Baja Mining Corp. (TSX:BAJ)(OTCQX:BAJFF) today advised shareholders
that Mount Kellett Capital Management LP offered a predatory term
for a "standstill" in the event that Mount Kellett's employee
Stephen Lehner joined Baja's Board and then resigned.
Further, Baja advised shareholders that Mount Kellett's support
for Baja's Shareholder Rights Plan was limited. Mount Kellett
wanted a preferential exemption so that it could increase its
ownership without paying a premium and without competition.
The perfunctory length of the standstill, consisting of just 15
days after the date of Mr. Lehner's resignation, is akin to no
standstill at all. It would have been highly advantageous to Mount
Kellett and would have materially disadvantaged other Baja
shareholders. For this reason Baja rejected the standstill offer,
which Mount Kellett made last month after initiating a proxy
contest to place Mr. Lehner on Baja's Board.
"Mount Kellett's rapid-expiry standstill offer provides no
comfort or protection to Baja's other shareholders, and was
rejected on that basis," said Giles Baynham, Chairman. "While on
the Board, Mr. Lehner would have unrestricted access to Baja's
information. He could resign at any time and after just 15 days,
Mount Kellett would be free to launch a takeover bid. Baja would
not have had time to find alternative bidders willing to pay more.
This was against the interests of other Baja shareholders and so
was not acceptable to your Board."
Mount Kellett's news release is misleading
Baja is publicly disclosing the 15-day period of the standstill
offer in response to a misleading news release issued by Mount
Kellett yesterday. Below in italics are the words Mount Kellett
chose to describe its standstill offer to the public:
"It (Mount Kellett) has twice proposed signing a standstill
agreement, including most recently in mid-January, when it offered
Baja a standstill against a takeover bid by Mount Kellett."
Why did Mount Kellett neglect to mention the standstill's
expedited expiry? Because it would have undermined Mount Kellett's
effort to place its employee Mr. Lehner on Baja's Board. As a
self-proclaimed opportunistic investor with access to $6 billion of
capital, such a worthless standstill is only to Mount Kellett's
advantage.
Mount Kellett is fully aware that the value of Baja is likely to
increase substantially when the Boleo mining project is in
production, within approximately the next 18 months. No doubt this
is why Mount Kellett has invested to date and wants a standstill
without teeth. It allows Mount Kellett to bid for Baja before the
Boleo mining project is completed, but after Mr. Lehner is armed
with still-fresh inside information about the valuation of Baja and
Boleo, and the strategic planning of the Board.
Mount Kellett twice sought an exemption from Baja's Shareholder
Rights Plan
Shareholders should be aware that Mount Kellett's objective is
to control Baja. That is why Mount Kellett twice demanded that
Baja's Board waive Baja's Shareholder Rights Plan last year-a
crucial fact that Mount Kellett failed to address in its news
release yesterday. Mount Kellett claims in the news release to have
supported the Shareholder Rights Plan but that is only part of the
truth.
The full truth is that with Mount Kellett's proposed exemptions
the Shareholder Rights Plan would have applied to everyone but
Mount Kellett. Had the Board not refused the exemptions, Mount
Kellett would have acquired a control position and more than 30% of
Baja's shares with no premium to other shareholders.
Mount Kellett's creeping takeover plan
Mount Kellett is understandably silent on its demands for
exemptions from the Shareholder Rights Plan and the 15-day duration
of the useless standstill it offered. But shareholders need to pay
special attention to Mount Kellett's silences. It has a hidden
agenda-a creeping takeover to gain control without paying full
value to Baja's shareholders.
As previously disclosed, Mount Kellett has requisitioned a
meeting of Baja shareholders to change Baja's Board-an initiative
that is part of Mount Kellett's creeping takeover plan. For a more
complete explanation Baja urges shareholders to carefully review
Baja's Management Information Circular and related materials, which
were mailed to shareholders and were posted to Baja's website and
SEDAR on February 9, 2012.
Baja's Management Information Circular describes how Mount
Kellett's Mr. Lehner has been the front-man for the demand to waive
the Shareholder Rights Plan and for other special status demands
that would have given Mount Kellett an advantage over other
shareholders. Baja believes the Board's rejection of special status
for Mount Kellett is the real reason Mount Kellett launched its
proxy contest.
Mount Kellett's stealth strategy continues
Mount Kellett's latest news release will not surprise those who
have read Baja's Management Information Circular. Mount Kellett, by
avoiding any mention of the swift expiry on its standstill, is
continuing a stealth strategy directed against the balance of
Baja's shareholders. The stealth strategy also included a decision
by Mount Kellett last year to use the least transparent disclosure
available with regard to its accumulation of Baja shares.
In its Management Information Circular Baja did not specifically
reference the 15-day "standstill" offer by Mount Kellett. Baja
omitted this fact only because it respected the "without prejudice"
nature of Mount Kellett's standstill offer, which in normal
circumstances means that it should not be used against Mount
Kellett in future dealings.
However, Mount Kellett has chosen to waive that privilege by
mentioning the standstill. Baja accepts that waiver and has no
choice but to tell shareholders the full story. Baja can't ignore
the 15-day term that Mount Kellett omitted with its misleading
reference to the offer in its news release yesterday.
Baja urges shareholders to vote AGAINST Mount Kellett's director
removal resolution, and AGAINST Mount Kellett's Board Expansion
resolution. Baja urges shareholders to vote WITHHOLD for the two
Mount Kellett nominees to the Board, Stephen Lehner (an employee of
Mount Kellett) and Lorie Waisberg. Shareholders should vote only
their GOLD proxy well in advance of the proxy voting deadline of
March 30, 2012 at 10:00 a.m. (Vancouver Time).
