Mining PRs and the Ottotrans™, Part 24

The Ottotrans™ is back with Baja Mining (BAJ.to) once again le feature du jour.

This is what they wrote:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 09/08/10) - Baja Mining Corp. ("Baja") (TSX:BAJ - News)(OTXQX: BAJFF) is pleased to announce that its 70% owned project company, Minera y Metalurgica del Boleo S.A. de C.V. ("MMB"), has now received confirmation from the ECAs and the Commercial Lenders (both defined below) and from the Korea Development Bank that all necessary credit approvals have been obtained in relation to the project financing facilities (the "Facilities") for the development of the Boleo project (the "Project") in Mexico. Total credit approved Facilities now amount to US$823 million, the entire amount of debt financing required to develop the Project. The amounts to be provided by each lender under the Facilities are detailed in the table below.
The Facilities will be provided, subject to satisfaction of customary project financing conditions precedent, by (i) a group of export credit agencies (the "ECAs") comprised of The Export-Import Bank of the United States and Export Development Canada; (ii) the Korea Development Bank (all mentioned in the press release dated 29 July 2010); and by (iii) a group of commercial banks comprised of Barclays Capital (the investment banking division of Barclays Bank PLC), Standard Bank plc, Standard Chartered Bank, UniCredit Bank AG and WestLB AG (together, the "Commercial Lenders"). MMB is working with the Commercial Lenders to arrange US$100 million of loans, consisting of US$50 million of senior project and US$50 million of senior cost overrun facilities, and to provide the proposed copper hedging program.
The combined Facilities total US$823 million. This will be the entire amount of required debt financing for Boleo.

 

----------------------------------------
        PROJECT FINANCING (US$ m)
----------------------------------------
EXIM Bank                            419
----------------------------------------
EDC                                  150
----------------------------------------
KDB                                   90
----------------------------------------
Commercial Lenders                   100
----------------------------------------
Total                                759
----------------------------------------
        SUBORDINATED DEBT (US$ m)
----------------------------------------
KDB                                   64
----------------------------------------
TOTAL                                823
----------------------------------------

Drawdown of the project financing will be subject to a number of standard conditions precedent, including completion of satisfactory legal documentation, implementation of a hedging program and expenditure by Baja and its Korean partners of their required equity contributions. Under the facility documents, MMB will be required to enter into offtake agreements for at least 70% of copper and cobalt production for the first 10 years of production and to enter into the proposed copper hedging program. MMB has finalized the terms of the 70% offtake arrangements with a major international trading entity.
Baja and its Korean partners are working with the ECAs, the Korea Development Bank and the Commercial Lenders towards finalizing all such necessary documents as required for initial signing of the Facilities to occur in the near future.
MMB is being advised on the financing by Endeavour Financial International Corporation, and aims to close the transaction and recommence construction at Boleo as soon as possible.

And This Is What It Means:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 09/08/10) - Baja Mining Corp. ("Baja") (TSX:BAJ - News)(OTXQX: BAJFF) is pleased to announce that its 70% owned project company, Minera y Metalurgica del Boleo S.A. de C.V. ("MMB"), is really really close to getting the money it needs to build the Boleo mine, honest like. I mean, you think we were close last time we announced that we were close back in July? Oh maaan, that's not nearly as close as the close we are now.

Meanwhile Baja is determined not to go into the details of the offtake agreement and the hedge program, because the company management team isn't that freakin' stupid and has no intention of revealing how bad this deal is going to be for the retail sheep at this stage in the game. Baja much prefers allowing more time for insiders to continue their non-stop selling of stock at  the moment and allowing people without intimate knowledge of the deal to live in some sort of false hope for a little while longer. Tequila reposadas served, the end.

Baja Mining (BAJ.to): As day follows night

Shocked! Ah wuz shocked ah sez! Here's Baja Mining's (BAJ.to) news release from this morning:

Baja Mining Corp. (Baja) (TSX:BAJ)(OTCQX:BAJFF)(PINK SHEETS:BAJFF) today announced it has executed an agreement with a syndicate of underwriters led by Cormark Securities Inc., and including CIBC World Markets and Canaccord Genuity Corp. and Rodman and Renshaw LLC, participating with respect to sales in the United States on an exempt basis, (collectively, the "Underwriters") under which the Underwriters have agreed to purchase, on a bought deal basis, 21,875,000 common shares (Shares) of Baja at a price of $0.80 per Share for gross proceeds of $17,500,000 (the "Offering"). The Shares will be offered in yada yada continues here

Well I've never seen this pattern of pump-then-finance in a junior miner with a poor track record of delivery before. Not. And heywow! here below is what was written on BAJ in last week's IKN Weekly...funny how these things happen, innit?

