A.E. Araiza / Arizona Daily Star 2006

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A fellow Canadian company has agreed to help finance Augusta Resource Corp.'s proposed Rosemont Mine in exchange for 45 percent of the silver output for the life of the mine.

Vancouver, British Columbia-based Silver Wheaton Corp., will make an upfront payment of $165 million once Augusta has secured all necessary permits for the copper mine, which will also produce silver and molybdenum. The site is about 25 miles southeast of Tucson along Arizona 83 and is expected to produce ore for about 20 years.

"Silver Wheaton will not be required to pay any further ongoing, per-ounce payments for silver delivered from Rosemont and is not required to fund or contribute to ongoing capital expenditures," according to a notice on Silver Wheaton's Web site.

"It's a good deal for us and a good deal for them," Augusta CEO Gil Clausen said Wednesday. "They are buying a piece of the resource and standing by us as a partner."

Clausen said the arrangement is "not uncommon" but the company does not plan any similar agreements regarding the copper or molybdenum production at the proposed mine.

"We plan to keep copper and molybdenum open to the market," Clausen said.

The transaction agreement is expected to be formalized by June 30, he said.

Economist George Leaming of the Western Economic Analysis Center said the partnership increases the credibility of the project because Augusta has secured some financing.

"It expresses confidence," he said.

Leaming, who produces reports for the Arizona Mining Association, said news of the agreement is unlikely to sway any community opposition to the mine.

"The public perception against the mine has never seemed to be concerned with the economics," Leaming said. "For people who want to work there, it's encouraging."

One member of the Santa Rita Mountains Conservation Coalition said the announcement was just for show.

"I just think it's noise," said Thomas Purdon, whose group opposes the Rosemont mine. "This is just Augusta flexing their muscles."

The fact that the partner is also a Canadian company is troubling, he said.

"I have concerns about a foreign company with no track record in the U.S. coming in and taking our groundwater — our precious groundwater — for purposes of mining," Purdon said. "We don't need another copper mine."

The Rosemont mine would be built in the Santa Rita Mountains on 995 acres of private land, 3,670 acres of national forest, 15 acres of Bureau of Land Management land and 75 acres of state trust land.

The company expects the project to cost $782.4 million to build.

A draft environmental statement is due in March 2009. A final statement is due in November 2009.

Mine executives say it will create 500 direct and 1,000 indirect jobs and boost the Tucson-area economy to the tune of about $250 million a year.