Canada-based Baja Mining Corporation has entered into a binding letter of intent with commodities trader Louis Dreyfus Commodities to part-finance the Boleo mining project near Santa Rosalia, Mexico.
Baja, a 70% sponsor of the Boleo project, and Louis Dreyfus have agreed to three separate transactions, including a US$35mn letter of credit for the mining company’s equity cost overrun of the Boleo project.
The remaining 30% of the project, which has measured resources of 265 million tonnes of copper, cobalt, zinc and manganese, is sponsored by a Korean consortium.
Louis Dreyfus has also signed an off-take agreement to purchase 70% of the annual copper and cobalt production from the Boleo project for a term of 10 years from first production of each metal.
Finally, the trading company has agreed to subscribe for common shares of Baja, which will finance the mining company’s equity contribution to the Boleo project.
All three transactions are pending approval from documentation and Baja’s completion of due diligence.
This latest commitment to the Boleo project follows Baja gaining interest in a senior syndicated project debt financing of US$740mn, with Export Development Canada, Export-Import Bank of the United States and Korea Development Bank all currently undertaking due diligence to asses eligibility for financial backing.
Last Updated June 08, 2010
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