Baja Mining Corp. (TSX:BAJ) shares are taking a beating in the wake of defections from its board of directors and news that the Vancouver-headquartered company is short $246 million to complete its $1.14 billion Boleo mine in Mexico.
On April 17, Gerald Prosalendis resigned from Baja's board of directors, citing personal and family reasons.
But his departure was soon followed by the resignation of a long-time director, Graham Thody. And on Monday, two more directors quit – Wolf Seidler, director and chairman of Baja's corporate governance committee, and Tom Ogryzlo, a former chairman of the board.
In a joint press release, Seidler and Ogryzlo said, "In light of recent developments, including the departure of Graham Thody, a dedicated long-time director and chairman of the audit committee, we are no longer confident that we can ensure the level of good governance and oversight that the shareholders of Baja have a right to expect from us."
Those "recent developments" include the news that Baja's copper-cobalt-zinc-manganese Boleo project near Santa Rosalia, Mexico, is now underfunded by 21%. The company has exhausted its contingency and cost overrun facilities and is still $246 million short of the total needed to put the mine into operation.
The Boleo project was estimated to cost US$1.14 billion, based on 2010 projections, and was slated to go into production early in 2013.
In a news release Monday, the company stated the increased costs are a result of design improvements and a change in scope, as well inflation on key inputs, such as steel and fuel.
The market reacted to the news Monday with a share dump. Baja's shares lost 37% of their value, dropping to $0.34 from $0.54.
A spokesperson for the company could not be reached for comment.
Baja is the project operator for the Boleo mine and owns holds a 70% interest in the project. A Korean syndicate of industrial companies holds the remaining 30%.
