In order to achieve climate neutrality through the transformation from fossil to renewable energy sources, gigantic quantities of the most diverse raw materials will be required in the next few years. The demand for copper, lithium, nickel and cobalt already significantly exceeds the global supply. The result is scarcity and skyrocketing prices to new all-time highs.
Super element still under the radar
But one super element, which is also indispensable for the energy transition, is currently still eking out a shadowy existence: boron. According to a study by Crdit Suisse, the boron market could increase tenfold by 2050! A Canadian company is likely to benefit particularly from this boom: Erin Ventures owns a pure boron project in Europe which, according to current studies, has one of the highest grades of mineralization in the world.
Data & Facts
| ISIN | CA29570H2000 |
| WKN / Symbols | A2DWW4 / EV (TSX.V) EKV1 (XBER) ERVFF (OTCMKTS) |
| last course | $0.08 (07/12/2022) |
| share count | 153.870.699 |
| market capitalization | C$12.31 million |
| industry | Mining, Junior Explorer Bor |
| Project | Piskanja (Serbia), 306 hectares, 100% ownership with joint venture partner |
| Resource Estimate | NI 43-101 (2022): 7.2 Mt Measured Indicated Inferred (@34.6% B2O3) |
| PEA study | 2022, NPV: $524.9M, IRR: 78.7%, Mine Life: 16 years |
| Bankable feasibility | planned for 2023 |
| start of production | planned for the end of 2025 |
| Catalysts/Triggers | Growth market, takeover candidate, severely undervalued |
| home page | www.erinventures.com |
| CEO | Tim Daniels |
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Source: Erin Ventures Inc., TSX Venture Exchange, as of 07/12/2022
Colemanite Calcium Borate,, Source: Erin Ventures Inc.
Boron – universally usable raw material for future technologies
The demand for industrial raw materials will grow exponentially in the coming years in view of climate change and the resulting upheavals. Cobalt, lithium, copper, nickel and rare earth metals are found in numerous devices that are essential for climate protection, such as wind turbines, solar systems or electric cars. The trend away from oil and gas towards alternative energies is also being fueled by the current Ukraine conflict.
Boron is one of the most versatile elements on earth! Anyone reading this text regularly uses hundreds of products that depend on boron. Examples are glass, ceramics, but also insulating material for houses or fiber optic cables, smartphones, computer screens or solar panels on the roof.
Tim Daniels, CEO of Erin Ventures Inc.
One substance that is still under the radar, despite its elementary importance for the energy transition, is boron, one of the most versatile elements in the universe. In addition to traditional applications such as special glass (borosilicate glass), glass fibers (insulating wool) or porcelain ceramics, the element with the symbol B and the atomic number 5 in the periodic table plays a key role in wind turbines, permanent magnets for electric motors, solar cells, energy storage systems or fuel cells. A single electric car alone contains around 50 kilograms of boron. A total of around 6,375 kilograms of boron are used for the blades and generator of an offshore wind turbine. Boron is also an important fertilizer and thus supports sustainable agriculture.
electromobility 
solar power 
wind energy 
fertilizer Boron has a wide variety of uses, image source: Pixabay
Demand could explode
In addition to the rapidly increasing demand for the super element due to climate change, the boron market could also explode due to the rapidly growing world population and the associated dramatic increase in demand for food. Because this requires increasing amounts of artificial fertilizer, for which boron is an essential element. Around three kilograms of boron per hectare of agricultural land are required to ensure the healthy development of crops.
As the major Swiss bank Crdit Suisse outlined in its study "Climate Transition Super Materials" at the end of last year, the demand for boron could be up to ten times higher than today's level by 2050. The Swiss assume that more than 90% of the demand will come from air conditioning technologies. Currently, the market volume for boron is USD 5 billion per year. Due to the increasing scarcity, the European Commission included borates (salts and esters of boric acid) in the list of critical raw materials as early as 2014.
Bormarkt is currently almost a duopoly
The rapidly increasing demand for boron is already faced with a limited supply. In fact, the Bormarkt is currently a duopoly. Around 73% of the world's known boron reserves are in Turkey. Production, operation and marketing in Turkey are carried out by the state-owned company Eti Maden. According to Crdit Suisse, Eti Maden covered around 56% of global boron demand in 2019.
The second player is Rio Tinto, one of the world's largest mining companies. Rio Tinto, with its production in the Mojave Desert in California, accounts for another 30% of the global demand for refined borates and produces about 90% of the US supply.
