Oroco Announces 22.2% After-tax IRR and $1.48 Billion NPV for its Santo Tomas Project
August 20, 2024 News Release
Oroco Announces 22.2% After-tax IRR and $1.48 Billion NPV for its Santo Tomas Project
VANCOUVER, CANADA, August 20th, 202 4 – Oroco Resource Corporation. (“ Oroco” or the “ Company”)
(TSXV: OCO; OTCQB: ORRCF, BF: OR6) is pleased to announce a revised Preliminary Economic Assessment
(“PEA”) and updated Mineral Resource Estimate (“MRE”) for the North Zone and South Zone of its Santo
Tomas Porphyry Copper Project (“ Santo Tomas” or the “ Project”) in Sinaloa State, Mexico. The PEA is
based on a staged open pit mine and processing plant achieving 60,000 tonnes per day (“t/d”) production
in year 1 and expanding to 120,000 t/ d in year 8 over a 22.6-year Life of Mine (“ LOM”). Production is
preceded by two years of construction and one concurrent year of pre -stripping. The PEA has been
prepared by Ausenco Engineering USA South Inc. (“Ausenco”). The updated MRE and geologic model were
prepared by SRK Consulting (U.S.), Inc. of Denver, Colorado and SRK Consulting (Canada) Inc., Vancouver,
BC (jointly “SRK”). SRK (Canada) was responsible for geotechnical modeling. The mine planning and mine
costs components of the PEA were prepared by SRK (U.S.).
Highlights of the revised PEA include:
• NPV (8%) of US$2.64 billion pre-tax and US$1.48 billion post-tax.
• IRR of 30.3% pre-tax and 22.2% post-tax.
• Total LOM payable copper production of 4,774 M lb.
• Pre-tax payback of 2.9 years; post-tax payback of 3.8 years from first concentrate production.
• Initial capital costs estimated at US$1,103.5 million; sustaining and expansion capital costs estimated
at US$1,734.1 million.
• Annual LOM C1 Cash Cost of US$1.54/lb Cu on by-product basis.
• Average CuEq grade of 0.51% over the first 7 years of production.
• Capital efficiency ratio (NPV / Initial Capital Cost) of 1.34.
• Total mineralized material mined of 825.5 Mt.
Commenting on the updated PEA, CEO Richard Lock:
“When we completed the initial PEA in December 2023 it was clear there was additional value to be unlocked
at Santo Tomas. Upon careful analysis, a staged approach to the mine expansion and a focus on exploiting
the higher-grade near surface material in the early years of mining has unlocked a considerable increase in
value. We have established a plan that invokes a very efficient use of capital and establishes a rapid post -tax
payback of 3.8 years. The plan starts with the use of smaller equipment to provide rapid entry to the
mineralized material and maintains a higher-grade feed profile to delay the requirement of an expansion until
year 8. Copper Equivalent production in the first 7 years is forecast at 1.34 billion pounds at a Mill Feed average
grade of 0.51% Cu Eq.
Quite significantly, this work establishes Santo Tomas as one of the most capital efficient large -scale, low-
cost copper projects in the world as illustrated in Figure 1 below.
Figure 1: Santo Tomas Displays Strong Economics Compared to its Peers
Source/Notes:
FactSet. Technical reports (1) Copper equivalent production calculated using stated metal prices from each project’s latest technical
report (After-Tax NPV 8% / Total Capex (US$M). Bubble size based on annual production). The above chart is for illustration purposes
only and presents an abstract and simplified view of the NPV based on published data. The other projects presented may not take
into account individual risk profiles of each deposit depicted and may not be contemporaneous with the current NPV of the San to
Tomas update. See important metal price and study date information for projects depicted above on Oroco’s website.
