Despite the downturn in base metals prices, Canadian-based Baja Mining Corp. has signed a letter of intent with Mexico's ICA Fluor to perform the engineering, procurement and construction management (EPCM) for the company's exciting Boleo copper-cobalt-zinc-manganese mining project located near Santa Rosalia, Baja California Sur, Mexico.
The project will be performed in two phases. Phase I consists of the development of an open book capital cost estimate and project construction schedule. The cost estimate will reflect current market conditions and be supported by the work performed to date (about 30% of engineering has been completed). The Phase I capital cost estimate will be subject to independent third party review, and is expected to be completed by the end of the third quarter of 2009.
Phase II will include the execution of engineering, procurement and construction management necessary to bring the project into production. The parties are currently negotiating an interim Memorandum of Understanding which will include the general terms and conditions of a reimbursable EPCM contract. Phase II will commence upon completion of construction financing.
The integrated Baja-ICA Fluor team will prove invaluable to Boleo's progress, says Baja President John Greenslade. With the combined knowledge and efforts of this team, the project will continue to be developed in a responsible, sustainable and economic manner ensuring that the best interests of all stakeholders and the community of Santa Rosalia continue to be served.
ICA Fluor is the leading industrial engineering and construction company in Mexico. The company specializes in engineering, procurement, maintenance and construction of industrial plants for the gas, oil, chemical, petrochemical, automotive, power, manufacturing, mining and telecommunication sectors. ICA Fluor is a joint venture of Empresas ICA and Fluor Corporation of the US - one of the world's top EPCM companies worldwide in its own right..
Baja (TSX:BAJ) has a 70% interest in the Boleo copper-cobalt-zinc-manganese project. A Korean syndicate holds the remaining 30% providing US$294 million in cash and project funding. Baja is the project operator. The target date for commissioning Boleo is 2011. A 2007 definitive feasibility study projected an average annual production for the first four years of 56,000 tonnes of copper cathode, 1,500 tonnes of cobalt cathode and 20,000 tonnes of zinc sulphate. The project has proven and probable reserves that support a mine life of more than 25 years. Anticipated cash costs in the first five years are US$0.27 per pound of copper, net of by-product credits for cobalt and zinc and with no credit for manganese.
Measured and Indicated resources: 277.2 million tonnes grading 1.77% copper equivalent . There is also an Inferred resource at Boleo of 253.2 million tonnes grading 1.29% copper equivalent.