Baja Mining cashed up with US$515 million for El Boleo

Vancouver – A US$515 million financing means Baja Mining (BAJ-T) can start construction at its large El Boleo copper-cobalt-zinc project in Mexico.

A US$475 million term loan facility and a US$40 million cost overrun loan facility from Bayerische Hypo-und Vereinsbank, a member of the UniCredit Group, will go a long way towards financing El Boleo’s US$568.4 million in development and working capital costs.

Only a week earlier the company announced a US$10 million bridge loan facility with Endeavour Mining Capital to finance the purchase of long-lead order equipment for El Boleo.

Together the financings mean Baja Mining is ready to run with El Boleo, a fully permitted polymetallic project on tidewater on the east coast of the Baja Penninsula. In May the company completed a definitive feasibility study based on the results of two test mining programs and more than 38,000 metres of in-fill drilling on the historic site.

The feasibility study predicted average annual production of 55,750 tonnes copper, 1,535 tonnes cobalt, and 6,300 tonnes zinc over a 25-year mine life. Internal rate of return is pegged at 24.7%.

Open pit reserves are estimated to be 17.6 million tonnes grading 0.73% copper, 0.09% cobalt, 0.41% zinc, and 2.86% manganese. The underground reserve is 67.4 million tonnes of 1.49% copper, 0.07% cobalt, 0.59% zinc, and 2.92% manganese.

Baja Mining plans to use continuous mining machines in the underground operation. The proposed plant is hydrometallurgical, producing copper and cobalt as cathode metals as well a hydrous sulphate zinc compound.

The company is also considering annual production of some 100,000 tonnes of manganese contained in manganese carbonate.

The French pulled 14 million tonnes of ore grading 5% copper from El Boleo between 1884 and 1934. A number of production attempts over the next 50 years failed. In 1992 Mintec International’s Mexican subsidiary Minera y Metalugica del Boleo (MMB) staked the claims.

International Curator, the predecessor company to Canadian Gold Hunter (CGH-T), optioned the claims for a few years in the late 1990s, spending $23 million on exploration. In 2001 the claims reverted back to MMB, which Baja Mining took over in 2004.

In the three years since, Baja Mining has spent US$25 million on the property. In December 2006 the Mexican Federal Environmental Agency approved El Boleo’s environmental impact manifest, a milestone because the project is located within the buffer zone of the El Vizcaino biosphere, a protected area established to preserve the whale nursing habitat roughly 130 km north.

The company aims to be in production in 2009.