Oroco Resource Corp.

604-688-6200, www.orocoresourcecorp.com/
Oroco Resource Corp is an exploration stage company. The company is
engaged in the business of acquiring, exploring and developing
exploration and evaluation assets in Mexico.

2018 EDITORIALS -- TABLE OF CONTENTS

Is Santo Tomas worth rebooting by Oroco Resources $OCO ........................... 1

Ancient History of Santo Tomas, Before Oroco Resource $OCO ...................... 7

Another look at the work history of Santo Tomas before Oroco $OCO .......... 15

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Is Santo Tomas worth rebooting by Oroco Resources $OCO

First published on CEO.CA at: https://ceo.ca/@Newton/is-santo-tomas-worth-
rebooting-by-oroco-resources-oco

How would you feel about a large land package in Sinaloa sold from a private company based
in the Bahamas to a Canadian company listed on the TSX Venture? It's enough to make most
investors run away in fear, but I encountered one such story and gave it a closer look. Here's
what I found.

Oroco Resource (TSXV:OCO) recently announced the acquisition of a large land package with a
very large copper porphyry in Sonora, Mexico. There is some corporate drama around this
project, with a legal dispute having kept it out of public companies since 1993. The owners
pushed forward with an economic report in 1994, but it's been a long and quiet 20 years at site
for the project as far as I can tell. Oroco Resources announced that work done in 2017 breathed
new life into the project with a good work program that includes property-wide mapping and
reassembling old drilling information.

With Oroco shares trading around $0.13, the company has a $10M valuation. That's a good
number for the valuation of a new exploration company, but makes me feel a bit late to the
party. Regardless of my feelings, the reality is that we are still quite early in this new phase of
the Santo Thomas story as Oroco hasn't yet registered their ownership of the project! With
shares trading at a fraction of a penny per pound of copper in the ground, the stock hasn't gotten
ahead of itself yet.

It looks like things are on track now and another chapter is shaping up in the long story of the
Santo Tomas Copper Porphyry Project. Keep in mind that "Active exploration of the Property
spans the period 1968 to 2003" as in the report below.

You can find a brief report on the project here. It was done when the project was held privately.
There are other reports out there that are a little hard to find as they pre-date SEDAR, but I will

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endeavour to find them and write about them. In the meantime, there are quite a few things to
consider in this report.

Again, see the full report here. Short report but lots to consider if it's your first time meeting the
Santo Tomas copper porphyry, like me.

First thing that occurred to me is that there is a lot of metal in the ground here. It's not clear
from this report how much of it is economic, but I have to pay attention to 1.3 billion tonnes of
rock hosting 10 billion pounds of copper equivalent at a 0.15% cutoff.

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My first thought is that it is too much heavy lifting to get off the ground in that form, but there
surely must be some subset of the full deposit that would be good enough to help get things
started? I look forward to studying the other reports for a sense of a possible starter pit and
watching what Oroco does in that regard.

You have to wonder how Santo Tomas ever got so big? I've heard stories of exploration taking
on a life of its own, where a junior tries to make a deposit as big as possible in the throes of a
bull market and ends up building something that's just not right for the upcoming bear market.
As these deposits gather dust over the next phases of the market cycle, the opportunity
remains. With Santo Tomas held in limbo since the 1990s, it's missed a few bull markets. Great
to see it coming back to the markets now as things are heating up for these massive copper
projects.

Let's go through some more of details on the project to see what it looks like.

Great to see the surface exposure, even if the deposit is not oxidized. I saw mention of that in
the short report here, but will have to wait for a larger report to better understand the
geology.

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Note the Santo Tomas project is fairly close to a railroad line that goes to a port in Sinaloa.
Apparently there has also been some talk of government spending to support capital
expenditures for the project, too. All good so far!

This cross section raises a couple concerns for me.

One, if the deposit is restricted to one side of hill then other side makes for nasty strip in an open
pit mining scenario. It's unclear how all that shakes out from this short report, but an economic
study was done in 1994 that will surely give some detail on that.

Two, what is the basis for the lower subsection of

the deposit model? The holes end in
mineralization but don’t extend to the depths of
the deposit as indicated by the line in the
diagram. There are probably other holes going
that deep on another line nearby to give some
confidence about the extension of the deposit to
depth, but this part of the diagram left me a bit
confused. Always important to consider how
many holes are giving you how much of the
deposit, right?

