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 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.

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.  

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.  

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.

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!