I was introduced to this company in
late 2013 and asked, “What is
Boron?” These are the times to invest
in a company when not many people
are aware of the commodity. I
remember working with a
Molybdenum company in 2004 and
helped to educate investors on Moly.
As more and more people became
aware of Moly, the popularity and
price of the mineral starting taking off.
A molybdenum fund was even
created. Boron could be on the same
track!
After meeting President Tim Daniels, I
was reassured that he is a great
person to lead the company. With 18
years of experience in mining and
another 8 in corporate ?nance before
that, Tim understands what is required
to take a project from early stage
exploration to a going concern
producing mine.
Boron Uses
It is used in hundreds of products and
touches the lives of everyone. Borate
minerals are used extensively
worldwide in the manufacture of over
500 products including: ?berglass
insulation, textile ?berglass,
borosilicate glass (LCD screens),
ceramic glazes and porcelain enamels
(over 60% of borate consumption).
Detergents, ?re retardants, metallurgy,
agriculture, insecticides, wood
preservatives and many specialty
products account for most of the
remainder of consumption.
Boron Supply and Demand
Economic borate occurrences are
very rare, 2 regions are currently
supplying 70% of world production
today (Rio Tinto’s US Borax in
California and EtiBor in Turkey-the
world’s leading producer).
Charts show that demand is growing
tremendously while suppliers are
operating near full capacity, which
means the mineral price should
continue to climb upwards.
“We don’t’ have any boron to sell for
at least the next three years” said
Taner Yildiz, Turkish Energy & Natural
Resources Minister in a recent
interview. Noting that Turkey
increased its capacity ?ve times in the
last 7-8 years. Yildiz stated that all the
boron for the next three years has
already been sold.
Source: Asia Ceramics
erinventures.com
boron_blue.jpg
The Price of Boron
US$630-730/t for colemanite (40%
B2O3); and US$620-900/t for boric
acid. (Industrial Minerals – March
2014)
“A very healthy demand is likely to
create a tightening supply by the
middle of 2013. Prices have been
inching northward, are expected to
shoot by another 40-45% by
2014-15” (Asia Ceramics—Feb, 2012)
The Story
Erin holds the rights to the Piskanja
Boron Project in Serbia. Within three
years they could be in production. The
43-101 indicated a resource that could
allow for 30+ years of production at a
market penetration of 200,000 tons/
year which translates to current priced
revenues around $100,000,000+/
year. With production cost estimated
around $100/ton, the company’s net
revenues could be between $70-
$80,000,000/year. Even though there
are approximately 230,000,000
shares out, the future cash/share
would be about $.30 per share. At a
conservative 10x cash ratio on the
future earnings, the stock should be
trading around $3/share. The current
market cap is a mere $13,000,000.
The next logical step prior to a
feasibility study would be the release
of a PEA, whereby a third party
would attribute a value to the
company and help substantiate the
numbers. The company has taken
this step as on March 19th the
company announced they have
contracted SRK Consulting Limited to
prepare a preliminary economic
assessment:
erinventures.com
nws_d.php?id=104
We are anticipating that it’ll show that
the property holds upwards of $3.5
billion worth of Boron, an
astronomical amount for a junior
resource company. A lot of investors
may wait until the report is completed
before buying the stock which is
understandable. If the study proves
to indicate the resources expected,
the stock should shoot up rapidly.
These projections are based on
Erin’s NI43-101 compliant technical
report, data found in the public
domain, combined with my own
interpretation based on knowledge
and experience. Please conduct your
own due diligence.
The Price/Book ratio is at the lowest
it has ever been in 4 years, the
current Price/Book ratio is around
1.89. It is a ratio used to compare a
stock's market value to its book
value. It is calculated by dividing the
current closing price of the stock by
the latest quarter's book value per
share. A lower price per book ratio
generally indicates that the company
is undervalued. It can be argued that
the actual price/book ratio is even
smaller as Erin voluntarily took a $4.9
million write down on the Piskanja
property previously.