A final thing from the report is the distribution of copper grade shown above.

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These grades are composites, which indicate the average grade over 15 meter intervals from all
the 89 drill holes for the purpose of "linking them into closed volumetric shapes". In other words,
these are the grades used in the 3D block model for the mine plan. 15 meters is a typical height
for the benches in an open pit mine, so these are mining widths.

At first blush, it looks like like a lot of low-grade material. I don't see much potential for a high-
grade core based on this diagram but there may well be enough of that +0.5% material to make
this thing work. And there are some benches at around 1.2% copper, which may be something
to get excited about if they are near-surface!

I was initially looking for more of the +1% material, but there could be quite a lot of that hiding
in 5-meter intervals contained within these 15-meter composites. I don't really have a good
sense for the marginal grade in these composites and look forward to reading the economic
report for more.

All this information was good, but I don't know the engineering economics of these porphyries
well enough to say if this passes a quick acid test. I love a good turnaround story, but it's tough
to be early.

Then, I looked at a posts from @cal on CEO.CA/OCO. In particular, this picture.

Now, you really have to be careful with photos.

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There was a lot of excitement around core photos that boiled over and left a nasty mess in 2017,
let alone the wild excitement that followed video of people digging up gold in Australia in the
same way as had been done for years before. Hard to guess at what will excite a crowd and
dangerous to get caught up in the excitement.

I'm not a geologist, but I pay attention when I see photos like this. I don't know where this photo
was taken, but the Oroco news release mentions that initial work programs focused on detailed
mapping and satellite reconnaissance at Santo Tomas. How much stuff like this did they see?

This photo gives me hope for a high-grade core within that +10 billion tonnes in the known
deposit. If this photo was taken at the same deposit, then they may be able to make a bunch of
noise really quickly about reinterpreting the geological model. By the way, I think that will be a
key to getting some energy into these massive porphyries that are stalled from past cycles. And
if the photo is from somewhere else on the property then it's time to get excited about a new
discovery. Either way, this will command some market attention as the property is 10,902
hectares, which is twice size of Manhattan. Sounds like Santo Tomas is worth rebooting!

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Ancient History of Santo Tomas, Before Oroco Resource $OCO

First published on CEO.CA at: https://ceo.ca/@Newton/ancient-history-of-santo-
tomas-before-oroco-resources-oco

I've been through some market cycles in the junior mining sector, but I didn't always know what
I was seeing when it was happening. Going back through news around a story is a good exercise
to help you understand how things looked at the time with the benefit of hindsight. For example,
Oroco Resource Corp. (TSXV:OCO) is bringing new life to the Santo Tomas copper porphyry and
it's essential to look into the public history of the project.

You can find some consideration of a geological report on Santo Tomas in an article I published
here. I liked what I saw, but had some big questions.

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For a period of time, Santo Tomas owned by a company called "Exall". Read on as I go through a
selection of old news releases from Exall as in this document. I provide some quotes from
various releases that jump out at me and why.

The first release of interest was made on 1992-10-06, titled "Exall acquires major copper assets
in Mexico". The key quote below sounds good as a starting point!

"Exall will acquire exclusive options on three properties in Mexico: the Santo
Tomas, Verde Grande and San Martin... The most advanced among these
properties is the Santo Tomas porphyry copper deposit. This is a geologic resource
of 195 million tonnes with an average ore grade of 0.52% copper. The company
believes there is strong potential within the concession area to expand this
resource."

As you might expect from reading this quote, the company came out with another release 3
weeks later to "clarify reports on the total contained copper" in that first release. They
emphasized that these are historical numbers and the project is only at the exploration stage.
This next release provides some other juicy information, such as surface trenching samples, first
mention of gold in the porphyry, and metallurgical testing.

The acquisition terms for Santo Tomas seem reasonable with 1M shares on closing, a half-
million shares at PFS, and another half-million shares on production. The news release don't say
if the company selling the project was a related party or not, which is always an important fact
to consider.

Exall announced a major financing on the back of the Santo Tomas acquisition with $5.58 million
announced 1993-03-19. This was a substantial amount of equity capital that could fund a lot of
good exploration work.

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On 1993-04-30 a month later, the company announced a "Contract on Santo Tomas awarded"
was awarded to Kilborn. Presumably, this Kilborn company is associated with Mining Hall of
Famer Roland Kilborn, but it's unclear from the release.

