Augusta Resource’s cash reserves plummet to less than $1 million with $83 million loan repayment looming next July

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Augusta Resource Corporation’s cash reserves fell to $749,000 at the end of September, forcing the parent company of Rosemont Copper Company to sell $10 million in bonds to its chairman and a major shareholder to provide working capital to the keep the company operating through the end of this year.

Vancouver, B.C.-based Augusta states it must obtain additional financing early next year or the company will not be able “to continue development of the Rosemont project until such time as permitting is completed and the Company can initiate construction on the project.”

Augusta warned investors in its 3rd Quarter Financial Statement and Management Discussion & Analysis reports filed Nov. 14 with Canadian securities regulators that its financial condition indicates “the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern and is dependent on the Company raising additional debt or equity financing.”

Augusta’s immediate financial future hinges on Rosemont Copper receiving all needed state and federal permits to begin construction of the $1.23 billion Rosemont open-pit copper mine in the 2nd Quarter of 2014. The time schedule appears to be very optimistic.

The US Forest Service cannot release its final Record of Decision on the proposed Rosemont mine until March because of administrative objection requirements. The U.S. Army Corps of Engineers, meanwhile, is not expected to make a decision on whether to issue a Clean Water Act permit for the mine until after the FEIS is released.

The U.S. Environmental Protection Agency has stated that the Army Corp’s decision on whether to issue the clean water permit is a candidate for joint review by EPA’s and the Army Corps’ headquarters in Washington. EPA also has veto authority over Army Corps clean water permits and has repeatedly stated it has serious concerns over the proposed mine’s impact on sensitive surface and ground water resources.

Augusta needs the ROD and the clean water permit, in addition to completing several other federal regulatory requirements related to endangered species and historic preservation, to obtain access to more than $300 million in pledged funds not only for working capital, but to also repay a $83 million loan that comes due in July.

Augusta states in Thursday’s regulatory filings it expects to use “a portion” of the $106 million pledged by its joint venture partner, United Copper & Moly, and $225 million from Silver Wheaton to repay the $83 million loan from Red Kite, a London-based metals hedge fund, due on July 21, 2014.

Augusta has pledged all of Rosemont Copper’s assets as collateral for the Red Kite loan.

The 3rd Quarter ending September 30 continued Augusta’s string of quarterly losses as the junior mining company posted a $1.7 million net loss for the quarter and $5.6 million net loss for the first nine months of 2013. The company spent $24.4 million in the first nine months of 2013, down from $30.2 million for the same period in 2012.

Augusta shored up its depleted cash reserves in September by selling $3.5 million in bonds that is convertible to stock. Augusta sold an additional $6.5 million in the bonds in October. Augusta Chairman Richard Warke, and one of the company’s largest shareholders, Ross Beaty, purchased the bonds.

Augusta forecasts $295 million in operating and capital expenditures for the next twelve months assuming the U.S. Forest Service issues the Final Environmental Impact Statement and draft ROD in the 4th Quarter.

Augusta projects construction to commence in the 2nd Quarter of 2014. This forecast includes approximately $194 million for Rosemont permitting and construction, $72 million for project financing fees and expenses, $4 million for general and administration and $25 million for non-Rosemont capital projects such as the construction of a Central Arizona Project water delivery system and a port facility in Topolobampo, Mexico.

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4 Responses to Augusta Resource’s cash reserves plummet to less than $1 million with $83 million loan repayment looming next July

  1. Thomas Stewart says:

    Good Golly Miss Miley This Sounds Like Something Out Of The “Barry Soetoro Aka BS Obama” Play Book So Until A Change Of Command Rosemont Is On The Same Page As “Keystone Pipeline” Anything That Helps The US Our Pres Is Against. God Bless America And The Real Tea Party Patriots.

  2. ALAN JOHNSON says:

    IS IT AN END TO THE BEGINNING OR THE BEGINNING OF THE END ? AUGUSTA IS EATING ITSELF UP FINANCIALLY . HOW MANY DEEP-POCKET INVESTORS/SHAREHOLDERS ARE PREPARED TO BAIL IT OUT ? THE TEAM OF WARKE AND BEATY GO BACK A LONG WAY WHEN BEATY MADE MILLIONS THANKS TO WARKE AND THE SALE OF VENTANA GOLD CORP FOR $1.56 BILLION . FRIENDS IN NEED ARE FRIENDS INDEED ! IT IS AMAZING HOW ” THE MONEY POT ” BRINGS LIKE-MINDED PEOPLE TOGETHER .

    ON A MORE SERIOUS NOTE IS THE PENDING RELEASE OF THE FEIS BY THE US FOREST SERVICE . THE HOLIDAY SEASON IS FAST APPROACHING WHEN PEOPLE’S INTERESTS AND PRIORITIES SHIFT TO FESTIVE ACTIVITES . PERHAPS EVERYONE SHOULD CONSIDER AN ” AUGUSTA TURKEY ” FOR THANKSGIVING AND/OR CHRISTMAS IN ORDER TO INDULGE IN ” ROASTING AND CARVING ” . PERHAPS , THE RELEASE WILL NOT TAKE PLACE UNTIL THE NEW YEAR . HOPEFULLY , THE VOLUME OF SUBMISSION TO THE US FOREST SERVICE AND THE LONELY FORESTER , SADDLED WITH THE RESPONSIBILITY OF DEALING WITH THE RESPONSES , WILL BE EXHAUSTIVE AND OVERWHELMING . I URGE ALL PARTICIPANTS TO USE A LAWYER’S APPROACH WHEN SUBMITTING AND ELABORATE ON EVERY ITEM IN ORDER TO FILL AS MANY PAGES AS POSSIBLE WITHOUT LOSING SIGHT OF THE TOPIC IN QUESTION .

    AUGUSTA INVESTORS ARE REACTING LIKE ” DEER CAUGHT IN THE HIGH BEAMS ” OF AN ONCOMING CAR . AUGUSTA IS NO LONGER BRINGING ANYTHING SUBSTANTIAL TO THE TABLE BUT CONTINUES TO SPEND HEAVILY IN ORDER TO SIMPLY CREATE AN ILLUSION OF A COMPANY ON THE ROAD TO SUCCESS . IT APPEARS THAT SENIOR OFFICERS AND FRIENDS , IN SOME WAYS , ARE PERHAPS INFLUENCING FINANCIAL MATTERS TO THEIR OWN BENEFIT . WHAT ARE THE LIMITS TO ” INSIDER TRADING ” ?

    HAS ANY OFFICIAL ATTEMPT BEEN MADE TO BRING MATTERS TO THE ATTENTION OF THE CANADIAN SECURITY COMMISSION/WATCH DOG THAT OVERSEES CANADIAN RESOURCE COMPANIES WHO RAISE FUNDS ON THE TSX FOR PROJECTS IN FOREIGN COUNTRIES ?

  3. Pingback: EPA recommends rejection of Rosemont Copper’s Clean Water Act permit application for its proposed massive open-pit mine | Rosemont Mine Truth

  4. Cheryl Rennie says:

    God Bless America and to Hell with Rosemont! I am a real Tea Party Patriot who understands that The Rosemont Copper Project is not good for America.

    The few temporary construction jobs that this company claims it will provide along with its bogus economic multiplier effect do not justify the long term environmental destruction this project will cause. Furthermore, the Company cannot demonstrate financial sustainability. Financial assurance is decided behind closed doors using Rosemont estimates with no public input. Yet, it is the taxpayers who will pick up the clean-up tab. A real Tea Party Patriot who believes in open, limited government and fiscal accountability would be opposed to that.