04/19/2013 10:17 EDT | Updated 06/19/2013 05:12 EDT

Augusta Resource adopts shareholder rights plan; HudBay hold 15% of stock

VANCOUVER - Augusta Resource Corp. (TSX:AZC) has adopted a shareholder rights plan amid reports that HudBay Minerals Inc. (TSX:HBM) has acquired a significant position in the company.

Augusta says the plan is intended to ensure that shareholders and the board have adequate time to consider and evaluate any unsolicited takeover bid.

The company says it is not aware of any specific bid, but notes that HudBay has accumulated 15.03 per cent of its common shares.

It also noted that weak stock prices related to 18-month lows in the price of copper have increased the likelihood of "predatory" takeover bids.

Shareholder rights plans are sometimes called a poison pill defences because they can make an acquisition by a hostile bidder prohibitively expensive.

In the case of Augusta Resource, the plan is set to kick in any time a buyer and its affiliates acquire or announces an intention of buying holdings totalling 15 per cent ore more of the company's common shares.

It would entitle holders of common shares to purchase additional shares at a substantial discount to the market price at the time.

Although the existing share ownership is grandfathered under the terms of the rights plan, any subsequent share acquisitions by HudBay Minerals would have to be completed in compliance with the provisions of the rights plan.

Under the plan, acquisition or control of the company would only be allowed through a "permitted bid" or one that, among other things is offered to all shareholders 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 per cent.

Augusta is developing the Rosemont copper-molybdenum project deposit near Tucson, Ariz.