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P. ZIHLMANN INVESTMENT MANAGEMENT AG
 

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    P. ZIHLMANN INVESTMENT MANAGEMENT AG P. ZIHLMANN INVESTMENT MANAGEMENT AG Document Transcript

    • P. ZIHLMANN INVESTMENT MANAGEMENT AGYour independent Swiss asset managerTHE TIMELESS PRECIOUS METAL FUNDTHE TIMELESS ENERGY FUNDTHE SIERRA MADRE GOLD & SILVER VENTURE CAPITAL FUNDOROCO RESOURCE CORP. (TSX: OCO) FOLLOW-UP NO. 4, JULY 4, 2012Home page of OCOChart 3 yearsOROCO RESOURCE CORP: RETURN ON CAD 10,000 INVESTMENTPurchase Date No. of Shares Purchase Price Cost (CAD) Price Today Value TodayFebruary 19, 2009 66700 0.15 10005Total 66700 0.15 10005 0.25 16675Profit 6670Profit (in %) 67%SHARES OUTSTANDING / FULLY DILUTED MARKET CAP69,376,155 / 106,137,822 CAD 17.34 Million52 WEEK LOW / HIGH TSXVCAD 0.17 to 0.35 43,743 (200-day)RECOMMENDATION RISK RATINGBUY SPECULATIVELOW-COST PRODUCTION IN MEXICO TO BE EXPECTED SOON. CURRENT STOCK PRICEOFFERS HUGE POTENTIAL.Business SummeryOroco is a Canadian-based mineral exploration company with its primary focus on the accelerateddevelopment of the gold-bearing oxide zones of its Cerro Prieto Project. The Cerro Prieto Projectconsists of a group of 100% owned concessions comprising over 7,000 ha in northern Sonora State,Mexico.Oroco also owns a 100% interest in the the Xochipala Project, consisting of important and historicalconcessions contained within the original Morelos National Mining Reserve (more recently dubbed theGuerrero Gold Belt).
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGProjectsCerro Prieto Project, Sonora, MexicoLocation: Sonora State, Mexico, 135 kilometers north of state capital Hermosillo. The concessionscover land that is a privately owned cattle range land with no communities or residents. Access to theproperty is secured by agreement with the landowner. The nearest community of Cucurpe is 12kilometres south. The regional center of Magdalena de Kino (population 40,000) is 27 kilometresnorthwest and is a one hour drive on mostly paved road.Infrastructure: National Grid power lines and a paved road leading to the State’s major highway areeach less than five kilometres from the property. Ground water is available on site and a river flowsyear round four kilometers south of the property. There are numerous nearby road and rail links toports in the state of Sonora.During the first field season in 2008, the Company drilled 5,975 meters of core and tabled a NI 43-101compliant resource estimate together with the results of a preliminary metallurgical studyConcessions: Oroco owns 100% of a 7,000 hectares land position: San Francisco, San Felix andElba (220 ha), Cerro Prieto North (2,508 ha), Argonauta (4,224 ha) and newly acquired Reyna dePlata and Huerto de Oro contain four historical mines and strike length of mineralized structures.The Cerro Prieto Mine is fully permitted for the construction and operation of an openpit, heap leach gold and silver mine, surface rights necessary for the commencementof mining and gold production are secure, and a contractor to provide engineering,procurement, construction and management (EPCM) services is engaged. 2
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGProperty overview for the Cerro Prieto Project:NI 43-101 Compliant Resource: The results of an independently calculated mineral resourceestimate based on data from the Phase 1 exploration program were announced in 2009.With the completion of preliminary metallurgical testing demonstrating high percentage recoveries ofgold and zinc the resource estimate was redefined and a restated resource estimate was issued in2009.using 0.25 g/T gold cut-offPositive Preliminary Economic Assessment completed in December 2010. Capital cost of $22.2million, 157% IRR at $1350/oz gold and undiscounted cash flow of $89.5 million. 3
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGPreliminary Economic Assessment and Mine Plan (see below):Highlights Oxide Gold and Silver Resource: 390,000 ounces gold and 6,193,000 ounces silver, 98% in the Measured and Indicated resource confidence classification, with additional strike length of geological structure drilled in 2012 yet to be incorporated into resource estimate A positive Preliminary Economic Assessment by an independent mining engineering firm demonstrates low CAPEX, rapid payback, and robust economics: Capital cost of US $22.2 million, 157% IRR at $1350/oz gold and undiscounted cash flow of US $89.5 million Term Sheet executed, securing US $19.75 million project financing to be repaid with future gold production 7 Year surface rights lease prepaid with extension option Experienced Engineering, Procurement, and Construction Management (EPCM) contractor engaged Fully permitted for construction and operation 100% ownership interest in 7,000 hectares of concessions containing up to 17.5 km of strike length Favorable location and mining lawsIf all goes as planned, construction on the mine site should start within the next couple of months. 4
