An interim financing of $90m has been provided by a Korean consortium to Baja Mining subsidiary Minera y Metalurgica del Boleo (MMB) to advance its Boleo copper-cobalt-zinc project located in Baja California Sur, Mexico.
Baja Mining owns a 70% stake in the project, while the consortium that includes Korea Resources, LS-Nikko Copper, Hyundai Hysco, SK Networks and Iljin Materials owns the remaining 30% equity stake, acquired in July 2008.
The disbursement of the stage I financing is expected to take place around 30 August 2012 and is subject to the relevant approvals of consortium members and extension by MMB's lenders of the existing standstill period to 30 September 2012.
If $45m of the total $90m commitment will be provided by this date, it will see a reduction in Baja's interest in MMB from 70% to 49%.
The consortium may also elect to provide additional stage II funding to complete the Boleo project in which Baja can contribute up to $10m, to be raised through a non-backstopped rights, which will help it in retaining a 40% stake in MMB.
If Baja refrains from making a contribution to the stage II funding, its interest in MMB will be reduced from 49% to 10%. Baja must participate on a pro rata basis to contribute if the project costs exceed $443.3m, if it does not participate, its remaining 10% interest in MMB will be diluted at an accelerated rate.
In addition, Baja would be required to contribute approximately $341m to retain a maximum 40% interest in MMB if it fully exercises its stage II participation right.
An updated NI 43-101 compliant technical report will be prepared by SRK Consulting and will be filed in September 2012.