---







ANNUAL INFORMATION FORM(AIF)

of

AUGUSTA RESOURCE CORPORATION(the Company or
Augusta) Suite 400, 837 West Hastings StreetVancouver,
British ColumbiaV6C 3N6



Telephone: 604-687-1717 Facsimile: 604-687-1715 Website:
www.augustaresource.com E-mail: info@augustaresource.com

For the Year Ended December 31, 2011 Dated: March
19, 2012

---

TABLE OF CONTENTS

|                                                                         | Page
|------------------------------------------------------------------------ | ----
|                                                                         |     
|ITEM
      1: PRELIMINARY NOTES                                          | 1   
|                                                                         |     
|Effective
      Date of Information                                      | 1   
|Currency                                                                 | 1   
|Note
      Regarding Forward Looking Statements                          | 1   
|National
      Instrument 43-101 Definitions                             | 2   
|                                                                         |     
|ITEM
      2: CORPORATE STRUCTURE                                        | 3   
|                                                                         |     
|Incorporation
      or Organization of Company                           | 3   
|Subsidiaries                                                             | 3   
|                                                                         |     
|ITEM
      3: GENERAL DEVELOPMENT OF THE BUSINESS                        | 4   
|                                                                         |     
|Three
      Year History                                                 | 4   
|Augustas
      Objectives for 2011                                      | 9   
|                                                                         |     
|ITEM
      4: NARRATIVE DESCRIPTION OF THE BUSINESS                      | 10  
|                                                                         |     
|Risk
      Factors                                                       | 11  
|Material
      Mineral Property                                          | 19  
|                                                                         |     
|ITEM
      5: DIVIDENDS                                                  | 32  
|                                                                         |     
|ITEM
      6: DESCRIPTION OF CAPITAL STRUCTURE                           | 32  
|                                                                         |     
|ITEM
      7: MARKET FOR SECURITIES                                      | 33  
|                                                                         |     
|ITEM
      8: DIRECTORS AND OFFICERS                                     | 33  
|                                                                         |     
|ITEM
      9: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 37  
|                                                                         |     
|ITEM
      10: TRANSFER AGENTS AND REGISTRARS                            | 38  
|                                                                         |     
|ITEM
      11: MATERIAL CONTRACTS                                        | 38  
|                                                                         |     
|ITEM
      12: INTEREST OF EXPERTS                                       | 39  
|                                                                         |     
|ITEM
      13: AUDIT COMMITTEE INFORMATION                               | 40  
|                                                                         |     
|ITEM
      14 ADDITIONAL INFORMATION                                     | 41  

-i-

---

ITEM
1:PRELIMINARY NOTES

Effective Date of Information

This AIF is dated March 19, 2012, and unless otherwise
indicated, the information contained herein is current as of such date, other
than certain financial information which is current as of December 31, 2011
being the date of the Companys most recently audited financial year end.

All financial information in this AIF is prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
International Accounting Standards Board..

Currency

All dollar amounts are expressed in United States dollars
unless otherwise indicated.

Note Regarding Forward Looking Statements

This AIF contain forward-looking statements within the meaning
  of the United States Private Securities Litigation Reform Act of 1995 and forward-looking
  information within the meaning of applicable Canadian securities laws. Such
  forward-looking statements and forward-looking information include, but are
  not limited to statements concerning:

- expectations surrounding future financing or refinancings;
- the Companys plans at the Rosemont Project including timing for final
  permits and construction;
- estimated production; and
- capital and operating and cash flow estimates.

Forward-looking statements or information include statements
regarding the expectations and beliefs of management. Often, but not always,
forward-looking statements and forward-looking information can be identified by
the use of words such as plans, expects, is expected, budget,
scheduled, estimates, forecasts, intends, anticipates, or believes
or the negatives thereof or variations of such words and phrases or statements
that certain actions, events or results may, could, would, might or
will be taken, occur or be achieved.

Forward-looking statements or information are subject to a
variety of risks and uncertainties which could cause actual events or results to
differ from those reflected in the forward-looking statements or information,
including, without limitation, risks and uncertainties relating to: history of
losses, requirements for additional capital, dilution, loss of material
properties, interest rate increases, global economy, no history of production,
speculative nature of exploration activities, periodic interruptions to
exploration, development and mining activities, environmental hazards and
liability, industrial accidents, failure of processing and mining equipment,
labour disputes, supply problems, commodity price fluctuations, uncertainty of
production and cost estimates, the interpretation of drill results and the
estimation of mineral resources and reserves, legal and regulatory proceedings
and community actions, title and tenure matters, regulatory restrictions,
permitting and licensing, volatility of the market price of the Companys common
shares, insurance, competition, hedging activities, currency fluctuations, loss
of key employees, as well as those factors discussed in the section entitled
Risk Factors in this AIF. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in forward-looking statements or
information. Accordingly, readers are advised not to place undue reliance on
forward-looking statements or information. The Company disclaims any intent or
obligation to update forward-looking statements or information except as
required by law, and you are referred to the full discussion of the Companys
business contained in the Companys reports filed with the securities regulatory
authorities in Canada and the United States. Readers are also advised to
consider such forward-looking statements or information, which speak only as of
the date the statements were made, while considering the risks set forth below
under the section Risk Factors.

---

- 2 -

National Instrument 43-101 Definitions

Canadian reporting requirements for disclosure of mineral properties
  are governed by National Instrument 43-101 (NI 43-101). The definitions
  given in NI 43-101 are adopted from those given by the Canadian Institute of
  Mining Metallurgy and Petroleum and certain of those defined terms are provided herein.

|Mineral Reserve            | The term “mineral reserve” refers to the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a preliminary feasibility study.  The study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.  A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.                                                                                                                                                                                                                                                            
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mineral Resource           | The term “mineral resource” refers to a concentration or occurrence of diamonds, natural solid inorganic material or natural solid fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.                                                                                                                                                                                                      
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Measured Mineral Resource  | The term measured mineral resource refers to that part
      of a Mineral Resource for which quantity, grade or quality, densities,
      shape and physical characteristics are so well established that they can
      be estimated with confidence sufficient to allow the appropriate
      application of technical and economic parameters, to support production
      planning and evaluation of the economic viability of the deposit. The
      estimate is based on detailed and reliable exploration, sampling and
      testing information gathered through appropriate techniques from locations
      such as outcrops, trenches, pits, workings and drill holes that are spaced
      closely enough to confirm both geological and grade continuity.
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Indicated Mineral Resource | The term indicated mineral resource refers to that part
      of a Mineral Resource for which quantity, grade or quality, densities,
      shape and physical characteristics can be estimated with a level of
      confidence sufficient to allow the appropriate application of technical
      and economic parameters, to support mine planning and evaluation of the
      economic viability of the deposit. The estimate is based on detailed and
      reliable exploration and testing information gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes that are spaced closely enough for geological and grade
      continuity to be reasonably assumed.                         

---

- 3 -

|Inferred Mineral Resource | The term inferred mineral resource refers to that part
      of a mineral resource for which quantity and grade or quality can be
      estimated on the basis of geological evidence and limited sampling and
      reasonably assumed, but not verified, geological and grade continuity. The
      estimate is based on limited information and sampling gathered through
      appropriate techniques from locations such as outcrops, trenches, pits,
      workings and drill holes.
|------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Qualified Person          | The term “qualified person” is an individual as such term is defined in NI 43-101.                                                                                                                                                                                                                                                                                                                                                                                                          

ITEM
2:CORPORATE STRUCTURE

Incorporation or Organization of Company

The Company was incorporated on January 14, 1937 by Articles of
Incorporation Letters Patent pursuant to the Ontario Business Corporations
Actunder the name Hol-Lac Gold Mines, Limited. In 1985, after a period of
dormancy, the Company began actively pursuing interests in mining properties. On
July 3, 1997, the Company changed its name to Augusta Resource Corporation and
on June 28, 1999 the Company was continued under section 187 of the Canada
Business Corporations Act.

The Companys registered office is at Suite 2900  Five Bentall
Centre, 550 Burrard Street, Vancouver, BC, V6C 0A3. The Companys head office is
located at Suite 400  837 West Hastings Street, Vancouver, BC, V6C 3N6. The
Company also has an executive office located at Suite 1040, 4500 Cherry Creek
Drive South, Glendale, Colorado, 80246. In addition, the Companys wholly owned
subsidiary, Rosemont Copper Company, has an office in Tucson, Arizona.

The Company is a reporting issuer in British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, New Brunswick and Newfoundland and Labrador and
as such is required to make filings on a continuous basis thereunder. Such
material information is available for inspection on the SEDAR website at
www.sedar.com.

The Companys fiscal year end is December 31 and its common
shares trade in Canada on the Toronto Stock Exchange (TSX) and in the United
States (US) on the NYSE Amex Equities (NYSE Amex) under the symbol AZC.
The Companys common shares also trade on the Frankfurt Stock Exchange (FWB)
under the symbol A5R.

The Company has an unlimited number of common shares without
par value authorized. At the date of this AIF, there were 144,196,058 shares
issued and outstanding.

Subsidiaries

Effective October 1, 2008, the Company re-organized its
ownership of Rosemont Copper Company and the Rosemont copper project by
interjecting US and Canadian subsidiaries (the Reorganization). The Rosemont
Copper Company remains wholly owned by Augusta, albeit indirectly through such
corporate chain (the Rosemont Corporate Chain). In September 2010, the Company
entered into an Earn-In Agreement with United Copper & Moly LLC (UCM) to
earn up to a 20% interest in the Rosemont joint venture (the Rosemont JV). At December 31, 2011, UCM had
earned a 7.95% interest in the Rosemont JV.

---

- 4 -

The Company currently has four wholly owned material subsidiaries,
  being Augusta Resource (Canada) Corporation (incorporated in British Columbia),
  Augusta Resource (US) Corporation (organized under the laws of Nevada), Augusta
  Resource (US) Holding Corporation (organized under the laws of Nevada) and Rosemont
  Copper Company (organized under the laws of Arizona).

ITEM
3:GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

The Company is engaged in the acquisition, exploration and
development of natural mineral resource properties. Currently the Companys only
material property is the Rosemont copper property located in Pima County,
Arizona (Rosemont, or the Rosemont Property or the Rosemont Project)
acquired in 2005 subject to a 3% Net Smelter Return Royalty (NSR). The Rosemont
Property is currently comprised of approximately 17,500 acres (7,080 hectares)
of patented and unpatented claims and fee land. Rosemont is approximately 50
kilometres southeast of Tucson, Arizona near a number of large porphyry type
producing copper mines operated by Freeport-McMoRan Copper & Gold Inc. and
ASARCO LLC (ASARCO). Rosemont contains an open-pit mineable
copper/molybdenum/silver skarn deposit, as well as other exploration targets.

Development of the Rosemont Project

In November 2008, Augusta completed an update of Rosemonts
proven and probable mineral reserve estimate, which totalled 616.32 million tons
of ore (including oxide and sulfide). This represented a 14% increase over the
previous reserve estimate set out in the 2007 Feasibility Study.

Results of the mineral resource and mineral reserve update
formed part of the Rosemont Copper Project Updated Feasibility Study completed
in January 2009 (the 2009 Feasibility Study). On March 20, 2009 the Company
filed an amended copy of the 2009 Feasibility Study to include further details
of the work program at the request of the British Columbia Securities
Commission. The 2009 Feasibility Study re-confirmed Rosemont as an economically
robust open pit copper/molybdenum mine with low development risk. The 2009
Feasibility Study concluded that while Rosemont is technically and economically
feasible, there are opportunities for further optimization, and the project
should press forward with development in anticipation of receiving the necessary
permits.

For a more detailed discussion of the Rosemont Project refer to
the Material Mineral Property section under Narrative Description of the
Business below.

The Company staked an additional 112 claims totalling 2,314
acres surrounding the Rosemont Property in the fourth quarter of 2011. The
claims were placed on the east side to better cover the property over areas of
planned infrastructure needed for mine development. Claims were also placed
along the west and southwest of the property to provide for additional buffer
zones for the planned open pit and rock storage areas.

A total of 16.6 kilometres of geophysical lines were run at
Rosemont during 2011. Data from the geophysical surveys identified several
anomalies with IP responses similar or better to that of the Rosemont deposit.
One encouraging anomaly was located to the northeast of the Rosemont deposit and
was drill tested in the fourth quarter of 2011. Drill hole AR-2074 was located
where the anomaly reached its shallowest extent, approximately 244 metres below
the surface. This hole was drilled to a total depth of 1,070 metres and tested
the full extent of the IP response, where the top of the anomaly was found to
consist of moderate to strong sulfide mineralization. At 250 metres, a 38 metre
interval occurred that contained 0.82 percent copper, 0.025 percent molybdenum and 6.5 grams per tonne of
silver. A second drill hole, AR-2080, was completed in January 2012 to
test the IP anomaly further to the south. The hole was drilled to a depth of 606
metres and was visibly observed to be the only weakly mineralized, with assays
still pending.