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGExploration Potential:On May 14, 2012 - Oroco reported additional results from the 2011 and 2012 exploration and infill drillprogram at its Cerro Prieto.As part of this overall drill program, the Company tested the southern extension of the mineralizedstructure on strike from the southern boundary of the area containing the current resource, a length of500 meters from Line 150N to Line 350S. All but one of the completed drill holes intersectedintervals of gold mineralization greater than the cut-off grade used in the existing resourceestimate for Cerro Prieto.Highlights of the results include: 1. Holes CP067 and CP068A, both drilled on line 100N (50 m south of the boundary of the current resource estimation), intersected 10.35 m of 0.65 g/t Au and 11.2 m of 0.60 g/t Au respectively; 2. At Line 200S, hole CP095 intersected 15.0 m of 0.50 g/t Au in one of two zones intersected; 3. At Line 250S, hole CP097 intersected 9.00 m of 3.29 g/t Au in one zone and 12.65 m of 0.45 g/t Au in a deeper zone; and 4. At Line 300S, hole CP098 intersected 9.15 m of 0.57 g/t AuThe drill holes were spaced to test the structure to a maximum vertical depth of 100 meters at 50meter intervals along strike. All drill holes intersected the structure and in some cases intersectedmore than one mineralized zone.The south end of the current proposed open pit extends south from line 150N to Line 000, however asno drilling had previously taken place south of line 150N, the Current Resource is presently estimatedonly as far south as Line 150N. Drill results within this area reported herein include intersections ofmineralization at gold grades greater than the cut-off grade used in the Company’s previouslyannounced resource calculation and Preliminary Economic Assessment. 5
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGThe Xochipala project, Guerrero Gold Belt, MexicoOroco holds a 100% interest in two contiguous mineral concessions in Guerrero, Mexico; CeliaGenerosa and Celia Gene, totalling 193 hectares and together called the Xochipala Project. The Xochipala claims cover ground in the Guerrero Gold Belt sufficient to potentially generate reserves greater than 1 million ounces gold in ore bodies similar to the productive high-grade ore bodies that have been discovered in the past within the region.” Oroco’s Xochipala Project is located in the southeast extreme of the original Morelos National Mining Reserve, a 49,400 ha federal mineral reserve which includes the most promising and expanding gold reserves in Mexico. This region encompasses a northwest trend of intrusions with associated gold bearing iron skarn deposits and is part of a wider area which has come to be known as the Guerrero Gold Belt. The Oroco claim is totally surrounded by a Goldcorp claim.All gold mineralization discovered in the Guerrero Gold Belt occurs in clusters around theseintrusions. Gold deposits along this trend include El Limon (Torex Gold Resources Inc.), Nukay,Los Filos and Bermejal (Golcorp) and Ana Paula (Newstrike Capital Inc.). Goldcorp’s Los Filos-minecurrently is the largest gold mine in Mexico and produced est. 345,000 ounces of gold in 2012. 6
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGOroco’s concessions contain mineralization in very well defined structures that outcrop for over onekilometre and were the site of some of the earliest gold mining in the region from a number of smallunderground workings. These concessions host intrusives of similar age and composition and severalareas of skarn mineralization with significant associated gold assays. Past work, including explorationand artisanal mining, has focused on the high grade showings on the properties. Recent explorationdrilling by Goldcorp still needs to be analysed. It will be interesting to see what kind of first resourceestimate for the Xochipala project can be made on the basis of these drill results.Xochipala Exploration and PotentialThe Xochipala project has great exploration potential. Goldcorp’s Los Filos and Bermejal mine arebasically neighbours to Oroco’s Xochipala claim. These Goldcorp mines are open pit, heap-leachoperations. A couple of months ago Goldcorp published its new vastly expanded reserves for thesemines:(Source: Goldcorp – Investor Day Presentation)Fundamental ConsiderationsOROCO HAS RECEIVED THE PERMITS TO ADVANCE THE MINE PROJECT AT CIERROPRIETO.THE PRELIMINARY ECONOMIC ASSESSMENT IS INDICATING THAT THE WAYS FORWARDTOWARDS PRODUCTION WILL CAUSE A REVALUATION OF THIS UNDERVALUED STOCK.OROCO HAS ENTERED INTO A CAD 19.75 MILLION FINANCING AGREEMENTS WITH A US-BASED INSTITUTIONAL INVESTOR TO FUND THE CERRO PRIETO GOLD MINE PROJECT.THE SHARE PRICE IN NO WAY REFLECTS THESE POSITIVE RESULTS AS THE MARKETCAPITALIZATION IS ONLY $ 30 PER OUNCE OF GOLD EQUIVALENT.THE POTENTIAL OF THE XOCHIPALA PROJECT HAS NOT BEEN REALIZED ANDAPPRECIATED BY THE MARKET YET… 7
