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Last updated on April 21, 2014 at 5:21 EDT

Augusta Arranges US$40 million Increase to Red Kite Loan Facility and Extends Maturity Date

August 14, 2012

DENVER, CO, Aug. 14, 2012 /PRNewswire/ – Augusta Resource Corporation (TSX/NYSE MKT: AZC) (“Augusta” or “the Company”) is pleased to announce that the Company
and RK Mine Finance Trust I (“Red Kite”) have signed a term sheet for a
US$40,000,000 increase (“Additional Loan”) to the existing
US$43,000,000 Red Kite loan (“Existing Loan”), on terms substantially
similar to the Existing Loan.  The Additional Loan and the Existing
Loan, together totalling US$83,000,000, are referred to as the Expanded
Loan.

The terms for the Expanded Loan include interest payable at LIBOR plus
4.50% and an origination fee of 2% of the Additional Loan.  The
Expanded Loan is substantially similar to the Existing Loan except that
the final maturity date has been extended by 15 months to July 21,
2014. In connection with Red Kite’s granting of the Expanded Loan,
Augusta will extend the expiry of the existing 1,791,700 share purchase
warrants held by Red Kite from April 22, 2014 to July 22, 2015. 
Augusta and Red Kite have also agreed to change the exercise price of
the warrants from C$3.90 per share to US$3.85 per share.

In addition, Rosemont Copper Company (“Rosemont”), a wholly owned
subsidiary of Augusta, has executed a term sheet to amend the existing
Red Kite Copper Concentrates Sales Agreement (“Amended Offtake
Agreement”).  Under the Amended Offtake Agreement, Red Kite will
purchase 20% of gross annual production until 1,500,000 tonnes has been
delivered.  This compares to the existing offtake agreement under which
Red Kite would purchase 16.125% of gross annual production with a
cumulative limit of 483,750 tonnes.

Upon closing of the Expanded Loan and the Amended Offtake Agreement, the
Copper Cathode Purchase and Sale Agreement between Rosemont and an
affiliate of Red Kite and the US$10,000,000 working capital facility
between Augusta and Red Kite will both be cancelled and deemed void.

Gil Clausen, Augusta’s President and CEO comments, “Red Kite is a strong
advocate of the Rosemont Copper Project and we appreciate their
continued support. This Expanded Loan provides us with the funding
needed to continue development of Rosemont through to the start of
construction, expected in early 2013, and fits our financing objective
of minimal equity dilution. Our entire focus can now be placed on
finalizing the project debt financing and completing the permitting
process.”

Closing of the Expanded Loan agreement is subject to customary due
diligence for these types of loan transactions, all regulatory
approvals, final legal documentation, and Board approvals.

ABOUT AUGUSTA
Augusta is a base metals company focused on advancing the Rosemont
Copper deposit near Tucson, Arizona. Rosemont hosts a large
copper/molybdenum reserve that would account for about 10% of US copper
output once in production (for details refer to www.augustaresource.com). The exceptional experience and strength of Augusta’s management team,
combined with the developed infrastructure and robust economics of the
Rosemont project, propels Augusta to becoming a solid mid-tier copper
producer. The Company trades on the Toronto Stock Exchange and the NYSE
MKT under the symbol AZC.

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION

Certain of the statements made and information contained herein may
contain forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and
forward-looking information within the meaning of applicable Canadian
securities laws. Such forward-looking statements and forward-looking
information include, but are not limited to statements concerning:
expectations surrounding, short term financing, future project
financings or refinancing; the Company’s plans at the Rosemont Project
including timing for final permits and construction; estimated
production; and capital and operating and cash flow estimates.
Forward-looking statements or information include statements regarding
the expectations and beliefs of management. Often, but not always,
forward-looking statements and forward-looking information can be
identified by the use of words such as “plans”, “expects”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates”, or “believes” or the negatives thereof or variations of
such words and phrases or statements that certain actions, events or
results “may”, “could”, “would”, “might” or “will” be taken, occur or
be achieved.

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: history of losses; requirements for additional capital;
dilution; loss of its material properties; interest rates increase;
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 matters;
regulatory restrictions; permitting and licensing; volatility of the
market price of Common Shares; insurance; competition; hedging
activities; currency fluctuations; loss of key employees; as well as
those factors discussed in the section entitled “Risk Factors” in the
Company’s Annual Information Form dated March 19, 2012. 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 or information.
Accordingly, readers are advised not to place undue reliance on
forward-looking statements or information. The Company disclaims any
intent or obligation to update forward-looking statements or
information except as required by law, 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.

 

SOURCE Augusta Resource Corporation


Source: PR Newswire