PEA Overview
The Santo Tomas property comprises 9,034 ha of mineral concessions encompassing significant porphyry
copper mineralization in northern Sinaloa and southwest Chihuahua, Mexico. The Project is located in the
Santo Tomas Porphyry District, which extends from Santo Tomas northward to the Jinchuan Group’s
Bahuerachi Project located approximately 14 km to the north -northeast. The PEA was conducted using
data (including 27,382 Cu assays) from 68 diamond drill holes ( 43,063 m) drilled by the Company and 90
legacy reverse circulation and diamond drill holes (21,075 m, for a total of 64,138 m in 158 drill holes ) in
the Project’s North Zone and South Zone . The data from the seven exploration diamond drill holes in
Brasiles Zone and the single geotechnical hole (GT001) drilled by the Company were excluded from
consideration in the MRE and PEA . Oroco’s entire updated drill hole database ( including PEA excluded
holes) contains 166 new and legacy drill holes totaling 69,556 m with lithological logging data and 29,992
Cu assays.
The commodity price assumptions for the Discounted Cash Flow (“ DCF”) analysis are presented in Table
1. Key results from the DCF analysis prepared by Ausenco are presented in Tables 2 & 3.
Table 1: DCF Price Assumptions
Commodity Unit Price*
Cu US $ / lb 4.00
Mo US $ / lb 15.00
Au US $ / t.oz 1,900
Ag US $ / t.oz 24.00
*Cash flow model assumptions only.
Cautionary Note to Investors
The reader is cautioned that the PEA is preliminary in nature, and that it includes inferred mineral resources
that are considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary
economic assessment will be realized.
Table 2: Mining and Production – Key Results
Key Assumptions Unit LOM
Exchange Rate MXN / US$ 19.76
Fuel Price MXN / L 20.41 (US$1.03)
Production Profile Unit LOM
Total Open Pit Tonnage Mt 1,964.9
Total Open Pit Mineralized Material Mined Mt 825.5
Open Pit Strip Ratio Waste : mill feed 1.38
Daily Throughput (Year 1 // Year 8 on) kt/d 60 // 120
LOM (concentrate production) Years 22.6
Copper in Mill Feed M lb 5,916
Molybdenum in Mill Feed M lb 138.7
Gold in Mill Feed koz 753.4
Silver in Mill Feed koz 55,200
LOM mill feed (Indicated // Inferred) Mt 388 // 460
Average Cu payable / year – LOM M lb 207.5
Average Cu payable / year – First 5 Years (1) M lb 167.5
Payable (2) Copper LOM (in concentrate) M lb 4,774
Payable Molybdenum LOM (in concentrate) M lb 80.8
Payable Silver LOM (min 30 g/t payable in Cu Concentrate) koz 26,673
Payable Gold LOM (min 1 g/t payable in Cu Concentrate) koz 300.2
Operating Costs (US$/lb.) Unit LOM
C1 Cash Costs Copper (By-Product Basis) (3) US$/lb 1.54
C3 Cash Costs Copper (By-Product Basis) (4) US$/lb 2.00
Capital Expenditures (5) Unit LOM
Initial Capital (6) US$M 1,103.5
Sustaining and Expansion Capital (6, 7) US$M 1,734.1
Closure Costs (5 years, year 22 - 27) US$M 209.2
Estimated Salvage Value US$M 0
Notes: (1) First 5 Years at full production, starting year 2. (2) Payable metals consider mining dilution, concentrator recoveries and
Treatment Charges/Refining Charges (TC/RC) . (3) C1 Cash Costs consist of mining costs, processing costs, mine -level G&A and
transportation costs net of by -product credits. (4) C3 Cash Costs includes C1 Cash Costs plus sustaining and expansion capital,
royalties, and closure costs. (5) All capital expenditures are inclusive of contingency provisions to allow for uncertain cost elements,
which are predicted to occur but are not included in the cost estimate. (6) Net of leasing capital deferment and leasing costs. (7) Sum
of expansion and sustaining capital.