---

- 5 -

Six holes were drilled in the fourth quarter 2011 to collect sample material for further metallurgical test work. The
six metallurgical holes were drilled for a total of 2,331 metres, with 1,387
metres of mineralized core being logged and sampled for analysis. All of the
laboratory analysis was complete by early January 2012 and is subsequently being
used to guide the preparation of metallurgical composites to be used in an
updated economic study in the second quarter of 2012. The assays will also be
incorporated into the resource database to provide for more comprehensive data
coverage in the central part of the deposit.

Following an evaluation of remaining inferred resources within
the planned pit limits, three infill drill hole locations were identified that
could reasonably contribute to the mineable reserves. All three holes were
completed to depths of approximately 450 metres, with all containing good copper
mineralization. These results will be used in the updated resource estimate
which is scheduled to be completed in the second quarter of 2012.

Financings and Other Corporate Initiatives

On April 17, 2009, the Company closed a non-brokered private
placement of 3.35 million units at a price of Cdn$1.50 per unit for gross
proceeds of Cdn$5,025,000. Each unit comprised one common share and one
non-transferable share purchase warrant entitling the holder to purchase one
common share at a price of Cdn$2.30 per common share until April 17, 2010.

In July 2009, the Company received written notification from
the Arizona State Mine Inspector that the Rosemont Copper Project Mined Land
Reclamation Plan had been approved. Also in July 2009 the Company announced the
signing of an agreement by Rosemont Copper Company for the purchase of 23,
250-ton Caterpillar 793F haulage trucks from Empire Southwest LLC a Caterpillar
dealership headquartered in Mesa, Arizona. Contingent with the purchase
agreement signed by the parties, Augusta and Caterpillar Financial Services
Corporation, USA have agreed on a term sheet for a capital lease of the
Caterpillar trucks and other related equipment for an amount up to $100 million.

In progression with its business and development strategy, the
Company required additional funding and in August 2009, the Company closed a
Cdn$25 million bought deal financing, plus a 15% over-allotment option exercised
in full, for gross proceeds of Cdn$28,758,740. The offering was conducted by a
syndicate of underwriters led by Wellington West Capital Markets Inc. and
included Cormark Securities Inc., CIBC World Markets Inc. and TD Securities Inc.
for the issuance of 12,380,000 common shares plus 1,857,000 common shares
pursuant to the over-allotment option at a price of Cdn$2.02 per common share.

In October 2009, Augusta retained Endeavour Financial
International Corporation (Endeavour) as financial advisor with respect to
project financing for the Rosemont Project.

In November 2009, the Company extended the annual payment in
connection with the remaining $4,000,000 owing by Ely Gold and Minerals Inc.
(Ely) in connection with the sale of the Companys interests in the Mount
Hamilton, Shell and Monte Cristo properties (the Properties). The original
closing of the agreement occurred in late February 2008 for consideration of
$6,625,000 in cash payable over a five year period, and warrants exercisable to
purchase up to 3,000,000 shares of Ely for eighteen months after closing at the
price of Cdn$0.50 per share. These warrants expired unexercised. The first
payment of $1,625,000 was made on closing of the transaction and an additional
$1,000,000 is payable each 12 months thereafter. On February 25, 2009, the
Company received the first instalment payment of $1,000,000. The Company agreed to amend and extend the terms of payment of the
remaining $4,000,000 owing for an additional two years ending in June 2015. As
consideration for the extension, Ely issued to the Company 2,000,000 warrants,
each exercisable into one common share of Ely at Cdn$0.25 per common share until
May 16, 2011. The warrants were exercised on May 13, 2011. The shares of Elys
subsidiary holding the Properties are pledged to the Company as its sole
recourse for non-payment of any portion of the remaining purchase price.

---

- 6 -

On February 11, 2010, Augusta announced it signed a definitive
agreement with Silver Wheaton Corporation (Silver Wheaton) under which the
Company agreed to sell to Silver Wheaton silver and gold ounces equal to 100% of
the payable silver and gold to be produced by the Companys Rosemont Project.
Silver Wheaton will pay Augusta upfront cash payments totalling $230 million and
payments of $3.90 per ounce of silver and $450 per ounce of gold delivered
during the mine life, or the prevailing market prices, if lower. The drawdown of
the cash payments is subject to Augusta receiving the Record of Decision (ROD)
on its Rosemont Project.

On March 12, 2010, Augusta closed Cdn$32.5 million bought deal
financing, conducted by a syndicate of underwriters led by TD Securities Inc.
and Wellington West Capital Markets Inc. for the issuance of 11,820,000 common
shares of the Company at a price of Cdn$2.75 per common share. Proceeds of this
financing were used to advance the development of the Rosemont Property and for
general working capital purposes.

On April 21, 2010, Augusta completed a $43 million senior
secured loan agreement and a copper concentrate off-take agreement with RK Mine
Finance Fund, formerly, Red Kite Explorer Trust (Red Kite). The loan bears
interest at LIBOR plus 4.5% compounded quarterly and matures on the earlier of
April 21, 2012 or the date of closing of the Rosemont Project senior debt
financing facility (the Red Kite Loan). The Company also has a one-time option
to declare, by October 22, 2011, an extension to the maturity date by one
additional year for a 2% fee. In exchange for Red Kites consent to execute the
Rosemont JV Agreement the one-time option was cancelled and the Company agreed
to pay Red Kite $0.93 million for accrued interest to October 1, 2010. Under the
copper concentrate off-take agreement, Augusta will supply Red Kite with 16.125%
of Rosemonts copper concentrate production per year until 483,750 dry tonnes of
concentrate have been delivered. As part of the loan agreement the Company paid
an origination fee of 2% and issued to Red Kite 1,791,700 warrants (the
Warrants) exercisable at Cdn$3.90 per share expiring on April 22, 2013.
Proceeds from the loan were used to retire the outstanding balance payable by
Rosemont Copper Company under the Sumitomo Loan Agreement. On February 27, 2012,
the Company and Red Kite signed a term sheet extending the maturity date of the
loan to the earlier of April 14, 2013 or the closing of the senior debt
financing for the Rosemont Project and such extension is subject to due
diligence, regulatory approval and final legal documentation. In exchange for
the extension, the Company agreed to extend the expiry date of the Warrants to
April 23, 2014 and Rosemont committed to sell to Red Kite 80% of the annual
copper cathode production of the Rosemont Project at market terms. At December
31, 2011, $2.67 million of loan interest has been accrued and is outstanding.

On August 27, 2010, the Company completed a private placement
with HudBay Minerals Inc. (HudBay) for the sale of 10,905,590 units at
Cdn$2.75 per unit for gross proceeds of approximately Cdn$30 million. Each unit
consists of one common share and one-half of a share purchase warrant. Each full
warrant was exercisable into one common share at a price of Cdn$3.90 per share
for an eighteen month period expiring on February 27, 2012. HudBay exercised
these warrants on March 18, 2011 on notice by the Company accelerating the
expiry of the warrants to March 21, 2011.

The Rosemont Joint Venture

On September 16, 2010, Rosemont entered into an Earn-In
Agreement with United Copper & Moly LLC (UCM), a company formed by Korea
Resources Corporation and LG International Corp to hold its interest in the Rosemont JV. Pursuant to the Earn-In Agreement, UCM can
acquire up to a 20% interest in the Rosemont JV by funding $176 million of
project expenditures. UCM will fund a maximum $70 million for permitting,
engineering, long-lead equipment purchases and ongoing support activities
(collectively, Pre-Construction Costs) and the remaining $106 million to fund
construction. UCM and Rosemont Copper Company have also entered into a Joint
Venture Agreement to establish their roles and responsibilities in the Rosemont
JV and agreed to enter into an off-take agreement for 30% of the copper
concentrates and 20% of copper cathode and molybdenum concentrates produced
annually by the Rosemont Project. As funds for the Pre-Construction Costs are
advanced UCM will earn its proportionate interest in the Rosemont JV. At
December 31, 2011 UCM has earned a 7.95% interest in the Rosemont JV.

---

- 7 -

Environmental/Permitting

In July 2007 the Company formally filed the Mine Plan of
Operations (MPO) with the U.S. Forest Service. The detailed plan for Augustas
Rosemont Project includes progressive design, conservation and sustainability
initiatives. Once approved, the final Rosemont MPO becomes a binding document
that assures the MPOs commitments, including reclamation and closure funding
guarantees.

Water conservation is one of the most important components of
the Companys plan to operate the Rosemont Project. A total of 45,000 acre feet
of water delivered by the Central Arizona Project has been stored in the Tucson
active management area basin, enough for an estimated 8-9 years operating
supply.

Using the MPO as a basis for permitting, the National
Environmental Policy Act (NEPA) process was officially launched during the
first quarter of 2008 when both the U.S. Forest Service and the Bureau of Land
Management made determinations of completeness regarding Rosemonts MPO. The MPO
was deemed sufficient to initiate the process for preparing an Environmental
Impact Statement (EIS) under federal law.

Applications for operation permits were initiated after
submittal of the MPO. Of these, the 20-year groundwater withdrawal permit, was
approved and issued by Department Water Resources in early 2008. In July 2009
the land reclamation plan was approved by the Arizona State Mine Inspector.

The EIS process is managed by the U.S. Forest Service. The ROD
will be issued by the U.S. Forest Service and Bureau of Land Management for
mining activities on public land and by the U.S. Army Corps of Engineers
(ACOE) for mining activities within jurisdictional waters of the United
States.

During 2010 a delay in the release of the Draft Environmental
Impact Statement (DEIS) was announced by the U.S. Forest Service in order to
complete an additional plan study and additional groundwater modeling of
development plan alternatives. This adjustment to the DEIS schedule was
necessary to allow the Forest Interdisciplinary Team and its third party
contractors to produce a complete and comprehensive evaluation.

On November 16, 2010 the DEIS was delivered to the U.S. Forest
Services, Coronado National Forest which included additional plant study and
groundwater modelling of development plan alternatives for internal review.
Copies of the preliminary draft DEIS were delivered by the U.S. Forest Service
to the State of Arizona and local Cooperating Agencies for their final review on
June 1, 2011. Upon completion of the various levels of review by the Regional
Forest Service Office and the cooperating agencies, the DEIS was printed and
released to the public on October 13, 2011 starting the 90-day comment period.
The formal Notice of Availability (NOA) was issued on October 19, 2011 and the
first public meeting was held on November 12, 2011. The NOA initiated the final
90 day public comment period. The final public hearing on the Rosemont DEIS was
held on January 14, 2012 with a public comment submission deadline scheduled for
January 18, 2012. Due to a technical problem with its computer system during the
last hours available for submission of public comments, the USFS Coronado National
Forest extended the comment submission period to January 31, 2012. The Company
sees no material impact on the projects schedule from this two week
extension.

---

- 8 -

The San Francisco Environmental Protection Agency office is the
final agency to submit comments to the U.S. Forest Service on the DEIS, joining
the over 25,000 comments of which approximately 10,000 have been characterized
as form letters or duplicates by the U.S. Forest Service. The receipt of these
comments now allows the U.S. Forest Service to complete its response to comments
and a final EIS for the Rosemont Project along with the Record of Decision
(ROD). The Company is targeting for late second quarter or third quarter of
2012 for the release of a ROD with construction to start in mid-2012.

ACOE completed its 45-day public comment period for the draft
Clean Water Act 404 permit on January 19, 2012. As part of the comment process,
the U.S. Environmental Protection Agency (EPA), as an advisory agency,
submitted a letter to the ACOE identifying the Rosemont permit as a candidate
for review by the EPA and ACOE. The full EIS of the Rosemont Copper project
already includes an extensive analysis and reviews conducted and completed by
the technical experts and the numerous Federal and State agencies that addresses
the impact of items listed in the EPA letter. The EPA letter identifies those
subject areas that the EPA wishes to review in detail with ACOE. The Company
will continue to work with the ACOE and EPA team to ensure that the EPAs
questions are answered fully and that the 404 permit meets the Clean Water Act
compliance standards. Although the EPA plays an important advisory role in the
404 permit application process, the agency does not actually issue the permit,
which is reserved for the ACOE.

The Arizona State Line Siting Committee issued its Certificate
of Environmental Compatibility (CEC) to the Tucson Electric Power Company on
December 19, 2011. The CEC specifies the selected route for the transmission
line to the Rosemont Copper project, which runs parallel to the project's water
pipeline.