In addition to the two big players, there are also some smaller producers, mainly in South America, who mostly mine low-quality boron as a by-product of lithium production. Because only a few providers dominate the market, the margins achieved are all the more attractive.
According to statements by the management of Erin Ventures, it is known that the profit margin of Rio Tinto in California was already 34% in 2015, and that of Eti Maden in Turkey was even estimated at 44%. Since then, however, the price of boron has risen significantly and Eti Maden's profit has exploded to around USD 500 million within almost two decades, which means almost a thirty-fold increase. This development had already started before climate neutrality was a big issue. According to Rio Tinto, too, boron demand will exceed supply in the medium term, despite new production facilities. The market is literally crying out for new projects.
Piskanja – The project for Europe
At least since the start of the Ukraine conflict, the European Union has had an interest in not making itself dependent on a single supplier to cover its raw material requirements. However, as of today, boron is imported to Europe almost exclusively from Turkey. Therefore, there are strong efforts to minimize the risk in terms of security of supply and to develop alternative, if possible local, sources of supply.
In 2010, the Canadian company Erin Ventures received an exploration license for the approximately 306-hectare Piskanja project in Serbia. This former coal mine is located in the tectonic belt of the Vardar Zone, which stretches from northern Croatia to Turkey and is considered a lithium borate district. The world market leader Eti Maden is active in this belt on the Turkish side.
Location of the Piskanja Project in the Vardar Belt, Source: Erin Ventures Inc., MMG Capital
Although the Piskanja project, located around 17 km from the Kosovar border, is not yet in production, it is by far the most advanced of all current exploration projects. The project also offers some tangible advantages over competitors. The Republic of Serbia is already on the way to EU membership. The government has also announced its goal of increasing the mining industry's contribution to gross domestic product from currently around 2% to 10%.
In addition, the infrastructure around Piskanja, which borders on the 3,000-inhabitant town of Baljevac, is first class. In addition to roads that can be used all year round, power lines and a mobile phone network, there is a railway line about 200m from the deposit that is connected to several seaports. The region is also a traditional mining area. Coal was mined here for centuries. A boron production facility brings work back to the region and is gratefully accepted by the population. In addition, no massive interventions in nature are to be expected from underground mining.
Location of the Piskanja Project in an established mining region, Source: Erin Ventures Inc.
The management of Erin Ventures around CEO Tim Daniels expects production to start by the end of 2025. In July of last year, Erin concluded a joint venture agreement with the Canadian company Temas Resources, according to which the joint venture partner will have a 50% stake to Piskanja, provided that the necessary development costs of EUR 10.5 million for the project are raised and 250,000 shares and warrants are paid to Erin. With this agreement, Erin manages to keep the dilution of the existing shareholders at a remarkably low level. Smaller equity rounds to strengthen working capital remain within the realm of possibility. Overall, the construction of the mine is to be managed with a share of around 75% outside capital.
The first Preliminary Economic Assessment (PEA) in accordance with Canadian NI 43-101 guidelines was completed in 2014 and was updated in June of this year.
Updated PEA shows unique boron levels and high economics
The updated PEA revealed the enormous potential of the project. The mineral resources at Piskanja are reported to be 7.2 million tonnes grading 34.6% B 2 O 3 (boron trioxide), placing the project among the highest grade boron deposits in the world. In a peer group comparison, the two producers Rio Tinto with 24% and Eti Maden with 26% show significantly lower levels on average.
Results of the PEA study
| NPV After Tax (10%) | $524.9 million |
| IRR after taxes | 78.7% |
| Initial investment costs (including 30% contingency buffer) | $79.9 million |
| Period for Capex repayment from commissioning | <12 months |
| Life-of-mine | 16 years |
| Gross Project Revenue | $2.02 billion |
| Project net cash flow (after tax) | $1.21 billion |
| Average annual gross receipts | $126.0 million |
| Average Annual EBITDA | $91.3 million |
| Net Operating Margin | 72.4% |
| After-Tax Profitability Index (NPV/Initial Investments) | 6.57x |
| Average annual production of colemanite | 258,272 tons |
| Average annual production of boric acid | 25,000 tons |
| Average salary (measured, displayed and derived) | 34.57% B2O3 |
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All values in US dollars unless otherwise noted.
Assumed prices colemanite (40% B2O3): 500 USD/t, boric acid (technical grade): 700 USD/t | |
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Source: Erin Ventures Inc.
