Baja assessment approved (December 18, 2006)

The Mexican Secretariat of Environment and Natural Resources has approved an environmental impact assessment for the Boleo copper project in the state of Baja California Sur, which will allow owner Baja Mining (BAJ-V, BAJFF-O) to apply for mining permits.

The impact assessment, approved after seven months, requires Baja to reach an agreement for compensation to the National Nature Reserve Commission, which exercises control over a protected area at Guerro Negro, about 130 km north of the project. The reserve protects a whale nursing area in the Gulf of California. Baja and the Commission have already reached an agreement-in-principle on the matter.

Baja says a final feasibility study, scheduled for completion this quarter, is nearly finished; it examines the economics of an underground mine producing 50,000 tonnes copper, 1,850 tonnes cobalt, and 23,000 tonnes zinc sulphate monohydrate annually. A preliminary economic assessment in 2005 estimated a mine producing 2.6 million tonnes per year would cost US$292 million to build and operating costs would be around US$20 per tonne.

That economic assessment was based on a measured and indicated resource of 86 million tonnes grading 1.09% copper, 0.09% cobalt and 0.7% zinc, plus an inferred resource of 108 million tonnes grading 1.18% copper, 0.08% cobalt and 1.07% zinc. The cutoff grade was 1.5% copper equivalent. A 20,000-metre drill program, recently completed, will allow much of that inferred resource to be upgraded to an indicated one.

Test mining in the spring and summer showed soft-rock mine techniques, common in the coal industry, were technically feasible at Boleo, where the mineralization occurs in a series of large, flat-lying sedimentary beds mainly 2 metres high. The tests led consultants for Baja to conclude that the deposit could be mined by a room-and-pillar method, with later removal of pillars and retreat, with mined-out workings allowed to collapse.