Mine Plan of Operations

US Map

The Rosemont Copper property is located in Pima County, approximately 50 kilometers southeast of Tucson, Arizona, and is situated near a number of large porphyry type producing copper mines operated by Freeport McMoRan and Asarco. The property contains three known potentially open-pit mineable copper/molybdenum (“Cu/Mo/Ag”) skarn deposits: Rosemont, Peach Elgin and Broadtop Butte.

Rosemont's proven and probable mineral reserves contain 546 million tons at 0.45% Cu, 0.015% Mo and 0.12 oz/t Ag in sulfide ore and an additional 70 million tons at 0.17% Cu in oxide ore. Proven and probable reserves are included within the measured and indicated resource, which estimates 7.2 billion pounds ("lbs") of Cu in measured, indicated and inferred resources. The estimate also includes 180 million lbs of Mo, and 75 million ounces of Ag in measured, indicated and inferred resources.

The proposed Rosemont mine is expected to produce annually 221 million pounds of Cu, 4.7 million pounds of Mo, 2.4 million ounces of Ag and approximately 15,000 ounces of gold as a by-product credit over the 20+ year mine life.


ROSEMONT MINERAL RESERVES

Classification

Sulfide >= 3.56 $/ton NSR Cutoff

Oxides >= 2.19 $/ton NSR

 

Ktons

NSR $/t

Cu%

Mo%

Ag oz/t

Ktons

NSR $/t

Cu%

Proven

141,999

14.19

0.48

0.015

0.13

16,250

3.91

0.18

Probable

404,339

13.12

0.45

0.015

0.11

53,724

3.77

0.17

Total

546,338

13.40

0.45

0.015

0.12

69,974

3.80

0.17

*Proven and probable reserves totals are included within the measured and indicated resource values quoted. .


ROSEMONT DEPOSIT MEASURED AND INDICATED MINERAL RESOURCES

Material/Cutoff
(% Cu)

Ktons

%Cu

%Mo

Ag oz/ton

lbs Cu
(millions)

lbs Mo
(millions)

oz Ag
(millions)

Oxides:
0.10
0.15
0.20
103,400
66,000
35,000
0.20
0.25
0.32

-
-
-

-
-
-
417
328
224

-
-
-

-
-
-
Mixed:
0.15
0.20
0.25
0.30
39,100
38,300
36,900
33,900
0.51
0.52
0.53
0.55
0.005
0.005
0.005
0.005
0.05
0.05
0.05
0.05
398
396
389
373
4.1
4.0
3.9
3.5
1.9
1.9
1.9
1.8
Sulfides:
0.15
0.20
0.25
0.30
596,800
523,800
458,100
401,300
0.46
0.50
0.54
0.57
0.014
0.015
0.016
0.016
0.12
0.13
0.14
0.14
5,440
5,190
4,910
4,600
172.4
159.5
148.8
130.4
70.4
66.6
62.3
57.7

ROSEMONT DEPOSIT INFERRED MINERAL RESOURCES

Material/Cutoff
(% Cu)

Ktons

%Cu

%Mo

Ag oz/ton

lbs Cu
(millions)

lbs Mo
(millions)

oz Ag
(millions)

Oxides:
0.10
0.15
0.20
30,400
17,800
12,700
0.24
0.33
0.39

-
-
-

-
-
-
147
117
100

-
-
-

-
-
-
Mixed:
0.15
0.20
0.25
0.30
21,100
19,100
14,500
12,200
0.35
0.37
0.42
0.45
0.004
0.004
0.004
0.003
0.02
0.01
0.02
0.02
148
141
121
109
1.7
1.5
1.2
0.7
0.3
0.3
0.2
0.2
Sulfides:
0.15
0.20
0.25
0.30
208,800
160,600
133,800
105,000
0.38
0.45
0.49
0.56
0.007
0.008
0.008
0.008
0.06
0.07
0.08
0.09
1,600
1,440
1,320
1,170
29.2
25.7
21.4
16.8
12.1
10.9
10.0
8.9
 

Feasbility Study - In May 2006 the Company announced positive results from metallurgical test work that would impact production and process techniques at Rosemont. The new findings had a major positive impact on flow sheet design and the financial performance of the project. The Company published a positive preliminary assessment ("PA") in June 2006, which demonstrated that the Rosemont copper/molybdenum/silver deposit may be developed as a low cost open pit mine with potentially robust project economics. With the positive project economics noted in the PA and the continued buoyant market for these strategic metals, management decided to move the Rosemont project to full feasibility study. M3 Engineering was awarded the contract in August 2006, and published the bankable feasibility study in August 2007, which evaluated the project economics associated with processing sulfide ores as well as oxide copper processing.

Permitting - The Company completed the first step of the permitting process when it filed its comprehensive Plan of Operations with the US Forest Service in July 2007. Using this plan as a basis for permitting, Augusta is now expecting to move through the National Environmental Policy Act (“NEPA”) permitting process, whereby the US Forest Service initiates an Environmental Impact Statement (“EIS”) and public review process.

The US Forest Service is the official agency in charge of leadingthe process of reviewing potential project impacts and identifying relevant mitigation plans resulting from the Plan of Operations. As such, the US Forest Service is responsible for issuing the final EIS and “Record of Decision” after pubic review and comment. These documents and findings are then considered by other federal and state agencies as they review the permits required to initiate mineral development on the property. It normally takes anywhere from 12 to 18 months to complete the draft EIS and the initial public review process. Another three to six months are typically required to respond to public comments and prepare the final EIS, after which the US Forest Service will issue a “Record of Decision” either approving the plan or providing recommendations for modifications to the plan. Subsequent to the “Record of Decision”, the Company will file a final Plan of Operations (incorporating any necessary modifications). It is then that permits would be issued allowing the Company to commence construction. Upon completion of this process, Augusta expects to receive approval to construct the mine in 2009 and begin pre-production mining in 2010.

Water Supply - The Company obtained a sustainable water supply source for Rosemont when it signed two contracts with the Central Arizona Water Conservation District (CAWCD) in June 2006. One contract allows Augusta to become a water user in the CAWCD system, allowing Augusta to request up to 10,000 acre-feet of water per year for the five-year term of the contract. The second contract allows the Company to store the water in the Pima Mine Storage and Retrieval Facility in Pima County, Arizona. The pre-stored water will accumulate in a water-bank account to offset groundwater removed from the aquifer once mine operations begin on the Rosemont property. Augusta announced in June 2007 it has already stored a full two years’ worth of water needed to operate the Rosemont Copper project within the Tucson Active Management Area. By the end of this year a total of 15,000 acre feet of water delivered by the Central Arizona Project ("CAP") is expected to be stored in the greater Tucson aquifer, bringing the level stored for Rosemont Copper to a three-year supply.

In addition to Rosemont Copper’s unique approach to supplying water, the project will employ water conservation and recycling techniques never before implemented by an Arizona copper mining facility. These initiatives are anticipated to yield a 50 to 60 percent reduction in water use, compared with traditional mining practices.