Table 3: Key Financial Results and Costs
Economics Unit LOM
NPV at 8% (pre-tax // post-tax) US$M 2,640.5 // 1,475.4
IRR (pre-tax // post-tax) % 30.3 // 22.2
Payback (pre-tax // post-tax) Years 2.9 // 3.8
Revenue over LOM US$M 21,517
Initial Capital
Mining Pre-Stripping (Capitalized OPEX) US$M 75.5
Mining Capital Equipment (1) US$M 89.4
Total Mining (1) US$M 164.9
Processing US$M 938.7
Total Initial Capital (1) US$M 1,103.6
Sustaining Capital
Mining Equipment US$M 952.4
Processing US$M 94.6
Total Sustaining Capital US$M 1,047.0
Expansion Capital – Processing (year 7) US$M 687.2
Average LOM Operating Costs
Mining Cost per tonne mined (2) US$ / t 2.04
Mining Cost per tonne milled (2) US$ / t 4.78
Mining Equipment Leasing Cost per tonne milled US$ / t 0.06
Processing Cost per tonne milled US$ / t 4.04
G&A Cost per tonne milled US$ / t 0.65
Total Operating Cost per tonne milled (2) US$ / t 9.53
Notes: ( 1) Includes leasing costs and deferral of capital associated with lease payments. Supplier -sourced leasing terms from
October 2023 are used in the mine fleet cost calculations that include a 5-year lease period with 10.3% interest, 0.5% upfront fee, and
no residual payment. (2) Excludes leasing costs.
Economic Sensitivities
Project economics and cash flows are most sensitive to changes in the price of copper (Figure 2) providing
the highest potential for change in economics. However, mined grade and recovery sensitivity are also high
and future studies will seek to optimize these parameters.
Figure 2: Post-Tax NPV and IRR Sensitivity Plots
Source: Ausenco 2024
Mineral Resource Estimate
The MRE was prepared in accordance with the Canadian Institute of Mining, Metallurgy, and Petroleum
(“CIM”) Definition Standards (the “CIM Standards ”) incorporated by reference in National Instrument 43 -
101 (“NI 43-101”), with an effective date of July 23, 2024. The Technical Report will be released by the
Company and available at www.orocoresourcecorp.com and on SEDAR (www.sedarplus .ca) under the
Company’s profile shortly.
The MRE includes the two primary mineralization zones identified at Santo Tomas : North Zone and South
Zone. These zones display similar mineralization styles but are physically separated by localized post-
mineralization faults and material currently defined as waste due to a lack of drilling . Consistent with the
previous study, the MRE is not constrained by the location of the Huites Reservoir . Mineral resources are
reported above an effective cut-off grade (CoG) of 0.15% Cu and constrained by an economic pit shell (see
Table 4).
Table 4: Mineral Resource Statement for the Santo Tomas Project, effective July 23, 2024.
Category Zone Tonnes
Mt
Average Grade In-situ Metal3
CuEq10 Cu Mo Au Ag CuEq10 Cu 11 Mo 11 Au 11 Ag 11
% % % g/t g/t M lb M lb M lb koz koz
Indicated
North Zone pit
- sulphide 540.6 0.37 0.33 0.008 0.028 2.1 4,465 3,976 95.4 483.4 36,524
Total Indicated 540.6 0.37 0.33 0.008 0.028 2.1 4,465 3,976 95.4 483.4 36,524
Inferred
North Zone pit
- sulphide 90.0 0.34 0.31 0.005 0.021 1.7 679 620 10.2 61.4 4,949
North Zone pit
- oxide 4.4 0.31 0.31 0.002 0.053 1.6 29 29 0.2 7.4 228
South Zone pit
- sulphide 399.2 0.36 0.32 0.008 0.023 2.0 3,132 2,789 71.2 294.4 26,200
South Zone pit
- oxide 36.7 0.27 0.27 0.004 0.020 1.6 218 218 2.8 23.8 1,851
Total Inferred 530.3 0.35 0.31 0.007 0.023 1.9 4,058 3,657 84.4 387.1 33,229
Notes:
(1) Mineral resources are not mineral reserves and do not have demonstrated economic viability.
(2) Abbreviations used in the table above include: Mt = million metric tonnes, % = percent, g/t = grams per metric tonne, M lb =
million pounds, and k oz = thousand troy ounces.
(3) All figures are rounded to reflect the relative accuracy of the estimates. Totals in Table may not sum or recalculate from
related values in the table due to rounding of values in the table, reflecting fewer significant digits than were carried in the
original calculations.
