TORONTO (miningweekly.com) – Vancouver-based Baja Mining has received credit approvals from two key lenders providing finance to build its Boleo copper/cobalt/zinc mine, the firm said this week.

Credit approvals were received from the Export-Import Bank of the United States and Korea Development Bank to provide $573-million in senior and subordinated project financing for the project.

Baja said it continues to work on obtaining credit approvals from Export Development Canada (EDC) and a group of commercial banks for the remaining $150-million and $100 million of loans respectively, consisting of senior project and cost overrun debt facilities.

In total, once all approvals are in place, Baja will have the entire $823-million of the debt-financing requirements for the project, the company said.

Drawdown of the project financing will be subject to the receipt of EDC and commercial bank credit approvals, as well as a number of standard conditions precedent, including the completion of satisfactory legal documentation, the implementation of a hedging programme and expenditure by Baja and its Korean partners of their required equity contributions.

Under the facility documents, Baja's local subsidiary will be required to enter into offtake agreements for at least 70% of copper and cobalt production for the first ten years of production and to hedge 50% of copper production for the initial three years of production.

Baja agreed in April 2008 to sell a 30% stake in the Boleo project to a consortium led by Korean State-owned Korea Resources Corporation, to help fund the mine's development.

The average annual production for the first four years at full operating capacity is expected to be 56 000 t of copper cathode, 1 500 t of cobalt cathode and 20 000 t of zinc sulphate.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.