For nearly a decade, analysts have been calling for increased demand for boron, a low abundance mineral with many uses, including ceramics, glass for electronics, fiberglass, agricultural products, detergents and much more. The vital trace mineral plays a key role in keeping the human body healthy, managing painful conditions like arthritis and osteoporosis, while helping the body absorb other key minerals.
The boron bulls have been right all along, with global consumption now at a tipping point to outstripping supply. Adding a sense of urgency to the situation, Rio Tinto, the biggest boron producer in the world, forecasts that the world needs another mine one-and-a-half times the size of its world class Borax Mine in Kern County, California. To put expected future demand into context, understand that Rio Tinto’s mine produces about half the world’s borates annually and has sufficient ore reserves to last through 2050 at the minimum.
A production shortfall and the fact that there is only a limited number of mines worldwide should continue to put upward pressure on prices, making young companies tapping into the market attractive to investors.
British Columbia-based Erin Ventures Inc. (TSX-Venture:EV) owns a world class boron asset called the Piskanja Borate Project in southern Serbia. Erin’s wholly owned, high-grade boron deposit has an indicated mineral resource of 7.8 million tonnes (averaging 31% B2O3), and an inferred resource of 3.4 million tonnes (averaging 28.6% B2O3). Exploration on the property suggests a high-grade boron deposit that remains open at strike.
A Preliminary Economic Assessment shows that payback on the project would come as quickly as 15 months from opening of a mine. At 21 years mine life, the gross revenue for the project is USD$2.04 billion (annual of approximately USD$100 Million) and a net operating margin of 68.7%.
The company did not go into great detail, but did disclose late in March that it is in advanced discussions with a potential strategic partner that would bring capital and experience in the boron industry to the table to expedite development of Piskanja. Investors surely will have their eyes peeled for more information on this matter.
Also in the boron space, Erin, through its Serbian subsidiary Balkan Gold, is negotiating a possible contract with Serbian authorities for the Pobrdje boron mine neighboring (1.5 miles away) the Piskanja property. The mine is currently operating by state-owned Ibar Mines. The negotiations between Erin leadership and the country’s lawmakers are contemplating Balkan Gold essentially taking over Pobrdje, providing the capital and management necessary to refurbish, upgrade and operate the mine at a capacity of 30,000 tonnes of colemanite, an important ore of boron formed through the alteration of borax and ulexite, annually until the mine is exhausted. With the current market price for boron at $500.00 per ton, producing 30,000 tonnes would equate to USD$15 Million per annum.
In exchange for its investment, Balkan Gold would be granted exclusive rights to the colemanite at a fixed price.
Erin Ventures is a thinly-traded company that has quietly worked itself into a very nice position in a boron industry that seems to have nothing but upside. The world is going to need more boron production for the foreseeable future. With one promising project in the portfolio and another near-producing mine within reach, mining investors would be wise to pay attention to how this little company progresses.
