Located on Mexico’s Baja Peninsula near Santa Rosalia, Baja Sur; Boleo is one of the largest copper deposits in development in North America. For more than a century (1868 to 1972), Mexico’s historic El Boleo mine produced approximately 19 million tons of copper ore at an average grade of approximately 4.3% copper. To date, Boleo’s true resource potential has never been tapped. However, thanks to Baja Mining Corp., all that is about to change.

“We discovered the project in 1991 when we were looking for a cobalt deposit,” recalled John Greenslade, President and Director of Baja Mining Corp. “One of our geologists took the time to read the US Senate Subcommittee meetings from 1954 on Strategic Metals and discovered there was this mine in Mexico that wasted a million pounds of cobalt, so we went to the faculty of geology at the University of British Columbia and found a treatise on the mine. In July of 1992, I went to Mexico and staked it.”Discovered in 1860, El Boleo was put into production in 1884 by the French mining company, la Compagnie du Boleo. Greenslade explained that Boleo’s former operators were unable to concentrate the minerals contained within the ore, which meant that the ore had to be direct smelted in the town of Santa Rosalia. As a consequence, they needed very high-grade ore, and this resulted in material grading less than 3% copper either not being mined or backfilled in mined areas.

“The Boleo deposit is unique in that the ore body is not rock,” said Greenslade. “The deposit was formed in a lagoon environment around volcanic islands; as the Baja Peninsula was separating from the mainland of Mexico. Volcanic ash settled in the lagoon and decomposed into clay. Then mineralizing fluids, derived from volcanic activity, flooded the sandy clay bottom of the lagoon to form beds or seams (referred to at Boloe as “Mantos”). This sequence of event was repeated seven times to form seven different mineralized mantos; three to four of which have economic significance.” In addition to copper, cobalt, zinc, and manganese, other potentially valuable constituents, gallium, indium and various rare earths, are found in small but economically significant amounts, at Boleo.

“From 1884 to 1935, the French mined approximately 14 million tons at an average grade -- just under five percent copper,” said Greenslade, adding that they never recovered the cobalt, zinc or manganese. When the French left, the Mexican government stepped in and operated the project sporadically until the 1980s. “In the mid 1950’s, they tried to use hydrometallurgy to recover the metals with limited success, certainly not economic success.”

Since 1992, approximately US$50 million has been invested in the Boleo Property to assess mineral resources and to develop modern techniques for the processing of the ore to extract the contained copper-cobalt-zinc-manganese. This culminated in the issuance of a pre-feasibility study by Bateman Engineering Pty Limited, of Perth, Western Australia, in February 2002, called the “Bateman Study”.

The Bateman Study focused on the utilization of relatively new solid liquid separation technology (which is currently used successfully at twelve operations with comparable or greater clay content) to separate metal enriched leach solutions from the clayey gangue material, resulting in a significantly simpler and more cost-effective flow sheet for the recovery of metal. During the past year, the Company completed a successful pilot plant removing the majority of technical risk from the project and the key component of a final feasibility study.

Greenslade noted that Santa Rosalia is the only French town in Mexico, and the area is ---within the buffer zone of the “El Vizcaino” biosphere. “On the west coast of the Baja Peninsula, there are a lot of nursing areas for whales. 80 miles north of us is a major salt operation at Guerrero Negro. The government of Mexico established the El Vizcaino Biosphere at Guerrero Negro to protect the nursing area, and they extended the buffer zone of that biosphere over the town of Santa Rosalia to protect the heritage of the town. It’s commendable, but it does mean that when we’re working in the influence of the biosphere and for the majority of the project, we’re held up to a higher level of environmental scrutiny. Having said that, we got our main environmental permit approved on December 7, 2006 and also entered into an agreement with the biosphere to permit development of the mine, so we are good to go on construction on the project. We are doing everything in accordance with Mexican and World Bank standards.”

The Project consists of roughly 11,000 hectares of mineral concessions and 7,000 hectares of surface occupancy rights; each assembled as a contiguous titled block. Boleo will be developed as a series of underground mines using conventional soft rock (such as coal, potash, salt and Trona) mining methods, along with small open-cut mines feeding ore to a processing plant utilizing a two stage leaching circuit (utilizing sulphuric acid) followed by solid/liquid separation and Solvent Extraction – Electrowinning to produce copper and cobalt as metal, zinc as zinc sulphate and eventually manganese as manganese carbonate.

“We will produce a high purity cobalt cathode on site that may well command a premium in price,” said Greenslade. “The zinc is produced as high purity zinc sulfate mono-hydrate crystals. The reason being the power required to produce zinc is very high, and in Baja the power cost to produce zinc metal would be too high to produce zinc metal economically. Everything is done in sea water, except the final electrowinning. The sea of Cortez is 750 meters from the plant, so we have an unlimited supply of sea water.

“We make the sulfuric acid by burning sulfur. We will burn about 800 tons of sulfur per day to make 2,400 tons of acid. That’s an exothermic reaction that generates heat. We use the excess heat to drive a steam turbine, and we will generate about 34 megawatts of power from the acid plant. That’s green power, and we expect to get a credit for the lack of CO₂ emissions.”

