Undiscovered Junior Miner Could Be Sitting On A Massive Boron Mine

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Thursday, April 21, 2022

In a Venn diagram of the chemical industry, energy industry (alternative, nuclear, oil refinement), aerospace, defense, healthcare, and steel manufacturing, there are a few overlaps, but perhaps none more important than boron. There are very few substitutes, limited suppliers, and a groundswell of expectations for rising demand, making this a market for investors to target going forward.

Against this backdrop, any upstarts with projects showing high-grade reserves should make an indelible impression on the investment community. Here’s why.

While its biggest use historically has been (and remains) in the glass market – where it increases mechanical strength and resistance to shock, chemicals, and water – future demand for boron is being driven by multiple other factors, including increased urbanization, rising energy production as part of Net Zero initiatives, and the need for sustainable food supply amid global population growth.

In its December 2021 “Climate Transition Super Materials” report, Credit Suisse referred to boron as “one of the most versatile elements in the world” and a “high impact, cross cutting super material,” while noting that every step towards a Net Zero economy “will see demand for boron outstretch supply.”

Boron supply is effectively a duopoly consisting of Turkey’s state-owned Eti Mine Works, which operates a massive eponymous mine in Turkey, and Rio Tinto (NYSE: RIO), which has been producing borates from its mine in Southern California for a century. The companies control about 50% and 30%, respectively, of the $5 billion global boron market, leaving the remainder for a handful of smaller, up-and-coming companies.

Even holding the current modest growth curve (~3%-6% CAGR), there is room for companies to emerge and capture market share. With consideration for the push for a Net Zero economy, though, there is a blue-sky opportunity for companies developing boron projects. Underscored by an explosion in adoption of decarbonization technologies, Credit Suisse sees the possibility for a 10x increase in boron demand by 2050.

Boron is a relatively rare element, so making high-grade discoveries are particularly valuable, like the Piskanja project in Serbia of Erin Ventures Inc. (TSX-Venture: EV) (OTCPK: ERVFF). The little Vancouver-based company is going mostly overlooked at this moment despite operating Piskanja, one of the few world-class boron projects known in the world today, through its 100% owned subsidiary, Balkan Gold (the holder of the Piskanja license).

With junior explorers, development costs are often a concern, but not here. Erin partnered in Q3 2021 with Temas Resource Corp. (CSE:TMAS) (OTCQB:TMASF), agreeing to allow Temas to earn a 50% stake in Balkan Gold by spending US$12.85 million on development at Piskanja over 36 months.

The capital committed by Temas, in combination with expertise provided by its seasoned team, is enough to get the project through key milestones to provide evidence of the boron resource at the project and the economics to extract it. For Erin Ventures, a company with a CDN$7.7 million market capitalization, meeting these inflection points should build corporate value and facilitate requisite financings for ongoing development.

Erin has reports generated over the last 8 years in its corner speaking to the merits of Piskanja. A National Instrument 43-101 report amended in February 2019 titled, “Mineral Resource Estimate Update On The Piskanja Borate Project, Serbia,” shows 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).

It should not go understated that Piskanja is known to include colemanite, a prized altered variation of borax that is only produced from the Eti Mine currently. It is commercially important because it contains 50% B2O3.

While considered “historic” by regulatory standards, a 2014 Preliminary Economic Assessment (PEA) on the project provides additional color on the potential of a mine. Amongst some highlights of the report were an initial projection for a 21-year mine life, generating gross revenue of $2.04 billion and net operating margin of 68.7%. In the report, all-in costs were figured at $165.75 per tonne, leaving plenty of room and high margins considering boron prices have been steadily increasing from $691 per tonne in 2015 to an expected $748 per tonne in 2022, according to Statista.

Erin is working to complete a current PEA and an “Elaborate” (essentially the Serbian equivalent to a NI-compliant PEA). The PEA is expected this quarter and the Elaborate in Q3 (translations take time), both of which can be catalysts for the stock. In the first half of 2023, Erin hopes to complete its Feasibility Study/Environmental Impact Study, a key document necessary for the issuance of a mining license.

Presently, Serbia’s mining industry is forging its way through some turmoil related to Rio Tinto’s $2.4 billion Jadar lithium-borates project in western Serbia that has been met with environmental impact concerns by the local community and cast a shadow on the market. Located closer to the Kosovo border in a historical mining region in the southern part of Serbia with all the necessary infrastructure readily available (including local skilled workers), Piskanja isn’t expected to experience similar resistance.

Add it all up, Erin Ventures appears to be an underappreciated company just waiting to start fulfilling its potential.

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Erin Ventures Inc. (TSX-Venture: EV) (OTCPK: ERVFF) Full Corporate Write-Up: Click Here.

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