Rosemont Copper still faces key technical hurdles that could further increase cost of proposed $1.2 billion open pit mine

Augusta Resource Corp., the Vancouver, B.C.-based parent company of Rosemont Copper Company, still has some major regulatory and non-regulatory hurdles to cross that could directly impact the cost of the $1.2 billion project that has increased more than $300 million over the last three years.

Augusta, along with national mine lobbying groups including Mined in America, are pressuring state and federal regulators to quickly approve outstanding permit applications for the proposed mile-wide, half-mile deep open pit copper mine Rosemont Copper wants to build in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

Augusta, which is strapped for cash and on the hook for an $83 million loan that is collateralized by all of the assets of Rosemont Copper and which comes due in July 2014, is pressing the U.S. Forest Service to quickly issue a Final Environmental Impact Statement and a Record of  Decision to allow mining operations to begin.

According to an Augusta feasibility study (page 226) (large file warning) filed last year with Canadian regulators, the company faces several significant risks that “may have cost impacts if not addressed in a timely manner.”

These risks include:

a) The risk of further delays in the permitting effort will continue to add costs to the project for storage of purchased equipment and escalation of equipment costs not released for manufacture.

b) Legal challenges to the Record of Decision can delay the resumption of design
engineering and start of construction, incurring added costs noted above.

c) Holding the resumption of engineering until the Record of Decision may delay the construction schedule if contractors need to wait for design information. This can add to the cost of construction.

d) Further geotechnical testing at critical areas of the site is still necessary to identify bedrock. Engineering design can mitigate cost increases by re-designing to avoid the need for blasting.

e) Availability of construction water at site has not been confirmed. Alternatives to having construction water available at site when construction starts are costly.

f) Sand and aggregate availability on site has not been confirmed. A (Clean Water Act Section) 404 permit is required to take sand from dry washes on site. If the permit is not available at start of construction, alternative sources for sand and gravel could be costly.

A decision on whether to require Augusta to prepare a new Environmental Impact Statement or supplemental report is expected later this year.