The Rights Plan permits the acquisition of control of the Company through a "permitted bid", a "competing permitted bid" or a negotiated transaction. A permitted bid is one that, among other things, is made to all holders of common shares for all of their shares, is open for a minimum of 60 days and is subject to an irrevocable minimum tender condition of at least 50% of the common shares held by independent shareholders.
The Board is aware of the recent accumulation of common shares of the Company by HudBay Minerals Inc. ("HudBay Minerals"). To the best knowledge of the Board, HudBay Minerals currently beneficially owns approximately 15.03% of the outstanding common shares of the Company. Although that existing share ownership is grandfathered under the terms of the Rights Plan, any share acquisitions by HudBay Minerals following the Effective Time will be required to be completed in compliance with the provisions of the Rights Plan. The Company is not aware of any specific take-over bid for the Company that has been made or is contemplated, either by HudBay Minerals or any other party.
The Board considered a number of factors in adopting the Rights Plan and, in particular, its 15% triggering threshold. At this time of global market uncertainty, the Board believes that there is a much greater risk of a predatory acquisition timed to take advantage of share price weakness tied to fluctuations in the copper price. The Board believes that the Rights Plan's 15% triggering threshold will give the Board a substantially greater opportunity to run a value maximizing auction process in the event that the Company is put in play through a hostile take-over bid than would be the case if one or more shareholders held share positions approximating 20%.
Richard Warke, Executive Chairman of Augusta, commented, "Various members of our Board are highly experienced in public company change of control transactions. We understand the need to have a more level playing field if Augusta is put in play, especially in these difficult market conditions, ensuring that we have a real opportunity to run an auction and capture value for our shareholders. We are not aware of any pending hostile bid, but in our view it is incumbent on our Board to be prepared. We are not willing to allow a predatory buyer to take advantage of these market conditions to acquire our world class Rosemont copper project at less than fair value."The Rights Plan will be submitted to the shareholders of the Company for ratification at a meeting to be held within the next six months of the date of adoption. If the Rights Plan is not ratified by the shareholders, the Rights Plan and any rights issued pursuant to it will terminate. If the Rights Plan is ratified, it will continue in effect until the third annual meeting of shareholders thereafter. The Rights Plan is subject to acceptance by the Toronto Stock Exchange. A copy of the Rights Plan will be available on SEDAR at www.sedar.com. Advance Notice Policy The Board has adopted an advance notice policy (the "Policy") in order to facilitate an orderly and efficient annual general or, where the need arises, special meeting, ensure that all shareholders receive adequate notice of director nominations and sufficient information with respect to all nominees, and allow shareholders to register an informed vote having been afforded reasonable time for appropriate deliberation.