(4) Metal assays are capped where appropriate. At this stage of the project, it is the Company’s opinion that all the elements
included in the metal equivalents calculation have a reasonable potential to be recovered and sold.
(5) All dollar amounts are presented in US dollars.
(6) Bulk density is estimated on a block basis using specific gravity data collected on diamond drill core.
(7) Economic pit constrained resource with reasonable prospects of eventual economic extraction (“RPEEE”) were based on a
copper price of $4.00/lb, molybdenum price of $13.50/lb, a gold price of $1,700/oz, and a silver price of $22.50/oz. Metal
recovery factors of 83.7% for copper, 66% for molybdenum, 53% for gold and 53% for silver have been applied. Selling costs
are $0.56/lb copper, $1.69/lb molybdenum, $191.71/oz gold and $2.94/oz silver. Slope angles varied by pit sector and
range from 40 degrees to 49 degrees.
(8) The in-situ economic copper (CoG) was calculated resulting in a 0.15% Cu CoG.
(9) CoG assumptions include: a copper price of $4.00/lb, molybdenum price of $13.50/lb, gold price of $1,700/oz, and silver
price of $22.50/oz. Suitable benchmarked technical and economic parameters for open pit mining, including a 98% mining
recovery and cost s of mining at $2.40/t, processing at $4.79/t, G&A at $0.67/t, with Private Royalties at 1.5% for
molybdenum, gold, silver, and copper, have been applied in consideration of the RPEEE. Recoveries are applied as listed in
Note 7.
(10) Equivalent Copper (CuEq) percent is calculated with the formula CuEq% = ((Cu grade * Cu recovery [83.7% sulphide or 75.0%
oxide] * Cu price) + (Mo grade * Mo recovery [59%] * Mo price) + (Au grade * Au recovery [53%] * Au price) + (Ag grade * Ag
recovery [53%] * Ag price)) / (Cu price * Cu recovery [83.7% sulphide or 75.0% oxide]). It assumed that the Santo Tomás
Project will produce a conventional (flotation) copper concentrate product based on metal recoveries at 83.7% Cu (sulphide)
or 75% Cu (oxide), 59% Mo, 53% Au, and 53% Ag based on initial preliminary metallurgical test work.
(11) Reported contained individual metals in Table represent in -situ metal, calculated on a 100% recovery basis, except for
CuEq% (see Note 10).
The mineral resource estimation process includes updated structural, lithologic, and mineralization models
not materially changed from the previous study, effective April 27, 2023. No additional drilling has been
added and the estimation methodology remains unchanged from the methodology used in the. Differences
in the MRE shown in Table 4 from the previous MRE are due to: 1) inclusion of oxidized mineralization in
the North Zone pit (the “North Pit”) and South Zone pit (the “ South Pit”); and 2) updated economic and pit
slope assumptions based on the updated PEA study. The resource estimation methodology involved the
following procedures:
• Database compilation and verification,
• Construction of wireframe models for the major structures, lithotypes, and controls on mineralization,
• Definition of resource domains using a combination of lithotypes, structure, oxidation, and
mineralization grade shells,
• Data conditioning (compositing and capping) for statistical and geostatistical analyses,
• Determination of spatial continuity through variography within the estimation domains,
• Block modeling and grade interpolation for all key economic variables (Cu, Mo, Ag, Au, and Sulfur [S])
and secondary variables (arsenic [As], calcium [Ca], potassium [K], lead [Pb], and zinc [Zn]),
• Block model validation,
• Resource classification,
• Assessment of “reasonable prospects for eventual economic extraction” (“RPEEE”) using a
constraining economic pit shell and selection of an effective cut- off grade (“CoG”), and
• Preparation of the updated mineral resource statement.