The Air Permit when issued will establish the standards for air
quality and emissions control for mining operations. On September 30, 2011, the
Control Officer of the Pima County Air Quality Control District (AQCD) issued
a denial of the Rosemont air permit application just weeks after releasing a
draft permit. The Company filed a Notice of Intent to sue AQCD on June 23, 2011
and AQCD provided a draft permit for public comment, two days before the
deadline to respond to Rosemont's notice. The draft permit was written by the
AQCD with enforceable conditions that demonstrated compliance with all
applicable regulations as a minor source. On September 2, 2011, Rosemont filed a
lawsuit to compel the AQCD to take action on the permit application following
the timelines as stipulated in the law. One day before the court deadline for
the AQCD to respond to the Augustas filing of the lawsuit, the AQCD issued a
permit denial, reversing its prior determination that Rosemont qualified as a
minor source. On October 7, 2011, the Company filed a Notice of Appeal with the
Pima County Air Quality Hearing Board (Pima County AQHB). A hearing with the
Pima County AQHB was conducted in November 2011 and a decision to uphold the
denial of the Rosemont air permit application was rendered on December 1, 2011
by the Pima County AQHB. On November 23, 2011, the Company submitted an
application for air permit with the Arizona Department of Environmental Quality
(ADEQ). On January 25, 2012, the application was considered administratively
complete signifying the start of the technical review process for the permit
application. The Company has met with ADEQ to discuss its concerns and the
appropriate process for moving the process forward.

The Company continues working towards obtaining the following
permits:

- The Aquifer Protection Permit when issued by the ADEQ will establish the
  operating standards and controls so that operations do not degrade
  groundwater. The ADEQ published a draft permit and held a public hearing on
  January 5, 2012. The hearing took place during the 45-day

---

- 9 -

- The State Land Department Right of Way valuation and approval process will
    provide a route to get water and power to Rosemont.

Over the calendar year 2011, Rosemont permit applications for
air emissions, ground water protection, powerline routes, waterline routes, and
work within waters of the United States were advanced.

Engineering

The Company continued with the engineering throughout 2011.
Detailed engineering work has been adjusted to match the revised construction
schedule.

Director Change and Ongoing Support Activities

In June 2011, the shareholders of the Company elected John R.
Brodie to its Board of Directors bringing exceptional financial oversight and
governance experience to the Companys Board.

Over the course of the last three years, the Company has hired
additional personnel and promoted personnel within the organization both at the
executive and operational levels and will continue to do so to meet the
construction time line for the Rosemont Project. In March 2009 the Company
appointed Gordon Jang to its executive team as Vice President, Corporate
Controller. In September 2010 the Company opened an office in Toronto, Ontario
when it hired Letitia Cornacchia as the Companys Vice President, Investor
Relations and Corporate Communications. In November 2010 the Company further
enhanced its executive team by appointing Charles Magolske as Vice President,
Business Development. Promotions within the organization during 2011 included
Rodney Pace as Executive Vice President in addition to his role as Chief
Operating Officer, James Sturgess as Senior Vice President, Corporate
Development and Government Affairs, Purni Parikh as Vice President, Corporate
Secretary and Katherine Arnold as Vice President, Environment and Regulatory
Affairs. Also during the year ended December 31, 2011 a number of technical and
operating personnel were added.

Since the commencement of permitting activities, the Company
has maintained an active community relations program which includes maximizing
the economic benefits to the region in which the Rosemont Project operates in,
support of local and regional activities and maintain a community outreach
program.

Augustas Objectives for 2012

Augustas key objective for 2012 is to work towards completing
the EIS process and receiving the ROD on its Rosemont Project. To accomplish
this, Augusta will have to secure all remaining required regulatory permits
through the federal state and local regulatory process while maintaining an
active community relations program, including support of local and regional
activities. In addition, Augusta will need to advance detailed engineering,
including earthwork, civil and structural design and advance project management
with the intention of being ready for construction activities upon completion of
the regulatory permits. The Company plans to hire additional project and
operations personnel as the Company gears up for the start of construction.
Finally, Augusta will need to follow through with its project financing strategy
that will see 55%-65% of the estimated capital cost to be covered by equipment,
concentrate off-take and bank debt financings. The Company expects to complete
an updated resource, capital and operating cost estimate in the second quarter
of 2012. A portion of the project capital cost will come from Silver Wheatons
$230 million upfront cash payments for the sale of all of Rosemonts silver and
gold produced from Rosemont and UCMs $106 million tranche 2 investment to
earn an additional 12% interest in the Rosemont project.

---

- 10 -

ITEM
4:NARRATIVE DESCRIPTION OF THE BUSINESS

The Company is engaged in the acquisition, exploration and, if
warranted, development of natural mineral resource properties. The Company does
not produce, develop or sell any products at this time. The properties that the
Company has interest in are in the exploratory or development stage and are thus
non-producing and consequently do not generate any significant operating income
or cash flows from operations. Currently, the Companys only material property
is the Rosemont Property located in Pima County, Arizona.

The Company depends on equity capital and debt to finance its
ongoing activities.

Specialized Skill and Knowledge

Various aspects of the Companys business require specialized
skills and knowledge. Such skills and knowledge include the areas of mine
construction, permitting, geology, drilling, metallurgy, logistical planning and
implementation of exploration programs as well as finance and accounting. It may
be difficult to locate competent employees and consultants in such fields. So
far, the Company has been able to locate and retain such employees and
consultants and believes it will continue to be able to do so. In the event the
Company cannot hire or retain specific technical personnel it may result in
delays and increased costs as the Company proceeds with its planned business
activities.

Competitive Conditions

Competition in the mining industry is intense. The Company
competes with other mining companies, many of which have greater financial
resources and technical facilities for the acquisition and development of, and
production from, mineral concessions, claims, leases and other interests, as
well as for the recruitment and retention of qualified employees and
consultants.

Business Cycles

The mining business is subject to volatility of the metal
prices. The marketability of minerals and mineral concentrates is also affected
by worldwide economic cycles. The Companys operations are related and sensitive
to the market price of copper and, to a lesser degree to other metal prices such
as molybdenum, silver and gold. Metal prices fluctuate widely and are affected
by numerous factors such as global supply, demand, inflation, exchange rate,
interest rates, forward selling by producers, central bank sales and purchases,
production, global or regional political, economic or financial situations and
other factors beyond the control of the Company.

Economic Dependence

The Companys business is not substantially dependent on any
contract such as a contract to sell the major part of its products or services
or to purchase the major part of its requirements for goods, services or raw
materials. The Company has no revenue and does not expect to generate any
revenues until completion of construction at the Rosemont Project and Rosemont
reaches commercial production in 2014. As a result, the Company relies on equity
and debt financing to finance its business activities and any adverse global
economic crisis may cause a detrimental effect on the Companys ability to raise
equity and debt financings.

Environmental

The Companys Rosemont Property is up to date and compliant
with its environmental obligations and as such there are no material
environmental liabilities. However, as the Rosemont Property reaches a stage of
commercial viability, the Company will be required to comply
with federal, state and local regulations prior to entering commercial
production.

---

- 11 -

Employees

As at December 31, 2011, the Company had nine employees in the
Vancouver, British Columbia office, two employees in its Toronto, Ontario
office, ten employees in the Glendale, Colorado office and thirty five employees
in Tucson, Arizona. As operations require, the Company also retains geologists,
engineers, geophysicists and other consultants on a fee for service basis.
Certain employees in the Toronto, Vancouver and Glendale office also have
responsibilities with other publicly traded companies and the Company only pays
for its share of the costs of these employees. Upon finalization of the
permitting process, the Company will embark on a significant hiring program to
ensure there is adequate staffing and that the staff is fully trained in time
for commercial production.

Risk Factors

An investment in the Companys common shares is highly
speculative and subject to a number of risks. Only those persons who can bear
the risk of the entire loss of their investment should invest in the common
shares of the Company. An investor should carefully consider the risks described
below and the other information filed with the Canadian securities regulators
before investing in Companys common shares. The risks described below are not
the only ones faced. Additional risks that the Company currently does not
foresee or believes to be immaterial may become important factors that affect
the Companys business. If any of the following risks occur, or if others occur,
the Companys business, operating results and financial condition could be
seriously harmed and investors may lose all of their investment.

The Company has a history of losses and anticipates that
it will continue to incur operating losses for the foreseeable future.

The Company has historically incurred loss from operations as
evidenced by its financial statements, including the consolidated statements of
comprehensive profit contained in its annual audited financial statements for
the year ending December 31, 2011.

As the Companys only material property is the Rosemont
Property, the Company continues to assess other strategic opportunities for
acquiring, exploring, advancing and developing mineral properties. The Company
does not anticipate that it will earn any significant revenue from its
operations until Rosemont reaches commercial production in 2014.

The Company will require additional capital to fund its
business plans.

As of December 31, 2011, Augusta had a working capital
deficiency of $17.63 million, including $44.98 million of the Red Kite Loan
maturing on April 21, 2012. On February 27, 2012, the Company extended the
maturity of the Red Kite Loan to the earlier of April 14, 2013 or the closing of
the senior debt financing subject to due diligence, regulatory approval and
final legal documentation. Augusta has minimal revenue from its operations and
does not expect to generate any significant revenue until Rosemont is placed
into commercial production. Augusta will require project financing to be in
place by the time the ROD is expected to be issued late in the second or third
quarter of 2012. Augusta may raise additional capital through debt or equity
financing, and possibly production sharing arrangements or other means. Recent
upheavals in the financial markets worldwide, particularly within Europe, could
make it very difficult for Augusta to raise funds. Such funding may not be
available on commercially acceptable terms or at all. The Companys failure to
meet its ongoing obligations on a timely basis or raise additional funds that
may be required could result in delay or indefinite postponement of further
exploration and development of the Companys property or the loss or substantial
dilution of any of its property interests.

---

- 12 -

The Company has historically depended on distributions of
its securities to fund its working capital and funding requirements.

Historically, the Company has raised funds principally through
the sale of its securities. Additional equity financing would cause dilution to
Augustas existing shareholders. In addition, the unrestricted resale of
outstanding shares from the exercise of dilutive securities may have a
depressing effect on the market for the Companys common shares. As at the date
of this AIF, 144,196,058 common shares of Augusta were issued and outstanding.
In addition, Augusta had outstanding 8,702,706 convertible securities comprising
of stock options, warrants, and restricted share units, which in aggregate may
result in the issuance of 8,702,706 common shares.

The Company could lose its only material property in the
event of a default under the Red Kite Loan Agreement.

The Companys obligations under the Red Kite Loan are secured
by the common shares and assets of Rosemont Copper Company, which holds title to
the Companys only material property. In the event of a default under the Red
Kite Loan Agreement, if the Company is unable to immediately pay all accrued and
unpaid interest and principal debt, Red Kite is entitled to take possession of
the common shares and assets of Rosemont Copper Company and sell, lease, or
dispose of such collateral including the Rosemont Property and apply the
proceeds to the Companys debt. If such an event occurs, the Company could lose
its only material property and Augustas shareholders could lose their entire
investment.

The Companys Joint Venture Agreement with UCM could
result in the possibility of deadlock

Under the Joint Venture Agreement with UCM, a number of
important project decisions (including program and budget approval, the
replacement of the operator and the terms and conditions of project financing)
require unanimous approval of the parties, which means that each party to the
Rosemont Joint Venture has a right to veto any of these decisions, which could
lead to a deadlock.

The Company may be subject to risks relating to the
global economy.

Market events and conditions, including disruptions in the
international credit markets and other financial systems and the deterioration
of global economic conditions, could impede Augustas access to capital or
increase the cost of capital.

The Company is also exposed to liquidity risks in meeting its
operating and capital expenditure requirements in instances where its cash
position is unable to be maintained or appropriate financing is unavailable.
These factors may impact the ability of the Company to obtain loans and other
credit facilities in the future and, if obtained, on terms favourable to the
Company. Increased market volatility may impact the Companys operations which
could adversely affect the trading price of the Companys common shares.

The Company has no history of production and may never
place any of its properties into production.

The Companys properties are not in commercial production, and
the Company has never recorded any revenues from mining operations. The Company
expects to incur losses unless and until such time as its properties enter into
commercial production and generate sufficient revenues to fund its continuing
operations. The development of mining operations on its properties will require
the commitment of substantial resources for operating expenses and capital
expenditures, which may increase in subsequent years as needed consultants,
personnel and equipment associated with advancing development and commercial
production of its properties is added. The amounts and timing of expenditures
will depend on the progress of ongoing development, the results of consultants
analysis and recommendations, the rate at which operating losses are incurred,
the execution of any joint venture agreements with strategic partners, the
acquisition of additional properties, and other factors, many of which are
beyond its control. The Company may not generate any revenues or achieve
profitability.

---

- 13 -

The Companys exploration activities may not be
commercially successful.

Mineral exploration is highly speculative in nature, involves
  many risks and is frequently non-productive. Unusual or unexpected geologic
  formations, and the inability to obtain suitable or adequate machinery, equipment
  or labour are risks involved in the conduct of exploration programs. The Company
  is currently advancing detailed engineering work in preparation for construction
  and as such it is largely beyond the exploration stage for its Rosemont Property.
  The success of mineral exploration and development is determined in part by
  the following factors:

- the identification of potential mineralization based on analysis;
- the availability of exploration permits;
- the quality of the Companys management and its geological and technical
  expertise; and
- the capital available for exploration and development.

