Augusta Resource falsely claiming “Rosemont has established funding” for proposed copper mine

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Augusta Resource Corp. continues its longstanding practice of providing misleading information to investors in its most recent “Investor Presentation” posted on the company’s website.

Vancouver, B.C-based Augusta, which is seeking state and federal permits through its Rosemont Copper Company subsidiary to construct an open pit copper mine southeast of Tucson, claims on page 16 of the presentation that “Rosemont has established funding” for the $1.23 billion project.

The company emphasizes the point by using red type for “established funding.”

Augusta then tells investors that it plans to use debt to cover 60 percent of the $890 million in project financing and that financing will be in place by the end of the 2nd Quarter 2013.

Augusta then claims that it will obtain the two final federal permits from the U.S. Forest Service and the U.S. Army Corps of Engineers needed to move forward with construction of the mile-wide, half-mile deep mine by the end of the 2nd Quarter.

With the permits in hand, and financing in place, the company tells investors it will “commence construction in 2013” and begin “copper production in 2015”.

All this may sound great to an Augusta investor or potential investor. But none of it is true. And Augusta knows it’s not true.

To start with, Rosemont doesn’t have “established funding”. In fact, Augusta’s auditor issued a March 25, 2013 warning to investors that there is “substantial doubt” about Augusta’s ability to “continue as a going concern.”

Not only is Augusta teetering on financial collapse, the company remains mired in negotiations for financing that have been ongoing for several years.

Contrary to Augusta’s claim in the Investors’ Presentation that Rosemont has “established funding”, Note 1 of the 2012 audited financial statement released March 25 reports that Augusta  is “currently discussing project financing  (emphasis added) with a number of lending institutions and believes (emphasis added) that such discussions will result in the Company obtaining the project financing required to fund the construction of the Rosemont project. However there is no assurance (emphasis added) that such financing will be obtained or obtained on commercially favourable terms.”

In other words, Augusta doesn’t have established funding for the Rosemont mine in place, and may never obtain the funding to build the mine. Augusta’s claim that Rosemont financing is in place is as misleading as telling your accountant you have won the Powerball jackpot merely by purchasing a $2 lottery ticket.

As for Augusta’s claims that the Forest Service and Army Corps will issue permits by the end of June, there is no evidence whatsoever from either agency that the permits will be issued by the end of the second quarter.

The Forest Service announced last November that it does not have a target date for issuing a Final Environmental Impact Statement and a Record of Decision needed before mining can commence. The agency is continuing a review of Rosemont’s proposed mitigation plan for the project and the impact on endangered species, including the jaguar.

Coronado National Forest Supervisor Jim Upchurch said last November that once a Final EIS is completed, it will be forwarded to the Regional Forest headquarters in Albuquerque for review. Other cooperating agencies will also have an opportunity to comment on the document, which could require more analysis.

The U.S. Army Corps of Engineers won’t make a decision on issuing a Section 404 Clean Water Act permit until after it has received the Final EIS from the Forest Service.

Further complicating matters for Augusta is that the U.S. Environmental Protection Agency Region IX has sharply criticized the mining plan. EPA also has veto authority over any water permit issued by the Army Corps of Engineers.

Meanwhile, two state permits – The Aquifer Protection Permit and the Air Quality Permit – are both under appeal by citizens groups. Contrary to Augusta’s assertion in the Investors Presentation, it does not yet have the two state permits “in hand”.

Without the permits, Augusta will not be able to begin construction on the mine.

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3 Responses to Augusta Resource falsely claiming “Rosemont has established funding” for proposed copper mine

  1. Catherine Cole Ferandelli says:

    To add further discussion, it was recently announced that Red Kite (investor for Augusta) just provided $200,000,000 in financing to a mining firm operating a copper mine in Northern Nevada. No…Augusta does NOT have a new mining project in Northern Nevada, this is a completely different firm.
    Could it be possible major mining investors such as Red Kite are looking elsewhere for a positive return on income? Looks that way!

  2. ALAN JOHNSON says:

    IT IS PROBABLY TIME TO DEVELOP A STRATEGY WHICH WILL LEAD TO A COMPLAINT FILED WITH THE TSX AND COPIED TO THE BRITISH COLUMBIA SECURITIES COMMISSION , THE NEW YORK STOCK EXCHANGE , THE FRANKFURT STOCK EXCHANGE , ETC . IT IS OBVIOUS THAT AUGUSTA HAS BEEN MISLEADING ALL CONCERNED OVER THE FINANCIAL RESOURCES REQUIRED TO BRING THE ROSEMONT PROSPECT INTO FULL PRODUCTION . HOWEVER , THERE MUST BE DOCUMENTED EVIDENCE OF FRAUD IN ORDER TO HAVE ACTION TAKEN AGAINST AUGUSTA .. THIS IS NO EASY TASK AS AUGUSTA HAS SURROUNDED ITSELF WITH LAWYERS AND A VERY PROMINENT ACCOUNTING FIRM WHO RELY ON THE INFORMATION PROVIDED TO THEM BY AUGUSTA . A FORENSIC AUDIT OF AUGUSTA’S FINANCIAL SITUATION BY AN INDEPENDENT THIRD PARTY MAY REVEAL A CASE OF FRAUD , HOWEVER SMALL . AUGUSTA IS VERY CLEVER AT MANIPULATION AS THEY HAVE A ESTABLISHED TRACK RECORD TO SHOW THAT ” CRIME DOES PAY “

  3. Cheryl Rennie says:

    Augusta’s VP of Investor Relations, Letitia Cornacehia recently made a misleading statement to the Arizona Daily Star when she said that the “auditors actually agree with the mining company’s position because if they didn’t the report would be “qualified.”
    Not true. Anybody that has taken Accounting 101 knows that an unqualified audit statement simply means that the Company has complied with Generally Accepted Accounting Principles in the way they reported the numbers. It is the auditors’ comments in interpreting those numbers that is meaningful. In this case, they have substantial doubt about Augusta’s ability to continue as a going concern.