Baja Mining (BAJ.to):, BAJ filed its June quarter results on Friday so let’s run a quick snapshot of some basic financials at BAJ:

• Shares out: 143.98m
• Warrants: 24.99m (16.2m at exercise price $1.25 , 8.1m at exercise price $2.49)
• Options: 12.625m (all in money at 40c or 59c)
• Fully Diluted: 181.6m
• Cash at Bank: $11.9m
• Working Capital: $8.2m
• Total Assets: $183.67 (incl $167.8m in booked mineral properties, i.e. Boleo)
• Total Debt: $56.82m (incl $42.3m in long term loans from Korean JV partner)

As BAJ has a typical cash burn of around $1.8m to $2m per quarter, it currently has the cash to run for around another four quarters, maybe five (working cap was $18.55m as at Dec 31 2009). There is some work being done at Boleo but due to the lack of a final deal on the financing of the project BAJ clearly isn’t working at full tilt. The feeling is that money is a little tight right now as no explorer (especially not one with an advanced-stage project) likes to see its cash position close to zero before running a round of financing. Therefore it would come as no surprise to this author to see another equity placement from BAJ at some point in 2010 if the company can’t nail down its definitive financing for Boleo.

Another thing: Your author notes the diminishing cash position, then notes the recent (we’ve mentoned it the last couple of weeks) rumourmill on BAJ “nearly there” etc etc, and then notices the recent upmove in the share price, too. Are they connected? Am I being too cynical? Maybe, but I’ve noted over time that being cynical means holding less regrets about juniors in the future.

This quarterly held no real surprises, however. The bottom line is that BAJ as a company will succeed or fail on eventual financing, construction and operation of the Boleo project in Mexico. In the words of the company’s MDA:

The recoverability of the Company’s investment in its mineral property remains dependent upon the Company’s ability to complete debt and, equity financings, and to successfully construct and develop the Boleo Project.

There’s no arguing with that.

Disclosure: No position in Baja mining.

Mining PRs and the Ottotrans™, Part 21

Today we check in on Baja Mining (BAJ.to) and its news release this morning that saw the stock pop 12%.

This is what they wrote:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 07/29/10) - Baja Mining Corp. (TSX:BAJNews)(Pinksheets:BAJFF - News)(PINK SHEETS:BAJFF - News) ("Baja") today announced that its 70% owned project company, Minera y Metalurgica del Boleo S.A. de C.V. ("MMB"), has received all necessary credit approvals from the Export-Import Bank of the United States ("Exim Bank") and Korea Development Bank ("KDB") to provide US$573 million in senior and subordinated project financing for the construction of the Boleo Project in Mexico. -

Baja continues to work on obtaining credit approvals from Export Development Canada ("EDC") (also serving as technical agent for the facilities) and a group of commercial banks for, respectively, the remaining US$150 million and US$100 million of loans, consisting of senior project and cost overrun debt facilities. When combined with the Exim Bank and KDB elements of the facilities, this total of US$823 million will be the entire amount of required debt financing for Boleo. Further details concerning approvals for the commercial bank tranche of the financing are anticipated in the near term.

--------------------------------
  PROJECT FINANCING (US$ m)
--------------------------------
EXIM Bank                    419
--------------------------------
EDC                          150
--------------------------------
KDB                           90
--------------------------------
Commercial Banks             100
--------------------------------
Total                        759
--------------------------------
  SUBORDINATED DEBT (US$ m)
--------------------------------
KDB                           64
--------------------------------
TOTAL                        823
--------------------------------

"The credit approval of these two key elements of the project debt facilities is truly an historic event in the development of the Boleo Project," says John Greenslade, President and CEO of Baja. "It is a testament to the confidence of those financial institutions in the Company, its management team and the Boleo Project, as well as in Mexico. This key milestone facilitates the development of the Boleo Project. We are pleased to have such a supportive and committed lending group."

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 completion of satisfactory legal documentation, implementation of a hedging program and expenditure by Baja and its Korean partners of their required equity contributions. Under the facility documents, MMB will be required to enter into offtake agreements for at least 70% of copper and cobalt production for the first 10 years of production and to hedge 50% of copper production for the initial 3 years of production.

MMB is being advised by Endeavour Financial International Corporation, and is progressing documentation with the lending group with the aim of closing the transactions and recommencing construction at Boleo as soon as possible.

And this is what it means:

Well, we seem to have nailed down the largest part of the debt financing deal, but we don't have the money yet because they won't give it over until the other guys agree to fund their parts of the deal. So we don't have the financing yet but it's close, pretty promise. Just like it was 'close' in 2008, in fact.