Substantial expenditures and time are required to establish or
to add to existing proven and probable reserves through drilling and analysis,
to develop metallurgical processes to extract metal, and to develop the mining
and processing facilities and infrastructure at any site chosen for mining.
Whether a mineral deposit will be commercially viable depends on a number of
factors, which include, without limitation, the particular attributes of the
deposit, such as size, grade and proximity to infrastructure; metal prices,
which fluctuate widely; and government regulations, including, without
limitation, regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection.

The Companys exploration and development projects have not had
any revenues from operations upon which to base estimates of future operating
costs or future revenues from operations. Particularly for development projects,
estimates of proven and probable mineral reserves and cash operating costs are,
to a large extent, based upon the interpretation of geologic data obtained from
drill holes and other sampling techniques, and feasibility studies that derive
estimates of cash operating costs based upon anticipated tonnage and grades of
ore to be mined and processed, the configuration of the ore body, expected
recovery rates of metals from the ore, estimated operating costs, anticipated
climatic conditions and other factors. As a result, it is possible that actual
cash operating costs and economic returns will differ significantly from those
currently estimated.

Any of the following events, among others, could affect the
profitability or economic feasibility of a project, unanticipated changes in
grade and tonnage of ore to be mined and processed, unanticipated adverse
geotechnical conditions, incorrect data on which engineering assumptions are
made, costs of constructing and operating a mine in a specific environment,
availability and costs of processing and refining facilities, availability of
economic sources of power, adequacy of water supply, availability of surface
tenure on which to locate processing and refining facilities, adequate access to
the site, including competing land uses (such as agriculture and illegal
mining), unanticipated transportation costs, and accidents, labour actions and
force majeure events.

Exploration, development and mining involve a high degree
of risk.

The Companys operations will be subject to all the hazards and
risks normally encountered in the exploration, development and production of
copper and other base or precious metals, including, without limitation,
encountering unusual or unexpected geologic formations or other geological or
grade problems, unanticipated changes in metallurgical characteristics and metal
recovery, periodic interruptions due to inclement or hazardous weather
condition, seismic activity, rock bursts, pit-wall failures, cave-ins,
encountering unanticipated ground or water conditions, flooding, fire, and other
conditions involved in the drilling, removal of material, environmental hazards,
discharge of pollutants or hazardous chemicals, industrial accidents, failure of
processing and mining equipment, labour disputes, supply problems and delays and
changes in the regulatory environment any of which could result in damage to, or
destruction of, mineral properties, mines and other producing facilities, damage
to life or property, personal injury or death, loss of key employees, environmental damage, delays in the
Companys exploration and development activities, monetary losses and legal
liabilities. Satisfying such liabilities may be very costly and could have a
material adverse effect on the Companys future cash flow, results of operations
and financial condition.

---

- 14 -

The Company may be adversely affected by fluctuations in
copper, molybdenum, silver, gold and other metal prices.

The value and price of the Companys common shares, financial
results, and its exploration, development and mining, if any, activities may be
adversely affected by declines in the price of copper, molybdenum, silver, gold
and other metals. Mineral prices fluctuate widely and are affected by numerous
factors beyond the Companys control such as interest rates, exchange rates,
inflation or deflation, fluctuation in the value of the US dollar and foreign
currencies, global and regional supply and demand, and the political and
economic conditions of mineral producing countries throughout the world. The
price for metals can fluctuate in response to many factors beyond anyones
ability to predict. The prices used in making the resource estimates are
disclosed and differ from daily prices quoted in the news media. The percentage
change in the price of a metal cannot be directly related to the estimated
resource quantities, which are affected by a number of additional factors. For
example, a 10 percent change in price may have little impact on the estimated
resource quantities and affect only the resultant cash flow, or it may result in
a significant change in the amount of resources. Because mining occurs over a
number of years, it may be prudent to continue mining for some periods during
which cash flows are temporarily negative for a variety of reasons, including a
belief that the low price is temporary and/or the greater expense incurred in
closing a property permanently.

Mineralized material calculations and life-of-mine plans using
significantly lower metal prices could result in material write-downs of the
Companys investments in the Rosemont Property and increased amortization,
reclamation and closure charges.

In addition to adversely affecting the Companys mineralized
material estimates and financial condition, declining metal prices could impact
operations by requiring a reassessment of the commercial feasibility of the
Rosemont Project. Such a reassessment may be the result of a management decision
related to a particular project. Even if the project is ultimately determined to
be economically viable, the need to conduct such a reassessment may cause
substantial delays in development or may interrupt operations, if any, until the
reassessment can be completed.

Production and cost estimates may be worse than
anticipated.

The decision by the Company to proceed with the development of
the Rosemont Project was based on economic projections determined as part of the
2007 Feasibility Study process later supported by the 2009 Feasibility Study
completed in January 2009. Included in these projections were estimates for
metal production and capital and operating costs. Failure to achieve these
production, capital and operating cost estimates or material increases in costs
could have an adverse impact on the Companys future cash flows, profitability,
results of operations and financial condition.

The Companys actual production and capital and operating costs
may vary from estimates for a variety of reasons, including: actual ore mined
varying from estimates of grade, tonnage, dilution and metallurgical and other
characteristics; short-term operating factors relating to the ore reserves, such
as the need for sequential development of ore bodies and the processing of new
or different ore grades; revisions to mine plans; risks and hazards associated
with mining; natural phenomena, such as inclement weather conditions, water
availability, floods, and earthquakes; and unexpected labour shortages or
strikes. Costs of production may also be affected by a variety of factors,
including; changing waste-to-ore ratios, ore grade metallurgy, labour costs, the
cost of commodities, general inflationary pressures and currency rates.

---

- 15 -

Litigation may adversely affect the Companys assets.

The Company may be involved in disputes with other parties in
the future, which may result in litigation. The results of litigation cannot be
predicted with certainty. If the Company is unable to resolve these disputes
favorably, it may have a material adverse impact on the Companys financial
performance, cash flow and results of operations.

Title to the Companys properties may be subject to other
claims.

Although the Company believes it has exercised commercially
reasonable due diligence with respect to determining title to properties it
owns, controls or has the right to acquire by option, there is no guarantee that
title to such properties and other tenure will not be challenged or impugned.
The Companys mineral property interests may be subject to prior unrecorded
agreements or transfers or native land claims and title may be affected by
undetected defects. There may be valid challenges to the title of the Companys
properties which, if successful, could impair development and/or operations.
This may be exacerbated due to the large number of title transfers historically
involved with some of the properties.

The Company is subject to risks related to community
action.

All industries, including the mining industry, are subject to
community actions. In recent years, communities and non-governmental
organizations have become more vocal and active with respect to mining
activities at or near their communities. These parties may take actions such as
road blockades, applications for injunctions seeking work stoppage and lawsuits
for damages. These actions can relate not only to current activities but also in
respect of decades old mining activities by prior owners of subject mining
properties.

Estimates of mineralized materials are subject to
geologic uncertainty and inherent sample variability.

Although the estimated resources at the Rosemont Property have
been delineated with appropriately spaced drilling, there is inherent
variability between duplicate samples taken adjacent to each other and between
sampling points that cannot be reasonably eliminated. There also may be unknown
geologic details that have not been identified or correctly appreciated at the
current level of delineation. This results in uncertainties that cannot be
reasonably eliminated from the estimation process. Some of the resulting
variances can have a positive effect and others can have a negative effect on
mining and processing operations. Acceptance of these uncertainties is part of
any mining operation.

Mineral resources and proven and probable reserves are
estimates.

Although the mineralized material and proven and probable
reserve figures included in this document have been carefully prepared by
independent engineers, these amounts are estimates only, and the Company cannot
be certain that specific quantities of copper, molybdenum, silver, gold or other
minerals will in fact be realized. There are numerous uncertainties inherent in
estimating measured, indicated and inferred mineral resources and proven and
probable mineral reserves including many factors beyond the Companys control.
The estimation of mineral resources and mineral reserves is necessarily a
subjective process, and the accuracy of any such estimates are a function of the
quantity and quality of available data and of the assumptions made and judgments
used in engineering and geological interpretations, which may prove to be
unreliable and different materially from actual results. Any material change in
the quantity of mineralization, grade or stripping ratio, or mineral prices may
affect the economic viability of its properties. In addition, the Company cannot
be certain that metal recoveries in small-scale laboratory tests will be
duplicated in larger scale tests under on-site conditions or during production.
Until a deposit is actually mined and processed the quantity of mineral
resources and reserves and grades must be considered as estimates only.

---

- 16 -

Government regulation may adversely affect the Companys
business and planned operations.

The Company believes the Rosemont Project complies with
existing environmental and mining laws and regulations affecting its operations.
Its mining, processing, development and mineral exploration activities, if any,
will be subject to various laws governing prospecting, mining, development,
production, taxes, labour standards and occupational health, mine safety, toxic
substances, land use, water use, land claims of local people and other matters.
The Company can provide no assurance that new rules and regulations will not be
enacted or that existing rules and regulations will not be applied in a manner
which could limit or curtail production or development.

A portion of the present Rosemont Property land position is
located on unpatented mine and millsite claims located on US federal public
lands. The right to use such claims are granted under the United States General
Mining Law of 1872 (the General Mining Law). Unpatented mining claims are
unique property interests in the US, and are generally considered to be subject
to greater title risk than other real property interests because the validity of
unpatented mining claims is often uncertain. This uncertainty arises, in part,
out of the complex federal and state laws and regulations under the General
Mining Law and the interaction of the General Mining Law and other federal and
state laws, such as those enacted for the protection of the environment.
Unpatented mining claims are subject to possible challenges by third parties or
contests by the federal government. The validity of an unpatented mining claim,
in terms of both its location and maintenance, is dependent on strict compliance
with a complex body of federal and state statutory or decisional law. In
addition, there are few public records that definitively control the issues of
validity and ownership of unpatentable mining claims. In recent years, the US
Congress has considered a number of proposed amendments to the General Mining
Law. If adopted, such legislation could, among other things:

- impose a royalty on the production of metals or minerals from unpatented
  mining claims;
- reduce or prohibit the ability of a mining company to expand its
  operations; and
- require a material change in the method of exploiting the reserves located
  on unpatented mining claims.

All of the foregoing could adversely affect the economic and
financial viability of any future mining operations at the Rosemont Property.

Amendments to current laws, regulations and permits governing
operations and activities of mining and exploration companies, or more stringent
implementation thereof, could have a material adverse impact on its business and
cause increases in exploration expenses, capital expenditures or production
costs or reduction in levels of production at producing properties or require
abandonment or delays in development of new mining properties.

The Company will require exploration and mining permits
and licences.

No guarantee can be given that the necessary exploration and
mining permits and licences will be issued to the Company or, if they are
issued, that they will be renewed, or that the Company will be in a position to
comply with all conditions that are imposed. Nearly all mining projects require
government approval. There can be no certainty that these approvals will be
granted to the Company in a timely manner, or at all.

The Companys operations are subject to environmental
risks.

All phases of the Companys operations are subject to federal,
state and local environmental regulation in the jurisdictions in which the
Company operates. These regulations mandate, among other things, the maintenance
of air and water quality standards and land reclamation. They also set forth
limitations on the generation, transportation, storage and disposal of solid and
hazardous waste. Environmental legislation is evolving in a manner which will
require stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. The Company cannot be certain that future changes in environmental regulation, if any, will
not adversely affect its operations. Environmental hazards may exist on the
properties on which the Company holds and will hold interests which are unknown
to the Company at present and which have been caused by previous or existing
owners or operators of the properties.

---

- 17 -

Failure to comply with applicable laws, regulations and
permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties
engaged in mining operations or in the exploration or development of mineral
properties may be required to compensate those suffering loss or damage by
reason of the mining activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations.

Production, if any, at its mines will involve the use of
hazardous materials. Should these materials leak or otherwise be discharged from
their containment systems then the Company may become subject to liability for
hazards that it may not be insured against or for cleanup work that may not be
insured.

The Companys common shares may be subject to price and
volume fluctuations and the market price for the common shares of the Company
may drop below the price at which such common shares were purchased.

In recent years, securities markets have experienced
considerable price and volume volatility, and the market prices of securities of
many companies have been subject to wide fluctuations not necessarily related to
the operating performance, underlying asset values, exploration success or
prospects of such companies. The market price of a publicly traded stock,
especially a junior resource issuer, is affected by many variables including the
market for junior resource stocks, the strength of the economy generally,
commodity prices, the availability and attractiveness of alternative
investments, and the breadth of the public market for the stock. The effect of
these and other factors on the market price of securities on the stock exchanges
on which Augusta trades, suggest the trading price of the common shares will
continue to be volatile. There can be no assurance that such fluctuations will
not affect the price of Augustas common shares and that the price of such
common shares may decline below the purchase price paid for such common
shares.

In the past, following periods of volatility in the market
price of a companys securities, shareholders have often instituted class action
securities litigation against those companies. Such litigation, if instituted,
could result in substantial costs and diversion of management attention and
resources, which could significantly harm the Companys profitability and
reputation.

The Company does not insure against all risks.

