Featured Company /
Erin Ventures Inc.
Gold, silver, copper and even now cobalt and lithium are metals that nearly everyone in the investment community can relate to. They’re covered constantly by mainstream media and the focus of mining targets by countless explorers and miners around the globe. Say “boron” and you just may get a blank stare in response as if to say, “What is that?” Fact is, nearly every person in the industrialized world comes in contact with boron everyday, only most don’t know it.
It’s actually a bit of an ironic situation that a mineral considered “non-abundant” in the earth is so abundantly used. Understanding the situation also provides clarity as to why the boron supply/demand balance is at a critical tipping point and why companies like Erin Ventures Inc. (TSX-Venture:EV) (OTC:ERVFF) could experience a boon in value as it advances its Piskanja Borate Project in Serbia.
Boron is a highly diverse mineral used in construction, agriculture, manufacturing, medicine, household cleaning projects, ceramics, microelectronics, telecommunications, satellites, battery technology and even space travel, to mention just a few of its daily applications. The screens in the smartphones, tablets and computers that everyone stares at everyday contain about 10 percent boron. A wildly popular craze across the U.S. today is DIY slime (or flubber), which uses the boron compound sodium borate.
Because boron is somewhat rare, just two companies control about 80% of the $4.9 billion market, including multinational mining giant Rio Tinto (NYSE:RIO) with its open-pit mine in Boron, California, one of only two world-class borate deposits in the world. The other is the state-owned Eti mine in Turkey.
The remaining market share is taken by South American producers, which are characterized by inferior products compared to the high-grade reserves of Rio Tinto and Eti.
Rio Tinto, with its 140 years in the borate business holds expert market status. The company sees borate demand remaining strong, which it believes will result in the need for another mine 1.5x the size of its massive mine in California. This estimate is underpinned by China, the largest boron consumer in the world increasing its demand by 15% annually from 2000 to 2010 and currently at about 7% per year. The U.S., the world’s second biggest consumer, is seeing boron demand outstrip GDP growth.
There is no slack in the market and the scarcity of new deposits means producing more boron is not as simple as turning on a spigot like it is with many other minerals. The lack of competition will continue to support prices and drive them modestly higher in the coming years. Stormcrow estimates that boron prices (as measures in boric acid) will climb from $691 per tonne in 2015 to $762 per tonne in 2023.
To that end, there is a clear opportunity for British Columbia-based Erin Ventures if it can continue to hold its course to prove the economic viability of Piskanja. Exploration at the project which has generated compelling data to date. This data served to compile a National Instrument 43-101 compliant mineral resource estimate showing 7.8 million tonnes grading 31.0% boron trioxide (B2O3) in the Indicated category and 3.4 million tonnes grading 28.6% B2O3 in the Inferred category.
During field test, drill cores visually support the presence of a massive borate mineralization. These observations have been further validated by drill holes confirming continuity of several known mineral beds, as well as identifying previously unknown mineralized zones. Recent intercepts have been prolific, including returns of massive borates over an aggregate of 21.6 meters, 15.9 meters, 30.1 meters, 24.5 meters and 11.3 meters.
Management is working currently to document the economic feasibility of the reserve by NI standards. A Preliminary Economic Assessment report on the project provided investors several statistics that lend to the value of the property, including a post-tax NPV (10%) of US$428 million with an IRR of 64%. Forecasted annual revenue came in at $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).
When considering current prices and forecast prices in the years to come, an all-in cost of under $166 per tonne is certainly enticing by any investment metric.
Erin’s calculations may be early in nature, but they are in line with the industry, which is no stranger to solid margins. Industrial Minerals figured Rio Tinto’s profit margins from its borate unit at 34% in 2015, while Hoover’s pegged Eti’s profit margin at 44.8% in 2014.
Ongoing exploration work at Piskanja is seeking to expand the resource, with mineralization shown to remain open in multiple directions.
In May, Erin completed a work program on its 100% owned project, consisting of 10 vertical HQ-sized diamond drill holes totaling 3,084 meters in depth on time and on budget. The successful completion of the exploration program ensures that Erin is compliant with its obligations required to keep its exploration license in good standing and extend it into 2020, as well as being integral to Erin’s goal of advancing the Piskanja project towards feasibility.
Erin also has another distinct advantage to its property because of the project’s colemanite content. Colemanite is a borate mineral found in evaporite deposits of alkaline lacustrine environments. It is a secondary mineral that forms by alteration of borax and ulexite. Another mineral that goes completely unheralded, colemanite has many irreplaceable industrial uses and virtually no supply competition. That’s not hyperbole, the Eti mine is the world’s only supplier. By bringing colemanite to the market, Erin will be in an enviable position and likely warmly welcomed by buyers.
