential to move past many of their peers on the list as exploration of the resource unfolds.

https://www.rfcambrian.com/publications/system/files/equity_publications/Copper%20Projects%20Review%20-%20Jan20.pdf