This is a very substantial project, with potentially huge returns. The numbers in the feasibility study say it all and are well worth reading. Potential investors should however be aware that the project does however carry some baggage within the markets, as a result of a number of factors:1. Boleo was held by the Lundin's in the last mining cycle who spent a fortune trying to develop it as an open pit operation but failed to make the economics work2. The mineralisation at Boleo is hosted in a clay environment. I have a piece of the ore on my desk - you can clearly see the mineralisation (the ore is bright green), but it is soft and easily crumbles. The mining technique that is being proposed by Baja has not been tried before on a "metal" project, although it is widely used to mine underground coal seams. For many, the jury is still out on whether or not this technique will work, although the test mining that has been undertaken by the company has been a success after initial teething problems were sorted out3. The metallurgy is considered complicated, and the process that is being proposed (hydromet techniques developed in Australia for lateritic nickel projects) is still considered relatively new and untested.That being said, this is my second largest holding and I am looking for substantial upside as and when this goes into production. The big question is how the project gets financed, and the level of dilution that shareholders will suffer. Their is the potential for the finance to be organised without recourse to the equity markets (project finance together with offtake agreements), although I believe that this best case scenario is unlikely and that shareholders should anticipate further dilution.
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