Even more enticing, the colemanite at Piskanja has a much lower arsenic content that that of Eti, which is a growing concern for many countries.
The value here was evidenced last month when an unnamed London-based commodity investment specialist entered a strategic partnership with Erin. The investment company (“InvestCo”) is remaining anonymous for the time being as it is integral to an ongoing initial public offering of a substantial mining complex. When the time is right (and allowed), the name will be revealed.
Per the deal, InvestCo has the right to make equity investments in two tranches, totaling US$20.135 million, with the proceeds to be used for the advancement of Piskanja towards production.
Tim Daniels, President of Erin Ventures, succinctly summarized the importance of this partner in saying, “This agreement provides an opportunity to significantly grow our shareholders’ value by creating a funding plan which matches our development milestones, allowing for the rapid advancement of our boron project, first to a feasibility study stage, and then into mine development and construction.”
A look at Erin’s plan going forward lends a great deal of color as to how far the company will advance in short order using only a small portion of the cash infusion. Within approximately 18 months and with capex of only about $5.23 million, drilling, metallurgical work and a feasibility study should be completed, leaving Erin ample cash to continue towards bringing Pskanja to production. That production milestone could be reached in as little as 24 months.
Without question, that means that Erin potentially is first in line to bring a new boron mine online.
A final relevant fact for the emergence of Erin Ventures as a leading player in the boron space is its project location. Serbia is in headlong in the process to become a member of the European Union. One of the greatest contributions the country can make is via mining, which has the full support of the government to increase GDP from 2% to 5% by leveraging the mining industry’s contribution. Belgrade is aiming to accomplish this with mining friendly regulation and tax incentives to encourage investment, both foreign and domestic, for which Erin will benefit.
In general, companies are valued in a couple ways, either in terms of tangible assets or through speculation as measured by market valuation of developing companies. Traditionally, mining investors lean towards the conservative side of things, waiting for concrete values on reserves. Erin is following its playbook to prove its reserves, which has attracted key partners with a deep understanding of the potential of a large boron project in a very favorable jurisdiction and negligible competition aside from a two-company oligopoly that is just waiting to be disrupted. With a market cap of only $13 million the long-term opportunity of this thinly traded company looks to be strongly to the upside.
Corporate Snapshot:
Erin Ventures Inc.
Stock Symbol:
CA
Stock Exchange:
TSX-Venture
Sector:
Basic Materials
52 Week High:
$0.3300
52 Week Low:
$0.0750
Alt Exchange/Ticker:
OTC:ERVFF
Current Stock Quote / Chart / News: Click here
Information as of
July 09, 2018
Gold, silver, copper and even now cobalt and lithium are metals that nearly everyone in the investment community can relate to. They’re covered constantly by mainstream media and the focus of mining targets by countless explorers and miners around the globe. Say “boron” and you just may get a blank stare in response as if to say, “What is that?” Fact is, nearly every person in the industrialized world comes in contact with boron everyday, only most don’t know it.
It’s actually a bit of an ironic situation that a mineral considered “non-abundant” in the earth is so abundantly used. Understanding the situation also provides clarity as to why the boron supply/demand balance is at a critical tipping point and why companies like Erin Ventures Inc. (TSX-Venture:EV) (OTC:ERVFF) could experience a boon in value as it advances its Piskanja Borate Project in Serbia.
Boron is a highly diverse mineral used in construction, agriculture, manufacturing, medicine, household cleaning projects, ceramics, microelectronics, telecommunications, satellites, battery technology and even space travel, to mention just a few of its daily applications. The screens in the smartphones, tablets and computers that everyone stares at everyday contain about 10 percent boron. A wildly popular craze across the U.S. today is DIY slime (or flubber), which uses the boron compound sodium borate.
Because boron is somewhat rare, just two companies control about 80% of the $4.9 billion market, including multinational mining giant Rio Tinto (NYSE:RIO) with its open-pit mine in Boron, California, one of only two world-class borate deposits in the world. The other is the state-owned Eti mine in Turkey.
The remaining market share is taken by South American producers, which are characterized by inferior products compared to the high-grade reserves of Rio Tinto and Eti.
Rio Tinto, with its 140 years in the borate business holds expert market status. The company sees borate demand remaining strong, which it believes will result in the need for another mine 1.5x the size of its massive mine in California. This estimate is underpinned by China, the largest boron consumer in the world increasing its demand by 15% annually from 2000 to 2010 and currently at about 7% per year. The U.S., the world’s second biggest consumer, is seeing boron demand outstrip GDP growth.
There is no slack in the market and the scarcity of new deposits means producing more boron is not as simple as turning on a spigot like it is with many other minerals. The lack of competition will continue to support prices and drive them modestly higher in the coming years. Stormcrow estimates that boron prices (as measures in boric acid) will climb from $691 per tonne in 2015 to $762 per tonne in 2023.
