After months in the works, Baja Mining said Wednesday that its 70% owned project company, Minera y Metalurgica del Boleo (MMB), has signed US$858
million of financing facilities for the construction and development of the Boleo project in Baja California Sur, Mexico.
The funds comprise of US$823 million of project financing facilities and a US$35 million equity cost overrun support facility.
“The closing of these facilities is a testament to the compelling economics of the project and to the strong effort of our team. It also means
full-scale construction activities at Boleo can commence imminently,” said president and CEO John Greenslade.
The Boleo project has a copper/cobalt/zinc/manganese resource consisting of 265 million tonnes of measured and indicated resources (including
approximately 85 million tonnes of proven and probable reserves) and approximately 160 million tonnes of inferred resources.
The $823 million in debt facilities, which represents all the debt needed to develop the property, will be provided by a group of lenders led by the
Export-Import Bank of the United States providing US$419 million, and includes Export Development Canada, the Korea Development Bank and a group of
commercial banks including Barclays Capital, Standard Bank, Standard Chartered Bank, UniCredit Bank and WestLB.
The US$35 million equity cost overrun will be provided by commodity merchant Louis Dreyfus Commodities in the form of a Letter of Credit, which, if
drawn, will be converted into common shares of Baja at the an agreed price. The funds will satisfy Baja's equity cost overrun requirement for the
project finance package.
Drawdown of the debt is subject to a number of conditions, including the establishment of a hedging program and Baja and its Korean partners paying
their required equity contributions.
Another condition of the debt funding is Baja settling its offtake agreement with Louis Dreyfus, under which Louis Dreyfus is committed to purchase on
commercial terms, 70% of the annual copper and cobalt production from the Boleo project for the first 10 years of production.
MMB has already finalized the terms of the agreements, it said.
Vancouver-based Baja Mining has a 70% interest in the Boleo copper-cobalt-zinc-manganese project located near Santa Rosalia, Baja California Sur,
targeted for copper commissioning in 2012. A Korean syndicate of industrial companies holds the remaining 30% of the project, with Baja being the
project operator.
A January 2010 NI 43-101 compliant updated technical report confirmed that Boleo can be developed at an after-tax IRR of 25.6% based on 100% equity.
The project, which has a minimum scheduled mine life of 25 years, has an NPV of US$1.306 billion, using an eight percent discount rate, and an average
life-of-mine cash cost of negative $0.29/lb for copper.
The company was up more than 3% to $1.00 as of 2:32pm ET on Wednesday.bajario - 10-3-2010 at 08:54 AM
Shares have shot from .80 to almost $1.20 in two or so weeks. Volume has risen steadily also.I wish I bought more when they were near .10 during the
market crash. Maybe this thing will let me buy a dream home in Loreto and retire by 40.Baja&Back - 10-3-2010 at 09:34 AM
Hooray for Santa Rosalia! Hope they can get someone to clean up that pigsty. SR has no civic pride. Could be a charming place.
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 12/20/10 -- Baja Mining Corp. ("Baja") (TSX: BAJ) (OTCQX: BAJFF) is pleased to announce that its 70%
owned project company, Minera y Metalurgica del Boleo S.A. de C.V. ("MMB") has completed a zero cost collar copper hedge program. This completed one
of the main outstanding conditions precedent relating to MMB's US$ 823 million debt financing.
MMB purchased put options with a strike price of US$ 5,291/tonne (US$ 2.40/lb) and sold call options with an average strike price of US$ 8,760/tonne
(US$ 3.97/lb) for 50% of the estimated copper production for the three year period of January 2014 to December 2016, inclusive, totalling 87,360
tonnes of copper. This program did not require any upfront outlay of cash for MMB.
These contracts are financially settled, monthly, based upon the London Metal Exchange monthly average copper cash price ("Copper Price") at the time
of copper sales from Boleo. The effect for revenues from copper sales will be as follows:
- If the Copper Price is less than or equal to US$ 5,291/tonne (US$ 2.40/lb): MMB will receive the put strike price. This establishes a price floor
at US$5,291/ tonne (US$ 2.40/lb), in accordance with the project financial model.
- If the Copper Price is between US$ 5,291/tonne (US$ 2.40/lb) and US$ 8,760/tonne (US$ 3.97/lb): MMB will receive the actual copper spot price.
- If the Copper Price is greater than or equal to US$ 8,760/tonne (US$ 3.97/lb): MMB will receive the call strike price.
The remainder of Boleo's copper production over its anticipated 23 year mine life will be sold at spot copper prices. Boleo's cobalt and zinc sulphate
production will also be sold at prevailing market prices.
