Baja Mining Corp. reported its 70% owned project company, Minera y Metalurgica del Boleo S.A. de C.V. (MMB), has received all necessary credit approvals from the Export-Import Bank of the United States and Korea Development Bank to provide $573 million in project financing for the construction of the Boleo project in Mexico.
Located near Santa Rosalia, Baja California Sur, Mexico, the Boleo project is targeted for copper commissioning in 2012. A Korean syndicate of industrial companies holds the remaining 30% ownership interest, and Baja is the project operator. Boleo has a copper/cobalt/zinc/manganese resource consisting of 265 million mt of measured and indicated resources (including approximately 85 million mt of proven and probable reserves) and approximately 160 million mt of inferred resources.
Baja said it was continuing to work on obtaining credit approvals from Export Development Canada—which also is serving as technical agent for the facilities—and a group of commercial banks for $150 million and $100 million in loans to cover senior project and cost-overrun debt facilities. When combined with the Exim Bank and KDB funding, the company said the total of $823 million represents the entire amount of debt financing needed for Boleo.
The company said drawdown of the project financing will be subject to the receipt of EDC and commercial bank credit approvals, as well as a number of standard conditions, including completion of satisfactory legal documentation, implementation of a hedging program and expenditure by Baja and its Korean partners of their required equity contributions.
Under the agreements, MMB will be required to enter into offtake agreements for at least 70% of copper and cobalt production for the first 10 years of production and to hedge 50% of copper production for the initial three years of production.
According to an updated technical report issued in March, Baja envisages a 23-year life of mine plan using mainly underground mining methods supplemented with ore mined from surface operations. Approximately 95% of the ore processed over the life of mine will come from underground production. The report indicated that room-and-pillar mining using continuous miners is the most appropriate approach for underground extraction, as it requires relatively low capital cost and can accommodate variations in mining height and other local conditions. Room-and-pillar mining, according to the report, also can achieve relatively high productivity and panels can be laid out in such a way that the mineral recovery from relatively small, fault-bounded mining blocks can be maximized.