Baja Mining Corp said lenders have agreed to a 45-day standstill for its Boleo project financing, giving the company more time to arrange for funds for its cash-strapped flagship project in Mexico.
Shares of company, which has a market value of C$61 million, rose as much as 22 percent to 22 Canadian cents on Wednesday morning making it one of the top percentage gainers on the Toronto Stock Exchange.
The Canadian miner, which in May raised going concern doubts, has been struggling to cover cost overruns at its copper-cobalt-zinc Boleo project, which is 70 percent owned by Baja and rest by a Korean consortium.
The lenders will refrain from exercising rights until Aug. 1 with regard to certain defaults, Baja said in a statement.
The company said a cash injection of $21 million will take care of cash requirements for the project till Aug. 1.
Spending at the Boleo project is expected to be $246 million more than the $1.14 billion estimated in 2010 because of design changes and higher steel and fuel costs.
The company had warned it would not be able to proceed beyond mid-June without a cash injection.
Baja’s second-largest shareholder recently sought an independent investigation into the cost overruns at the Boleo project.
