July 2, 2008
TSX:BAJ
PRESS
RELEASE
BAJA
MINING CLOSES SALE OF 30% OF BOLEO PROJECT TO KOREAN CONSORTIUM FOR US$294
MILLION CASH AND PROJECT FUNDING , AND INCREASES SENIOR DEBT FINANCING TO
US$665 MILLION
Baja
Mining Corp. (the ?Company? or ?Baja?) is pleased to announce that on the 30th
of June it completed the transaction (the ?Transaction?, as described in its
press releases of April 17, 2008 and June 3, 2008) with a consortium of Korean
companies (the ?Consortium?) led by Korea Resources Corporation (?Kores?).
Baja is
pleased to welcome its new development partners and Consortium members: Kores,
LS-Nikko Copper Inc., Hyundai Hysco Co. Ltd., , SK Networks Co. Ltd.
and Iljin Copper Foil Co. Ltd.
The Consortium has acquired a 30% interest in Baja?s Mexican subsidiary,
Minera y Metalurgica del Boleo S.A. de C.V. (?MMB?) which is currently
constructing a mining and milling facility in Santa Rosalia, Mexico (?Boleo? or
the ?Project?). In consideration for the acquisition of its interest, the
Korean Consortium is:
?
paying to Baja approximately
US$103 million in cash, of which US$13 million will be deferred until a
decision is made relating to the production of manganese at Boleo;
?
providing a US$50
million shareholder loan to MMB to fund part of Baja?s construction commitment
for Boleo;
?
procuring a US$60
million subordinated loan to MMB;
?
contributing its 30%
share (estimated by Baja to be approximately US$81 million) of the
remaining construction costs for Boleo after senior and subordinated debt financing;
?
providing its share of
Completion Guarantees in respect of an increased Senior Debt Financing of
US$665 million;
?
acquiring a right to
offtake 30% of the Boleo production on commercial terms.
MMB has
also received underwriting commitments from Bayerische Hypo-und Vereinsbank AG
a member of UniCredit Group (?HVB?), and the Export Import Bank of Korea
(?K-Exim?) to jointly underwrite and arrange a US$665 million senior debt
package, consisting of a 17 year US$300 million project debt facility to be
provided by K-Exim and a 12 year US$325 million project debt facility together
with a US$40 million cost overrun facility to be provided by HVB. The senior
debt package commitments have received all necessary credit approvals and are
subject only to finalization of due diligence and other standard terms and
conditions. These facilities replace the previous underwritten commitment for
US$475 million received from HVB in September 2007.
With the completion of the
Transaction, Baja has secured sufficient cash and other funding to meet its
share of the construction costs into the fourth quarter of 2008. In addition,
Baja is well advanced in discussions with offtake counterparties to provide
additional financing and thereby further minimise dilution to shareholders.
John Greenslade, President and CEO commented:
?Baja welcomes its new
partners, representing some of Korea?s largest companies and the Korean
Government, and looks forward to continuing construction and operation of
Boleo. The completion of the Transaction, together with receipt of the
underwriting commitments from HVB and K-Exim, represents a significant
milestone in the development of Boleo, confirming the Project?s robust
economics and leaving Baja well funded to continue development of the Project.
Baja has retained 70% ownership and control of Boleo, and has attracted a
consortium of financially and technically strong partners, all with minimal
dilution to existing shareholders.
It is a testament to the
quality of the project team assembled by Baja that we have been able to fund
this Project while maintaining control and 70% ownership.To the best of my
knowledge, the size and scope of this Transaction is unprecendented for a
company of this size.
We continue to work closely
with our financial adviser, Endeavour Financial International Corporation, to
finalise additional offtake funding and to close the final legal documentation
in regard to the debt facilities.
Baja is
constructing the Boleo copper-cobalt-zinc-manganese project at Santa Rosalia,
Baja California Sur, Mexico. Boleo?s targeted date for commissioning is the
first quarter of 2010. The average annual production for the first four years
at full operating capacity is scheduled to be 56,000 tonnes of copper cathode,
1,500 tonnes of cobalt cathode and 20,000 tonnes of zinc sulphate. Erection of
the construction camp and civil earthworks continues on site, with foundation
work and plant site construction scheduled to begin in the third quarter of
2008. Receipt of these funds from its new partners will allow Baja to continue
construction on schedule and accelerate the pace of procurement and
mobilization of contractors.
ON
BEHALF OF THE BOARD OF DIRECTORS OF
BAJA MINING CORP.
?John W. Greenslade?
JOHN W. GREENSLADE, PRESIDENT
For further information please contact John Greenslade,
President, at (604) 685-2323
Some of the
statements contained in this release are forward-looking statements, such as
statements that describe the Company?s projected metal price expectations, the
need for additional capital, estimated start of construction of the process
plant and other such facilities, potential negotiation and finalization of
offtake agreements, estimated production numbers, estimated commissioning date
and other statements. Since forward-looking statements are not statements
of historical fact and address future events, conditions and expectations,
forward-looking statements by their nature inherently involve unknown risks,
uncertainties, assumptions and other factors well beyond the Company?s ability
to control or predict. Actual results and developments may differ
materially from those contemplated by such forward-looking statements. Material
factors that could cause actual revenues to differ materially from those
contained in such forwarding-looking statements include (i) fluctuations on the
prices of copper, cobalt, zinc and manganese, (ii) interpretation of contract
terms, (iii) accuracy of the Company?s and consultants? projections, (iv)
the Company?s ability to finance, receive permits for, obtain equipment,
construct and develop the El Boleo Project, (v) the effects of weather;
operating hazards; adverse geological conditions and global warming, (vi)
impact of availability of labor, materials and equipment; and (vii) changes in
governmental laws, regulations, economic conditions or shifts in political
attitudes or stability.
These forward-looking statements represent the Company?s views as of the
date of this release. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Readers should not
place undue reliance on any forward-looking statements.
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