The Companys insurance policies do not insure the Company
against all the potential risks associated with a mining companys operations.
The Company may also be unable to maintain insurance to cover these risks at
economically feasible premiums. Insurance coverage may not continue to be
available or may not be adequate to cover any resulting liability. Moreover,
insurance against risks such as environmental pollution or other hazards as a
result of exploration and production is not generally available to the Company
or to other companies in the mining industry on acceptable terms. The Company
might also become subject to liability for pollution or other hazards which may
not be insured against or which the Company may elect not to insure against
because of premium costs or other reasons. Losses from these events may cause
the Company to incur significant costs that could have a material adverse effect
upon the Companys financial condition and results of operations.

---

- 18 -

The Company competes with larger, better capitalized
competitors in the mining industry.

The mining industry is competitive in all of its phases. The
Company faces strong competition from other mining companies in connection with
the acquisition of properties producing, or capable of producing, base and
precious metals. Many of these companies have greater financial resources,
operational experience and technical capabilities than the Company. As a result
of this competition, the Company may be unable to maintain or acquire attractive
mining properties on terms it considers acceptable or at all. Consequently, the
Companys revenues, operations and financial condition could be materially
adversely affected.

Any metal price hedging activities undertaken by the
Company may also limit the price that it can realize on such metals.

Other than in respect of the silver and gold purchase
arrangement entered into with Silver Wheaton, the Company has no hedges in place
against volatility in the metal prices. The Company may engage in hedging
activities in the future. Hedging activities are intended to protect a company
from the fluctuations of the prices of metal and to minimize the effect of
declines in prices on results of operations for a period of time. Although
hedging activities may protect a company against low metal prices, they may also
limit the price that can be realized on the relevant metal that is subject to
forward sales and call options where the market price of the relevant metal
exceeds the price in a forward sale or call option contract.

The Company may incur losses associated with foreign
currency fluctuations.

The Company operates predominantly in the United States and
Canada, and incurs most of its expenses in the Companys sole material property,
which is located in the United States. Consequently, a significant portion of
the Companys operating expenses are incurred in US dollars. The fluctuation of
the exchange rate between the US dollar and the Canadian dollar may affect the
Companys stock price and its financial condition.

The Company is dependent on its key personnel.

The Companys success depends on its key executives. The loss
of the services of one or more of such key management personnel could have a
material adverse effect on the Company. The Companys ability to manage
exploration and development activities, and hence its success, will depend in
large part on the efforts of these individuals. The Company faces intense
competition for qualified personnel, and cannot be certain that it will be able
to attract and retain such personnel.

The Companys officers and directors may have potential
conflicts of interest.

Certain of the Companys directors and officers serve as
directors and/or officers of other public and private companies and devote a
portion of their time to manage other business interests. This may result in
certain conflicts of interest. To the extent that such other companies may
participate in ventures in which the Company is also participating, such
directors and officers may have a conflict of interest in negotiating and
reaching an agreement with respect to the extent of each companys
participation. The laws of Canada require the directors and officers to act
honestly, in good faith, and in the best interests of the Company and its
shareholders. However, in conflict of interest situations, the Companys
directors and officers may owe the same duty to another company and will need to
balance the competing obligations and liabilities of their actions. There is no
assurance that the Companys needs, will receive priority in all cases. From
time to time, several companies may participate together in the acquisition,
exploration and development of natural resource properties, thereby allowing
these companies to: (i) participate in larger programs; (ii) acquire an interest
in a greater number of programs; and (iii) reduce their financial exposure with
respect to any one program. A particular company may assign, at its cost, all or
a portion of its interests in a particular program to another affiliated company
due to the financial position of the company making the assignment. In
determining whether or not the Company will participate in a particular program
and the interest therein to be acquired by it, it is expected that the Companys directors
will primarily consider the degree of risk to which the Company may be exposed
and its financial position at the time.

---

- 19 -

The Company provides indemnity and protection to its
directors and officers.

Section 7 of Augustas By-Law No.1 provides that Augusta shall
indemnify a director or officer, a former director or officer, or a person who
acts or acted at Augustas request as a director or officer of a body corporate
of which Augusta is or was a shareholder or creditor against all costs, charges
and expenses, including an amount paid to settle an action or satisfy a
judgment. Thus, Augusta may be required to pay amounts to settle any such claims
that may arise. The impact of any such possible future indemnity protection
cannot be determined at this time.

The Company does not intend to pay dividends.

Augusta has never paid a dividend to its shareholders and
intends to retain its cash for the continued development of its business.
Augusta does not intend to pay cash dividends on its common stock in the
foreseeable future. As a result, an investors return on investment will be
solely determined by his or her ability to sell the Companys common shares in
the secondary market.

The Company faces increased costs and compliance risks as
a result of being a public company.

Legal, accounting and other expenses associated with public
company reporting requirements have increased significantly in the past few
years. The Company anticipates that general and administrative costs associated
with regulatory compliance will continue to increase with ongoing compliance
requirements under the Sarbanes-Oxley Act of 2002,as well as any new
rules implemented by the SEC, Canadian Securities Administrators, the NYSE Amex
and the TSX in the future. These rules and regulations have significantly
increased the Companys legal and financial compliance costs and made some
activities more time-consuming and costly. There can be no assurance that the
Company will continue to effectively meet all of the requirements of these
regulations, including Sarbanes-Oxley Section 404andNational
Instrument 52-109 of the Canadian Securities Administrators(NI
52-109).Any failure to effectively implement internal controls, or to
resolve difficulties encountered in their implementation, could harm the
Companys operating results, cause the Company to fail to meet reporting
obligations or result in management being required to give a qualified
assessment of the Companys internal controls over financial reporting or the
Companys independent auditors providing an adverse opinion regarding
managements assessment. Any such result could cause investors to lose
confidence in the Companys reported financial information, which could have a
material adverse effect on the trading price of the Companys common shares.
These rules and regulations have made it more difficult and more expensive for
it to obtain director and officer liability insurance, and the Company may be
required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage in the future. As a result,
it may be more difficult for the Company to attract and retain qualified
individuals to serve on its board of directors or as executive officers. If the
Company fails to maintain the adequacy of its internal control over financial
reporting, the Companys ability to provide accurate financial statements and
comply with the requirements of the Sarbanes-Oxley Act of 2002and/or NI
52-109could be impaired, which could cause the Companys stock price to
decrease.

Material Mineral Property

The following is a narrative description of the Companys only
material property.

The Rosemont Property

On June 1, 2005, the Company announced that it had entered into
an Option Agreement to purchase 100% of the Rosemont Property in Pima County,
Arizona. After making the initial payment of $6.7 million in June 2005, the
Company completed the remaining payment of $13.7 million on March 31, 2006,
after adjusting for early payment provisions, and thereby acquired a 100% working
interest in the Rosemont Property subject to the 3% NSR.

---

- 20 -

The Rosemont Property, which includes patented and unpatented
claims, fee land and leased grazing ranchland, is approximately 50 kilometres
southeast of Tucson. The Rosemont Property covers most of the Rosemont Mining
District and adjacent Helvetia Mining District and contains an open-pit mineable
copper/molybdenum/silver (Cu-Mo-Ag) skarn deposit, as well as other
exploration targets, on patented mining claims. Taken together the land position
is sufficient to allow mining of the open pit, processing of ore, storage of
tailings, disposal of waste rock, and operation of milling equipment. These
lands are accessible under provisions of the General Mining Law, subject to
obtaining approval from the US Forest Service after completion of an EIS
process. The EIS process includes interagency consultation on endangered species
and cultural resources. The use of the project surface rights will require
obtaining a number of federal, state, and local permits and approvals, which are
now in progress.

The Rosemont deposit, the principal known area of
mineralization on the Rosemont Property, is a typical representative of the
porphyry copper class of deposits. Similar to many of other south-western US
deposits in this class, Rosemont consists of broad-scale skarn mineralization
developed in Paleozoic-aged carbonate sedimentary rocks, adjacent to their
contact with quartz-latite or quartz-monzonite porphyry intrusive rocks. The
deposit has been extensively drilled using diamond core holes.

The eastern portion of the property is easily reached from the
city of Tucson by traveling Interstate Highway I-10 approximately 25 miles (40
kilometres) east to its intersection with Arizona State Highway 83, then
continuing south for approximately 11 miles (18 kilometres) where Highway 83
crosses the Rosemont Property. From Highway 83, a number of unimproved dirt
roads access various locations on the property. The western portion of the
property is reached from Tucson by following Interstate Highway I-19 south about
20 miles (30 kilometres) to the town of Sahuarita, then east 10-15 miles (20 km)
along any of a number of unpaved roads that lead to the property.

Weather presents no significant difficulties to mining
operations in the area. The semi-arid climate, typical of the Arizona-Sonoran
Desert, produces an average of about 8 inches (20 centimetres) annual rainfall,
mostly during the late summer and winter months. Temperatures range from about
25oF to 115oF (-4oC to 45oC). The resulting vegetation ranges from mesquite and
grasses in the lower elevations to oak, pine and juniper in the mountains.

Sufficient mining personnel are available within commuting
distance of the site. Tucson, Arizona is a city in excess of 500,000 people and
has a well known history of mining in the area. The proximity of the property to
the metropolitan Tucson area allows for the convenient transportation of
workers, equipment, and supplies to the site using established road ways.

2009 Feasibility Study

In late 2008 Augusta completed an updated mineral resource
estimate and an update of Rosemonts proven and probable mineral reserve
estimate. The updated estimates represent a 5% increase in the measured and
indicated resource and a 14% increase in the mineral reserve estimate over the
previous estimates completed as part of the 2007 Feasibility Study. Results of
the 2008 mineral resource update and the 2008 mineral reserve update were
incorporated in the 2009 Feasibility Study filed in January 2009.

Results of the 2009 Feasibility Study reconfirmed Rosemont as
an economically robust copper/molybdenum mine with low development risk. Using
long-term metal pricing of $1.85 per pound of copper, $15 per pound of
molybdenum, and $12 per ounce of silver, the project generates an net present
value (NPV) (5%) of $1.2 billion, an after-tax internal rate of return (IRR)
of 17.8%, and a payback of five years on an after-tax basis. Even applying the average spot metal prices
witnessed in December 2008 of $1.36 per pound copper, $11.00 per pound of
molybdenum and $10.79 per ounce of silver, the project generates an after-tax
IRR of 7.7% .

---

- 21 -

The 2009 Feasibility Study estimates cash costs at $0.62 per
pound of copper, net of by-product credits, while the total capital cost is
estimated at $897 million. The mine life based on current mineral reserves is 21
years.

The following is an extract of the Summary section of the 2009
Feasibility Study entitled NI 43-101 Technical Report for the Rosemont Copper
Project Updated Feasibility Study, Pima County, Arizona, USA, dated January 14,
2009 (Volume 1). On March 20, 2009 the Company filed an amended copy of the
2009 Feasibility Study to include further details of the work program at the
request of the British Columbia Securities Commission. The principal author
responsible for the overall preparation of the 2009 Feasibility Study is Dr.
Conrad Huss, P.E., Qualified Person, of M3 Engineering & Technology
Corporation and other contributors to the 2009 Feasibility Study include:
William L. Rose, P.E. a Qualified Person, of WLR Consulting, Inc., Thomas L.
Drielick, P.E., a Qualified Person, of M3 Engineering & Technology
Corporation, Robert Fong, P.E., a Qualified Person, of Moose Mountain Technical
Services and John Ajie, P.E., a Qualified Person, of URS Washington Division.
Additional details regarding the Rosemont Property may be obtained from the 2009
Feasibility Study available on SEDAR at www.sedar.com, which readers are
encouraged to review in its entirety.

S U M M A R Y

Property

The Rosemont Property is primarily a copper mining project with
appreciable amounts of molybdenum and silver by-products. Rosemont is being
developed by Augusta. At the time of completion of the 2009 Feasibility Study,
the property consisted of 132 patented lode claims comprising about 1969 acres
(797 hectares) and a contiguous package of unpatented lode mining claims
comprising more than 12,000 acres (4,860 hectares) which surround the core of
patented claims. There are also 10 blocks of fee land associated with the
property, consisting of a number of individual parcels that enclose an
additional 911 acres (369 hectares). The area covered by patented claims,
unpatented claims and fee land totals approximately 15,000 acres (6,070
hectares), and is situated within the historic Helvetia Mining District on the
northwestern flank of the Santa Rita Mountain Range and the Rosemont Mining
District on the northeastern flank of the Santa Rita Mountain Range. Since
completion of the 2009 Feasibility Study additional claims were acquired for a
total contiguous package of 1,060 unpatented mining claims comprising more than
14,000 acres (5,670 hectares). The total area now covered by patented claims,
unpatented claims and fee land totals approximately 17,500 acres (7,080
hectares). In addition, the Rosemont Ranch lands have been expanded to include
surface grazing permits over almost 30,000 acres, including the claim areas and
fee lands described above.

