Hudbay extends hostile bid for Augusta 10 days as it reviews permitting and approval outlook for Rosemont copper mine


Hudbay Minerals Inc. today extended its hostile take over bid for Augusta Resource Corporation to gain control of the Rosemont copper project for another 10 days and is now set to expire on May 16.

The extension comes three days after the British Columbia Securities Commission rejected Hudbay’s request to immediately void Augusta’s poison pill plan designed to thwart a hostile takeover of the Vancouver, B.C.-based speculative mining company.

The poison pill, also known as a shareholders’ rights protection plan, would allow Augusta to issue below market-priced shares of stock to existing shareholders, effectively raising the cost of a hostile takeover.

A four-member BCSC panel ruled Friday that Augusta’s poison pill would remain in place until at least July 15.  The commission ruled Augusta’s poison pill would only expire if Hudbay extended its offer to July 16 and provides a 10-day extension of the offer if it takes up any shares under the offer.

Unless Hudbay extends its offer to July 16, Augusta’s poison pill remains in place until the company’s next shareholder meeting in 2015, Augusta stated in a release.

Rather than extending the bid until mid-July, Hudbay opted for the much shorter extension as it evaluates the permitting and approval outlook for the Rosemont project based on new information that was released last week.

“Hudbay is assessing, among other things, the implications of the announcement by the US Forest Service (“USFS”) on May 1, 2014 that ‘the complexity of the content of the objections‘ raised in connection with the Final Environmental Impact Statement for the Rosemont project ‘will require additional time to thoroughly review and give full and deliberate consideration to the issues raised.”‘

Hudbay also stated it “is assessing the implications of Augusta’s recent announcement that it was informed by the U.S. Army Corps of Engineers that ‘there is a shortfall between the mitigation plan it had proposed in April and the mitigation needed to fully offset impacts to waters of the U.S. associated with the [p]roject.”‘

The USFS has stated it will provide an update on the schedule for the Record of Decision (“ROD”), which appears to be subject to further delay, by the end of May, Hudbay stated.

The USACE has indicated to Augusta that the timing of its permit decision for the Clean Water Act 404 Permit may be affected by the schedule for the ROD, Hudbay noted.

Hudbay has repeatedly stated during the acrimonious takeover struggle that began Feb. 9 that Augusta’s management was “misleading” shareholders when it would receive the Final ROD and 404 permit.

Augusta needs the cash to cover operational expenses and repay a $109 million loan that is due not later than Oct. 21, 2014. The loan from London-based RK Mine Finance is secured by the Rosemont project and default could mean Augusta loses its only material asset.

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