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.