TORONTO (miningweekly.com) – The sighting of a wild cat called an ocelot close to the boundaries of Toronto-based Augusta Resources' proposed Rosemont copper project, near Tucson, Arizona, contributed to a federal environment agency saying it might not be able to give the company an environmental green light to start building the project, saying more consultation might be needed.

Augusta on Thursday said that it was aware of a US Fish and Wildlife Service (US FWS) letter that were submitted to the US Forest Service (USFS) summarising its rationale for restarting consultations regarding the project’s permitting.

“While we are disappointed with any delay, our expectation is that these final issues will be handled in a timely, expeditious manner,” Augusta president and CEO Gil Clausen said.

A remote camera south of the project site photographed the wild cat, prompting the USFS to evaluate the issues raised in the letter and, as the action agency, to decide whether further consultation would be necessary.

The company is under severe pressure to keep to the project’s stated development timelines, as it is being pursued by base metals miner Hudbay Minerals which had launched a C$540-million hostile takeover bid in February to gain control of the project.

Hudbay has previously contended that construction of the copper project was not imminent, and that Augusta's plan carried “significant risk” given its financial situation and permitting delays.

Hudbay believes that Augusta is four years behind schedule on its original permitting guidance and that it had revised this guidance 11 times, suggesting that there was no basis for any confidence in the firm's current guidance regarding the timing for receiving permits by midyear, and completing potential related legal challenges.

Augusta said that the USFS had commented informally that it may not be in a position to issue the final record of decision (ROD) by the end of the second quarter.

“However, until the USFS determines whether consultation with the US FWS must be re-initiated and publishes the definitive ROD schedule, expected by the end of May, it is uncertain when the ROD will be issued. The company believes that the ROD may be delayed until the third quarter,” Augusta said in a statement.

The mandated time frame for consultation under the Endangered Species Act is 135 days.

However, consultation has been completed and the Fish and Wildlife Service have issued a detailed biological opinion.

For that reason, Augusta expected the process to be completed within a shorter time period, should consultation be reinitiated, because the issues that would need to be addressed would be limited and much of the analysis had already been completed.

Augusta held that the recent ocelot sighting validated the conclusions of the Rosemont environmental studies that ocelots likely occur in the Santa Rita Mountains near the project area. A detailed analysis of the project's effects on the ocelot has already been completed in the biological opinion.

CASH INJECTION

The company also on Thursday said that the Red Kite Mine Finance Trust I had waived the conditions precedent for $6-million of the $7.5-million third tranche of the loan facility.

Among the conditions precedent to draw down the money was the publication of Rosemont's final ROD by the USFS.

Red Kite would now make available $6-million to Augusta on June 2.

The remaining $1.5-million remained subject to the conditions precedent, including the final ROD.

The conditions precedent for the fourth tranche of $5-million include receiving the final Clean Water Act Section 404 permit by the Army Corps of Engineers.

Canada-based Hudbay in February said it would offer Augusta shareholders 0.315 of a Hudbay share for each Augusta share held, representing about C$2.96 per Augusta share, or a 62% premium to Augusta’s 20-day volume-weighted average share price on the TSX on February 7, or an 18% increase over the stock’s closing price on that date.

Hudbay, which has applied to the British Columbia Securities Commission (BCSC) to block the Augusta shareholder rights plan, in March waived a condition of the offer that two-thirds of Augusta’s shares needed to be tendered for the deal to close.

The extension followed a ruling by the BCSC that it would cease trade Augusta’s shareholder rights plan, or ‘poison pill’, on July 15, but only if Hudbay extended its offer to July 16 and if it extended the offer for another ten days if any shares were taken up.

Augusta shareholders recently voted in favour of keeping the rights plan in place in a bid to thwart Hudbay’s takeover ambitions. Augusta’s poison pill was put in place in April last year, at a time when Hudbay was aggressively buying Augusta shares.

The BCSC ruling gives Augusta more time to look for alternative bidders. The company recently revealed that it had signed confidentiality agreements with ten potential suitors under its strategic review process.

On Thursday, Augusta’s stock closed up 1.62% at C$3.13 apiece.