In addition, the calcium borate colemanite was mainly identified as a mineral. The estimate assumes annual production of approximately 260,000 tonnes per year of salable colemanite and 25,000 tonnes per year of boric acid. These substances are much more universally applicable than the sodium borohydride produced by Rio Tinto mainly in North America, which cannot be used for hardening. Eti Maden also mainly produces colemanite in Turkey, but has one major disadvantage: the colemanite produced in Turkey contains a high proportion of toxic arsenic, which has to be laboriously extracted before further processing and leads to high additional costs.
According to the PEA, the Piskanja project has an after-tax Net Present Value (NPV) of $524.9 million at a discount rate of 10%. The internal rate of return (IRR) shows an extremely high rate of return and amounts to 78.7% after taxes (comparable projects: max. 30% to 40%).
Drill core from assays for the Piskanja project Source: Erin Ventures Inc.
The initial capital cost for the 16 year mine life is estimated at just $79.9 million including a 30% safety margin (typically for comparable projects this margin is between 10% and 20%). The production costs (all-in-sustaining costs, AISC) for the colemanite are thus 155 USD per tonne. Applied to the current market prices, which are currently at least USD 500 per ton, this results in a fantastic net margin of 69%. Since the PEA assumes a mixed calculation with the more expensive boric acid, the net margin is even slightly higher at 72.4%.
Analysts give thumbs up
The analyst firm MMG Capital recently carried out a sum-of-the-parts valuation of Piskanja and thus also of Erin Ventures based on the updated PEA. Half of Piskanja's NPV, equal to US$262 million or CAD$338 million, is attributable to Erin Ventures following the entry of Temas Resources. To account for country and project risk, the responsible analyst, Nick Hatch, decided to discount this figure by a further 50%. This discount was deliberately chosen to reflect the recent lack of new mine development in Serbia, which could be seen as an indicator of administrative problems. In addition, the challenges Rio Tinto recently faced at its Serbian lithium-boron project Jadar,
However, it is important to emphasize that Piskanja and Jadar differ in important respects. While Jadar is a gigantic lithium-boron project which, through open-pit mining on 626 hectares of prime farmland and pasture land, is likely to cause an undeniably large and also lasting environmental impact, the Piskanja project is one former coal mine. Here boron is mined underground, the impact on the environment is likely to be minimal. In addition, the local population, where unemployment is currently high, is very open to the project. A major headwind from the ranks of environmentalists is therefore not to be expected.
MMG Capital's further evaluation of Erin Ventures also included Erin's 50% interest in the cost of capital less the additional €10.5 million contribution from Temas, added net cash and final operating and exploration costs deducted three years. This works out to be a value of CAD 122.3 million for Erin Ventures. or $0.79 per share, a tenfold increase from the current share price of $0.08. Incidentally, the value of a mining license for an area of almost 21km² in the Jarandol Basin west of Piskanja was not taken into account here and can be seen as a possible upside.
Investment highlights
| Only publicly traded pure boron explorer |
| Boron is a scarce mineral with increasing demand and use |
| High profitability of the project (IRR: 78.7%, net margin: 69%) |
| Massive undervaluation (MMG Capital price target: 0.79 CAD) |
| Strong financing partner with Temas Resources |
| So far, no comparable projects exist in Europe |
| Highest boron content with over 34% boron trioxide (B2O3) worldwide |
| Versatile Calcium Boron available on the project |
| First-class infrastructure and open-minded administration |
| Attractive acquisition target |
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Source: Erin Ventures Inc., MMG Capital
Ambitious goals, high potential
Following the extremely successful results of the economic assessment, management plans to conduct a bankable feasibility study in the first quarter of 2023 and complete a multi-stage approval process in order to be able to start production at the end of 2025 at 250,000 tons pa. The design of the mine and processing plants and the preparation of an environmental impact study are also planned for the end of next year.
In order to make Erin Ventures visible on the stock exchange as a pure boron project, management is planning a name change.
Overall, an investment in Erin Ventures offers a very attractive risk/reward ratio due to the updated PEA and the favorable framework conditions. The element boron is one of the most important raw materials for both climate change and the agricultural industry. Politicians are therefore likely to support projects in Europe, such as Erin Ventures' Piskanja project in Serbia, in order to minimize dependencies on corporations outside the continent.
The analysts at MMG Capital see a tenbagger candidate at the current level in a long-term growth market. In addition, if the feasibility stage continues to develop positively, the promising project could be taken over by a larger mining group before production begins.