Baja Mining Corp. (TSX:BAJ)(OTCQX:BAJFF) today alerted shareholders
that dissident Mount Kellett Master Fund II A L.P. has finally
acknowledged it sought control of Baja. In addition, Mount Kellett
has acknowledged that it demanded a rapid, 15-day expiry to its
worthless standstill offer.
However Mount Kellett, in a new attempt to deceive Baja
shareholders, offered phony explanations alongside its
acknowledgements. And Mount Kellett did not explain why it waited
to make its acknowledgements until it was two-thirds of the way
through the proxy contest it initiated.
Acknowledgements support Baja's contention of another Mount
Kellett agenda
The acknowledgements, however rationalized, support Baja's
longstanding contention that Mount Kellett has another agenda-a
creeping takeover of Baja without a premium to all shareholders.
Mount Kellett is now pursuing that agenda by trying to place two
representatives-one of them Mount Kellett's Managing Director
Stephen Lehner-on Baja's Board.
"Mount Kellett pretends Mr. Lehner is not in a position of
conflict, but as a Mount Kellett employee he is professionally
conflicted," said Giles Baynham, Baja's Chairman. "That's why we
offered Mount Kellett a fair compromise-two nominees who are
independent of Mount Kellett."
Acknowledgements buried in a slide presentation
Mount Kellett furnished its acknowledgements deep inside a slide
presentation disclosed to the public on March 2, 2012. Baja
believes Mount Kellett made the acknowledgements only because of
pressure from Baja's Board and from many Baja shareholders.
Prior to March 2, 2012, Mount Kellett had been silent on its
control objective, which it sought by twice demanding an exemption
from Baja's Shareholder Rights Plan. Baja rebuffed both attempts.
Mount Kellett was similarly silent on the highly perishable expiry
date on its standstill offer. Mount Kellett made no mention of
these matters in its 42-page dissident circular or in its proxy
contest news releases.
Historical revisionism
Baja observes that the rationalization Mount Kellett proffered
for the predatory 15-day standstill expiry amounts to historical
revisionism. Through clever and ambiguous wording, the presentation
leaves the erroneous impression that Mount Kellett would restrict
the standstill expiry to "issues of governance that it believed
should be brought to shareholders."
In fact the standstill expiry was completely unrestricted when
Mount Kellett Managing Director Stephen Lehner privately presented
it to Baja in an email on January 5, 2012. In the email Mr. Lehner
made ten demands, the ninth of which was the 15-day expiry. Baja
provides Mr. Lehner's words verbatim, and in context, as follows:
"MK's standstill will fall away 15 days after my resignation from
the Board." That's it. Not even a hint of a governance restriction.
Mount Kellett has no grounds to assert otherwise.
Unconvincing control rationale
Mount Kellett's unconvincing rationale for control was that it
would "protect Baja against a premature hostile take-out." In fact
what Mount Kellett really wanted was to buy more shares without
offering a premium to other shareholders and to prevent anyone else
from establishing a control position. Mount Kellett also wanted all
of the other self-serving advantages of control, such as the
ability to manipulate Baja's agenda and strategy, including with
regard to acceptance of a takeover bid that would be favourable to
Mount Kellett in terms of pricing and timing, but with little
regard for other Baja shareholders.
Baja's Board decided that with 19.9%, Mount Kellett already has
a strong blocking position. The Board was not inclined to give
Mount Kellett special status if Mount Kellett was unwilling to
offer a premium to all shareholders. That's why the Board refused
to give Mount Kellett an exemption from the Shareholder Rights Plan
when Mount Kellett twice asked for it in May 2011.
The real reason for the proxy contest
Baja believes its refusal to hand control to Mount Kellett is
the real reason for the proxy contest. Now Mount Kellett is seeking
control by other means. With its rapid-expiry standstill, Mount
Kellett is clearly signalling that it wants the freedom to take any
action just 15 days after Mount Kellett's Managing Director Stephen
Lehner resigns from Baja's Board. Such actions could include the
launch of yet another proxy contest, or the launch of a takeover
bid while Mr. Lehner is armed with still-fresh information and
timing advantages gleaned from his board tenure.
It is hard to imagine a position more favourable to Mount
Kellett, and less favourable to all other shareholders. That's why
Baja says the standstill expiry was predatory. No Board would allow
itself to be trapped into such a hostage position. Neither should
shareholders force the Board into this position by electing Mr.
Lehner and his ally Lorie Waisberg.
Voting Instructions
Baja urges shareholders to vote only the GOLD proxy AGAINST
Mount Kellett's director removal resolution, and AGAINST Mount
Kellett's Board expansion resolution. Vote WITHHOLD for the two
Mount Kellett nominees to the Board, Stephen Lehner (the managing
director of Mount Kellett) and Lorie Waisberg. Shareholders should
discard any blue proxy they may receive and 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: Shareholders: Laurel Hill Advisory Group Toll-free
1-877-304-0211 or Collect: 416-304-0211assistance@laurelhill.com
Media: Longview Communications Alan Bayless
604-694-6035abayless@longviewcomms.ca Longview Communications Joel
Shaffer 416-649-8006jshaffer@longviewcomms.ca
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