Baja Mining Corp.

What This Proxy Contest Is About

This proxy contest is about stopping a creeping takeover of Baja by Mount Kellett, a dissident that is attempting to put its interests above those of all other shareholders. Last year Mount Kellett sought exemptions that would have permitted it to acquire more than 30% of Baja’s Shares. Your Board, which refused the exemptions, believes Mount Kellett wants control of your company without paying a premium.

Your Board has worked hard and made dramatic progress towards creating an operating mine at Boleo. The Board has done so for the benefit of Baja and all its shareholders. Now, the Board needs your help to ensure that it is able to continue working towards this goal for the benefit of all shareholders.

Baja is poised to create a substantial increase in value for shareholders over the next 18 months as it becomes a significant base metal producer. Mount Kellett is trying to capture more of this value for itself, at your expense. If Mount Kellett’s representatives are elected, Mount Kellett will have additional influence over Baja and access to non-public information that could help advance its special status agenda.

Mount Kellett’s insistence on having its representatives (and in particular, its Managing Director Stephen Lehner) on the Board may be in Mount Kellett’s best interest, but it is not in the best interests of Baja or other shareholders. If you don’t stop Mount Kellett now, you may not be able to stop Mount Kellett later.

Consider the following:

• Mount Kellett launched this proxy contest not for the reasons it has stated, but because Baja’s Board rejected the Mount Kellett initiatives described below that were self-serving and not in the interests of Baja or its shareholders. The Board:
• Rejected Mount Kellett’s offer of equity financing – Mount Kellett’s offer came with a number of strings attached that would put it ahead of other shareholders.
• Rejected two separate proposals from Mount Kellett to increase its ownership above the 19.9% maximum permitted under Baja’s shareholder-approved Shareholder Rights Plan – Mount Kellett was unwilling to offer a premium to all shareholders for control. Under Canadian securities laws 20% is a significant threshold – an ownership level at which a shareholder is deemed to be a “control person”.
• Having failed to influence the Board, Mount Kellett is now trying to obtain direct, inside access to the Board in pursuit of a hidden objective: to further increase its ownership and gain control without paying a premium for control.
• Mount Kellett, which describes itself on its website as an “opportunistic” investor, used stealth tactics to accumulate its current 19.9% holding and is attempting to disguise its real agenda with a governance smokescreen. Mount Kellett’s record demonstrates that it doesn’t really care about governance. Nor has Mount Kellett offered any strategic plan or “vision” for Baja. Mount Kellett has only one vision – its own best interests.
• Stephen Lehner rejected an offer to join the Board when Mount Kellett held approximately 11.9% of Baja's Shares. If he had joined then, insider reports would have been required to be filed on the System for Electronic Disclosure by Insiders (“SEDI”) for every subsequent trade by Mount Kellett, including the price at which it bought or sold Baja’s Shares. Instead, Mr. Lehner waited to demand a Board seat only after Mount Kellett had substantially increased its position. While he waited, Mount Kellett continued to increase its holding stealthily, with limited SEC and SEDAR filings that were less transparent, less frequent and less informative than SEDI filings, and less likely to come to the attention of Baja's other shareholders.
• Mount Kellett rejected your Board’s fair offer to appoint as directors two Mount Kellett nominees who are independent of Mount Kellett.
• Baja has a strong Board. There is no valid reason for a proxy contest.
• Baja has outperformed most of its peers (see Exhibit F of Baja's Information Circular), and during a period of troubled financial markets has succeeded in completing a US$1.1 billion financing for the construction of the Boleo mine.
• Mount Kellett had the option to simply wait to press its agenda at the annual general meeting of shareholders. Instead Mount Kellett unnecessarily requisitioned the Meeting and has caused Baja to incur significant expense when instead it should be spending its funds on the Boleo project. Once again Mount Kellett has placed its own interests ahead of those of other shareholders.

Your Board last year became increasingly concerned about the demand of Mount Kellett employee Stephen Lehner to become a director of Baja. He is the front man for Mount Kellett’s special status demands. He is professionally conflicted. He lacks relevant experience. His interests are Mount Kellett’s, not those of other shareholders. If you elect him, Mount Kellett will have its man on the inside and will be a significant step closer to executing its creeping takeover strategy.

Lorie Waisberg, Mount Kellett’s other nominee, has relevant experience and appears to be qualified, but he has refused an invitation to join the Board. This conduct suggests that he is not independent of Mount Kellett.

Your Board needs your support to prevent Mount Kellett from advancing its creeping takeover. All votes matter, regardless of how many Shares you hold. Protect the interests of all shareholders by keeping Mr. Lehner of Mount Kellett and his ally Mr. Waisberg off Baja’s Board. Vote only the GOLD Proxy so that your Board and management can remain focused on developing Boleo and delivering value to all shareholders.