After completing a definitive feasibility study in 2007, Baja Mining (BAJ-T, BAJFF-O) has just released an updated capital cost estimate and economic model for its Boleo base metal deposit on the east coast of Mexico’s Baja California Sur, near the town of Santa Rosalia.
Baja owns 70% of the copper-cobalt- zinc-manganese deposit, which the most recent figures indicate would be economic with a minimum mine life of 23 years.
A South Korean consortium owns the remaining 30% intrest in Boleo.
On a 100%-equity basis, Boleo should yield an after-tax internal rate of return of 25.6%. The project’s net present value is US$1.31 billion at an 8% discount rate and an average life of mine cash cost of negative US29¢ per lb. copper, net of by-product credits, Baja Mining says.
The Vancouver-based junior estimates the project’s remaining capital costs stand at about US$889 million, including a $92.3-million contingency.
During its first six years, average annual production should be 56,697 tonnes of copper cathode; 1,708 tonnes of cobalt cathode; and 25,364 tonnes of zinc sulphate monohydrate.
Boleo has a measured and indicated resource of 265 million tonnes grading 0.76% copper, 0.06% cobalt, 0.64% zinc and 3.23% manganese (1.5% copper equivalent). There is an additional inferred resource of 169 million tonnes of 0.47% copper, 0.04% cobalt, 0.7% zinc and 2.93% manganese (1.15% copper equivalent).
Baja’s management says the up-to- date capital and operating cost estimates clear the way for wrapping up financing and restarting construction of the mine and processing facility.
The processing plant is scheduled to be online for the second half of 2012, based on funding the project during the first half of 2010.
The project is to be developed as a series of underground mines using conventional soft-rock mining methods, coupled with several small open-pit mines feeding ore to a processing plant.
Both surface and underground mining operations have been designed to extract ore for the first 23 years at a full mining rate exceeding 3.1 million tonnes per year. About 67 million tonnes will be mined from underground operations and three million tonnes from open pits.
The process plant has been designed to treat 3.1 million tonnes a year at maximum head grades of 2.2% copper, 0.1% cobalt and 0.67% zinc through an integrated hydrometallurgical facility to produce LME Grade ‘A’ copper cathode; high purity (greater than 99.8% cobalt) cobalt cathode; and zinc sulphate monohydrate.
Boleo contains seven mineralized seams stacked within a single formation, all dipping to the east towards the Sea of Cortez in a step-like fashion, due to post-depositional faulting.
The deposit lies within the so-called “buffer zone” of the El Vizcaino Biosphere, a Mexican National environmental reserve. Mexican authorities have approved the company’s Environmental Impact Manifest, and Baja Mining has received authorization to start developing the project.
Boleo plans to further study the manganese content in the deposit in an effort to assess its potential contribution. Manganese could be recovered in the form of manganese carbonate.
The market for manganese carbonate is limited but the company says the material can be further processed into electrolytic manganese metal and manganese sulphate monohydrate.
In Toronto, Baja Mining is trading at 84¢ per share within a 52-week band of 17.5¢-97¢ per share. It has 143.4 million shares outstanding.
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