Boron isn't probably the first mineral an investor thinks of when it comes to miners, but it is most definitely one worth considering. Boron is a safe chemical used for centuries in making glass (including phone, tablet, computer and television screens) and ceramics, as well as fiberglass insulation, detergents, insecticides and agricultural products, to name just a few.
In 2015, the boron market was valued at roughly $2.4 billion with only a handful of producers controlling 83% of the market, namely Rio Tinto's U.S. Borax in California and the Eti Mine in Turkey. Production hit a record 2.4 million tons boron trioxide (B2O3). Right now, production and consumption are at breakeven, with analysts seeing demand growth outstripping production growth. China is the largest boron consumer, which grew at a stunning 15% annual rate during the decade through 2010 and is still expanding at a 7% annual pace.
Rio Tinto says that the world is going to need another mine 1.5x the size of its world-class mine in California to keep up with demand over the next decade. Boron isn't like so many other metals where production can be easily ramped up due to the scarcity of economic boron deposits. That fact, along with the limited number of producers will help support boron prices for the foreseeable future.
British Columbia-based Erin Ventures Inc. (TSX-Venture:EV) owns a world class boron asset in Serbia. The company is squarely focused at the moment on its 100%-owned Piskanja Borate Project in southern Serbia, with additional funds and resources slated to be utilized on the adjacent Jarandol license area.
Furthermore, the company's wholly-owned Serbia-based subsidiary, Balkan Gold, is presently negotiating with Serbian authorities about a possible commercial contract for the Pobrdje boron mine. The Pobrdje mine, located just 1.5 kilometers from the Piskanja project, is licensed and operated by Ibar Mines, a Serbian state-owned company. Erin has proposed that Balkan Gold will provide the capital, technical expertise and management oversight required to refurbish, upgrade and operate the Pobrdje mine at a capacity of approximately 30,000 tonnes of colemanite (a secondary mineral formed by alteration of borax and ulexite) per year until depletion. In return for its efforts and cap ex, Balkan would receive exclusive rights to all the colemanite produced at the mine at a fixed price.
Exploration on the 35-square-kilometer Piskanja property is ongoing, but data to date indicates a high-grade boron deposit still open in two directions, meaning there is good potential for current deposit expansion or even additional deposits. Right now, Erin projects a mine life of 20-plus years of low-cost mining. Moreover, Piskanja is in a historical mining region of Serbia with all existing required infrastructure, including paved roads, rail, power, ports, experienced miners, etc.
A National Instrument 43-101 compliant mineral resource estimate for the project shows 7.8 million tonnes grading 31.0% B2O3 in the Indicated category and 3.4 million tonnes grading 28.6% B2O3 are shown in the Inferred category. While compelling, more exploration needs to be documented to show the economic viability of the reserves.
Some highlights of the Preliminary Economic Assessment (PEA) report on the project include a Post-tax NPV (10%) of US$428M with an IRR of 64%, forecasted annual revenue of $97 million and project payback (CAPEX: US$84.6M) within 15 months from mine start-up. At 21 years mine life, the gross revenue for the project is $2.04 billion with a net operating margin of 68.7%. All-in cost per tonne of product sold (post-tax) is projected at $165.75 (all figures are in U.S. dollars from the 2014 report).
Erin is working on proving the resources and the economic viability of production. A 2017 work program is getting underway, including two diamond drill holes required to complete an infill 50 x 50 meter grid; the twinning of one of Erin's previous reverse circulation holes located on a 100 x 100 meter drill grid for a metallurgical testing bulk sample; four exploratory drill holes to evaluate the potential propagation of mineral bodies in the direction of some positive historical Rio Tinto drill holes to the western and southern extremities of the property; one drill hole on the 100 x 100 meter grid designed to be multi-purposed as a hydrogeological monitoring station as well as an exploration hole; one decline hole for structural engineering purposes; geochemical testing of the drill cores; continuation of ongoing hydrogeological monitoring; and, geophysical, geotechnical, mineralogical-petrological and metallurgical studies.
In order to help fund the exploration, Erin last month announced a private placement offering to raise C$500,000 through the issuance of 10 million units at $0.05 per unit. A unit is comprised of a share of common stock and a warrant to buy another share of EV stock, exercisable at $0.10 within the first year, $0.20 within the second year and $0.30 in the third year.
With the dearth of competition in the boron space, Erin Ventures finds itself in an enviable position with its substantial land package in Serbia, not to mention discussions to acquire a proven boron mine in the country. This is a thinly traded stock that is largely flying off the radar of the investment community, but looks to be establishing a footprint in an industry that is going to be in need of more boron in the not too distant future.
Forward Looking Statements
This report includes forward-looking statements that reflect current expectations about its future results, performance, prospects and opportunities. Erin Ventures Inc. has tried to identify these forward-looking statements by using words and phrases such as “may,” “will,” “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plan,” “should,” “typical,” “preliminary,” “we are confident” or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Erin Ventures Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.
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