Baja Corporate Update -- Boleo Project, Cinto Colorado, MMB Shareholders Agreement and Board Retirement - Seite 2

Boleo Project Funding

On May 27, 2016, MMB issued a cash call for US$40.0 million for funding planned operations through Q3 2016. The Company has informed MMB that it would not contribute its 10% share of the cash call. This may result in a further decrease in Baja's ownership of the Boleo Project, in addition to that which may arise in respect of the May 2015, February 2016 and March 2016 MMB cash calls (total advance of US$166.0 million). The extent of any dilution to Baja's current 10% shareholding in MMB is pending finalization of the revised Shareholders Agreement and the ultimate form of the cash call participation (i.e. shareholder loan or equity).

Cinto Colorado

In early April 2016, the executive management of the Company, together with a representative of SNC-Lavalin, met with senior executives of KORES in Wonju, South Korea to discuss the proposed installation of an autoclave. KORES subsequently informed the Company that though the autoclave installation has attractive commercial merit to add copper cathode production from the SX/EW circuit, which KORES has also been evaluating, KORES prefers to wait for stable production to be achieved and to have MMB undertake this project internally sometime in the future. This position was reaffirmed by KORES to Baja at meetings at Boleo in June 2016. In addition, KORES also indicated that MMB will not utilize the Cinto Colorado tailings as a potential feed source for the Boleo plant, preferring to mine and process low grade Boleo ore. Baja is currently exploring alternative projects.

Cinto Colorado continue to await for a meeting of the Cabildo (elected municipal governing body of the Municipio of Mulegé, the regional municipality) to be held to ratify the Cinto Colorado lease but have been recently advised that the necessary documentation has been readied for ratification by the Cabildo at its next scheduled meeting.

Revised MMB Shareholders Agreement update

Baja management met recently in Vancouver with representatives of KORES to discuss the few outstanding issues remaining in respect of the revised MMB shareholders' agreement (the "Shareholders' Agreement"), including dilution and the manganese production decision and related payments (see Baja news release dated April 2, 2014), as well as settlement of the Management Services Agreement ("MSA") margin amount owing to Baja.