TORONTO (miningweekly.com) – Toronto-listed project developer Baja Mining on Tuesday announced that it had negotiated a second standstill agreement with its creditors.
This was in line with the requirements of a consortium of Korean companies that had extended a $90-million lifeline to the embattled firm in July, to consider offering a second tranche of funding, whereby the consortium would take control of Baja subsidiary Minera y Metalurgica del Boleo (MMB), which is developing the Boleo copper/cobalt/zinc project.
In April, Baja said spending at the 70%-owned Boleo project was expected to be $246-million more than the $1.14-billion estimated in 2010, and the company had subsequently run out of funds to sustain development activities.
The new standstill agreement extended the first 45-day agreement, which was concluded in June and expired on August 1, by another 45 days.
The new agreement required an immediate advance of $11.2-million to MMB by the Korean consortium, which held the other 30% interest in MMB.
For the standstill agreement to remain in effect and, as part of the first phase of the financing agreement with Baja, the Korean consortium would need to advance another $18-million by August 9, and $60.8-million more by August 20.
The agreement would also terminate if members of the consortium decided not to make any further investment in the project and consequently not to proceed to Stage 2 financing.
Other requirements keeping the standstill agreement from lapsing required the consortium to acquire an additional 21% interest in MMB (for a total 51% interest) and control of MMB's board by no later than August 20.
The new standstill agreement included an option to extend the standstill if required.