Augusta Resource executives purchased and sold stock in days leading up to and after HudBay takeover bid announcement

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Correction and Clarification: An earlier post incorrectly stated last Friday was Feb. 8. The correct date is Feb. 7. This post also includes updated information from Augusta Resource’s May 17, 2013 proxy statement that states the market value of “restricted shares” of common stock is the closing price of the common shares on the Toronto Stock Exchange on the day immediately preceding the relevant event.

In the days leading up to and immediately after HudBay Mineral’s Sunday, Feb. 9 public announcement that it was making an unsolicited offer to purchase all the outstanding shares of Augusta Resource Corporation, at least five Augusta insiders purchased and sold substantial shares of Augusta stock, records compiled by Canadian Insider show.

On Wednesday, Feb. 5, Augusta CEO and President Gil Clausen purchased 90,000 shares, Chief Operating Officer Rod Pace purchased 50,000 shares, Senior Vice President for Corporate Affairs James Sturgess purchased 40,000 shares, Augusta board member W. Durand Eppler bought 20,000 shares and Vice President of Exploration Mark Stevens acquired 15,000 shares, according to records published by Canadian Insider which analyzes insider trading reports filed with Canadian regulators.

The day after HudBay’s Sunday take over bid announcement made through a press release, the five Augusta executives  sold substantial shares of common stock.

Canadian Insider reports state that Clausen sold 90,000 shares, Pace sold 50,000 shares, Sturgess 40,000 shares, Eppler 20,000 shares and Stevens 15,000 shares.

Canadian Insider does not report the purchase and sales price of stock by the Augusta insiders because the transactions involved “restricted” shares of stock. Companies typically issue executives restricted stock as part of stock-based compensation plans.

According to Augusta’s May 2013 proxy statement, the market value of restricted shares is the closing price of the common shares on the Toronto Stock Exchange (TSX) on the day immediately preceding the relevant date.

Augusta’s website states shares in its common stock closed at $2.01 on Feb. 4 on the TSX, the day before Augusta insiders purchased restricted shares. The stock  closed at $2.51 on Friday, Feb. 7, the last market day before Augusta insiders sold shares on Monday, Feb. 10.

Based on this information, five Augusta insiders made a 50 cent per share profit on their trades immediately preceding and after Hudbay’s take over bid was made public.

The Financial Post raised the question of whether news of HudBay’s plans to pursue a hostile takeover leaked out last week, in a Feb. 10 post on its website.

The Financial Post noted that Augusta stock rose 25 percent last week, with the bulk of the increase – 14.6 percent — occurring on Friday, Feb. 7 in heavy trading.

On the same day, Augusta posted an investor’s report placing a net present value of the company at $2.5 billion based on $3.50 a pound copper and a discount rate of 8 percent.

HudBay’s tender offer for Augusta is worth $540 million.

Augusta said in a Feb. 10 press release that its board of directors will meet this week to consider the HudBay offer.

Augusta is seeking state and federal permits through its Rosemont Copper Company subsidiary to construct the Rosemont open pit copper mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

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One Response to Augusta Resource executives purchased and sold stock in days leading up to and after HudBay takeover bid announcement

  1. ALAN JOHNSON says:

    IT APPEARS THAT , ONCE AGAIN , AUGUSTA HAS PULLED A PROVERBIAL RABBIT OUT OF THE HAT . HUDBAY HAS ARRIVED ON THE SCENE AND MADE AN OFFER . THIS IS NOT SURPRISING AS HUBAY HAS MADE IT KNOWN THAT IT IS SHOPPING FOR COPPER PROPERTIES AND ROSEMONT APPEARS TO FIT THEIR LONG TERM NEEDS . AUGUSTA IS ALL ABOUT MAKING QUICK MONEY AS WAS EVIDENT WHEN THEY SOLD A COLUMBIAN GOLD PROPERTY FOR $ ONE BILLION DOLLARS . IN COMPARISON , HUDBAY IS ALL ABOUT MINING . AS A CANADIAN MINING COMPANY , THEY HAVE BEEN IN BUSINESS FOR MANY YEARS AND HAVE ESTABLISHED A GOOD REPUTATION , AT LEAST IN CANADA . THEY ARE SOMEWHAT CONSERVATIVE IN THEIR ACTIVITIES AND WOULD HAVE CARRIED OUT THEIR OWN DUE DILIGENCE BEFORE MAKING THEIR OFFER WHICH AT THIS POINT IS OPEN TO CHALLENGE . IT IS VERY POSSIBLE THAT ROSS BEATY WHO IS A MAJOR SHAREHOLDER IN AUGUSTA IS ACTING AS A FACILITATOR IN THIS DEAL . BEATY , A CANADIAN , IS A WELL KNOWN AND HIGHLY RESPECTED INVESTOR IN THE MINING BUSINESS . HE IS ALSO A MAJOR SHAREHOLDER IN A CANADIAN COMPANY THAT HAS A COPPER DEPOSIT IN ARGENTINA WHICH IS ALSO PUT ON THE MARKET . NO DOUBT BEATY HAS APPROACHED HUDBAY WITH A DEAL . IN ANY CASE , THESE ARE STILL EARLY DAYS BUT NOT FOR AUGUSTA WHO ARE FACING A SERIOUS FINANCIAL CRISIS . THEY ARE RAPIDLY RUNNING OUT OF OPERATING FUNDS AND THE CREDITORS ARE STARTING TO LINE UP. PERHAPS IT IS TIME TO CUT AND RUN AN GET OUT OF TOWN AS QUIETLY AS POSSIBLE .