Oroco management team got lot of heat for having done a private placement recently. In March 2022 the company did a private placement at $1.70 CAD. I got some messages from investors that were not happy with the raise. I read a lot of comments about investors being extremely disappointed with management for having done the raise.
Well hindsight is 20/20 but lets see what management was planning to do and where we are right now. Management did the raise to make sure they had enough capital to keep drilling for rest of 2022 and likely into 2023. The company already had cash in the bank to keep going with their drilling plan for months. So why do the raise? It ensure the company could stick to its plans and not be derailed due to low cash balance.
Looking at the market that we have right now, it is extremely hard to raise capital. Any news that a company needs cash is a seen as a huge negative in this market. Also the ability to successfully execute on a raise in this market is not that great.
You have to realize that the private placement closed in March ’22. These private placements take months. So management likely started talking to investors in late ’21 to get feedback on interest level and pricing. A management team that thinks ahead and takes a short term hit while being able to execute on the long term plan is rare, especially in mining.
Decisions like these don’t really get management any hi-fives from investors but these type of decisions make huge long term benefits. These type of decisions make investors fret short term concerns and never gets management long term kudos. It is these type of decisions over long run that make a big difference on companies that do well and others that struggle.
Decisions like this private placement, hiring someone like Richard Lock, 100% drilling success, getting permits for drilling, increasing ownership interest in Santo Tomas, acquiring land packages to expand the resource, …. compound over time. The decisions viewed separately don’t seem like much. Although when you see these type of smart decisions over time, investors reap the benefits in the long term by getting the most of its assets.
So kudos to the management team for making these smart decisions, again and again. As for investors, be patient and let the management team execute. The past track record shows they have been smart with their measured decisions. I think we will reap the benefits of these decisions soon.