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HudBay Minerals extends hostile bid for Augusta Resource

Augusta Resource's Rosemont Copper project, located in Arizona.

Augusta Resource

HudBay Minerals Inc. (TSX:HBM) has extended its hostile takeover offer for Augusta Resource Corp., that was to expire on Monday, to May 16.

The company said it was assessing an announcement last week by Augusta that a U.S. Forest Service review process of its Rosemont copper project will take longer than expected.

August has also said it is working with the Army Corps of Engineers regarding mitigation efforts required for a key water permit.

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The extension by HudBay follows a decision by the B.C. Securities Commission to allow Augusta's shareholder rights plan to remain in place unless HudBay extends its offer to July 16.

If HudBay extends its offer to July 16, the rights plan will be blocked on July 15.

HudBay, which owns about a 16 per cent stake in Augusta, has offered 0.315 of a HudBay share for each Augusta share, valuing the company at about $443-million or $3.05 per share.

Augusta adopted a shareholder rights plan last year following HudBay's acquisition of a large stake in the company. Its shareholders reaffirmed the plan at the company's annual meeting on Friday.

Shareholder rights plans – sometimes called poison pill defences – make an acquisition by a hostile bidder prohibitively expensive by increasing the number of shares a company has by allowing shareholders to purchase additional shares at a substantial discount to the market price.

Augusta has said that nine potential buyers had signed confidentiality agreements and were reviewing its books.

The company holds the Rosemont copper-molybdenum project near Tucson, Ariz.

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