Rosemont Copper Company’s parent company, Augusta Resource Corp., will run out of cash by the end of the year unless it sharply reduces spending or receives a new injection of capital, the Arizona Daily Star reported Sunday in a lengthy story by Tony Davis.
Augusta’s available cash to carry out its permitting and other efforts has dwindled sharply over the past year, just as the mine project has hit some major snags, most notably two highly critical letters from the Environmental Protection Agency last winter, the Star reported.
The Star also provided key details from the company’s financial statements:
• August’s $19.6 million cash on hand as of March 31 is down from about $31 million at the start of 2012 and about $50.4 million at the end of the first quarter of 2011.
• In the first quarter of 2012, the company spent about $10 million on expenses related to mine development, on top of about $39 million in similar expenses for 2011. The first quarter expenses included $8.5 million for “permitting, engineering and ongoing support activities.”
• The company reported a $29 million working capital deficiency – representing liabilities exceeding assets – for the first quarter of 2012. That compared to a $17.6 million working capital deficiency at the start of 2012 and $17.79 million in available capital at the start of 2011. The latest deficiency means that financing committed for the project’s current phase – before full permitting – is short by the $29 million.
The increased working capital deficit is due to spending on administration, permitting and operating costs and on deposits on mining equipment, Augusta financial statements say.