Mining activity in the Helvetia and Rosemont Mining Districts
dates to the mid 1800s, and by the 1880s production from mines on both sides of
the Santa Rita Mountains supported the construction and operation of the
Columbia Smelter at Helvetia, on the western side, and the Rosemont Smelter in
the Rosemont Mining District on the eastern side. Production ceased in 1951
after production of about 227,300 tons of ore containing an estimated 17.3
million pounds of copper, 1.1 million pounds of zinc and 180,760 ounces of
silver.

The copper mineralization of the Rosemont deposit is primarily
sulfide with a cap of oxide copper close to the surface. The sulfide and oxide
ore will be mined through conventional open pit mining techniques. Sulfide ore
will be processed by crushing, grinding, and flotation to produce a copper
concentrate product and a molybdenum concentrate product for market. The run of
mine (ROM) oxide ore will be leached and the resulting leach solution processed
through a solvent extraction and electrowinning facility to produce a copper
cathode product for market.

---

- 22 -

Location

The Rosemont copper-molybdenum-silver deposit is located in
Pima County, Arizona, USA on the northeastern flank of the Santa Rita Mountains
approximately 30 miles southeast of the city of Tucson Arizona. The property
occupies flat to mountainous topography at a surface elevation ranging from
4,000 feet to 6,290 feet and at geographical coordinates of approximately 31°
50 N and 110° 45 W.

Ownership

The Rosemont deposit is the principal known area of
mineralization on the Rosemont Property, a group of patented mining claims,
unpatented mining claims and fee land that in aggregate total approximately
15,000 acres (6,100 hectares). Since the 2009 Feasibility Study the total
patented mining claims, unpatented mining claims and fee lands aggregates to
17,500 acres (7,080 hectares), Augusta first became interested in the Rosemont
deposit in 2005 and after completing a two phase drilling program in 2005 and
2006, Augusta completed the purchase of a 100 percent interest in the property
in March 2006. The purchase is subject to a 3% NSR.

Geology and Mineralization

The Rosemont deposit is a typical representative of the
porphyry copper class of deposits. Similar to many other southwestern USA
deposits in this class, Rosemont consists of broad-scale skarn mineralization
developed in Paleozoic-aged carbonate sedimentary rocks, adjacent to their
contact with quartz-latite or quartz-monzonite porphyry intrusive rocks. The
deposit has been extensively drilled using diamond core holes. Broadly
disseminated sulfide mineralization occurs in the Paleozoic units. Near surface
weathering has resulted in the oxidation of the sulfides in the overlying
Mesozoic units.

Exploration and Sampling

In 2008, Augusta completed a 20-hole, 17,522 foot diamond
drilling program, along with the sampling of 10 previously drilled geotechnical
holes. Previously in 2006, Augusta completed a 40-hole, 68,727 foot diamond
drilling program on the deposit, consisting of resource, geotechnical, and
metallurgical holes. In 2005, Augusta carried out a 15-hole, 27,402 foot diamond
drilling program. The results of all of these drilling programs have been
integrated with approximately 210,000 feet of previous drilling, conducted by
other companies prior to Augustas involvement, to estimate the mineral
resources presented in this report. This work was incorporated into an updated
mineral resource statement provided in a WLRC Technical Report dated December 4,
2008 herein referred to as the 2008 Mineral Resource Update.

---

- 23 -

Mineral Resource and Mineral Reserve Estimates

A block grade model of the Rosemont deposit was constructed
using MEDSystem® software using a geologic model developed in Gemcom® by Augusta
personnel and contract geologists. Statistical studies were conducted to
identify outliers to the distribution of assays and to estimate the ranges of
influence for block grade estimation. Block grade estimations were conducted by
rock type using 50-foot composited data and ordinary kriging interpolation
methods. Blocks were also classified into measured, indicated and inferred
resources in a manner that conforms to NI 43-101 standards. The mineral resource
estimation work was performed by or under the direction of Mr. William Rose,
P.E., WLR Consulting Inc.s (WLRCs) Principal Mining Engineer and an
independent Qualified Person under the standards set forth by NI 43-101.

Updated measured and indicated mineral resource estimates for
the Rosemont deposit are summarized in Tables 1-1 and 1-2, respectively. The
combined measured and indicated mineral resource estimates are presented in
Table 1-3. Inferred mineral resource estimates are shown in Table 1-4. US units
are used in these estimations, where tons refer to short tons (2000 lbs). The
mineral resource estimates contained herein are effective as of October 22,
2008.

Table 1-1 Rosemont Deposit Measured Mineral Resources

Material / 
      Cutoff (% Cu)
    Ktons
    % Cu
    % Mo
    Ag Oz/ton
    % CuEqv*
    lbs Cu (millions)
    lbs Mo (millions)
    oz Ag (millions)
    lbs 
    CuEqv* (millions)Oxides: 0.10 0.15 0.20
    21,600   14,600
          7,500
    0.20 0.23 0.30
    - - -
    - - -
    0.20 0.23 0.30
    85 68 45
    - - -
    - - -
    85 68 45Mixed: 0.15 0.20 0.25 0.30
    4,900
          4,800     4,700
          4,500
    0.65 0.66 0.67 0.69
    0.007 0.007 0.007 0.007
    0.08 0.08 0.08 0.08
    0.78 0.79 0.80 0.82
    64 64 63 62
    0.7 0.7 0.7 0.6
    0.4 0.4 0.4 0.4
    76 76 75 73Sulfides: 0.15 0.20 0.25 0.30
    132,300 119,100 106,900
         96,100
    0.50 0.54 0.58 0.61
    0.016 0.016 0.017 0.017
    0.14 0.15 0.16 0.16
    0.78 0.82 0.87 0.91
    1,330    
      1,280     1,230    
      1,170
    42.3   38.1  
      36.4   32.7
    18.4   17.6  
      16.6   15.6
    2,060    
      1,950     1,870    
      1,750


* Equivalency based on prices of $1.25/lb Cu, $18.00/lb Mo and
$8.50/oz Ag, with no applied recovery factors.

Table 1-2 Rosemont Deposit Indicated Mineral Resources

---

- 24 -

Material / 
      Cutoff (% Cu)
    Ktons
    % Cu
    % Mo
    Ag Oz/ton
    % CuEqv*
    lbs Cu (millions)
    lbs Mo (millions)
    oz Ag (millions)
    lbs 
    CuEqv* (millions)Oxides: 0.10 0.15 0.20
    81,700 51,400 27,400
    0.20 0.25 0.33
    - - -
    - - -
    0.20 0.25 0.33
    332 260 180
    - - -
    - - -
    332 260 180Mixed: 0.15 0.20 0.25 0.30
    34,300 33,500 32,200 29,400
    0.49 0.50 0.51 0.53
    0.005 0.005 0.005 0.005
    0.05 0.05 0.05 0.05
    0.58 0.58 0.59 0.62
    334 332 326 311
    3.4 3.3 3.2 2.9
    1.5 1.5 1.5 1.4
    394 391 383 363Sulfides: 0.15 0.20 0.25 0.30
    464,500 404,700 351,200
      305,200
    0.44 0.48 0.52 0.56
    0.014 0.015 0.016 0.016
    0.11 0.12 0.13 0.14
    0.68 0.74 0.80 0.84
    4,120 3,910 3,680 3,430
    130.1 121.4 112.4 97.7
    52.0 49.0 45.7 42.1
    6,340 5,990 5,610 5,120


* Equivalency based on prices of $1.25/lb Cu, $18.00/lb Mo and
$8.50/oz Ag, with no applied recovery factors.





Table 1-3 Rosemont Deposit Combined Measured and Indicated
  Mineral Resources

Material / 
      Cutoff (% Cu)
    Ktons
    % Cu
    % Mo
    Ag Oz/ton
    % CuEqv*
    lbs Cu (millions)
    lbs Mo (millions)
    oz Ag (millions)
    lbs 
    CuEqv* (millions)Oxides: 0.10 0.15 0.20
    103,400 66,000 35,000
    0.20 0.25 0.32
    - - -
    - - -
    0.20 0.25 0.32
    417 328 224
    - - -
    - - -
    417 328 224Mixed: 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
    0.60 0.61 0.62 0.64
    398 396 389 373
    4.1 4.0 3.9 3.5
    1.9 1.9 1.9 1.8
    471 467 458 436Sulfides: 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
    0.70 0.76 0.82 0.86
    5,440 5,190 4,910 4,600
    172.4 159.5 148.8 130.4
    70.4 66.6 62.3 57.7
    8,410 7,940 7,480 6,870


* Equivalency based on prices of $1.25/lb Cu, $18.00/lb Mo and
$8.50/oz Ag, with no applied recovery factors.

Table 1-4 Rosemont Deposit Inferred Mineral Resources(Excludes Measured & Indicated)

---

- 25 -

Material / 
      Cutoff (% Cu)
    Ktons
    % Cu
    % Mo
    Ag Oz/ton
    % CuEqv*
    lbs Cu (millions)
    lbs Mo (millions)
    oz Ag (millions)
    lbs 
    CuEqv* (millions)Oxides: 0.10 0.15 0.20
    30,400 17,800 12,700
    0.24 0.33 0.39
    - - -
    - - -
    0.24 0.33 0.39
    147 117 100
    - - -
    - - -
    147 117 100Mixed: 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
    0.41 0.43 0.48 0.49
    148 141 121 109
    1.7 1.5 1.2 0.7
    0.3 0.3 0.2 0.2
    175 164 139 121Sulfides: 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
    0.50 0.59 0.63 0.70
    1,600 1,440 1,320 1,170
    29.2 25.7 21.4 16.8
    12.1 10.9 10.0 8.9
    2,110 1,880 1,700 1,470


* Equivalency based on prices of $1.25/lb Cu, $18.00/lb Mo and
$8.50/oz Ag, with no applied recovery factors.

Augustas 2008 drilling campaign at the Rosemont deposit has
increased both the quantity and confidence level of the estimated mineral
resources, which presently totals about 562 million tons of measured and
indicated combined-mixed-plus sulfide mineral resources grading 0.50% Cu, 0.015%
Mo, and 0.12 ounces per ton Ag, at a 0.20% Cu cutoff. An additional 180 million
tons of inferred sulfide mineral resources are estimated at a grade of 0.44% Cu
using the same cutoff. Augustas recent drilling program was successful in
converting significant tonnages of inferred material into measured and indicated
classifications. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.

In addition, geologic and metallurgical studies conducted by
Augusta have shown the potential for considering the oxide copper mineralization
that overlies the sulfide deposit. Estimated measured and indicated oxide
mineral resources total nearly 103 million tons grading 0.20% Cu, at a 0.10% Cu
cutoff. An additional 30 million tons of inferred oxide mineral resource are
estimated at a grade of 0.24% Cu, using the same cutoff.

The classification of currently inferred sulfide and oxide
mineral resources can potentially be improved with further drilling. Additional
mineral resources may be found in extensions to the north and east of the
Rosemont deposit. Mineralization also is known to occur in the Broadtop Butte,
Copper World and Peach-Elgin deposits on the Rosemont Property, which could
potentially add to the total mineral resource base of the Rosemont area.

The Rosemont deposits proximity to the topographic surface
makes it amenable to open pit mining methods. Lerchs-Grossman analyses of
economic pit limits were conducted using a variety of metal prices and operating
costs. A base case mining pit shell generated at metal prices of $1.75/lb Cu,
$15.00/lb Mo and $10.00/oz Ag and anticipated operating costs was used to design
an ultimate pit for mineral reserve estimation and subsequent mine planning. The
mineral reserve estimation work was performed by or under the direction of Mr.
Robert Fong, P. Eng., Moose Mountain Technical Services (MMTS) Principal Mining
Engineer and an independent Qualified Person under the standards set forth by NI
43-101.

Rosemont mineral reserves have been estimated from only
measured and indicated mineral resources; all inferred resources have been
treated as waste. Net Smelter Returns (NSRs) were computed as a means of
aggregating the net recoverable value of the three primary metals in sulfide
rock types; only copper was used in calculating oxide NSRs. No recovery of
molybdenum and silver is projected from oxide ore leaching and only quartz
monzonite porphyry (QMP), andesite and arkose rock types were considered as
potential oxide leach ore (no NSRs were computed for other oxide rock types).
An internal NSR cutoff of $3.56/ton was used for sulfide mill ore and $2.19/ton
was used for oxide leach ore. Table 1-5 summarizes the estimated mineral
reserves for the Rosemont deposit as of the date of this report.

