The shares of Baja Minig Corp. (TSE:BAJ, BAJ message board), (PINK:BAJFF) were positively stirred after the company announced its end-2010 financial statements and its annual information form. This happened last Thursday and probably inspired the stock for a surge. It is not clear for how long the advance of the shares will hold, though.
During the last two sessions, BAJ added 9% to its value, finishing the week at $1.10. The turnover was much more impressive. The 7.39M shares that changed hands on Friday, made the stock one of the most demanded by investors item on the Toronto Stock Exchange.
The mentioned financial statements reveal somewhat contradictory results. The positive figures include a solid cash position of over $48M in the end of 2010, and a working capital of $37M. The corporation looks financially stable enough; this was, maybe, appreciated positively by investors.
Baja Mining Corp. is a Vancouver-based mine development company. Through its 70%-owned subsidiary Minera y Metalurgica del Boleo S.A. de C.V., Baja holds the Boleo copper-cobalt-zinc-manganese project located in Mexico.
In spite of the corporation’s financial stability, there are some negative factors that could probably hurdle the future performance of the shares too. They are obvious from the same financial reports that show:
- Baja had over $79M of long-term debt in the end of last year;
- The company recorded a very huge net loss of more than $80.7M for 2010. This is due to the unrealized non-cash hedge loss recognized on the corporation’s zero-cost collar copper hedging program. In order to satisfy a condition precedent to some senior debt facilities, Baja entered into such a program with the Commercial Banks. The company recognized a fair value adjustment of $72.3M related to the derivative instruments;
- Baja expects copper production on the property to commence no sooner than in early 2013. Until then, the company can rely to receive no revenue from its activities and will continue to incur losses.
Nevertheless, Baja might possibly profit from the rising as a whole copper prices over the last year. This will, however, have a much more favorable impact on the company only when Baja enters the production phase.
