TORONTO (miningweekly.com) – Local authorities are blocking access to the Boleo copper/cobalt/zinc mine, in Mexico’s Baja California Sur, after the municipality of Mulegé claimed that it was entitled to certain construction permit-related payments from 100%-owner Minera y Metalúrgica del Boleo (MMB).

TSX-V-listed miner Baja Mining, which owned a 10% stake in MMB, on Thursday reported that the partners believed that a legal appeal launched to resolve the matter still remained before the courts and, as a result, the municipality had acted without legal authority in imposing the restrictions.

The access restrictions came on the heels of MMB shipping it first consignment of 1 919 t of electrolytic copper cathodes to offtake partner Louis Dreyfus from its marine terminal at Boleo. The $2-billion mine reported first production in January.

Baja advised that its interim CEO Tom Ogryzlo, as well as the company’s VP of metallurgy and CFO, were planning a visit to Boleo in October, after site activities had normalised, to meet with the newly elected municipal president, who would take office later this month.

Baja stood to further dilute its interest in MMB, after MMB earlier this year issued a cash call to its shareholders for $63-million to cover interest payments on bonds and a loan, as well as for operating expenditures while the operation ramped up.

Baja was required to contribute $7.6-million by no later than June 16, on which it defaulted.

Talks were ongoing with significant MMB owner Korea Resources Corporation (Kores) on finalising a dilution formula, which would be applied to reduce Baja’s ownership in MMB by about 1% for each $100-million of cash calls made.

The Boleo project contained 265-million tons of measured and indicated resources, grading at 1.5% copper equivalent, with a further 159-million tons of inferred resources, grading at 1.15% copper equivalent.

Over the mine’s 22-year life, MMB expected to produce 51 000 t/y of copper cathodes of 99.99% purity, 1 700 t/y of metallic cobalt and 25 000 t/y of zinc sulphate.