The implementation of the hedge program was one of the final conditions precedent required under the loan facilities. MMB hopes to satisfy the
remaining conditions and to fix the interest rate of the loan provided by Export-Import Bank of the United States ("US EXIM") early in 2011. The US
EXIM loan totals US$ 419.6 million with a 14 year term, and is a part of the US$ 823 million debt financing that closed on September 28, 2010.
The hedge program was arranged with Barclays Capital (the investment banking division of Barclays Bank PLC), Standard Bank Plc, Standard Chartered
Bank, UniCredit Bank AG and WestLB AG.
John Greenslade said, "We are pleased to have concluded the copper hedge program at a time of historic highs in the copper market. The structure of
the program satisfies the requirement of the bank group, whilst preserving significant copper price upside for Baja's shareholders."DENNIS - 12-22-2010 at 11:49 AM
Quote:
Originally posted by Baja&Back
Hooray for Santa Rosalia! Hope they can get someone to clean up that pigsty. SR has no civic pride. Could be a charming place.
It could be a Gay Pride project.....then, they can have a parade or an "Ask 'n Tell" fiesta..............or something, whatever they do best.Bajahowodd - 12-22-2010 at 04:26 PM
Quote:
Originally posted by Baja&Back
Hooray for Santa Rosalia! Hope they can get someone to clean up that pigsty. SR has no civic pride. Could be a charming place.
Have you never turned off Highway One and gone into town? It is quite amazing and unique. I will agree with you that the old mining stuff on the main
road, is off-putting, especially when approaching from the North. But, I have to believe that the industrial stuff to which we are referring is not
going anywhere, given a resurgence in mining activity,
That said, you need to spend some time in the lovely town that only requires a right turn off the main highway. Pigsty can only refer to the old
industrial stuff North of town.
Good for the folks there that there is going to be a resurgence in the mining operation, bringing more jobs and revenue to them.BajaNomad - 12-22-2010 at 04:37 PM
Quote:
Originally posted by Bajahowodd
I have to believe that the industrial stuff to which we are referring is not going anywhere, given a resurgence in mining activity,
Thanks, Doug. Just don't know if industrial can be all that pretty. My post was specifically triggered by the term "pigsty". Just thought it was a
little too harsh, especially given the beautiful town within.Pescador - 12-23-2010 at 09:36 AM
Quote:
Originally posted by Baja&Back
Hooray for Santa Rosalia! Hope they can get someone to clean up that pigsty. SR has no civic pride. Could be a charming place.
Obviously you have no experience on which to base your Civic Pride issue and for those of us who are involved in the civic issues like hospital,
schools, architecture, Rotary International, and the like, we know that there is a great deal of Civic Pride and responsibility in the Santa Rosalia
area.
Just like you should never judge a book by it's cover, you are observing only what you want to see and if you were to look past the industrial
waste areas (which were pretty much left by the French) you would certainly discover a real "Gem" of Mexico. While I take some offense with your
"Pigsty" comment, I must on one level, agree with your assesment, because that is the very reason I chose to move to the area for retirement in the
first place. I knew that the areas like Cabo and Loreto would be the ones that would fall under the "spell of the developers" and that places like
Santa Rosalia would be the last to succumb to the allure of the tourist dollars. This is one of the last towns where one can truly visit in the
evening and be one of the only "tourists" on the street in the evening and not surrounded by a bunch of noisy and hyperactive tourist types trying to
cram 3 days of vacation into a good time.
So the old adage of walking a mile in another's moccasins really applies here and you might be well advised to be a little less critical of things
that you really do not understand.mulegemichael - 12-23-2010 at 10:24 AM
anyone have any idea how many people are going to be employed?....should really be a shot in the arm for the local economy...Pescador - 12-23-2010 at 02:44 PM
Quote:
Originally posted by mulegemichael
anyone have any idea how many people are going to be employed?....should really be a shot in the arm for the local economy...
Projections are up to 2,000 people. It has already had a major impact as people who were doing OK at other jobs have pretty much left and gone over
to Boleo. As long as they function well and do the right things, it should be a long term situation. If you look at Guerrero Negro, you get some
kind of idea about what happens with lifestyle when people get regular paychecks and employment. Office and store space is at a premium right now
and prices are reflecting an upward trend. Great that this happened before Christmas as several of the stores I talked to are ecstatic about
business, which was way down due to the total lack of squid this year. So yes, this will probably have a very positive effect on the town and its
peoples. Pretty good example of "trickle down economics".
