Directors, Officers and Shareholders holding over 33% of Augusta's Common Shares (on a fully diluted basis) have advised Augusta that they WILL NOT TENDER to Hudbay's Unsolicited Offer
Commenting on the offer,
In making this recommendation the Board considered a number of factors including the following:
•The Unsolicited Offer fails to recognize the strategic value of Augusta's
a) Rosemont is a scarce, large scale, construction ready copper asset.
•The timing of the Unsolicited Offer is highly opportunistic given that permitting is nearing completion and construction at the
a) Augusta has received seven of the eight major permits for the
b) The Board is confident that the
c) The Board believes that the Unsolicited Offer is timed to deprive Augusta shareholders of the full and fair value of the
•The value of the Unsolicited Offer is significantly below implied multiples of precedent base metal transactions.
•A combination of Hudbay and Augusta would be dilutive to Augusta shareholders. If the Unsolicited Offer is successful, Augusta shareholders (other than Hudbay) will only hold approximately 18% of the combined company's shares on a fully-diluted basis, but will have contributed approximately 26% of the combined company's net asset value and approximately 41% of the combined company's copper equivalent reserves and would account for approximately 32% of the combined company's estimated total copper production by 2018.
•The market views the Unsolicited Offer as inadequate.
a) The value of the Unsolicited Offer as of
b) The value of the Unsolicited Offer as of
•Augusta shareholders are not being adequately compensated for the risks and uncertainties inherent in Hudbay's shares.
a) Hudbay's shares carry substantial geopolitical risks due to the location of material Hudbay assets in
b) Hudbay's development projects and core competencies introduce material additional risk.
•Hudbay has a track record of underperformance. Since current senior management of Hudbay was appointed in
•Directors, officers and four other shareholders of Augusta holding over 33% of the Augusta shares (on a fully-diluted basis) have advised Augusta that they WILL NOT TENDER to the Unsolicited Offer. Amongst its numerous conditions, the Unsolicited Offer contains a condition that not less than 66?% of Augusta shares, calculated on a fully-diluted basis, be tendered to that offer and not withdrawn. Given the determination of the directors, officers and these shareholders it is a virtual certainty that, as structured, the Unsolicited Offer CANNOT SUCCEED.
•The Board of Directors is aggressively pursuing value-maximizing alternatives to the Unsolicited Offer.
•The Unsolicited Offer is inherently coercive and is not a "Permitted Bid" under Augusta's shareholder rights plan.
•The Unsolicited Offer is highly conditional. The Board is concerned that tendering to the Unsolicited Offer would, in effect, constitute the grant to Hudbay of an option to acquire the Augusta shares so tendered at a price that is grossly inadequate and does not come close to recognizing the value and potential of the
The Board's recommendation to Augusta shareholders that they REJECT the Unsolicited Offer and DO NOT TENDER their Augusta shares, as well as a more detailed discussion of the reasons for rejecting the Unsolicited Offer and the inadequacy opinions provided by Augusta's financial advisors, is contained in the Directors' Circular that will be mailed to each of Augusta's shareholders and filed with Canadian securities regulatory authorities. Shareholders are advised to read the Directors' Circular carefully and in its entirety, as it contains important information regarding Augusta, Hudbay and the Unsolicited Offer. The Directors' Circular will be available on SEDAR at www.sedar.com and on the Augusta website at www.augustaresource.com.
Conference Call and Webcast Information
The Company will host a conference call and webcast on
Conference Call Information:
Toll Free (
Conference Call Replay:
Toll Free (
(855) 859-2056 (passcode: 3815466)
(416) 849-0833 (passcode: 3815466)
The conference call replay will be available from
Augusta is a base metals company focused on advancing the Rosemont Copper deposit near Tucson, Arizona.
Cautionary Statements Regarding Forward Looking Information
Certain of the statements made and the information contained in this news release constitutes "forward-looking statements" under
Forward-looking statements or information is frequently, but not always, characterized by words such as "will", "plan", "expect", "project", "intend", "believe", "anticipate", "budget", "forecast", "schedule", "estimate" and similar expressions, or statements that certain events or conditions "may", "should", "could", "might" or "will" occur. The forward-looking statements or information contained in this news release is based on the reasonable expectations and beliefs of management and involves numerous assumptions, known and unknown risks and uncertainties, both general and specific to Augusta and the industry in which the Company operates. Such assumptions, risks and uncertainties include, but are not limited to Augusta's history of losses, requirements for additional capital, dilution, loss of material properties, interest rate increases, global economy, no history of production, speculative nature of exploration activities, periodic interruptions to exploration, development and mining activities, environmental hazards and liability, industrial accidents, failure of processing and mining equipment, labour disputes, supply problems, commodity price fluctuations, uncertainty of production and cost estimates, the interpretation of drill results and the estimation of mineral resources and reserves, legal and regulatory proceedings and community actions, title and tenure matters, regulatory restrictions, permitting and licensing, volatility of the market price of the Company's common shares, insurance, competition, hedging activities, currency fluctuations, loss of key employees, as well as those factors disclosed in Augusta's documents filed from time to time with the securities regulators in the provinces of
Although Augusta has attempted to identify important factors that could cause actual actions, events, results, performance or achievements to differ materially from those described in the forward-looking statements or information contained in this news release, there may be other factors that cause actions, events, results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Such forward-looking statements and information are made or given as at the date of this news release and Augusta disclaims any intention or obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required under applicable securities law. The reader is cautioned not to place undue reliance on forward-looking statements or information.