UPDATE TO YESTERDAY'S POST: Hudbay upped its rhetoric another step this week when its CEO, David Garofalo, told an interviewer for the Canadian Financial Post newspaper that Augusta is "essentially insolvent," putting its shareholders at risk if the mine's permitting is delayed past the Vancouver, B.C. company's stated goal of 2nd quarter 2014.
“They really have no money, they have significant debt and that debt is coming due very soon,” Garofalo was quoted as saying in the interview. “We’re concerned about what they might do to extend that debt and what it might do to destroy value for shareholders.”
The Financial Post article concluded: "HudBay believes it is the right company to build the US$1.2-billion project because of its strong technical and financial capabilities. But it has to win the battle first. Augusta shares are trading above its bid and numerous analysts stated that rival offers are a strong possibility."
Here's the earlier post:
After Augusta Resource Corp. took a big shot at Hudbay Minerals Inc.'s takeover effort of Augusta earlier this week, Hudbay struck back today.
Hudbay issued a news release warning that Augusta's goal of getting the Rosemont Mine permitted by mid-2014 is unrealistic and cited several reasons why.
It said that a circular from Augusta this week "disclosed no additional information that would warrant the modification by Hudbay of its offer to acquire all of the issued and outstanding common shares of Augusta not already owned by Hudbay."
"More importantly, the Augusta Circular fails to address critical permitting and financing risks that cast significant doubt on Augusta's plans to develop the Rosemont project," wrote Hudbay, which owns 16 percent of Augusta's shares of stock.
One issue raised by Hudbay is that the Forest Service doesn't have to make a final decision as soon as the 45 to 75-day period passes for it to review all objections. It could decide to hold off on a decision to do additional analysis and/or require more mitigation, for instance.
This release came three days after Augusta announced that its board of directors has unanimously recommended against its shareholders accepting Hudbay's takeover bid.
In its news release that same day, Augusta called Hudbay's hostile takeover effort "highly opportunistic" given that permitting for the mine "is nearing completion." It said it's confident of getting its final formal permit -- the 404 Clean Water Act permit from the Army Corps of Engineers -- approved by the second quarter of this year, and starting construction by mid-2014.
"The unsolicited offer is grossly inadequate and does not come close to recognizing the full and fair value of Augusta and the world-class Rosemont project," said Augusta Board Chairman Richard Warke in the news release. "It not only is opportunistic, failing to compensate Augusta's shareholders adequately at a time when the company is at an inflection point of significant value creation, but it replaces this lost value with an increased exposure to risk. Our board rejects this low ball bid, and recommends that our shareholders do not tender their common shares."