Baja Corporate Update -- Boleo Ramp-up and 2016 MMB Budget - Seite 2

Plant

Details of the plant problems and solutions are in line with those reported in the Company's New Release dated November 10, 2015. Some remedies, like the addition of a "Sizer" unit to deal with problems related to clay in plant feed material, have been installed and are functioning as expected, while other improvements are awaiting delivery of key items. MMB management is encouraged by the copper recoveries after reduction leaching, which it advised are currently ±70%. During the ramp-up phase, the plant continues to process lower grade material ranging between 0.70% and 0.90% copper. Baja representatives were not made aware of any process plant problems to which, in the option of MMB management, there were no solutions, and were advised that most, if not all of which, should be in place by the end of 2016. Delays in the delivery of key materials are impacting the timing with which outstanding improvements are achievable.

The 2016 target of 22,000 tonnes of copper cathode is similar to the 2015 target of 20,000 tonnes. Copper cathode production in 2015 was 7,319 tonnes. The cobalt and zinc circuits are now scheduled to be in operation sometime in March 2016. The first zinc sulphate prills were on display during Baja's visit having been produced the night before.

During the year, MMB will be installing two additional acid storage tanks at a cost of US$3.5 million.

Underground and Surface Mining

Due largely to difficult ground conditions, underground mining continues to be a serious challenge. The 2015 year end target of producing 1,000 tonnes per day (tpd) underground was achieved on the day before the visit but has not yet been demonstrated to be sustainable at that level. Plans involving new custom built mining equipment and more underground workers are in place to ramp up daily production to the forecast 3,000 tpd by year end.

Two Mexican mining contractors with experience in coal mining are working underground currently employing approximately 80 miners. They are responsible for the mining activity in two of the underground mines.

Surface mining seems to be working well. The only challenges relate to the high stripping ratio, which is now reaching 12:1.

The technical and other information in respect of the Boleo operations disclosed herein has been provided or disclosed to Baja by MMB management during the site visit of Mr. Ogryzlo and Mr. Seidler on February 19, 2016. However, Baja is a minority 10% shareholder in MMB, a company indirectly controlled by KORES, a Korean state-owned company. Therefore, Baja does not have direct and independent access to information relating to the operations of MMB customary for a controlling shareholder or project operator. Baja is dependent upon information provided by MMB and/or KORES either routinely to shareholders, or at specific request. Accordingly, Mr. Ogryzlo and Mr. Seidler have been unable to verify the technical disclosures in this news release relating to current and prospective Boleo mine and process plant production tonnages and operational performance and therefore cannot provide definitive assurance that the technical information disclosed is correct. The technical comments contained herein with respect to the processing plant has been reviewed and approved by Dr. David Dreisinger, Ph.D., P.Eng., F.C.I.M., F.C.A.E, who is a Qualified Person as defined in NI 43-101.