---

- 26 -

Table 1-5 Rosemont Mineral Reserves

Classification
      Sulfides >= 3.56 $/ton NSR
        Cutoff
      Oxides >= 2.19 $/ton NSRKtons
      NSR $/t
      TCu %
      Mo %
      Ag oz/t
      Ktons
      NSR $/t
      TCu %Proven
      141,999
      14.19
      0.48
      0.015
      0.13
      16,250
      3.91
      0.18Probable
      404,339
      13.12
      0.45
      0.015
      0.11
      53,724
      3.77
      0.17Total
      546,338
      13.40
      0.45
      0.015
      0.12
      69,974
      3.80
      0.17


At prices of $1.75/lb Cu, $15.00/lb Mo and $10.00/oz Ag,
combined proven and probable sulfide mineral reserves within the designed
Rosemont ultimate pit total nearly 546 million tons grading 0.45% Cu, 0.015% Mo
and 0.12 oz/ton Ag. Proven and probable oxide mineral reserves total about 70
million tons grading 0.17% Cu. The pit contains a total of about 1.85 billion
tons of material, of which 616 million tons are mineral reserves and 1.23
billion tons are waste rock, resulting in a stripping ratio of 2.0:1 (tons waste
per ton of ore). Contained metal in the sulfide (proven and probable) mineral
reserves is estimated at 4.93 billion pounds of copper, 161 million pounds of
molybdenum and 65 million ounces of silver. Contained metal in proven and
probable oxide mineral reserves is estimated at 241 million pounds of copper.
All of the mineral reserve estimates reported above are contained in the
mineral resource estimates presented in Tables 1-1 through 1-3.

The Rosemont ultimate pit contains approximately 54 million
tons of inferred sulfide mineral resources and nearly 8 million tons of inferred
oxide mineral resources that are above respective sulfide and oxide NSR cutoffs
of $3.56/ton and $2.19/ton. These resources are included in the waste estimates
presented in the previous paragraph. Inferred mineral resources are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves.
Inferred mineral resources have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or economically. It cannot
be assumed that all or any part of inferred mineral resources will ever be
upgraded.

Mining

Six internal mining phase designs were also developed, bringing
the total number of phases to seven. A production scheduling analysis was
conducted to determine preproduction and long-term waste rock stripping rates.
This scheduling was based on a milling rate of 75,000 tons per day (tpd),
operating 365 days per year, for a total sulfide ore feed of 27.375 million tpy.
Oxide ore will be delivered to the leach pad as it is encountered during the
course of mining. Mine and plant operations will be scheduled for continuous
coverage, using two 12-hour shifts per day, seven days per week. Ramp-up
schedules were developed for preproduction stripping and sulfide ore milling
during the first year of plant operations.

Mining sequence plans were developed on a quarterly basis
through the end of Year 2 and on an annual basis through Year 7. Additional
plans include mining progress through the end of Year 10, Year 15 and Year 21
(end of mining). A production schedule was then generated from these mining
plans, indicating a project operating life of 20.1 years using only proven and
probable mineral reserves. Peak mining rates of 318,000 tpd of total material
(ore and waste) will be realized in Year 1. Typical mining rates during Years
3-6 will be 224,000 tpd of waste rock and oxide ore, or 299,000 tpd of total
material (including 75,000 tpd of sulfide ore). Minimum oxide ore will be recovered after Year
6, and typical mining rates during Years 7 to 10 will be 299,000 tpd of ore and
waste. A 15-month preproduction stripping program will be required to open the
deposit up for initial ore deliveries to the mill.

---

- 27 -

Overburden and other waste rock encountered in the course of
mining will be placed into a waste rock storage (WRS) area located to the
southeast and south of the planned open pit and into the dry stack tailings
area, where dewatered mill tailings will be placed behind waste rock containment
buttresses. The dry stack tailings area is north of the WRS area and
east-northeast of the pit. The oxide ore heap leach pad will be located between
the dry stack tailings area and the initial WRS area.

The proposed pit operations will be conducted from 50-foot-high
benches using large-scale equipment, including up to: three 12.25 -inch-diameter
rotary blasthole drills, three 70-cu-yd electric mining shovels, two 36-cu-yd
front-end loaders, twenty four 320-ton off-highway haul trucks, five 580- to
850-hp crawler dozers, three 500-hp rubber-tired dozers, three 270- to 500-hp
motor graders and three 30,000-gallon off-highway water trucks. Four rotating
crews will be used for continuous operator and maintenance coverage. Peak
manpower (and equipment) levels will occur in Years 11-15, with 45 supervisory
and technical personnel, 150 workers in mine operations and 79 in mine
maintenance, totalling 274 people.

Metallurgical Testing

The earliest existing records of metallurgical testing are from
the period 1974 - 1975, at which time grinding and flotation tests were
performed. In the first half of 2006, Augusta initiated test work to provide a
better understanding of the metallurgy of the Rosemont deposit and establish the
design criteria for the design of a process facility.

The Rosemont sulfide ore was tested to determine grinding and
flotation criteria. The test work indicates a process of crushing and grinding
the ore to 80% passing 105 micron size distribution followed by bulk flotation
to recover copper and molybdenite minerals. A molybdenite concentration circuit
to treat the bulk flotation concentrate will be able to produce a molybdenite
concentrate.

The Rosemont oxide ore was tested to determine heap leaching
design criteria. The test work indicates that a heap leach process on run of
mine ore can recover the copper into a pregnant leach solution (PLS) that can be
subsequently processed in a solvent extraction  electrowinning (SX-EW) circuit.

Process Flowsheet

Both sulfide and oxide copper ore will be processed. Sulfide
ore will be transported from the mine to the primary crusher by off-highway
haulage trucks then conveyed to the concentrator facilities. Oxide ore will be
transported from the mine to a run of mine heap leaching facility by the
off-highway haulage trucks. Copper concentrate produced at the concentrator
facility will be loaded into highway haul trucks and transported to a
concentrate smelter and metal refinery. Molybdenum concentrate produced at the
concentrator facility will be bagged and loaded onto trucks for shipment to
market. Oxide ore will be leached with acidic solution and the leach solution
will be processed using solvent extraction electrowinning (SX-EW) technology to
produce high purity cathode copper plates (cathodes). The copper cathodes will
be loaded onto trucks for shipment to market.

The process selected for recovering the copper and molybdenite
minerals can be classified as conventional. The sulfide ore will be crushed
and ground to a fine size and processed through mineral flotation circuits.

---

- 28 -

The process selected for the recovery of copper from the oxide
ore can be classified as conventional. The oxide ore will be heap leached and
the copper recovered from the leach solution using solvent extraction 
electrowinning technology.

Extraction Rates

Sulfide ore metal recoveries for operating years 1 through 3
are indicated by the test work to be for copper (85%), gold (73%), and silver
(77%) in a copper concentrate, and molybdenum (72%) in a molybdenite
concentrate.

Sulfide ore metal recoveries for operating years 4 through 7
are indicated by the test work to be for copper (83%), gold (73%), and silver
(76%) in a copper concentrate, and molybdenum (65%) in a molybdenite
concentrate.

Sulfide ore metal recoveries for subsequent years are indicated
by the test work to be for copper (84%), gold (73%), and silver (78%) in a
copper concentrate, and molybdenum (56%) in a molybdenite concentrate.

Oxide ore copper recovery is indicated by the test work to be
65%.

Process Reagents

Reagent consumption rates for the full scale plant operation
have been estimated from the test results. The reagents that will be used in the
sulfide circuit are considered to be conventional. Consumption rates for
collectors is estimated to be about 0.164 lbs/ton of sulfide ore, lime about
1.797 lbs/ton, and modifiers, frothers and other about 0.166 lbs/ton. The
molybdenite recovery circuit will consume about 0.2125 lbs/ton of sulfide ore in
modifiers, collectors, and frothers.

In the oxide ore leaching circuit, sulfuric acid consumption is
estimated to be 30.0 lbs/ton ore. In the SX-EW circuit, extractant consumption
is estimated to be 0.0002 lbs/lb cathode copper, diluent at 0.001 lbs/lb, all
other electrowinning additives 0.0107 lbs/lb, and solution filtering additives
at 0.08 lbs/lb.

Power

The power supply for the Rosemont mine and process facilities
will be administered by Tucson Electric Power (TEP) under a shared service
agreement with TRICO, a local cooperative. The estimated connected load for the
project is 139 MW, and will be supplied by a minimum of a 138 kV line to site.
The estimated operating load for the project is approximately 106 MW. For the
higher power load required to operate the mine, new construction of
approximately 15 miles of 138 kV line is required.

Subsequent to the completion of the 2009 Feasibility Study, the
Arizona State Line-Sitting Committee selected their preferred route during an
established process that reviewed new power line routes for Rosemont. The
preferred route was supported by the entire committee and the vote was 11-0. The
preferred route still needs validation by the Arizona Corporation Commission,
expected in mid-March 2012, however there is no reason to think the preferred
route will not be supported.

The route chosen ties into TEP powerlines fed by the South
Substation near Sahuarita, Arizona. These powerlines connect to a new switchyard
at the Sanrita South. The lines then will head east across State Lane and then
following the Santa Rita Road through the University of Arizona Santa Rita
Experimental Range (SRER). This route was also the route preferred by the
landowner  the State Land Department and the land manager, University of
Arizona. Once the line crosses the eastern boundary of the SRER, the line will
remain on Rosemont Property until it crosses the ridgeline of the Santa Rita
Mountains at Lopez Pass near the Rosemont Property. The line terminates at a TEP switch near
the Rosemont Substation at the project site.

---

- 29 -

Water

The fresh water requirements for the Rosemont facilities are
about 5,000 acre-feet per year with a peak demand of 5,000 gallons per minute
(gpm) and an average demand of 3,370 gpm. All gallons in this report are United
States gallons. Water will come from wells located west of the Santa Rita
Mountains and will be pumped to the fresh water and fire water storage tank
located at the Rosemont site.

The daily usage for potable water is about 17,000 gallons per
day, fresh water makeup is 4.8 million gallons per day, and the recycle process
water is 37 million gallons per day. There is also a fire water distribution
system throughout the mine site.

Augusta has committed to recharging the Santa Cruz aquifer with
available Central Arizona Project (CAP) water.

A summary description of the fresh water system is included in
Section 1.25.7 of the 2009 Feasibility Study.

Permits

Permitting for the Rosemont Project involves federal approvals
and requires compliance with the NEPA. This in turn requires an EIS and
compliance with the Endangered Species Act (ESA) and the National Historic
Preservation Act (NHPA). A MPO was submitted to the US Forest Service on July
11, 2007 to initiate the EIS and start the permitting process. Major federal
permits required to construct and begin operation of the Rosemont Project
includes a Clean Water Act (CWA) Section 404 permit for discharge of fill
material to onsite washes. Major state permits include an aquifer protection
permit, a 401 Certification, an Arizona Pollution Discharge Elimination System
(AZPDES) multi-sector general permit for stormwater, and a Class II Air Quality
Control Permit for both installation and operation. Other permits which do not
affect the timeline for project permitting and subsequent start up include
explosives permits, nuclear instrumentation licenses, hazardous waste
identification, tracking numbers and spill control plans. A list of permits is
provided in Section 1.25.8 of the 2009 Feasibility Study.

Operating Costs

The mine operating costs were derived from equipment hours and
cycle times developed by Moose Mountain from their Mine Plan. Rebuild costs for
major equipment were generated from vendor supplied component replacement
schedules and URS Washington Mining Divisions data base for similar projects
and equipment. Mining costs supplied by others were checked by URS Washington
Division who built the estimate and was the QP. The average life of mine
operating costs for the mining operation is $0.83 per ton mined. These costs
include: clearing of vegetation, removal of topsoil, drilling, blasting,
loading, hauling, road and dump maintenance, regrading, mine operations
supervision, craft labor and subcontractor costs.

Mill process operating costs in Year 2 average $3.34/ton of
mill ore which includes crushing and conveying, grinding and classification,
flotation and regrind, concentrate thickening, filtration and dewatering,
tailings disposal and mill ancillary services. In addition, these operating
costs are broken into the major categories of labor, power, reagents,
maintenance, supplies and services.

Operating costs for the SX-EW process in Year 2 average $0.92/
lb. of cathode copper which includes heap leach pad, solvent extraction, tank
farm, electrowinning and SX-EW ancillary services. In addition, these operating costs are broken into the major categories of labor,
power, reagents, maintenance, supplies and services.

---

- 30 -

The average operating cost for the supporting facilities and
general administrative expenses in Year 2 is $0.27/ton of sulfide ore. The
supporting facilities include laboratory, safety and environmental, accounting,
human resources, security and the general managers office.

The overall site direct operating cost estimate by cost center
in Year 2 is shown in Table 1-6 below. All costs are based on estimates in the
fourth quarter 2008 with an accuracy of ± 10%.

Table 1-6 Summary of Operating Costs
Based on Year 2 of Operations

Annual Cost ($000)Mining
    70,141Mill Operations
    91,452SX-EW Operations
    18,398Support Facilities and G&A
    8,974Total
    188,965


Capital Cost Estimate

The total capital cost estimate to design, construct and
commission the Rosemont facilities is estimated to be $897 million for the
combined sulfide and oxide plant. The estimate includes the direct field cost
for constructing the project at $713 million as well as $185 million for the
indirect costs associated with the design engineering, procurement and
construction, commissioning, spare parts, contingency and owners cost. An
incremental cost for the oxide plant was estimated to be $65 million with $54
million for the direct costs and $11 million for indirect costs and are based on
fourth quarter 2008 cost estimates with an accuracy of ± 15% with no allowance
provided for escalation, interest, foreign currency, hedging, or financing
during construction.

