Featured Company / Erin Ventures Inc.

There is plenty of talk on Wall Street about metals and what re-opening of economies post-coronavirus will mean to the commodities markets. Not much of that talk is about boron, though. Boron, with atomic symbol “B” and number atomic number 5 just quietly goes about as a mineral critical to life and industry. Applications for boron abound and are in many cases irreplaceable, used in healthcare, fiberglass, specialized glass, nuclear reactors, powerful magnets, agriculture, detergents, electronics, semiconductors, manufacturing and much more.

To be clear, while the word “boron” is commonly used, it is boron combined with oxygen and other elements to form boric acid or inorganic salts called borates that are commercially important. Four borate minerals, colemanite, kernite, tincal, and ulexite, account for 90 percent of the borate minerals used by industry worldwide.

Boron touches almost every part of our lives, from the food we eat to the homes we eat it in, to the energy that makes everything go around. It’s even in those smartphones that people spend countless hours staring at daily. With its robust manufacturing capacity, China is not surprisingly the world’s largest boron consumer. The U.S. weighs in at number two, driven largely by a thriving housing market.

As the supplier of roughly 30% of world demand for refined borates, Rio Tinto (NYSE:RIO) has been mining from its world class mine in appropriately named Boron, California about 100 miles north of Los Angeles for a century. Essentially, worldwide boron supply is an oligopoly, with about 80% of the $4.9 billion market split between Rio Tinto and Turkey’s state-owned Eti Mine Works, which owns the massive Eti Mine.

Turkey is the 700-pound gorilla in the market, hosting some 1.1 billion metric tons of boron reserves. To put that into context, consider that the U.S. and Russia share second place with 40 million metric tons each.

While Rio and Eti control the vast majority of the market, the remainder is split up amongst smaller producers from high-cost, low-quality mines scattered about the planet.  According to Rio Tinto, steadily increasing demand will result in the need to discover another mine at least 1-1/2 times the size of its producing mine in California.

Safe to say, there is more than ample room for another player to join in the fold.

If you ask little Victoria, British Columbia-based Erin Ventures (TSX-Venture:EV) (OTCQB:ERVFF), the company is ready to answer the call for new high-grade boron and one day vault itself in a class alongside Rio and Eti. The international mineral exploration and development company owns the Piskanja high-grade boron project in Serbia.

In a National Instrument 43-101 report amended in February 2019 titled, “Mineral Resource Estimate Update On The Piskanja Borate Project, Serbia,” the project hosts an indicated mineral resource of 7.8 million tonnes (averaging 31% B2O3 (boron trioxide)) and an inferred resource of 3.4 million tonnes (averaging 28.6% B2O3). The estimate is calculated in accordance with the Canadian Institute of Mining Definition Standards on Mineral Resources and Reserves, better known as simply “CIM Standards.”

Erin has filed its compulsory Annual Work Report and License Extension Application for Piskanja with Serbian regulators, which covers completing the “Certification of Reserves” process within three years.

Exploration over the years has repeatedly provided compelling data suggesting massive borate mineralization. Drill holes have validated the continuity of high-grade boron mineralization throughout several mineral beds. Drilling to date shows the mineralization remaining open in several directions, leaving room to grow the resource going forward.

A 2014 Preliminary Economic Assessment evaluating Piskanja provided additional insight on some favorable economics for a future mine, including a post-tax NPV (10%) of US$428 million with an internal rate of return (IRR) of 64%.  Forecasted annual revenue was shown at $97 million and project payback based on capex of $84.6 million (all figures in USD) 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.

According to Statista, boric acid prices are climbing modestly year-over-year and should reach $762 per tonne in 2023, meaning there is considerable room to maintain strong margins.

As mentioned, colemanite is a secondary mineral of boron formed by alteration of borax and ulexite. It is an extremely rare borate mineral found only in evaporite deposits of alkaline lacustrine environments. It has no alternatives in some industrial applications, with literally every ounce of the world’s colemanite coming from the Eti Mine.

As it happens, colemanite can be produced from Piskanja. Furthermore, the colemanite is even more attractive insomuch that it has a lower arsenic content than colemanite from Eti.

The time is now for Erin Ventures to move Piskanja forward after relatively slow progress in the last couple years, including being hamstrung by a nationwide Serbian lockdown designed to mitigate the coronavirus outbreak in the spring. This month, Erin struck a joint deal with Temas Resources Corp. (CSE:TMAS) (OTCQB:TMASF) to move the ball down the field.

Per the Letter of Intent, Temas can earn up to a 50% equity interest in Balkan Gold, a subsidiary of Erin and holder of the Piskanja license, by making 10.5 million euro (US$12.85 million) in expenditures on the development of the Piskanja project within 36 months. Effectively, Temas will earn a 1% interest in the project with every €210,000 advanced to the project until it controls half of Piskanja.

The LOI also stipulates that Temas will, amongst other things, be entitled to seats on the Balkan Gold board of directors once it makes the full investment. Also, upon making the final payment, Temas will replace Erin as the operator on the project.

Upon completion of due diligence and signing of all requisite agreements, expected no later than mid-April, the transaction will be initiated with Temas making a one-time payment of 250,000 Temas common shares and 250,000 share purchase warrants (at $1.00 for 4 years) to Erin.

Erin CEO Tim Daniels is elated by the new partnership with Temas that represents a clear path forward at Piskanja. "Temas is an exceptionally good fit for this project,” he said. “Not only are they willing to match their funding commitments for Piskanja with the anticipated equity requirements for project development right through to production, but in addition, they have an experienced management team with like-minded thinking towards the development of Piskanja. Undoubtedly we are stronger with them as our partner."

When all is said and done, Piskanja will be significantly advanced and Erin will be a large shareholder in Temas, a company on the rise (shares have doubled recently to $0.60) with a portfolio of iron, titanium and vanadium projects in mining friendly jurisdictions in the U.S. and Canada.

And if things come together in a timely manner, Serbia should be joining the European Union as well, which will simply provide additional sales channels, not that there should be any trouble finding buyers of high-grade borate and colemanite. Against that backdrop, investors are starting to pile on to Erin Ventures, recently sending shares to a new 52-week high at 8.5 cents, with plenty of headroom just to reach the 2019 high at $0.15.