Korea Resources Corporation (KORES) will provide the phase two funding requirement to Minera y Metalúrgica del Boleo, SAPI de CV (MMB) on behalf of TSX-listed Baja Mining. MMB owns a 26.2% interest in the Boleo copper-cobalt-zinc-manganese project in Baja California Sur, Mexico. The project is under construction.
The total funding package is US$443.4 million and 58.4% has already been paid to date. A further 22.8% equity interest in MMB has been transferred to KORES, which has reduced Baja Mining’s equity interest to 26.2%.
Baja has also transferred to KORES $67,313,147 of its shareholder loans to MMB plus associated accrued interest in order to adjust the shareholder loans owed by MMB to Baja so they correspond with its proportionate equity interest in MMB. This condition was provided for under the July 2012 interim funding agreement.
The framework agreed between the parties provides for three further pro-rata transfers of equity and shareholder loans plus accrued interest to the KORES appointed entity upon contributions being made by KORES to MMB of US$60 million, US$60 million and US$64.4 million which will dilute Baja’s equity interest in MMB to 20.9%, 15.7% and 10%, respectively. No fixed schedule has been set out for the timing of the further funding contributions.
The remaining 2010 project financing lenders, which no longer include the Export-Import Bank of the United States, continue to temporarily forbear exercise of rights and remedies under the 2010 project financing pursuant to a third standstill agreement which expired last month.
MMB has informed Baja that it continues to actively engage the remaining 2010 project financing lenders in a renegotiation of the original project financing in an effort to normalize the loan facilities. The company’s interim chief executive officer Tom Ogryzlo says he is hopeful that the fact of the Phase 2 Funding Commitment having been made will assist MMB in these efforts.