Oroco Resource Corp V.OCO

RFC Ambrian Report 9th June 2021 - Oroco Resource Corp.

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Indicative Valuation of Oroco

To calculate a takeover value of Oroco we have made a number of assumptions. We assume in the next 18-24 months the company will have completed the planned exploration drilling programme and an initial feasibility study. We also assume continued project advancement through exploration success and that on-going expenditure will eventually result in an 85.5% interest in Santo Tomas.

We have applied these assumptions to a takeover value US$193/t resource for a feasibility stage project and are based on US$1.25/C$ and 189.3m shares in issue. The takeover target share price in Canadian dollars is shown in the table below for varying ultimate sizes of orebody. We have also shown the potential takeover value for an exploration project (US$74/t) and an operating asset (US$307/t).

What is the Potential Size of Santo Tomas

The size of the orebody based on the historical resource is 2.65Mt of contained copper. Previous studies have shown the potential for a project-wide endowment of greater than 7.0Mt of contained copper and indications are that modern targeted drilling and exploration work has the potential to significantly increase the grade and tonnage.

This potential is indicated in the recent 3D-IP Geophysical Survey results, where the final dataset suggests a substantial continuation of Santo Tomas chargeability along strike and to depth, inferring that the mineralized system is much more extensive than was defined historically.

In addition to the strike continuity, chargeability features at South Zone and Brasiles protrude east of their anticipated distribution, and a distinct feature of intermediate chargeability is developed westward below a mapped limestone bluff at Brasiles. This clearly illustrates the opportunity to target very significant additional tonnage.

As a reference for the newly identified volume of mineralization, the historical resource outlined in the North Zone is shown in red in Figure 7 and is positioned against the latest 3D IP outline.

The 3D IP data suggests that the area of mineralization is firstly at least as deep again as the historical resource (x2) and secondly covers an area at least 2-3 times the historical resource. Obviously, this takes no account for the grade of the mineralization, but it is worth noting that there is a strong correlation to the IP chargeability and the known historical resource.

As a result, we believe that a resource of at least 3-4x the original historical resource, equivalent to 7.95-10.60Mt of contained copper, could be outlined over the course of the next 18-24 months through continued exploration. We provide Table 2 for investors to make their own decision about the potential size of the orebody and to show the sensitivity.

Based on a resource of this size, the table shows a takeover target share price for Oroco in the range of C$8.66/share to C$11.55/share.

On the basis that the takeover company pays a 30% premium to the trading price, we place an 18 to 24-month share price trading range of C$6.66/share to C$8.88/share on Oroco, an 119% to 192% premium to the current trading price of C$3.04/share.