NEW YORK A consortium of South Korean investors has committed to provide full second-phase funding for Baja Mining Corp.s minority-owned copper-cobalt-manganese-zinc mining subsidiary Minera y Metalúrgica del Boleo (MMB), allowing the Boleo Mine project to continue, Vancouver, British Columbia-based Baja said Feb. 12.
According to the agreement, MMB will receive the total second-phase funding requirement of $443.4 million$259 million, or 58.4 percent, of which has already been paid.
The group of investors, led by Korea Resources Corp. (Kores), has now acquired a further 22.8-percent in MMB, reducing Bajas stake in the subsidiary from 49 percent to 26.2 percent. Once Baja has received all second-phase financing contributions, its stake in the flagship Boleo project will be reduced to 10 percent, Baja said, down from 70 percent a year ago.
"The company is hopeful that the fact of the phase-two funding commitment having been made will assist MMB" in achieving financial stability, Baja said in a statement.
News of the funding commitment follows a number of challenges for the cash-strapped miner, which said in 2012 it was facing overrun costs of around $440 million (amm.com, Oct. 25). The cost overruns have been attributed to underestimated construction costs during planning, contractor inefficiencies, increased labor costs and reappraised plans for a marine terminal, a source familiar with the company said.
The company has been coordinating funding for mounting project costs for months, reducing its equity interest in MMB with each financial investment.
"The choice on the other side of it is to go bankrupt, so obviously were very pleased to see that were going ahead," Tom Ogryzlo, Bajas interim chief executive officer, told AMM.