Why is then the stock trading SO
low? Exposure is needed! Erin has a
tremendous story but has waited for
the recently released 43-101
compliant Technical Report and
Mineral Resource Estimate to start
marketing themselves to the public.
Additionally, specialty minerals (such
as boron) have a steeper learning
curve for the investing public,
requiring more time for people to
grasp the signi?cance of the project.
Not to mention, small cap stocks tend
to be less well known to the general
public, which results in less people
capitalizing on the opportunities
present.
Well it is my job to unearth quality
companies that are extremely
undervalued for my dedicated
readers. The company is working
diligently on this property and the
word is releasing on how great a
company Erin Ventures is. I’m
optimistic that this company will do
quite well.
I have not created a SWOT analysis
for any company I have covered thus
far but I believe Erin deserves one.
Strengths
There are many reasons why Erin
stands tall. They boast a great
experienced management team that
is fully focused on putting this project
into production.
Boron is a mineral that is in great
demand and tightly supplied by the
Turkish government and Rio Tinto.
Boron is the most valuable industrial
mineral in the world with the price
doubling in the last 3 years, an
upward trend that is expected to
continue. Erin owns 100% of the
property with an exclusive
exploration license covering 35
square kilometers.
Certain competitive advantages
include: large ore deposit; high
quality, arsenic free grade ore; great
proximity to markets and strong
relationships with industry leaders.
The mining costs are expected to be
low equaling about 20% and the
property is well located for shipping
the ore to destinations by road, rail
and ship.
Weaknesses
The company needs $50,000,000 or
so to put the mine into production. A
PEA would outline it further but it is in
the ballpark. The management team
agrees that the way to fund it is not
through further major share equity
but rather thru less dilutive methods
which may include a strategic
alliance with a major partner, royalty
sale, pre-sale of material, and debt.
Opportunities
Here is where the blue sky potential
begins. Erin controls 35 square
kilometers of land where the property
sits. The mineable property is less
than 3 square miles. Rio Tinto
conducted work around the Piskanja
Boron Property and found grades
comparable to the high grades of
Boron at the property. With another
30+ kilometers of property that could
hold many hundreds of millions of
dollars of Boron, the blue sky for Erin
is vast.
-Extremely valuable industrial mineral
with growing uses and demand
-Excellent potential to expand
resource size
-Potential for additional deposits in
remainder of the basin
-Good mining infrastructure in place
-Very small market capitalization
(<16m)
-Potential for $100,000,000+ per year
revenue
-Potential 30+ year mine life
From what management has told me
over my two day meeting with them,
there are about 7 suitors waiting to
work with Erin, several letters of
intent have been announced, but
only one entity has actually been
named at this time and that is SCL.
According to:
scl-us.com
pro?le_sc_4.html
Società Chimica Larderello (SCL) is
an Italian chemical company that has
worked in the boron business for 2
centuries. SCL is the only European
producer in this business and works
in a market which is widespread
regarding product application in the
nuclear, electronic, chemical,
pharmaceutical sectors SCL sells
worldwide distributing in more than
50 countries.
In my opinion SCL would be a fantastic partner and from
what I understand, the other strategic partners also have
major clout and deep pockets. So Erin is sitting in a very
advantageous position.
Threats
Some would say working in Serbia is a threat, I currently
don’t see it that way. In a Reuter’s interview, Serbia's
minister for mines, Milan Bacevic, says 300 companies
are now registered for mining and exploration. Many are
small ?rms attracted by the security and infrastructure as
well as the relatively new political stability. "There are
small and medium companies that are recognizing Serbia
as one of the most interesting places in Europe," he told
Reuters. "These investments may be small and medium,
but they are big for us." Reuters.com
Erin faces two major competitors, Rio Tinto and the
Turkish government. Both combined produce about 70%
of the world’s Boron. Erin does not have any expected
challenges selling their Boron as their production would
be <5% market penetration |