Next, we get a couple news releases titled "Year end review" on 1993-05-20 and an "Annual
report" on 1993-08-25. The company first announced plans for initial production in 1995, then
updated the target to initial production in 1994. That's an aggressive timeline!

What's more, the releases had even more aggressive economic forecasts as they noted that
"Cash costs are expected to be below US$0.50 per pound." For the trifecta, they planed for a full
feasibility study "to be completed by December 1993" on the oxide section of the orebody.

At this point, the company notes that the mineral resource is "currently estimated at 195 million
tonnes grading 0.52% copper, of which 22.8 million tonnes are oxide material with a grade of
0.60% copper." That's a good place to be one short year year after acquiring the project,
although it is a bit suspect as they didn't update the resource estimate themselves. Full-steam
ahead!

There was no shortage of things to encourage the bullish in these results, as "Field work carried
out by Exall has identified additional oxide zones and there is a high probability of expanding
the oxide reserves." The news release on 1993-11-24 titled "Positive bioleach test at Santo
Tomas" was encouraging, as well. The potential for bioleaching is great and I hope it is even
more likely now, 25 years later.

Shoutout to EnviroLeach as the winner of PDAC 2018 Disrupt Mining event.

In November 1993, a news release mentioned that the full Feasibility Study was not going to be
complete by December. They wrote, "A feasibility study is scheduled for completion in 1994
which will outline the best development parameters for the deposit." Fair enough -- delays are
a matter of course in the mining business.

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Almost 6 months later, we heard from the company on 1994-04-26. They mentioned that a pre-
feasibility study had been completed, which was a surprise to me as I hadn't seen mention of it
in any prior releases. I also found out that Exall's drilling had twinned some of the previously-
drilled holes, although I don't see any mention of assays in any releases.

On 1994-05-11, Exall made a headline with a release titled "Copper reserves exceeds 7 billion
pounds". Such a big number is possible with porphyry deposits like this, but still exciting. What's
more, they mentioned "A high grade core (grades > 0.7% Cu) will be the target of early mining
with minimal pre-stripping required." All of that makes for a good start, but it's important to
note that "The economic evaluations, metallurgy and other portions of the study are being
compiled at this time." All this over a year since the $5M equity financing.

In the same release in May 1994, the company mentions that "Mintec of Tucson, Arizona has
completed its ore reserve calculations on the Santo Tomas copper porphyry deposit in Sinaloa,
Mexico." It is good to see the company do some kind of resource estimate itself as the prior
resources and PFS were based on work by prior owner, however, it's important to note that all
this was before the NI 43-101 rules gave rigorous structure to the business of mineral resource
estimates in Canada.

A few months later in July 1994, Exall has a release titled "Positive prefeasibility for Santo
Tomas". This should have been a bit of a surprise for people watching the company, as it was a
PFS almost a year after the full FS was expected. And all this after they redid their own reserve
calculations in May 1994? It doesn't look particulary surprising in retrospect, but it is concerning.

The initial timelines looked overly optimistic and the PFS itself has a surprise as it is based on "A
total of 14,881m of drilling data completed by Asarco and the company was used for the study."
This misses out half of "total of 30,000 metres drilled to date" at Santo Tomas, as announced in
the first news release on the project from 1993-09-17. I'm not a geologist, but it seems like an
avoidable problem.

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On 1994-08-24, the company announced that "Mexican government supports Santo Tomas
development." I can understand that support and imagine there is still local support for it,
almost 25 years ago.

Six months later on 1995-04-11, the company announces a "Santo Tomas progress report".
Time continues to go by, but the company reports that they have accomplished work on "ore
reserve definition, mine design and processing facilities." It sounds like they are doing the right
thing, but it is starting to become clear that they are struggling as they note that "A number of
options are being studied to complete a final feasibility and construct the mine. Further
information will be released when available."

In passing, I will point out that this is a mega-project. At a mining rate at 40,000 tonnes per day
and after-tax IRR of 14.7%, the "Capital payback is estimated at about five years with a mine life
of 22 years based on the new pit design." It's appropriate that the 1995-06-02 release noted
Santo Tomas "became the main focus of its activities" during 1994 because a big project like
that requires heavy lifting!