Oh, we're not going to tell you just how much we've committed to the debt lenders either, because the deal might turn out to be really shitty for you retail guys and leave nothing on the table for equity holders. There's a few bits about "offtake" and "hedge" but no details or numbers or prices, so don't worry about that. We don't want to put you off buying right now, do we?

Baja Mining (BAJ.to); A cute piece of late-filed insider selling from Robert Mouat

We'd already noted some significant inside selling over at Baja Mining (BAJ.to) about a month ago when insiders Kendra Low, Ross Glanvilleand Graham Thody were all seen dumping at the same moment, raising a whiff of a suspicion of a hint of a smell around the BAJ shop. But none of these compares to ex-CFO of BAJ and Nassau Bahamas resident, Robert Mouat:

Baja Mining Corp. (BAJ)						As of May 18th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
May 18/10	May 06/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-35,000	$0.780
May 18/10	May 04/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-40,000	$0.800
May 18/10	Apr 29/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-35,000	$0.840
May 18/10	Apr 27/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-40,000	$0.860
May 18/10	Apr 22/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-35,000	$0.870
May 18/10	Apr 20/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-40,000	$0.800
May 18/10	Apr 15/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-35,000	$0.800
May 18/10	Apr 14/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-40,000	$0.810
May 18/10	Apr 08/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-35,000	$0.800
May 18/10	Apr 06/10	Mouat, Robert Lawrence	Indirect Ownership	Common Shares	10 - Disposition in the public market	-40,000	$0.810

And there are plenty more line items not shown on Cad Insider, as well. In fact, not only has Mouat been disposing of large lumps of stock at 20%+ prices than today but he's also only just gotten round to filing dozens of the way-late filed that date as far back as January, FerCryinOutLoud! In total, the dude quietly and rulebreakingly got rid of 555,000 shares of BAJ and finally bothered to tell the world yesterday. Just shows you what BAJ.to executives think of their shareholders, dunnit?

The inside track

Back with another one of our occasional looks at insider trades, with two today worthy of comment. Firstly, we note that Eike Batista is buying small ($1.5m or so is small for him) lumps of Ventana Gold (VEN.to) and topping up his large position on the open market:

Ventana Gold Corp. (VEN)						As of April 8th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Apr 08/10	Apr 05/10	63X Master Fund	Direct Ownership	Common Shares	10 - Acquisition in the public market	75,200	$10.208
Apr 08/10	Apr 01/10	63X Master Fund	Direct Ownership	Common Shares	10 - Acquisition in the public market	79,000	$9.676

That smacks of confidence.


On the flipside, what are the people running Baja Mining (BAJ.to) trying to tell us?

Baja Mining Corp. (BAJ)						As of April 8th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Apr 08/10	Apr 07/10	Thody, Graham Campbell	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$0.830
Apr 08/10	Apr 07/10	Low, Kendra Leigh	Direct Ownership	Common Shares	10 - Disposition in the public market	-80,000	$0.800
Apr 08/10	Apr 07/10	Low, Kendra Leigh	Direct Ownership	Common Shares	51 - Exercise of options	80,000	$0.350
Apr 08/10	Apr 07/10	Low, Kendra Leigh	Direct Ownership	Options	51 - Exercise of options	-80,000
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Common Shares	10 - Disposition in the public market	-120,000	$0.750
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Common Shares	51 - Exercise of options	210,000	$0.350
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Options	51 - Exercise of options	-210,000	$0.350

Not one but three insiders are telling us that selling BAJ.to at the levels seen in the last few days is a good idea. Do you see a red flag here too, or are you daltonian?

DYODD, dude.

An eye on the insiders

Three inside trades that caught the eye of this humble scribe while perusing CadInsider this morning.

First up Evolving Gold (EVG.v), the company with good (though at depth) drill results coming from its USA project. Sadly, it's also pumped by über-BSmerchant Peter Grandich, which is enough reason in itself to avoid this stock forever, good rock or not. And lo and behold! we got insiders bailing right now, too:

Evolving Gold Corp. (EVG)						As of March 25th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Mar 25/10	Mar 19/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-48,500	$0.960
Mar 25/10	Mar 18/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-42,500	$0.970
Mar 25/10	Mar 18/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-7,500	$0.980
Mar 25/10	Mar 17/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-2,000	$0.980
Mar 25/10	Mar 17/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$0.960
Mar 25/10	Mar 17/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-6,000	$0.980
Mar 25/10	Mar 16/10	Bick, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-18,000	$0.980
Mar 25/10	Mar 16/10	Bick, Robert	Direct Ownership	Common Shares	51 - Exercise of options	129,500	$0.230
Mar 25/10	Mar 16/10	Bick, Robert	Direct Ownership	Options	51 - Exercise of options	-129,500	$0.230

All at the same time that Grandich pumps this stock to his sheep. Whatever can it mean?

