Oroco Signs Term Sheet For Funding Cerro Prieto Gold Project

April 13, 2012

VANCOUVER, British Columbia – (April 13, 2012) Oroco Resource Corp. (TSX-V: OCO) (“Oroco” or “the Company”) is pleased to announce that it has entered into a term sheet with a private, American institutional investor with regard to a CAD$3.75 million dollar convertible debenture (the “Debenture”), a US$15 million gold prepayment agreement and a US$1 million dollar cost overrun facility (the “Overrun Facility”), the net proceeds of which will be used to fund the development of the Company’s Cerro Prieto Project in Sonora State, Mexico, a proposed open pit, heap leach oxide gold mine which was the subject of a Preliminary Economic Assessment detailed in a news release by the Company on December 15, 2010.

The Debenture, which will have a term of two years and a coupon rate of 10% per annum, will be convertible into units of the Company’s equity, with each unit being comprised of one common share and one half of one share purchase warrant.  Each whole warrant will entitle the holder to purchase a common share of the Company at a price of $0.40 per share for a period of two years from the date of issuance of the Debenture.  Proceeds from the Debenture will be used to repay the outstanding loan from EXP T1 Ltd. in the principal amount of US$2,471,440 plus accumulated interest, and to advance the Company’s Cerro Prieto Project.

The US$15 million dollar gold pre-payment is to be satisfied by the delivery of 17,500 ounces of gold, subject to adjustment if the price of gold falls below $1,550 per oz, over a period of 27 months commencing in the 13th month after the first advance of funds under the gold pre-payment agreement (the “First Advance”).  Additionally, Oroco is to grant to the lender a series of warrants entitling the lender to purchase up to 9,450 ounces of gold from Oroco at a price of US$1,550 per ounce over the 27 month period beginning 19 months after the First Advance.  The First Advance will be subject to the Company raising the balance of capital, currently estimated at $5,000,000, required to complete the development of the Cerro Prieto Project.  The net proceeds of the gold pre-payment, after deduction of a 3% procurement fee and reimbursement of associated expenses, will be used to develop the Cerro Prieto Project.  The gold pre-payment will be secured by a security interest on the Company’s assets.

The US$1 million dollar Overrun Facility will be made available to the Company in the event that, during development of the mine at the Cerro Prieto Project, the Company requires up to an additional one million dollars to complete and commission the mine.  The Facility will have a term of 3 years and will bear interest of 10% per annum.  Upon the closing of the Facility, the Company will issue bonus share purchase warrants to the lender as allowed by TSX Venture policies, to a maximum of 3.3 million warrants.

The Debenture, Gold Pre-payment and Overrun Facility are subject to completion of legal documentation, receipt of regulatory approvals, including that of the TSX Venture, and conditions precedent typical of transactions of this nature.

The Company also announces that it has, with the approval of the TSX Venture, amended the terms of 1,000,000 outstanding warrants by extending their term from April 14, 2012 to October 14, 2012.  There has been no change to the exercise price of $0.30 per share.

For further information, please contact:
Mr. Craig Dalziel, President and CEO
Oroco Resource Corp.
Tel: 604-688-6200

This news release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. The Company’s actual results, programs and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company’s control. These factors include: the availability of funds; the timing and content of work programs; results of exploration activities and development of mineral properties, the interpretation of drilling results and other geological data, the uncertainties of resource and reserve estimations, receipt and security of mineral property titles; project cost overruns or unanticipated costs and expenses, fluctuations in metal prices; currency fluctuations; and general market and industry conditions.

Forward-looking statements are based on the expectations and opinions of the Company’s management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Subscribe for Updates

These historical resource estimate models are based upon historical resource estimates prepared by John Thornton in 2011. While, in the opinion of Dane A. Bridge, author of the revised NI 43-101 standard technical report, Geology, Mineralization and Exploration of the Santo Tomas Cu-(Mo-Au-Ag) Porphyry Deposit, Sinaloa, Mexico dated April 21, 2020 (the “Report”), reliable estimation practices were used, in order to upgrade or verify the historical estimations, resampling and assay of historical drill samples, twinning of historical drill holes, and a new program of regularly spaced drilling is required. No qualified person has undertaken sufficient work to classify the current mineral resources or mineral reserves upon which these models are based and the Company is not treating the estimates as current estimates of the mineral resources. The Company gives no assurance that either these models or the historical resource estimates upon which they are based are accurate, and does not undertake any obligation to update the models or to release publicly any update or revisions of the resource estimates except as required by applicable securities law. The reader is cautioned not to rely upon these models or the historical resource estimates upon which they are based.

Please signify your understanding:

I Agree