Three weeks later on 1995-06-21, the company announced "Final feasibility at Santo Tomas to
be completed". Again, it sounds like things are moving forward as the company announces "it is
expected that further developments will be announced in due course." However, it's important
to look where the rubber meets road: exploration and development work.

Exall originally planned for a full FS in December 1993. That was delayed as they revised the
resource and PFS. It was now July 1995 and their release titled "Final feasibility at Santo Tomas
to be completed" mentions a new player, Bechtel Corp, who offer to "build the plant under a
fixed price arrangement and also provide mutually acceptable completion and performance
guarantees. Bechtel Financing Services has indicated an interest in assisting Exall, to obtain
financing for the project." It's getting a bit late in the race to be switching jockeys, but their
reported interest in helping build the project is encouraging. What else?

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Things continue to get interesting as the same release notes that, "Bechtel has agreed to
provide its services at cost. The total cost of the detailed feasibility study, including various field
programs, is currently estimated at $1.5 million." Sounds good!

In July 1995, there was an article in the Northern Miner and one line jumped out at me: "Mr
Roman says Exall's real prize is Santo Tomas, where reserves exceed one billion tonnes, making
it one of the largest copper-gold projects in the world." I wonder about the use of the term
"reserve" there as my understanding was that you need a Feasibility Study to have reserves, but
I understand that this was a different time before the NI 43-101 rules following Bre-X.

In 1995-09-27, the company had a release titled "6mo results". This had the most realistic
statement about timelines yet with the line: "Given a positive feasibility study in 1996, 18 to 24
months of construction and production starting in 1998, Exall would have cash flow that year
and be debt-free by 2003. The company's present efforts are being carried out with that goal in
mind." This may be a bit of wake-up call for those who were originally sold on the idea of
production in 1995?

Things got even more interesting with arrangement with Bechtel when company announce in
same release from September, when we learned that "A positive feasibility study will result in
Exall and Bechtel negotiating a lump sum turnkey contract to construct the mine and mill
facilities. Bechtel would build the plant under a fixed price arrangement and provide completion
and performance guarantees. If Bechtel is not awarded the contract to build the plant, Exall will
reimburse the deferred services costs to Bechtel." Again, sounds good!

Hope springs eternal following the 1995-11-02 news titled, "Letter of intent between Britannia
Gold and Exall Resources". First, the good news:

"Britannia Gold has executed a letter of intent with Exall Resources of Toronto,
Ontario, pursuant to which Britannia has the option to earn a 60% interest in
Exall's Santo Tomas copper-gold project in Sinaloa State, Mexico. Britannia will
earn a 30% interest by assuming and making property payments and taxes of

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approximately US$1,500,000 and a further 30% by financing the preparation of

an independent feasibility study to be prepared by an internationally recognized
mining consulting firm to be selected by Britannia."

If you read that carefully, then you have to wonder about the $1.5M Exall requires to cover
property payments and taxes. That comment should strike fear into the hearts of speculator as
losing a project in this way is game over for a junior mining company.

Things got worse with sticker shock for the cost estimate of a new Feasibility Study at $5 million.
It's tough to hear that in 1995, since they raised that more than that just 2 years prior but now
couldn't afford the $1.5M in property payments!

They did some drilling and revised the resource estimate and PFS since that financing, but not
$5 million worth. Without going to the financial statements from the company to see all the gory
details, it seems clear that the writing was on the wall at this point.

One of the last releases I will consider was released on 1996-05-24 and titled "Year end results".
This news came six months after the November 1995 news release where the company
announced that "Britannia Gold Corporation agreed to finance the entire cost of a bankable
feasibility study as well as undertaking all property liabilities".

Turns out that "on completion of its due diligence review, Britannia concluded the project's rates
of return did not meet its investment criteria and the agreement was not concluded." Six months
sounds like a long time to wait for such material information. Regardless, hope continues as
"The company continued marketing its Santo Tomas copper gold project in Mexico in order to
complete a final feasibility study."

Exall did careful work on Santo Tomas under leadership of CEO Steve Roman, son of a Mining
Hall of Famer, but the wind went out of their sails with weakness in copper markets following
the 1995 Sumitomo scandal and then the Bre-X scandal in 1997. They did a good job, but the
project was lost to public markets after ownership shifted to a private company around 2001.

