Richard Warke, chairman of Augusta Resource Corp.'s board of directors, told the Canadian Financial Post newspaper this week that permitting delays for the proposed Rosemont Mine helped lead to the friendly takeover agreement that the company reached with Hudbay Minerals Inc., the paper said.
“Everyone can do the math,” Warke was quoted as saying in an interview with the paper. “If the permit came in on the timeline we were expecting in April, obviously things would have been different."
The two companies announced the takeover agreement on Monday. It calls for Hudbay to pay Augusta shareholders the equivalent of $3.56 per share of Augusta stock. That compared to an earlier Hudbay offer of $2.96 per share that Augusta officials and most company shareholders had refused.
The federal permitting delays have been caused in part by recent photographs taken of an endangered ocelot near the mine site, the fifth confirmed ocelot sighting in Arizona in the past decade. There previously hadn't been any confirmed ocelot records in this state since 1964.
Another factor in the delays has been new scientific determinations that the mine's impact on Cienega Creek and its tributary Empire Gulch may be more serious than the Forest Service had originally said. That could affect five federally protected plant, bird fish and frog species and two other rare species proposed for federal protection that live in or near those water courses.
As a result, the U.S. Fish and Wildlife Service will conduct a new round of reviews of the mine's impact on those species, and the Forest Service will also have to write a supplement to an earlier biological assessment it did of the mine. Augusta had hoped to obtain its federal permits by the end of June, but the new reviews will stretch the permitting timeline for an unknown time, up to 135 days.
Here's an excerpt from the Financial Post article:
"After the ocelot sighting, analysts speculated that Augusta shareholders would be more likely to tender to HudBay’s bid because of the permitting uncertainty. Mr. Warke said that was not a concern, as investors were supportive of the company and recently backed a shareholder rights plan.
However, he said the permitting delay caused the company to re-evaluate its options. It ultimately decided to negotiate a friendly deal with HudBay.
“Obviously not the best upside we wanted today, but you can only control what you can control,” Mr. Warke said. “Going forward, the combined company offers a really nice exposure to the copper market for our shareholders.”