Settles ASARCO Lawsuit
posted on Jan 16, 2009 04:21AM
Focused on advancing the Rosemont copper-moly deposit near Tucson, Arizona.
|January 16, 2009|
|Augusta Settles ASARCO Lawsuit|
|VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 16, 2009) - 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.
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.