HudBay Minerals Inc. is asking Canadian regulators to get rid of Augusta Resource Corp.'s defense plan so that it can acquire Augusta's copper project in Arizona.
HudBay already owns a 16 per cent stake in Augusta. But the Toronto-based company is blocked from acquiring more shares because Augusta adopted a shareholder rights plan, also known as a poison pill, when it found out HudBay had accumulated such a large position.
The plan allows non-HudBay shareholders to buy additional shares at a discount, which would make it prohibitively expensive for the Toronto miner to acquire the rest of Augusta.
On Monday, HudBay asked the British Columbia Securities Commission to make a decision before its hostile offer expires May 5.
Vancouver-based Augusta is scheduled to hold a meeting May 2 where shareholders will get to vote on whether they want to keep their poison pill in place.
HudBay's chief executive David Garofalo said if regulators strike down the poison pill, that would make the shareholder vote moot.
Augusta's Rosemont copper asset holds nearly six billion pounds of copper reserves and will be the third-largest copper mine in the United States once in production. It would push HudBay closer to the big leagues if the company succeeds in buying Augusta.
Augusta's chief executive Gil Clausen said in an e-mailed statement that his company would vigorously defend its poison pill. He said he was pleased with Augusta's progress to find an alternative to HudBay's bid.
The all-stock HudBay offer is valued at $2.79 per share, nearly 20 per cent lower than Augusta's trading price of $3.40 apiece.
Augusta has said it is in discussions with nine prospective white knights, an assertion HudBay questioned.
"Anybody that really knows the copper space has looked at this asset extensively over the last four years. If there was competition it would have come out of the woodwork," said Mr. Garofalo in an interview.
The companies entertained the possibility of a friendly merger four years ago but talks never progressed. HudBay reinitiated negotiations in 2012 and said they fell apart over a dispute over the timing of Rosemont's development.
Augusta has said it will get the necessary permits to start construction on Rosemont this year. The miner contends that HudBay made a low-ball offer just as it was getting ready to realize Rosemont's full potential. In April, Augusta started showing interested parties the Arizona copper site and said the visits would take place over a three to four week period.
"We are scratching our heads as to why it takes three to four weeks to conduct site visits," said Mr. Garofalo.
"There's nothing to look at. But if they want to walk around some moose pastures, they are more than welcome to," he said.