SRK undertook the geological modeling and mineral resource estimate using Seequent Leapfrog Geo and
Leapfrog Edge, respectively. The procedure involved construction of wireframe models for structural
geology controls, key geological and mineralization domains, data conditioning (compositing and capping)
for statistical analysis, variography, block modeling and grade interpolation followed by block model
validation. Grade was estimated using a combination of ordinary kriging and inverse distance weighting
cubed estimates for copper, molybdenum, gold, and silver. Sulfur grades are estimated using inverse
distance weighting squared (“ IDW2”) and bulk density is estimated using a combination of simple kriging
and IDW2. Grade estimation was based on block dimensions of 50 m x 50 m x 10 m for the PEA model
(unchanged from previous studies). The block size reflects current data spacing across the Project while
considering a likely open pit mining method. Classification of mineral resources considers the geological
complexity (structure, lithology, alteration, and mineralization), spatial continuity of mineralization, data
quality, and spatial distribution of drilling conducted at the Project.
The MRE is supported by 64,138 m of drilling in 158 holes. The drilling data represents a combination of
holes completed by Oroco from 2021 to 2023 and historical drill holes but excludes drilling at Brasiles Zone
(outside current project scope) and one geotechnical hole (due to lack of assay data).
Mineralization has been identified outside the current economic pit shell. The PEA highlights the potential
to define additional mineral resources on the property . There is identified exploration potential for
additional mineralization in the southeastern and southwestern portions of the South Zone based on
observations from drilling and surface outcrops in the area.
Mine Design
The mine design re-worked previous phase designs to increase the number of pit phases from 4 to 20.
Initial phases are smaller to reduce waste stripping and allow for faster access to higher grade mill feed ,
resulting in an average 0.51% CuEq ore grade for the first 7 years of production. These smaller phases have
narrower access roads that require the use of small-scale haul trucks (72 t capacity). Later in the mine life,
the pit phases are typically larger and will allow for the use of large-scale haul trucks (240 t capacity). Over
the life of the project, including the pre-production waste mining year, 80% of the tonnes mined will be with
the large-scale equipment fleet.
The final pit design ensures no incursion upon the Huites Reservoir, remaining outside of CONAGUA’s
(Mexican water authority) jurisdiction boundary (the “ CONAGUA limit”). Slope constraints derived from
geotechnical domains were defined from Phase 1 drilling on the Project.
Table 5 shows mineral inventory within the ultimate pit design for this PEA.
Table 5: Pit Constrained Resource
Mill Feed Waste Material Strip Ratio Total Material
Tonnes
(Mt)
Cu
(%)
Mo
(%)
Au
(g/t)
Ag
(g/t)
CuEq
(%)
Tonnes
(Mt) Waste/Mill Tonnes
(Mt)
825.5 0.325 0.008 0.028 2.080 0.365 1,139.4 1.38 1,964.9
The proposed mining method is conventional open pit truck and shovel operation with 10 -meter bench
intervals. Haul trucks will be used for hauling mineralized material to the crushing plant, long-term stockpile
facilities, and waste to the waste rock storage facilities (“WRSFs”).
The mine production plan contains 825.5 M tonnes of mineralized sulfide material with an average grade
of 0.37% CuEq , and 1,139.4 M tonnes of waste material (including mineralized oxide), resulting in a strip
ratio of 1.38 over the LOM. CuEq is calculated using the methodology described in the footnotes to Table
4.
Mining operations will be carried out on a 24-hour per day, 365 days per year schedule. Total mined tonnes
will start at 27.2M tonnes mined during the pre -stripping year and eventually ramp up to a maximum of
116M tonnes per annum (Mt/a) in Year 13. The Project has a total life of 23.5 years, which includes 1 year
of pre-stripping and one final year of stockpile rehandling to the mill. Project expansion (Phase II) starts in
Year 8 of operation.
The mining sequence consists of 20 phases (10 in the North P it and 10 in the South Pit), which vary in
minimum mining width according to the type of equipment to be used. Early years focus on mining the
North Pit, while transitioning to larger equipment to be used once the South P it has opened up to wider
benches.
Mined tonnes, Mill Feed tonnes and Mineral Inventory classification are shown in Figures 3 , 4 and 5.
Figure 3: Mine Production Schedule – Mineralized Material/Waste
Figure 4: Mill Production Schedule
Figure 5: Classification of Mineral Inventory