May 30, 2012 / 2:58 PM / 6 years ago

Baja Mining to miss funding deadline for Mexico project

(Reuters) - Baja Mining Corp BAJ.TO, which raised going concern doubts earlier this month, cut 40 percent jobs at its headquarters in Vancouver and said it does not expect additional funding for its copper-cobalt-zinc project in Mexico by mid-June, sending its shares down to their lowest in over three years.

The struggling Canadian miner said the reduction in the number of staff and consultants was effective from May 25. It did not specify the number of jobs eliminated.

“I think it is something they have to do,” Haywood Securities analyst Stefan Ioannou said.

“They are asking their existing lenders for some additional waivers ... so in the interim they are trying to demonstrate that they are being frugal.”

Spending at the Boleo project, which is 70 percent owned by Baja and rest by a Korean Consortium, is expected to be $246 million more than the $1.14 billion estimated in 2010, the company had said in April.

Baja has not been able to come up with a plan to fund the extra cost at its flagship project. Its largest shareholder recently forced John Greenslade to step down as the company’s CEO.

“They are doing things to talk about (them) ... the bottom line is they still do not have financing,” Ioannou said.

The company now expects the Boleo project to be able to fund its operations at a reduced level through mid-July, a month longer than its earlier deadline.

Baja said it may also suspend the construction of the cobalt and zinc circuits in Boleo and is in discussions with the project lenders and the Korean Consortium.

Vancouver, British Columbia-based company shares, which have lost about 80 percent of their value since April, were down 12 percent at 22 Canadian cents on the Toronto Stock Exchange. They touched a low of 21 Canadian cents earlier.

Reporting by Aftab Ahmed in Bangalore; Editing by Sreejiraj Eluvangal

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