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGBOTH PROJECTS ARE IN POLITICALLY STABLE MEXICO. BOTH PROJECTS COULDBE SUBJECT TO FUTURE CONSOLIDATION OF THE GOLD MINING INDUSTRY INMEXICO.Technical Considerations TARGET +30% = $ 2,100 +26% +27% +34% 8
    • P. ZIHLMANN INVESTMENT MANAGEMENT AG +1,100% THE DIFFERENCE BETWEEN 2008 AND 2012: THE COMPANY HAS RECEIVED PERMITS TO PUT A MINE WITH OVER 500’000 oz. GOLD EQ. INTO PRODUCTION. ONE MAN’S DESPAIR, ANOTHER MAN’S OPPORTUNITY!Peter Zihlmann / Andrew PortmannP. ZIHLMANN INVESTMENT MANAGEMENT AGwww.pzim.chwww.timeless-funds.cominvest@pzim.chphone +41 44 268 51 10THE TIMELESS PRECIOUS METAL FUNDis a shareholder in the company and will benefit from any increase in the company’sshare price. How to invest: http://www.timeless-funds.com/en/timeless-precious-metal-how-invest 9
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGTHE TIMELESS PRECIOUS METAL FUNDIs a Retail Collective Investment Scheme (SICAV), licensed by the Malta Financial Services Authority (MFSA).THE TIMELESS PRECIOUS METAL FUND invests in listed mining companies of medium or small market capitalization,which have to fulfill the following criteria: Companies that are in production on the one hand, and have a high potential of adding new reserves and resources. Companies that are set to go into production and that have, at the same time, considerable exploration prospects. Companies that concentrate their exploration for precious metals in resource rich regions that have a positive track record. In addition we consider the experience and integrity of the mining company’s management as another important investment criterion. Emphasis on operations in mining friendly countries and jurisdictions.Shares of medium sized mining companies are more volatile than big cap mining stocks and are best suited for long-term investors. We also believe that mining companies are extremely undervalued at this time in relation to gold andsilver and that, for this very reason, they offer an outstanding capital gain potential. NAV - The Timeless Precious Metal Fund 20 18 16 14 12 in EUR 10 8 6 4 2 0 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12THE SIERRA MADRE GOLD & SILVER VENTURE CAPITAL FUNDIs a Professional Investor Fund targeting experienced investors and is licensed by the MFSA.The SIERRA MADRE GOLD AND SILVER VENTURE CAPITAL FUND invests in listed precious metal venture capitalmining companies with a focus on Mexico and other Latin American countries which have to fulfill the followingcriteria: Companies that are in production on the one hand, and have a high potential of substituting exhausted resource bases, and at the same time, of adding new reserves. Companies that concentrate on the exploration for precious metals in commodity rich regions that already have a substantial resource. In addition we consider the experience and integrity of the mining company’s management as another important investment criterion. Geographic focus is on Mexico and other Latin America countries but 10% of assets may be invested in other countries.The fund has no limitations as to the amount that can be invested in one company, giving the investor the chance tobenefit fully from the capital appreciation potential of a company. NAV - Sierra Madre Gold and Silver Venture Capital Fund 1.4 1.2 1 0.8 in CAD 0.6 0.4 0.2 0 Nov-06 May-07 Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12Our aim is to focus on a sustainable and constantly growing performance. 10
    • P. ZIHLMANN INVESTMENT MANAGEMENT AGP&V PRECIOUS METAL MINING FUNDIs a UCITS III fund, conform with EU law.This fund also invests in junior precious metal mining companies world-wide.The fund is more restrictive than the two previous ones as investments which exceed 5% cannot be more than 40% oftotal assets. Not more than 10% can be invested in one single company.The P&V PRECIOUS METAL MINING FUND offers less capital potential than the first two but it is also less exposed torisk. P&V Precious Metals Mining Fund 180 160 140 in CAD 120 100 80 60 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12************************************************************************************************************************************************Disclosure:The author has not been paid to write this article, nor has he received any otherinducement to do so.Disclaimer:The author’s objective in writing this article is to invoke an interest on the partof potential investors in this stock to the point where they are encouraged toconduct their own further diligent research. Neither the information nor theopinions expressed should be construed as a solicitation to buy or sell thisstock.Investors are recommended to obtain the advice of a qualified investmentadvisor before entering into any transactions in the stock - or to use their ownbrains.In our opinion, the best approach is to buy a diversified portfolio of stocks asrepresented in THE TIMELESS PRECIOUS METAL FUND or THE SIERRA MADREGOLD & SILVER VENTURE CAPITAL FUND instead of shares of only a smallnumber of companies.******************************************************************************* 11