To that end, there is a clear opportunity for British Columbia-based Erin Ventures if it can continue to hold its course to prove the economic viability of Piskanja. Exploration at the project which has generated compelling data to date. This data served to compile a National Instrument 43-101 compliant mineral resource estimate showing 7.8 million tonnes grading 31.0% boron trioxide (B2O3) in the Indicated category and 3.4 million tonnes grading 28.6% B2O3 in the Inferred category.
During field test, drill cores visually support the presence of a massive borate mineralization. These observations have been further validated by drill holes confirming continuity of several known mineral beds, as well as identifying previously unknown mineralized zones. Recent intercepts have been prolific, including returns of massive borates over an aggregate of 21.6 meters, 15.9 meters, 30.1 meters, 24.5 meters and 11.3 meters.
Management is working currently to document the economic feasibility of the reserve by NI standards. A Preliminary Economic Assessment report on the project provided investors several statistics that lend to the value of the property, including a post-tax NPV (10%) of US$428 million with an IRR of 64%. Forecasted annual revenue came in at $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).
When considering current prices and forecast prices in the years to come, an all-in cost of under $166 per tonne is certainly enticing by any investment metric.
Erin’s calculations may be early in nature, but they are in line with the industry, which is no stranger to solid margins. Industrial Minerals figured Rio Tinto’s profit margins from its borate unit at 34% in 2015, while Hoover’s pegged Eti’s profit margin at 44.8% in 2014.
Ongoing exploration work at Piskanja is seeking to expand the resource, with mineralization shown to remain open in multiple directions.
In May, Erin completed a work program on its 100% owned project, consisting of 10 vertical HQ-sized diamond drill holes totaling 3,084 meters in depth on time and on budget. The successful completion of the exploration program ensures that Erin is compliant with its obligations required to keep its exploration license in good standing and extend it into 2020, as well as being integral to Erin’s goal of advancing the Piskanja project towards feasibility.
Erin also has another distinct advantage to its property because of the project’s colemanite content. Colemanite is a borate mineral found in evaporite deposits of alkaline lacustrine environments. It is a secondary mineral that forms by alteration of borax and ulexite. Another mineral that goes completely unheralded, colemanite has many irreplaceable industrial uses and virtually no supply competition. That’s not hyperbole, the Eti mine is the world’s only supplier. By bringing colemanite to the market, Erin will be in an enviable position and likely warmly welcomed by buyers.
Even more enticing, the colemanite at Piskanja has a much lower arsenic content that that of Eti, which is a growing concern for many countries.
The value here was evidenced last month when an unnamed London-based commodity investment specialist entered a strategic partnership with Erin. The investment company (“InvestCo”) is remaining anonymous for the time being as it is integral to an ongoing initial public offering of a substantial mining complex. When the time is right (and allowed), the name will be revealed.
Per the deal, InvestCo has the right to make equity investments in two tranches, totaling US$20.135 million, with the proceeds to be used for the advancement of Piskanja towards production.
Tim Daniels, President of Erin Ventures, succinctly summarized the importance of this partner in saying, “This agreement provides an opportunity to significantly grow our shareholders’ value by creating a funding plan which matches our development milestones, allowing for the rapid advancement of our boron project, first to a feasibility study stage, and then into mine development and construction.”
A look at Erin’s plan going forward lends a great deal of color as to how far the company will advance in short order using only a small portion of the cash infusion. Within approximately 18 months and with capex of only about $5.23 million, drilling, metallurgical work and a feasibility study should be completed, leaving Erin ample cash to continue towards bringing Pskanja to production. That production milestone could be reached in as little as 24 months.
Without question, that means that Erin potentially is first in line to bring a new boron mine online.
A final relevant fact for the emergence of Erin Ventures as a leading player in the boron space is its project location. Serbia is in headlong in the process to become a member of the European Union. One of the greatest contributions the country can make is via mining, which has the full support of the government to increase GDP from 2% to 5% by leveraging the mining industry’s contribution. Belgrade is aiming to accomplish this with mining friendly regulation and tax incentives to encourage investment, both foreign and domestic, for which Erin will benefit.
In general, companies are valued in a couple ways, either in terms of tangible assets or through speculation as measured by market valuation of developing companies. Traditionally, mining investors lean towards the conservative side of things, waiting for concrete values on reserves. Erin is following its playbook to prove its reserves, which has attracted key partners with a deep understanding of the potential of a large boron project in a very favorable jurisdiction and negligible competition aside from a two-company oligopoly that is just waiting to be disrupted. With a market cap of only $13 million the long-term opportunity of this thinly traded company looks to be strongly to the upside.
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.
Disclaimer
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