NEW YORK HudBay Minerals Inc. has hit back at claims from takeover target Augusta Resource Corp. that its unsolicited bid is "grossly inadequate," citing what it describes as "critical permitting and financing risks" for the Rosemont copper-molybdenum project in southern Arizona.
The Toronto-based company said that Augusta had "disclosed no additional information that would warrant the modification by HudBay of its offer" to acquire the remaining 84 percent of shares it does not already own.
The Augusta board of directors previously urged shareholders to reject the offer, claiming the bid was "opportunistic" with the Rosemont project close to receiving its final major permit and beginning construction (amm.com, Feb. 24).
However, HudBay said in a statement Feb. 27 that Augustas forecasts are "simply the latest of many assurances around permitting which have consistently proven to be inaccurate. Augustas timelines have been missed and subsequently extended on at least 10 separate occasions, with the project now four years delayed from Augustas original guidance."
HudBay also expressed "serious concerns" about Augustas current financial position and its ability to secure additional financing without diluting shareholder value.
"As long as Augusta continues as a standalone entity, its shareholders face the risk of significant value destruction due to critical permitting and financing risks," HudBay president and chief executive officer David Garofalo said in a statement. "The failure of Augusta to address these fundamental issues in their circular should give all Augusta shareholders pause."
HudBays offer, which expires March 19, values Toronto-based Augusta at about Canadian $540 million ($486.6 million) on a fully diluted basis.
Augustas directors, officers and shareholders holding more than 33 percent of shares have advised the company that they will not tender to the unsolicited offer.