Putin scolds Tomtor rare earth deposit’s operator over development delays
Located in the north of the Siberian region of Yakutia, Tomtor is a key project in Russia's plans to boost output of rare earth.
Baja Mining (TSX:BAJ) shed 5% on Wednesday on higher than usual trading volumes, after releasing an update on its Boleo copper-cobalt-zinc project in Mexico.
The company in a carefully worded statement said it has detected “inflationary pressure on several key components of the project,” including fuel, steel and labour.
Before these cost run-ups Baja forecast $890 million would be needed to build the mine. It will now give a definitive cost estimate next quarter.
Baja also said in order to “maintain its development schedule” for the underground mine and due to safety issues it has had to hire a contractor with an experienced work force because its own workers were “largely inexperienced”.
The company kicked off surface ops late last year and at the end of February 2012, construction was 37% complete with 2,362 workers on site.
In early afternoon trade the miner was trading down 5% at $0.95 on the Toronto big board, at its lowest for the day. The mining sector was generally weak on the day with the TSX Global Mining index down 1.8%
Around 590,000 shares in the $325 million company had changed hands by 1:30 pm EST on Wednesday compared to the daily average of 440,000. The counter is still showing robust 2012 gains – it is up 20% year to date.
Apart from the snags with construction of 70%-owned Boleo, Baja is also involved in a bitter – and very public – boardroom dispute with 20%-shareholder Mount Kellet Capital Management.
Mount Kellett, which has pumped $80 million into Baja, has been not pulling punches, accusing Baja CEO John Greenslade of “enriching family and friends” at the expense of shareholders.
For its part Baja calls Mount Kellet a wolf in sheep’s clothing wishing to do a takeover of the company by stealth.
A showdown at a special shareholders’ meeting to vote on the new board composition is set for April 3.
3 Comments
Baddiehere4u
Mr. Els, how in the world can you say the market reacted negatively to the news release based on yesterday’s market action since it was an off day for the market and most junior issues were down similiar percentages. Baja is up from 80 cents since the begining of the year but you fail to report that and put this one day’s share price movement into perspective. Also did you report the the three prior days to the news release the share price rose 7 cents.
You failed to report that in the news release Baja managment is taking corrective action. Also, you fail to mention that this rising cost are what all miners are facing. You fail do provide any kind of technical analysis that shows Baja has been in an up trend since the begining of the year.
Your reporting lacks in-depth analysis. Your reporting is so superficial that it can not be taken seriously.
MINING.com Editors
Thanks for your comments Baddiehere4u.
You seemed to have missed a few things in the report though:
I do mention that it was a down day for the sector – “The mining sector was generally weak on the day with the TSX Global Mining index down 1.8%”
I do mention Baja’s share price performance prior to Wed – “The counter is still showing robust 2012 gains – it is up 20% year to date.”
As to your other points:
I would only find it newsworthy if Baja management was NOT “taking corrective action.”
Many miners are facing rising costs, but not all. The issue is how you factor it into your planning.
You’re right I did not report that Baja rose 7c over the three prior days before falling 5c on the day in question.
I’m with JP Morgan on this one. Asked how the stock market would do he famously said “It will fluctuate.”
JB
I think someone is in bed with Mount Kellett…..