Baja is currently looking at selling carbon credits for production off the acid plant, which will be supplemented with diesel-generated power. “We’ve already acquired ten megawatts of diesel power, and we will probably have a total of 20 megawatts of standby capacity,” said Greenslade. “I’m expecting the mine mill complex will be about 38-39 megawatts. The mining is unique to our copper deposit in that we are applying mining techniques that are typically utilized in coal, soda ash (trona) or potash mines. We will use what are known as continuous mining machines to mine the ore. These machines have a rotating drum (with spikes on its surface) on a boom that cuts the clayey ore, which is gathered at the front of the machine and then conveyed to the rear of the machine into trucks which haul the ore to a central conveyor system where it is conveyed out of the mine and then to a stockpile near the process plant.

A veteran in the mining industry since 1968, John Greenslade holds a Master of Engineering degree as well as a Bachelor of Laws. He is a member of the Association of Professional Engineers for the Province of British Columbia and a member of the Law Society of British Columbia. His former legal practice focused on mining, corporate and securities law, as well as cross border tax issues and offshore trusts. Greenslade has been involved in the funding of numerous mining projects, at all stages of exploration, development and production, in various capacities, including legal counsel and director of a TSE listed company, from October 1995 to July 1999 and a TSX company from 1992 to present.

Greenslade said that Baja’s General Manager of Mining, Scott Britton, who is also a mining engineer, was a valuable addition to his team. “Scott has spent 32 years in underground mine management and engineering. He spent 20 years mining coal in Illinois, Pennsylvania and Virginia using the exact same techniques as will be used at Boleo, and for the last 13 years he held the position of Underground Mine Manager for General Chemical (Soda Ash) Partners in Green River, Wyoming.

“After we demonstrated at the pilot plant that we could process the ore, the next step was to demonstrate that we could mine the ore underground at a significant daily production rate,” explained Greenslade. “We’re going to mine at a high rate of almost 10,000 wet tonnes of material a day, about 7,300 dry tonnes. That’s a lot of material for underground, so we bought a roadheader style of continuous mining machine and mined the deposit for approximately 6 months. We did the first test mine prior to Scott joining us. While it was relatively successful, we did identify a number of issues. For example, the clay tended to smear on the conveyor deck causing a build-up on the conveyor deck of the miner, which affected production. So we shipped the conveyor to a machine shop in northern Mexico and had the conveyor deck covered with Teflon like material that has a wear strength greater than steel. Clay build up was solved.

“After Scott joined us, we went back and did a second test mine. We changed some of the equipment we were using and Scott spent time educating the miners on techniques to achieve higher production rates. The second test went incredibly well, and we were able to demonstrate suitable production rates with those tests. We now have finished the test mining, have finished the majority of the feasibility level design engineering, and we will come out with a revised resource model in March 2007. With the new resource model that incorporates the results of our in-fill drilling program, we expect to see an increase in both tonnes and grade.”

Greenslade said mining will have some open pit components to it, but for the first ten years, the majority of the mine feed will come from underground. “Rather than buying limestone (used for acid neutralization) from someone else, we will mine limestone on-site. The ore feed grade to the process plant will initially target between 2.3 and 2.4 percent copper. Because of this expected grade, we’re probably looking at production in the first six years in the range of 53,000 metric tonnes per annum of copper cathode. We will build the copper circuit first and fund everything on day one. As soon as the copper circuit is built we will start commissioning that circuit and would hope to be close to design capacity within 12 months. While the copper circuit is being commissioned we will build the cobalt and zinc circuits. Commencement of copper production is now scheduled in the first quarter of 2009. When cobalt and zinc come on stream, it’s now looking like it can be as much as 3,100 tonnes of high purity cobalt cathode production annually and about up to 36,000 tons of zinc sulfate. We’re still looking at manganese production -- we’ve not added that to the equation yet.”

Boleo is a large geological resource and currently has over 230 million tonnes of measured and indicated resources at a copper equivalent cutoff grade of 0.5% and about 130 million tonnes of inferred. “In the first 20 years we will mine between 65 and 70 million dry tonnes, about one-third of the current measured and indicated equivalent resources,” said Greenslade. “As we put a mine plan around those measured and indicated resources, we expect to see that 65 to 70 million tonnes shift to proven and probable reserves. There’s no reason to expand that further now. We expect that of the 300 plus million tonnes that are there, somewhere between 35 and 50 percent will be mineable. So we’re looking at a mine life that could exceed 35 to 40 years. Grade will drop off as the years progress, and we have provided for the ability to increase production for the plant by 20 percent without pushing the equipment, so we’re designing the plant for 3.1 million dry tonnes a year, while we’re looking in the early years of processing 2.6 million dry tonnes per year.”

After 15 years of working on the Boleo Project, Greenslade is finally looking forward to seeing it to production. “We’re looking at doing conventional financing for 75 percent of the capital costs,” he said, adding that there’s been much interest from major lenders on this multi-100-million-dollar project. “We’re talking to metal off-take candidates and looking at possibly doing subordinate debt for the majority and possibly all of the remaining project capital cost. Our shares are now qualified for secondary trading in the US and we propose to seek a US listing of our shares. Right now, we have approximately $8 million in the bank, and this is more than adequate to take us through the feasibility study.”

For further information please contact John Greenslade, President, at (604) 685-2323

http://bajamining.com/