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Baja Confirms Robust Economics at Boleo

Monday, January 18th, 2010

Baja Mining Corp. announce that an updated capital cost estimate and economic model have confirmed that its 70%-owned Boleo deposit in Baja California Sur, Mexico, can be developed economically at an after-tax internal rate of return (IRR) of 25.6% based on 100% equity. The project, which has a minimum scheduled mine life of 23 years, has a NPV of $1.306 billion using an eight percent discount rate and an average life of mine cash cost of negative $0.29/lb for copper, net of by-product credits. All dollar amounts are stated in U.S. dollars and are on an equity basis (i.e. assume no debt or related finance charges).
Highlights of Boleo project update
– Proven and probable reserves for minimum 23-year mine life.
– Negative $0.29/lb for copper average life of mine cash cost, net of by-product credits.
– Remaining estimated capital costs of $889 million (including $92.3 million contingency).
– Average annual production, for the first six years of full production:
. Copper cathode: 56,697 tonnes
. Cobalt cathode: 1,708 tonnes
. Zinc sulphate monohydrate: 25,364 tonnes
– 265 million tonnes of measured and indicated resources grading 1.50% copper equivalent.
– 159 million tonnes of inferred resources grading 1.15% copper equivalent.
– After-tax IRR of 25.6% using SEC guidelines, or 27.9% at current market prices.
– After-tax NPV (at 8% discount rate) of $1.306 billion using SEC guidelines or $1.473 billion at current market prices.
“We are pleased that the updated capital and operating cost estimates confirm the robust economics of the Boleo project,” says Baja President and CEO John Greenslade. “This update now provides a strong foundation for completing construction financing and recommencing construction of the mine and processing facility in order to move to production as soon as possible.”
Mr. Greenslade says “there is also significant upside potential for Boleo which is endowed with a rich resource of manganese. We will shortly commence a feasibility study to quantify this potential which could substantially add to the project’s value.”
The current update incorporates plant capital cost estimates prepared by ICA Fluor Daniel, S. de R.L. de C.V. (ICA Fluor), operating cost estimates prepared by the Company and reviewed by ICA Fluor, and owner’s costs prepared by the Company. A revised geological model, in accordance with NI 43-101, has been prepared by Wardrop, A Tetra Tech Company (Wardrop) and used by Agapito Associates, Inc. (AAI) to prepare the current mine plan. The initial capital cost for the mine was prepared by AAI, however mine sustaining capital and operating costs were prepared by the Company. The Company utilized these cost estimates to prepare the financial projections. In doing so, the capital and operating costs were adjusted to reflect leasing of certain equipment, and to capture costs incurred in the fourth quarter of 2009.An updated NI 43-101 compliant technical report (the “Technical Report”) will be filed within 45 days of today’s date.

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