Boleo budget revised up to US$1.79bn

The cost of developing the Boleo copper-cobalt-zinc project in Mexico's Baja California Sur state has been revised up to US$1.79bn, Vancouver-based Baja Mining (TSX: BAJ, OTCQB: BAJFF) said in a statement. The revised budget has been approved by the board of 100% owner and operator Minera y Metalurgica del Boleo (MMB), Baja said. The project was previously expected to cost US$1.67bn, after cost overrunsidentified in 2Q12 increased the price tag from the original US$1.17bn. Following the identification of the cost overruns, the project's main backer, state-owned Korea Resources(Kores), has stumped up US$459mn in additional phase II funding to take the project forward, which has seen Baja's stake in MMB reduced from 70% to 10%. BOLEO NEARING COMPLETION Work on the Boleo project is continuing to progress, the Baja statement added, with gains made in "all construction areas" since the start of Q2 and the project was 72.8% complete at the end of June. Total project commitments reached US$1.42bn at the end of the quarter, with copper production expected to begin in February, although there is "considerable pressure" on the schedule, Baja said. A shortage of laborat the project, reported in May, has also eased, the statement added, with 817 additional workers hired in Q2, taking the total to 3,630. Progress on surface and underground mining has been hampered by "reliability issues" relating to the fleet of haulage trucks and the late start of an underground mining contractor and "unreliability" of underground miners, along with geological conditions, Baja said. The company last week announced the suspensionof work on an updated technical report for Boleo because of a lack of consensus over "key aspects" of the project between MMB's mining department, consultants and senior lenders. Q2 FINANCIAL RESULTS Baja recorded a loss attributable to shareholders of US$10.7mn in Q2, compared to a loss of US$101mn in 2Q12, reflecting Baja's reduced ownership of MMB and impairments in 2Q12 resulting from the cost overruns in that quarter. To see the full Baja statement click here