TORONTO (miningweekly.com) – The TSX-listed stock of Augusta Resources on Thursday regained 92.06% in value after the stock on Wednesday collapsed, dropping from C$1.69 to C$0.63 in half an hour after a leaked letter from the Environmental Protection Agency (EPA) surfaced.

A nongovernmental organiation published a letter dated November 7 on its website, and issued a press release alleging that the EPA recommended to the US Army Corps of Engineers that the proposed Rosemont copper mine, near Tucson, Arizona, should not receive a permit that would allow the company to “dump potentially toxic mine wastes into area waterways”.

The environmentalists Save the Scenic Santa Ritas (SSSR) said the EPA had concluded in the letter that Augusta’s proposals to mitigate Rosemont's severe damage to area water supplies were “scientifically flawed” and “grossly inadequate”, and advised the Corps of Engineers that the project “should not be permitted as proposed”.

The letter, addressed to Colonel Kim Colloton, said the construction of the mine would permanently fill about 18 miles of streams across the about 5 000-acre project footprint and result in the fragmentation of an intact natural hydrologic landscape unit composed of hundreds of streams stretching many linear miles.

“The mine pit would reverse groundwater flow direction well beyond the project, and cause permanent regional drawdown of groundwater that currently sustains hundreds of acres of springs, seeps, streams, and wetlands and their aquatic and wetland dependent fish, wildlife and plant species.”

The letter stated that the area in question was home to “ten federally listed endangered or threatened species”, adding that “Based on the information currently available, the permit application does not appear to comply with The Guidelines at 40 CFR 230.10(b), (c) and (d) and should not be permitted as proposed”.

The authenticity of the letter could not be verified.

However, Augusta hit back, accusing the SSSR of an “inaccurate press release”, “inappropriate comments” and “distorted interpretations”.

Augusta president and CEO Gil Clausen accused the SSSR of launching “another attempt to harm our company.”

“This group has historically mischaracterised the level of impact that letters between agencies have and obviously do not understand the permitting or the evaluation process,” Clausen said.

“SSSR totally misrepresents the contents of the letter and the EPA's comments actually said that they were looking forward to working with the Army Corps on mitigation and risk based assessments.

“For example, nowhere in the EPA's letter did they discuss discharges as 'toxic mine wastes'. The SSSR is fabricating information and attributing that information to EPA in an effort to scare our shareholders and disrupt markets,” he added.

“The references to scientific flaws are from a letter written almost a year ago and acknowledged that the assessment methods were what was prescribed by the ACOE [Corps of Engineers] and references a mitigation plan that is out of date and not currently in use. The EPA does not determine appropriate mitigations, this is the ACOE's responsibility.”

Clausen noted that Rosemont had been working closely with the federal agencies for the past five years to ensure the appropriate mitigations were developed to address impacts.

“Throughout that time, the SSSR has consistently and purposely misrepresented the company's intentions, the facts and the NEPA process. They have deliberately worked to undermine the obligations and work of the agencies involved,” he said.

In its presentation, Augusta said it had already spent $90-million on equipment and most major equipment was procured and fixed price contracts were set in 2008/09. The grinding mills and drives were also already paid for and delivered, making the project construction-ready.

Augusta in January received the air quality permit for the Rosemont project from the Arizona Department of Environmental Quality.

The permit, which stipulated the operating, monitoring and reporting parameters that Rosemont must comply with to meet all federal, state and local air quality requirements, represented the seventh critical permit required to start construction.

Only one more permit remained to be obtained - the Clean Water Act Section 404 permit from the Corps of Engineers - which Augusta expects to receive upon the issuance of the record of decision on the plan of operations from the US Forest Service.

Meanwhile, Augusta on Wednesday also announced that it had arranged a $26-million increase to its existing $83-million Red Kite loan facility, now totalling $109-million.

The Rosemont deposit hosts a copper/molybdenum reserve of 5.9-billion pounds of copper and 194-million pounds of molybdenum, and the start of production at the operation is planned for 2016. Augusta said that once the mine is in production, it would account for about 10% of US copper output.

Augusta shares on Thursday closed at C$1.21 apiece, still down about 28% when compared with the share price on Wednesday before the news was released.