Next we check out Baja Mining (BAJ.to) which is also flashing a "management think it's a good place to lighten" signal via this filed trade:

Baja Mining Corp. (BAJ)						As of March 25th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Common Shares	10 - Disposition in the public market	-120,000	$0.750
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Common Shares	51 - Exercise of options	210,000	$0.350
Mar 25/10	Mar 24/10	Glanville, Ross Owen	Direct Ownership	Options	51 - Exercise of options	-210,000	$0.350

Finally, we have a bit of positive flipside: Apoquindo Minerals' (AQM.v) have a management team that are putting money where their mouths are. This is healthy:

Apoquindo Minerals Inc. (AQM)						As of March 25th, 2010
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Mar 25/10	Mar 17/10	Lopez, Cesar	Direct Ownership	Warrants	11 - Acquisition carried out privately	100,000	$1.000
Mar 25/10	Mar 17/10	Lopez, Cesar	Direct Ownership	Common Shares	11 - Acquisition carried out privately	200,000	$0.850
Mar 25/10	Mar 17/10	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Warrants	11 - Acquisition carried out privately	59,941	$1.000
Mar 25/10	Jan 07/08	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Warrants	00 - Opening Balance-Initial SEDI Report
Mar 25/10	Mar 17/10	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Warrants	11 - Acquisition carried out privately	59,941	$1.000
Mar 25/10	Jan 07/08	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Warrants	00 - Opening Balance-Initial SEDI Report
Mar 25/10	Mar 17/10	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Common Shares	11 - Acquisition carried out privately	119,882	$0.850
Mar 25/10	Jan 07/08	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Common Shares	00 - Opening Balance-Initial SEDI Report
Mar 25/10	Mar 17/10	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Common Shares	11 - Acquisition carried out privately	119,882	$0.850
Mar 25/10	Jan 07/08	Villarzu Rodhe, Juan Rodolfo	Indirect Ownership	Common Shares	00 - Opening Balance-Initial SEDI Report

Also, those with a memory for mining names will note the heavy-hitters that run AQM.v.

Disclosure: no position in any stock, though BAJ.to and AQM.v are part of the IKN Weekly 'Copper Basket' of junior exploration stage copper companies.

Microcap copper junior update

Hey I'm no TA junkie or pusher, but check out Chariot Resources (CHD.to) today.

This is the copper junior explorer with the large 'Marcona' property on the South coast of Peru that it majority owns (with a Korean consortium heavily involved) and that IKN mentioned recently. With copper showing continued strength (topped $1.80/lb today), people seem to be revisiting this beaten down junior. As for the wider sector, the upmove is true of more than just CHD.to, of course. Here are a few examples of LatAm copper junior charts. Featured are Baja Mining (BAJ.to), Inca Pacific (IPR.v) and Candente (DNT.to).

There's no reco in this post. DYODD, dude. There are also plenty more stocks displaying short-term pops on the recent copper moves and it's not confined to the non-producing explorers with large copper prospects in LatAm. Call this post a small headsup and let's see what Dr. Copper does next.

Baja Mining (BAJ.to): A victim of the credit crunch

This morning Baja Mining (BAJ.to) bit the bullet, faced reality and announced to the world its 'Boleo' copper/cobalt mine in Mexico would be indefinitely delayed. Mine construction started last year but will now be halted until further notice. Here's a quote from today's PR:

"While project economics remain robust even at low metal prices, the impact of the current financial crisis on short term metal prices and hedging prices, coupled with an effective shutdown of the global bank syndication and equity markets, require Baja to revise its construction schedule."

Allow me to translate: BAJ.to contradicts itself on the metals prices issue; on the one hand the mine would be profitable at low prices, but on the other hand low metals prices are halting the project. That doesn't make any sense and can be discarded. This leaves us with the real reason for the stoppage, namely there isn't a bank willing to fund BAJ.to right now. And that's full square the credit crunch and how it's affecting the industry.

The stock sold off 20% or so on the news and stands at $0.22. That's a long way from the $2+ figures it was printing last year when I took a serious look at Boleo and liked what I saw even though capex costs had almost doubled on the deal. The moral of the story is that metal in the ground ain't worth squat unless you can get it out the ground. Junior mine investors have to remember that one.