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Ioneer gaining traction with funds as it seeks to take on boron duopoly giants

Ioneer Ltd. is gaining traction in improving some institutional funds' previously poor knowledge of the boron market as it looks to take on the industrial mineral's duopoly dominated by Rio Tinto and Turkish group Eti Maden Isletmeleri Genel Müdürlügü.

One of the bigger moves by institutionals concerning ioneer by was Citigroup Global Markets Australia Pty. Ltd., which underwrote its placement in June 2018.

Ioneer's sales and marketing consultant, Michael Le Page, said on the sidelines of the Diggers & Dealers conference in Kalgoorlie, Australia, on Aug. 7 that the investment was primarily made on the lithium potential in the Rhyolite Ridge project in Nevada due to expectations of the future uptake of electric vehicles, which use lithium-ion batteries.

SNL Image

Ioneer Investor Relations Manager Roger Howe addresses
the Diggers & Dealers conference Aug. 6, 2019.
Source: Diggers & Dealers

However, ioneer's investor relations manager, Roger Howe, told delegates Aug. 6 that Rhyolite Ridge's boron content differentiates the project from other sedimentary lithium deposits and is one of only two known large lithium-boron deposits globally.

Rio Tinto's Boron project in California, which was the major's biggest cash flow earner before its West Australian iron ore business evolved, produces about 30% of global boron production, while Eti Maden accounts for about 50%.

That duopoly, and the opaque nature of the boron market like many industrial minerals such as lithium and graphite, means knowledge among retail and institutional investors is generally poor.

While Citigroup's investment has attracted other investors onto ioneer's shareholder register, Le Page told S&P Global Market Intelligence that ioneer's concerted efforts at educating institutional funds on the boron market are starting to bear fruit.

Le Page said that once ioneer explained its plans to produce boric acid first then lithium carbonate through a single leach solution, the funds saw that the boron would cover the operating costs of the business, thus putting its lithium operation at the low end of the cost curve.

Rhyolite Ridge is also in a strategically important location as the United States' only lithium production comes from Albemarle Corp.'s Silver Peak lithium brine operation in Nevada, Le Page said.

Howe highlighted Rhyolite Ridge's advantages over the only other undeveloped large-scale lithium-boron project, Rio Tinto's Jadar underground project in Serbia, which faces technical challenges and has been in the pre-feasibility stage for several years.

While Jadar will be much more expensive to operate and develop, Rhyolite Ridge has a 20-meter-thick, shallow dipping ore zone that outcrops over 3 kilometers, so will be a simple open pit operation.

Le Page, who spent nearly 20 years at Rio Tinto, particularly in industrial minerals, visited Jadar when he was with the mining major and said the Serbian project's definitive feasibility study could take up to two years, whereas ioneer's is due in the current quarter.

The key challenge ioneer faces in taking on Rio Tinto's dominant market share is "getting the quality right" of the material for end users, Le Page said.

He added that the world's major liquid display glass manufacturers, which are the world's top boron consumers, are all in South Korea, Japan, Taiwan and China and need suppliers that can provide "good quality and reliable products as Rio Tinto does ... that's what you need to compete with."

Ioneer expects Rhyolite Ridge to start producing lithium carbonate and boric acid by 2021.