About Baja
Baja Mining Corp. (TSX:BAJ)(OTCQX:BAJFF) is a mine development
company with a 70 percent interest in the Boleo
copper-cobalt-zinc-manganese Project located near Santa Rosalia,
Baja California Sur, Mexico. Baja is the project operator and a
Korean syndicate of industrial companies holds the remaining 30
percent. Boleo is funded, currently under construction and targeted
for copper commissioning in 2012, and copper production in early
2013. Boleo has 265 Mt of measured and indicated resources
(including 85 Mt of proven and probable reserves) and 165 Mt of
inferred resources. A March 2010 updated technical report to the
2007 definitive feasibility study, confirmed that Boleo could be
developed economically at an after-tax IRR of 25.6 percent (100
percent equity), with a minimum scheduled mine life of 23 years
(during which approximately 70 Mt of the noted proven and probable
reserves will be exploited), a NPV of US$1.3 billion (8 percent
discount rate), and an average life-of-mine cash cost of negative
US$0.29/lb for copper, net of by-product credits. Metal Prices were
based on SEC pricing guidelines (which at the time of the 2010
report were US$2.91/lb Cu, US$26.85/lb Co and US$1,175/tonne
ZnSO4H2O). For more information, please visit
www.bajamining.com.
On behalf of the Board of Directors of Baja Mining Corp.
John W. Greenslade, President & Chief Executive Officer
Forward-Looking Statements
This news release contains forward-looking statements.
Forward-looking statements are statements that relate to future
events or financial performance, anticipated developments at the
Company's projects and the projected performance and economics of
the Boleo Project. In addition, estimates of mineral reserves and
resources and NPV estimates may be forward-looking statements
because they represent estimates of mineralization, costs, revenues
and other factors that may be encountered in the future.
Forward-looking statements speak only as of their date, are only
predictions and are subject to known and unknown risks,
uncertainties and other factors, including without limitation those
described in Baja's most recent annual information form filed under
its profile at www.sedar.com and its most recent annual report
filed with the US Securities and Exchange Commission ("SEC") at
www.sec.gov. All forward-looking statements in this news release
are qualified by these cautionary statements. These risks, as well
as risks that the Company cannot currently anticipate, could cause
the Company's or its industry's actual results, levels of activity
or performance to be materially different from any future results,
levels of activities or performance expressed or implied by these
forward-looking statements. Although the Company believes that the
expectations reflected in the forward-looking statements included
in this press release are reasonable, the Company cannot guarantee
future results, levels of activity or performance. Except as
required by applicable law, the Company does not intend to update
any of these forward-looking statements to conform them to actual
results.
Cautionary Note Regarding References to Resources and
Reserves
National Instrument 43 101 - Standards of Disclosure for Mineral
Projects ("NI 43-101") is a rule developed by the Canadian
Securities Administrators which establishes standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Unless otherwise
indicated, all reserve and resource estimates contained in this
press release have been prepared in accordance with NI 43-101 and
the guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum (the "CIM") Standards on Mineral Resource
and Mineral Reserves (the "CIM Standards").
United States shareholders are cautioned that the requirements
and terminology of NI 43-101 and the CIM Standards differ
significantly from the requirements and terminology of the SEC set
forth in the SEC's Industry Guide 7 ("SEC Industry Guide 7").
Accordingly, the Company's disclosures regarding mineralization may
not be comparable to similar information disclosed by companies
subject to SEC Industry Guide 7. Without limiting the foregoing,
while the terms "mineral resources", "inferred mineral resources",
"indicated mineral resources" and "measured mineral resources" are
recognized and required by NI 43-101 and the CIM Standards, they
are not recognized by the SEC and are not permitted to be used in
documents filed with the SEC by companies subject to SEC Industry
Guide 7. Mineral resources which are not mineral reserves do not
have demonstrated economic viability, and US investors are
cautioned not to assume that all or any part of a mineral resource
will ever be converted into reserves. Further, inferred resources
have a great amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. It cannot be
assumed that all or any part of the inferred resources will ever be
upgraded to a higher resource category. Under Canadian rules,
estimates of inferred mineral resources may not form the basis of a
feasibility study or prefeasibility study, except in rare cases.
The SEC normally only permits issuers to report mineralization that
does not constitute SEC Industry Guide 7 compliant "reserves" as
in-place tonnage and grade without reference to unit amounts. In
addition, the NI 43-101 and CIM Standards definition of a "reserve"
differs from the definition in SEC Industry Guide 7. In SEC
Industry Guide 7, a mineral reserve is defined as a part of a
mineral deposit which could be economically and legally extracted
or produced at the time the mineral reserve determination is made,
and a "final" or "bankable" feasibility study is required to report
reserves, the three-year historical price is used in any reserve or
cash flow analysis of designated reserves and the primary
environmental analysis or report must be filed with the appropriate
governmental authority.
Contacts: Laurel Hill Advisory Group Shareholder Contact
Toll-free 1-877-304-0211 or Collect:
416-304-0211assistance@laurelhill.com Longview Communications Media
Contact Alan Bayless 604-694-6035abayless@longviewcomms.ca Longview
Communications Media Contact Joel Shaffer
416-649-8006jshaffer@longviewcomms.ca
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