Augusta Settles ASARCO Lawsuit
16 January 2009 - 2:15PM
Marketwired
Augusta Resource Corporation (TSX: AZC)(NYSE Alternext US: AZC)
("Augusta" or the "Company") has reached an agreement with ASARCO
LLC that fully and finally resolves the lawsuit ASARCO filed
against Augusta and other defendants on August 8, 2007 in the
ASARCO Chapter 11 bankruptcy proceeding pending in the Southern
District of Texas, Corpus Christi Division. The proceeding sought
the return of the Rosemont property, located approximately 50
kilometers southeast of Tucson, Arizona, which Augusta acquired in
2006 from a real-estate development company that had purchased the
property from ASARCO in 2004.
"This settlement removes significant uncertainty in our efforts
to develop the Rosemont copper mine as a cornerstone asset of
Augusta," said Gil Clausen, President and CEO of Augusta. "We
believe ASARCO's complaint was completely unfounded. Augusta
purchased the property in good faith, and we are confident the
court ultimately would have vindicated Augusta's position.
Resolving this matter through continued litigation could have taken
months or years, however, and potentially cost the Company several
millions of dollars in court fees, experts, and other expenses. We
are extremely pleased to resolve this distraction and turn all of
our attention to developing the Rosemont mine. Permitting, site
work, and engineering remain on schedule."
The resolution currently is reflected in a binding Terms of
Settlement, and will be formalized in a comprehensive Settlement
Agreement to be approved by the Bankruptcy Court presiding over
ASARCO's bankruptcy proceeding. In the settlement, ASARCO will
receive from Augusta the sum of US$250,000 cash within 14 days of
court approval, in addition to sums the other defendants will pay.
Also, once commercial mine operations commence at the Rosemont
property, Augusta will pay ASARCO certain specified annual
production payments, without interest, over the course of eight
years. These payments will come solely out of the net profits of
mine operations and will not, in any year, exceed 25% of net
profits. In the settlement, Augusta has the right of a
pre-production, pre-payment option for these annual payments at the
net present value of the aggregate annual payments, using an agreed
18% discount rate. Should Augusta elect this option during the
calendar year 2009, it will pay ASARCO US$2.6 million. It may elect
to exercise this option at any time up to and during mine
production.
About Augusta
Augusta is a base metals company focused on advancing the
Rosemont Copper deposit near Tucson, Arizona. Rosemont currently
hosts a large copper/molybdenum reserve that may account for about
10% of US copper output once in production in 2012 (refer to
Augusta's website at www.augustaresource.com for details). The
exceptional experience and strength of Augusta's management team,
combined with the developed infrastructure and robust economics of
the Rosemont project, will propel Augusta to become a solid
mid-tier copper producer within the next four years. The Company is
traded on the Toronto Stock Exchange and the NYSE Alternext under
the symbol AZC, and on the Frankfurt Stock Exchange under the
symbol A5R.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Certain of the statements made and information contained herein
and in the documents incorporated by reference may contain
forward-looking statements or information within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
forward looking statements or information within the meaning of the
Securities Act (Ontario). Forward-looking statements or information
include statements regarding the expectations and beliefs of
management. Forward looking statements or information include, but
are not limited to, statements or information with respect to known
or unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements or information. Forward-looking
statements or information are subject to a variety of risks and
uncertainties which could cause actual events or results to differ
from those reflected in the forward-looking statements or
information, including, without limitation, risks and uncertainties
relating to the Company's plans at its Rosemont Property and other
mineral properties, the interpretation of drill results and the
estimation of mineral resources and reserves, the geology, grade
and continuity of mineral deposits, the possibility that future
exploration, development or mining results will not be consistent
with the Company's expectations, metal recoveries, accidents,
equipment breakdowns, title matters, labor disputes or other
unanticipated difficulties with or interruptions in production and
operations, the potential for delays in exploration or development
activities or the completion of feasibility studies, the inherent
uncertainty of production and cost estimates and the potential for
unexpected costs and expenses, commodity price fluctuations,
currency fluctuations, failure to obtain adequate financing on a
timely basis, the effect of hedging activities, including margin
limits and margin calls, regulatory restrictions, including
environmental regulatory restrictions and liability, the
speculative nature of mineral exploration, dilution, competition,
loss of key employees, and other risks and uncertainties, including
those described under "Risk Factors Relating to the Company's
Business" in the Company's Annual Information Form dated March 4,
2008.
Should one or more of these risks and uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those described in forward-looking
statements. Accordingly, readers are advised not to place undue
reliance on forward-looking statements or information. We do not
expect to update forward-looking statements or information
continually as conditions change, and you are referred to the full
discussion of the Company's business contained in the Company's
reports filed with the securities regulatory authorities in Canada
and the United States.
Contacts: Augusta Resource Corporation Gil Clausen President and
CEO (303) 300-0136 (303) 300-0135 (FAX) Email:
gclausen@augustaresource.com Augusta Resource Corporation Meghan
Brown Manager Investor Relations (604) 638-2002 (604) 687-1715
(FAX) Email: mbrown@augustaresource.com Website:
www.augustaresource.com