Augusta Resource Corp agrees to HudBay Minerals Inc sweetened takeover offer – by Peter Koven (National Post – June 23, 2014)

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It took four and a half months of hostilities and the sighting of a rare wild cat. But in the end, HudBay Minerals Inc. got just what it wanted.

The Toronto-based miner unveiled a friendly deal on Monday to buy Augusta Resource Corp. for about $555-million in shares and warrants. And to the surprise of many observers, it only had to boost its original hostile bid by 10% to get the deal done.

When HudBay made its initial offer in February, Augusta chief executive Gil Clausen said it had “no chance of success.” Augusta’s shares were trading far above the bid, and the company thought it would receive all the key permits for its Rosemont copper project in the first half of 2014. That was expected to be a key catalyst for the stock price.

HudBay maintained that Augusta’s permitting timeline for the Arizona-based project was too optimistic. That turned out to be correct — but not for any reason HudBay expected.

Last month, an ocelot was photographed near the Rosemont project site. It is highly unusual for these wild cats to be spotted as far north as Arizona, and as a result, the U.S. Forest Service requested a new round of consultations on the project before permitting would be granted.

“Everyone can do the math,” Augusta executive chairman Richard Warke said in an interview. “If the permit came in on the timeline we were expecting in April, obviously things would have been different.”

After the ocelot sighting, analysts speculated that Augusta shareholders would be more likely to tender to HudBay’s bid because of the permitting uncertainty. Mr. Warke said that was not a concern, as investors were supportive of the company and recently backed a shareholder rights plan.

However, he said the permitting delay caused the company to re-evaluate its options. It ultimately decided to negotiate a friendly deal with HudBay.

“Obviously not the best upside we wanted today, but you can only control what you can control,” Mr. Warke said. “Going forward, the combined company offers a really nice exposure to the copper market for our shareholders.”

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