Part of the site for the proposed mine in the Santa Rita Mountains. 

Mike Christy / Arizona Daily Star 2013

Augusta Resource Corp. shareholders could be on the verge of rejecting a takeover bid from another Canadian mining company, but the bidder isn’t backing away from an offer Augusta denounces as inadequate.

The governing board of Rosemont Copper’s Vancouver, B.C.-based parent company Augusta Resource Corp. has unanimously recommended rejection of an unsolicited takeover bid by Hudbay Minerals, Augusta said Monday. Hudbay is a larger, Toronto-based mining company.

Overall, owners of more than one-third of all Augusta shares have indicated they’ll reject the offer, the company said in a news release Monday. In a conference call for analysts and investors on Monday, Augusta President and CEO Gil Clausen called the offer “lowballing” and accused Hudbay of a “highly opportunistic” offer, given that Augusta believes federal permitting of the highly controversial Rosemont Mine is close at hand.

Because Hudbay says its offer requires approval of owners of at least two-thirds of Augusta shareholders, “it is a virtual certainty, that, as structured, Hudbay’s offer cannot succeed,” the Vancouver, B.C.-based Augusta said in its news release.

Announced Feb. 9, Hudbay’s offer of its own stock amounts to the equivalent of $2.96 per share in Augusta stock, compared to a Toronto Stock Exchange share price of $2.51 on Feb. 7, the most recent day of trading before the takeover offer occurred. Since then, Augusta’s stock price has risen while Hudbay’s has dropped. The offer expires on March 19.

“Our offer stands as is,” Hudbay spokesman Scott Brubacher said in an email to the Star Monday, in response to a question of whether the bid would now be raised.

He pointed out that during Augusta’s conference call today, Clausen said the company has no “binding or contractual arrangements” that prevent investors from “tendering” — turning over — shares in response to the Hudbay offer.

“Based on publicly available information, Augusta’s board and management own approximately 10% of Augusta’s shares, while Hudbay owns 16%,” Brubacher said.

But during the conference call, Clausen said for the moment, there’s no need to try to lock up the shareholders in binding agreements not to sell, since the officers and directors and enough of the shareholders have indicated they won’t accept the offer, adding “That’s good enough for us.”

Clausen also said his company is “aggressively pursuing other opportunities,” is already discussing potential future offers from “other third parties,” and has signed several confidentiality agreements with them. He declined to elaborate.

“We’ve expanded the project significantly, with seven of the eight permits required,” Clausen said during the conference call, not counting a Forest Service formal decision in favor of the Rosemont Mine, which is not technically a permit. “We have one more to go, the Clean Water Act permit from the Corps, which is expected next quarter.

“The final EIS has been published,” he said, referring to the mine’s final Environmental Impact Statement. “It’s an enormous achievement after six long years. The draft Forest Service record of decision has been issued and is already halfway done in the last step to getting this complete. Then, Hudbay comes in the last second with a lowball bid ... This is an exciting time for Augusta; and we will protect that value for our shareholders.”

Hudbay spokesman Brubacher, in another email to the Star, repeated the company’s belief that its offer represents a significant premium for Augusta shareholders.

Agreeing to an acquisition by Hudbay would reduce risk for Augusta shareholders, Brubacher said, by helping them avoid “the current single asset risk,” referring to the fact that Rosemont is Augusta’s only major asset. In contrast, Hudbay has a 70 to 100 percent interest in three existing mines and is halfway finished building a major copper mine in Peru known as Costancia.

“Hudbay believes its significant technical expertise and superior financial capacity better positions Hudbay to advance Rosemont through the final stages of permitting and into construction,” Brubacher said.

Augusta, however, said that while Hudbay’s offer exceeded Augusta’s stock price at the time it was announced, it was 22 percent less than the closing price of Augusta stock on Friday at the Toronto Stock Exchange. It’s also 36 percent lower than the average target price set for Augusta stock by mining analysts — a price not expected to become reality until the mine gets all of its permits.

The Peru mine also would present Augusta shareholders increased geopolitical risk, due to recent unrest at other mining operations in that country, Clausen told the conference call listeners.

In a note to investors on Monday, market analyst CIBC World Markets said they continue to recommend that Augusta shareholders reject Hudbay’s offer. Its analysis projects a $4.75 share price for Augusta in 12 to 18 months, CIBC said.

“We would not be surprised to see a competitive bidding process being now that (Hudbay) has set the low-ball anchor price for Augusta shares,” CIBC wrote.

But Hudbay’s offer should be looked on favorably because it’s Augusta’s single biggest shareholder and “has an excellent growth profile with lower risk, analyst Dundee Capital Markets said an investor note last week.

“Hudbay makes a strong case for the takeover given that Augusta’s permitting timeline still remains uncertain in the face of significant environmental and social headwinds,” said Dundee, also of Toronto.

Augusta’s stock price closed down five cents a share Monday, at $3.17 on the New York Stock Exchange. Hudbay’s shares fell three cents a share, to $7.97 on the same exchange.

Contact reporter Tony Davis at or 806-7746. Follow Davis on Twitter at tonydavis987.