TORONTO (miningweekly.com) – Augusta Resource Corp shareholders voted on Friday to keep in place its rights plan, or ‘poison pill’, which would hold back Hudbay Minerals' takeover ambitions.

Augusta, which is currently the target of a C$540-million hostile takeover bid by base metals miner Hudbay, said that 94% of the votes cast, excluding that of Hudbay, voted in favour of keeping the poison pill in place.

As long as the poison pill remained in effect, Hudbay cannot take up any shares without triggering the rights plan, which broadly entails that new shares would be issued if a shareholder exceeded a 15% interest.

Augusta's poison pill was put in place in April last year, at a time when Hudbay was aggressively buying Augusta shares.

Canada-based Hudbay in February said it would offer Augusta shareholders 0.315 of a Hudbay share for each Augusta share held, representing about C$2.96 per Augusta share, or a 62% premium to Augusta’s 20-day volume-weighted average share price on the TSX on February 7, or an 18% increase over the stock’s closing price on that date.

Last month, Hudbay had applied to the British Columbia Securities Commission (BCSC) to cease trade Augusta’s shareholder rights plan.

Augusta said that it would place the results of the vote before the hearing of the BCSC, which is scheduled to conclude on Friday afternoon.

ROSEMONT PERMITTING

Meanwhile, Augusta also on Friday said that the US Forest Service (USFS) had notified it that it would take about another month to respond to about 100 comments and objections in reaching a permitting decision for the Rosemont project, in Arizona.

The company, said that the USFS had informed it that the objection review process for the draft Record of Decision (ROD) concluded on April 30, but that it would take about a month longer to review about 100 comments and objections received.

Augusta reported that the USFS had sent notices to each objector that the process would extend into May, saying it would strive to issue a response to the objectors without “undue delay”.

The USFS would provide an update on its progress and announce the schedule for the ROD by the end of the month.

Augusta also reported that the Army Corps of Engineers (ACOE) had informed it that in its assessment of the Clean Water Act 404 permit for Rosemont, it had uncovered a shortfall between the mitigation plan proposed by the company last month, and the mitigation needed to fully offset impacts to "national waters" associated with the project.

The process of evaluating other permitting criteria, such as compliance with 404 guidelines, the evaluation of the public benefit, as well as a more detailed analysis of the mitigation plan, remained to be completed.

The ACOE underscored that it had not yet made a permitting decision, but that it remained on schedule to deliver the permit decision for Rosemont by the end of June, provided that the USFS had issued its ROD before then.

"We look forward to dialogue and details from the ACOE. We know the impacts can be mitigated and we will continue to work with the federal agencies towards a successful conclusion of the 404 and [National Environmental Policy Act] process without undue delay,” Augusta VP for environmental and regulatory affairs Katherine Arnold said.

The company's permitting guidance has been based on, and had been consistent with, USFS guidance. At this time, Augusta’s permitting guidance remained unchanged until a definitive schedule for the ROD had been provided by the USFS.

POTENTIAL RISKS

In its bid to gain control of the significant Rosemont project, Hudbay had previously contended that construction of the copper project was not imminent, and that Augusta's plan carried “significant risk” given its financial situation and “its history of misleading shareholders by being overly optimistic about its achievement of significant milestones”.

Hudbay believed that Augusta was four years behind schedule on its original permitting guidance and had revised this guidance 11 times, suggesting that there was no basis for any confidence in the firm's current guidance regarding the timing for receiving permits by midyear, and completing related legal challenges.

Augusta had also previously conceded that it would need to raise capital in the third quarter to continue with the project, and that it could not guarantee obtaining the required funds.

Hudbay pointed out that the USFS did not have to make a final decision after the 45- to 75-day period had passed for it to review all objections. It could for instance, decide to hold off on a decision to do additional analysis and/or require more mitigation.

Further, Hudbay noted that two of the seven critical permits Augusta already had in hand were currently subject to legal challenges, which were unlikely to be resolved in 2014.

“Based on this permitting uncertainty, it is unclear how Rosemont could be fully financed by mid-2014, as asserted in the Augusta circular,” Hudbay said earlier this year.

When up and running, Rosemont is expected to be the third-largest copper mine in the US, after Kennecott Utah Copper’s Bingham Canyon mine, in Utah, and produce as much as 10% of US copper output.

Augusta’s TSX-listed shares closed down 5.68% at C$2.99 apiece on Friday.