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Santo Tomas was subject to reliable work by competent parties when it was owned by Exall, but
this is not to be relied on now in the age of NI 43-101. With the historical resource estimates and
pre-feasibility studies described above, Oroco Resource Corp. is positioned to do some
meaningful work on Santo Tomas immediately as they bring the project back to public markets
that are getting desperate for large copper exploration and development projects.

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Another look at the work history of Santo Tomas before Oroco $OCO
First published on CEO.CA at: https://ceo.ca/@Newton/another-look-at-the-work-
history-of-santo-tomas-before-oroco-resource-oco

The Santo Tomas porphyry deposit that Oroco Resource Corp. (TSXV:OCO) is working to secure
ownership over has an interesting history. It was "actively" explored from 1968-2003 with 106
diamond and RC drill holes comprising about 30,000 meters. That may sound like a lot, but it's
really not. It's fair to say that Santo Tomas was incompletely drilled by past operators, who
didn't chase mineralization along strike or to depth.

Just look at this cross section from 1994 pre-feasibility study done by Bateman Engineering that
shows how the holes stopped at a set length, even when they were returning well-mineralized
material with good grades.

Hindsight may be 20-20, but it's important to study the project's history in close detail to get
handle on the scale of the opportunity as it stands and what kind of important questions may
have remained unanswered for all these years. So far, I'm happy with what I am seeing.

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The early days at Santo Tomas were led by ASARCO, a storied company originally named as the
American Smelting and Refining Company. It is now a wholly-owned subsidiary of Grupo Mexico.
ASARCO may have left a bunch of mining sites with nasty pollution, but they also left some great
exploration stories that have been largely overlooked for one reason or another.

ASARCO drilled 43 core and 16 percussion holes at Santo Tomas, mostly in the North Zone. They
drilled a few holes 2 kilometers away in the South Zone and found good copper mineralization,
but the holes there were more widely spaced. All in all, ASARCO made a great initial push at
Santo Tomas. Their work was foundational for everything that came after and their drilling
program set a high-water mark that no-one else has surpassed yet.

Another legendary mining company made their mark on the project when Penoles optioned
Santo Tomas in 1973 and drilled 6 holes. All the holes were drilled in the North Zone and were
meant to to tighten the spacing to increase confidence as they calculated a new mineral
resource. Almost 20 years went by before any more work was done.

In 1990 and 1991, some work was done by another group to "re-interpret the geology" and
"confirm the reliability of the prior exploration programs". I am a big fan of reinterpreting the
geological model for a particular deposit that isn't quite working, but I don't think that was
necessary at Santo Tomas. I think it just needed more drilling -- step out and drill deeper!

Exall Resources started work in 1993 and drilled 33 RC holes for 4,000 meters, which was a step
in the right direction.

For example, two holes in the oxide domain of the North Zone returned 1.14% copper over 160
meters near surface. These were great results that surprise me as copper is usually leached-out
of the oxide domain of a porphyry deposit. It's just a footnote in a report now, but it could take
on new life as Oroco Resource Corp. steps in to add a new chapter to the story of Santo Tomas.

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As I discuss in this article, Exall eventually completed a resource estimate and PFS that used all
the data on the project. Great news, but it focused mainly on the North Zone. What could be
hiding in plain sight at the South Zone?

There is good potential to double the tonnage in M&I categories at the South Zone from Inferred
with 10-15 holes, as in a 2011 report by John Thornton. However, there's even more potential
for whoever is willing to step-out along strike as there is an untested area to the southwest of
the South Zone. Between all this infill and step-out drilling, there is a lot of low-hanging fruit at
the South Zone.

There is a lot of low-hanging fruit at the North Zone, too. There is still lots of room for infill
drilling to convert indicated to measured and increasing the indicated resource itself by stepping
out to the west or drilling deeper in the center of the high-grade ore zone. The 2011 report
mentions this high-grade zone, but it can be a bit hard to see it in the reports.

We can see a bit of evidence of the high-grade in the past estimates of tonnage that show
relatively large amounts above 0.4% copper. Note how almost half the total tonnage is above
0.4% copper equivalent, particularly at the North Zone.

Santo Tomas offers a full suite of options to increase confidence, extend the known envelope
of mineralization, and better define the high-grade core. It all puts Oroco Resource Corp. in a
position to come storming out of the gate as they bring the property back to the public markets. I
will be watching for more from Oroco soon!

Disclaimers: I was not compensated to write these articles. This is not investment advice.

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