Oroco Resource Corp V.OCO

NPV question for Mariusz

[auricgold]

Hi Mariusz,
On your Video 4 of your series on OCO you talk about a NPV of 1.6 Billion USD. Could is also be a NPV of 3 Billion US$ if we get a bit lucky with resources, considering the copper prices are higher now? If so, would a 50% of NPV valuation be a realistic value for a takeover by a major?
if that is the case, I calculated roughly CAD 9/share.

Let me know if im way off. thanks.

[rbarbarick]

Caesar's NPV models used $3 and $2.75 copper.  Without a bidding war or other animal spirits at play, can a miner assume higher copper prices for the length of a 30+ year mining project?  Isn't copper is too cyclic to do take on that risk?

[caliche]

yes i think everyone can see copper rises at some rate per year or decade or whatever.. i surely will not accept an offer based on lower copper price than spot at the time of the offer considering the dearth of generaltional deposits now im doing my calculations using a 3.50 copper price and its very very pleasing what a 50 cent rise in copper does to both the economics, IRR NPV etc

[MariuszSkonieczny]

Before I answer it, let me say the word historic three times. Historic, historic, historic. The estimated NPV does not include any potential from Brasiles. So you can let your imagination run wild here. Yes, the NPV could be much higher. South and North could add more tonnage. It could also add better grade. We won't know until drills resutls are released. Also, everybody likes to talk

[auricgold]

Mariousz, not sure if a Major will pay 150%. i will assume even 50% to be safe. What we have on our side is the copper prices higher and potentially the higher grade. In that case, I was wondering if we reach 2.5 to 3 bill in NPV.

[MariuszSkonieczny]

All I am saying is that if there is huge exploration potential, the major will pay a higher percentage of NPV. If there is zero exploration potential, then they will pay a percentage of what is known.

[AnchorValue]

Given scarcity value alone, and likely a long term trend of rising copper prices, I could see this going for 100% even if fully explored.

[auricgold]

Anchor, this would validate my high target I mentioned a little earlier at CA$9/share. I mean this would mean a lot more resource and a copper price at time of purchase of $5 and maybe being bought for copper price value of $3.75 to $4.

[auricgold]

Thank you Mariousz. I will assume that a 2 billion NPV is doable and ill do a low conservative case of 40%. in CAD its approx. 975,000,000 and if we own 85% maybe by then its approx 830million  divided by 210 mill shares or so we get 395 CAD rounded at 4CAD. I am not compaining:)

[jwall34]

2 billion NPV is history imo given current 3DIP results as well as the price of copper. Remember 1.6b was the rough NPV given 3$ copper and no upside.  Now we have 3.6$ copper on its way to 4$ likely with evidence that deposit size will be doubled or tripled, including the high grade north zone. I think a minimum NPV of 3B is more realistic in this case, which would put the buyout closer to 7

[auricgold]

Thank you Jwall, your analysis is also sound. if we get more deposits, yes, we could see 3 Bill NPV.

[MariuszSkonieczny]

Also let's not forget $3.60 copper is in US dollars. NPV is also in US dollars.

[auricgold]

Here is my calculation: 3 billion USD 50% NPV is 1.5 BUSD or approx 1.875 Billion CAD (1USD=1.25CAD) divide that by 210 million shares fully diluted:  CAD 8.92 is what you get.   

[SteveC2020]

Auricgold -Aren't you forgetting that Oroco will own 81% of San Tomas? Your $8.92CAD would have to be multiplied by .81. ($7.23 -still not too bad).

[auricgold]

Steve, YES I forgot. Although I hear that they can go higher even. But yes around 7 to 8 CAD. Extremely satisfied at that level. Steak definitely!!

[SteveC2020]

I'm new to the board and a new investor as of early November. Bought more this week as I strongly feel the long term risk/reward of this stock is very favorable even at $1.39 USD (current closing price). The biggest short/medium term risk seems to just be normal profit taking from shareholders who likely acquired at much, much lower prices. $8-10 USD takeout price is very possible with success

[auricgold]

Steve, welcome! smart move. The people who bought cheap, like me and others, have either gone now or are holding for the long haul. This stock is very solid and liquid. All you have to do is wait 24 months or so and make most likely, from the info that we know, a solid 200% at least it seems. Management is stellar, I know them, and some of the shareholders have been holding this for 10 years

[Overertune]

I am wondering how high the SP goes without a buyout.  Will anyone buy at 3-4$ ?  Seems we have to wait for buyout to get 5-8$.

[auricgold]

Overtune, we used to talk about 2$ buyout way back. Meanwhile we broke the 2$ barrier this month. I think once drilling starts, we will most likely see the 3$ mark, beyond that we have to see the progress. However, if the resource, grade etc warrants it, we can see 4$ before takout if takout price is 5 to 7$.

[Overertune]

Thanks! Sounds good!

[AnchorValue]

I'm hearing that most likely the brasille zone & the south zone will be drilled first - which is good news. 

[caliche]

once drill results start coming in the share price will go high! SLS market cap is 880 million, share price 6 bucks .. 3 drill holes

[AnchorValue]

question for you guys. I only recently noticed that in the m&a comp page that Adam has in his slidedeck that there are names highlighted in grey. Any idea what the are trying to accentuate?

[caliche]

roughly i use the usd price for copper or npv and just directly convert to cdn.. since the usd to cdn conversion is roughly equal to the 81% vs 100% easy 2 bn usd buyout divided by 210mm shares 9.52 cdn  more math 2 bn usd convert to cdn 2.54 bn cdn *.81 ownership = 2.05 bn /210 = 9.79 cdn  2.8%diff

[Popeye82]

This post has been removed in accordance with Community Policy