Financial Analysis

The Rosemont Project economics were done using a discounted
cash flow model. The study evaluated a sulfide concentrate plant with a heap
leach SX-EW plant for the treatment of the oxide copper reserves. Costs are in
constant fourth quarter 2008 US dollars with no provisions for cost escalation.
The financial indicators examined for the project included the NPV, IRR and
payback period (time in years to recapture the initial capital investment).
Annual cash flow projections were estimated over the life of the mine based on
capital expenditures, production costs, transportation and treatment charges and
sales revenue. The life of the mine is 21 years.

The sales revenue is based on the production of three
commodities: copper, molybdenum and silver. Gold is also present in the copper
concentrates in the form of a saleable by-product credit. The estimates of
capital expenditures and site production costs have been developed specifically
for this project.

Metal prices used in the evaluation are listed in Table 1-7.

---

- 31 -

Table 1-7 Base Case and Historical Metals Prices

60/40 WEIGHTED AVERAGE *
    3 YEAR HISTORICAL AVERAGECOPPER
    $ 2.47 / POUND
    $ 3.14 / POUNDMOLYBDENUM
    $22.70 / POUND
    $29.05 / POUNDSILVER
    $12.40 / OUNCE
    $13.32 / OUNCEGOLD
    $784.65 / OUNCE
    $723.48 / OUNCE


*60/40 weighted average of the 36 month historic price and
the 24 month futures price forecast

In addition to the above metal sales price cases, a case of
long term metal prices was also evaluated. Long term metal prices were assumed
at $1.85/lb Cu, $15.00/lb Mo, $12.00/oz Ag and $750.00/oz Au.

Table 1-8 Long Term Metals Prices

Copper
    $               1.85/lbMolybdenum
    $            
      15.00/lbSilver
    $           
      12.00/ozGold
    $         
      750.00/oz


The after tax financial results for the three metal pricing
scenarios are shown in Table 1-9.

Table 1-9 Financial Indicators (After Tax)

Base Case 
      (60/40 split)
    Historical 
      36 Months
    Long Term 
    Metal PricesNPV 0%
    4,850.0
    6,999.9
    2,715.0NPV 5%
    2,417.6
    3,628.9
    1,200.3NPV 10%
    1,254.2
    2,006.2
    488.4IRR
    28.5%
    37.5%
    17.8%Payback Years
    3.1
    2.3
    5.0


---

- 32 -

Authors Conclusions

The after-tax IRR is above the owners project criteria of 15%,
therefore the project should continue to advance with basic engineering and
permitting. In the meantime, the copper price should stabilize somewhat, as it
is presently below the $1.85/lb price used in this study, although it is not
below either the last three (3) years historical plus two (2) years futures
average or the three (3) year historical average. Using the spot prices of end
of month December 2008 of $1.36/lb Cu, $11.00/lb Mo, $10.79/oz Ag, $869.75/oz Au
yields an after-tax IRR of 7.7% .

The downward trend in capital equipment and commodity cost that
started in October 2008 is not reflected herein. It may result in even more
favorable economics.

Authors Recommendation

The project should proceed with basic engineering and
permitting. While that is ongoing, the copper price trend should become more
evident following the financial market turmoil of 2008.

Update to the 2009 Feasibility Study

The Company expects to complete an updated resource, capital
and operating cost estimate in the second quarter of 2012. These updates are
required to finalize the project financing for its Rosemont Project.

ITEM
5:DIVIDENDS

The Company has not paid any cash dividends on its common
shares and has no present intention of doing so, as it anticipates that all
available funds will be utilized to finance exploration, development and future
investment opportunities. There are no restrictions that could prevent the
Company from paying dividends.

ITEM
6:DESCRIPTION OF CAPITAL STRUCTURE

The Companys authorized share capital consists of an unlimited
number of common shares without par value of which as at December 31, 2011 there
were 143,160,392 common shares issued and outstanding. Each common share of the
Company has the following rights, privileges, restrictions and conditions
attached thereto:

| | (i)   | to vote at meetings of shareholders, except meetings at
      which only holders of a specified class of shares are entitled to
    vote:                                                                                                                                     
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                               
| | (ii)  | to share equally, share for share, in any dividends
      declared by the Company; and                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                               
| | (iii) | subject to the rights, privileges, restrictions and
      conditions attaching to any other class of shares of the Company, to share
      equally, share for share in the remaining property of the company upon
      liquidation, dissolution or winding-up of the
Company.

The Articles and By-laws of the Company contain no restrictions
on the right to hold or vote the Companys common shares.

---

- 33 -

ITEM
7:MARKET FOR SECURITIES

Trading Price and Volume

The common shares of the Company currently trade on the TSX and
NYSE Amex. The table below presents the high and low sale prices for the common
shares of the Company and the volume on a monthly basis for the TSX and NYSE
Amex.

High and Low Prices and Volume on a monthly basis for Fiscal 2011TSX
      NYSE AMEXPeriod
      HighCdn$
      LowCdn$
      Volume
      HighU.S.$
      LowU.S.$
      VolumeDecember 2011
      3.84
      2.99
      2,971,900
      3.79
      2.85
      3,098,500November 2011
      4.13
      2.95
      2,731,700
      4.06
      2.82
      4,146,900October 2011
      4.05
      2.83
      6,788,200
      3.98
      2.65
      4,793,200September 2011
      4.12
      3.10
      5,062,700
      4.20
      2.95
      5,086,500August 2011
      4.90
      3.54
      3,322,600
      5.11
      3.49
      5,990,000July 2011
      5.35
      4.41
      5,095,700
      5.48
      4.56
      7,265,900June 2011
      4.59
      3.83
      3,626,400
      4.69
      3.88
      4,348,700May 2011
      4.50
      3.82
      2,468,300
      4.68
      3.78
      5,494,900April 2011
      5.38
      4.32
      3,891,200
      5.58
      4.53
      7,252,000March 2011
      6.11
      4.80
      6,060,100
      6.29
      4.65
      13,936,100February 2011
      5.83
      4.07
      11,832,700
      5.69
      4.32
      18,368,300January 2011
      4.10
      3.49
      5,426,000
      4.15
      3.50
      5,833,100


Prior Sales

At the date of this AIF Augusta had outstanding 6,681,003 stock
options, 1,791,700 warrants, and 230,003 restricted share units, which in
aggregate may result in the issuance of 8,702,706 common shares. During the year ended December 31, 2011
the Company granted 1,958,500 options exercisable at between Cdn$3.91 and
Cdn$4.45 and expire between February 10, 2016 and August 10, 2016 and granted
195,000 of restricted share units. The outstanding stock options are exercisable
at between Cdn$1.13 and Cdn$4.97 and expire between January 4, 2013 and December
3, 2018. The 1,791,700 warrants were issued in connection with the Red Kite
transaction and are exercisable until April 23, 2014 at an exercise price of
Cdn$3.90.

ITEM
8:DIRECTORS AND OFFICERS

Name, Municipality ofResidence
    Position with the Company;Present and Principal Occupation Duringthe Last
      Five Years
    Date FirstAppointed asOfficer
    DateAppointed asDirectorTimothy C. Baker(2) (3)Toronto, ON, Canada
    Directorof the Company; Executive VP
      and Chief Operating Officer of Kinross Gold Corporation between June 2006
      and December 2010.
    Not Applicable
    September 11, 2008John R. Brodie(1)(3)West Vancouver, BC, Canada
    Directorof the Company and President of
      John R. Brodie Capital Inc.; Since 2003, Mr. Brodie has been serving on
      the Board of various public companies in the resource and manufacturing
      sector.
    Not Applicable
    June 8, 2011


---

- 34 -

Name, Municipality ofResidence
    Position with the Company;Present and Principal Occupation Duringthe Last
      Five Years
    Date FirstAppointed asOfficer
    DateAppointed asDirectorDonald B. ClarkRichmond, BC,
      Canada
    Directorof the Company; VP
      Administration between May 2006 and January 2010. Director of Sargold
      Resource Corporation between May 1998 to October 2007; President and CEO
      of Wildcat Silver Corporation between February 2006 and July 2008 and
      Director since February, 2006; President of Ventana Gold Corp. between
      March 2006 and July 2008 and Director between March 2006 and October 2009.
    June 21, 1996
    February 1, 1996Gilmour ClausenDenver, CO, USA
    President, CEO and Directorof the
      Company;
    April 18, 2005
    March 28, 2005W. Durand Eppler(1) (2) (3)Denver, CO, USA
    Directorof the Company; Founding
      partner of New World Advisors, LLC (since August 2004) and Sierra
      Partners, LLC (since May 2005), CEO and Director of Coal International,
      Plc. between July 2005 and August 2008.
    Not Applicable
    June 15, 2005Christopher M.H. Jennings(1)Grand Cayman, Cayman Islands, BWI
    Lead Directorof the Company; Non-
      executive Chairman of SouthernEra Diamonds Inc., a company engaged in
      diamond exploration in Canada, South Africa, Gabon, Australia and the
      Democratic Republic of Congo between 1992  2007;
    Not Applicable
    April 2002Robert P. Wares(2)Montreal, QC, Canada
    Directorof the Company; Executive VP
      and Chief Operating Officer of Osisko Exploration Ltd. (Osisko) since
      early 2006.
    Not Applicable
    April 26, 1999Richard W. WarkeWest Vancouver,
      BC, Canada
    Executive Chairman and Directorof the
      Company; Chairman of the Company between April 2005 and July 2008; VP
      Corporate Development of the Company between May 2006 and July 2008;
      Chairman of Wildcat Silver Corporation since July 2008; Chairman of
      Ventana Gold Corp. since July 2008 and CEO between July 2008 and August
      2009; CEO and Chairman of Sargold Resource Corporation between May 1998 to
      October 2007 and President between May 2007 and October 2007.
    February 1, 1996
    February 1, 1996Raghunath N. ReddyDenver, CO, USA
    Senior VP and CFOfor the Company; VP
      Finance for the Company between November 2007 and November 2008; Director
      of Finance, URS Washington Division (formerly Washington Group
      International, Inc.), between July 1998 and November 2007.
    November 26, 2007
    Not Applicable


---

- 35 -

Name, Municipality of
      Residence
    Position with the Company;
      Present and Principal Occupation During the Last Five
      Years
    Date First
      Appointed as Officer
    Date Appointed
      as DirectorJames A. Sturgess Centennial, CO,
      USA
    Senior VP Corporate Development and
      Government Affairsfor the Company; VP Projects and Environment for
      the Company between September 2005 and February 2008;
    October 1, 2005
    Not ApplicableRodney O. Pace Tucson, AZ, USA
    Executive VP and Chief Operating Officer
      of the Company and President and CEO of Rosemont Copper Company. VP
      Operations and General Manager of Rosemont Copper Company between January
      2008 and May 2009; Consultant to the Mining Industry between September
      2006 and December 2007;
    January 1, 2008
    Not ApplicableKatherine Arnold Tucson, AZ,
      USA
    VP, Environment and Regulatory
      Affairsof the Company; Director of Environmental and Regulatory
      Affairs of the Company between February 2008 and April 2011; Project
      Manager for Tetra Tech, Inc. between July 2005 and February 2008.
    April 1, 2011
    Not ApplicableLetitia Cornacchia Toronto, ON,
      Canada
    VP, Investor Relations and Corporate
      Communicationssince September 2010; Director of Investor Relations
      at Yamana Gold. between December 2007 and September 2010. Finance and
      Investor Relations TELUS between May 2002 and December 2007
    September 27, 2010
    Not ApplicableGordon Jang Vancouver, BC, Canada
    VP, Corporate Controllerof the Company;
      Corporate Controller for EuroZinc/Lundin Mining Corporation between March
      2005 and February 2009;
    March 1, 2009
    Not ApplicableCharles Magolske Denver, CO, USA
    VP, Corporate Development and
      Marketingof the Company since November 2010. Vice President of
      Business Development and Strategy for FreightCar America between 2007
      through all of 2009 (employed at FreightCar America between 2002 to 2009);
    September 15, 2010
    Not ApplicableLance C. Newman Highlands Ranch,
      CO, USA
    VP, Project Developmentof the Company;
      VP Metallurgical Operations for the Company between August 2006 and
      November 2007;
    August 2, 2006
    Not Applicable


---

- 36 -

Name, Municipality of Residence
    Position with the Company;
      Present and Principal Occupation During the Last Five
      Years
    Date First Appointed as
      Officer
    Date Appointed as
      DirectorPurni Parikh Burnaby, BC, Canada
    VP, Corporate Secretaryfor the Company;
      Corporate Secretary for Wildcat Silver Corporation since February 2010 and
      previously between November 2006 and February 2009 and for Ventana Gold
      Corporation between February 2010 and March 2011 and between April 2007
      and February 2009 and for Sargold Resource Corp. between June 2000 and
      October 2007.
    July 1999
    Not ApplicableMark G. Stevens Denver, CO, USA
    VP, Explorationof the Company; Chief
      Geologist for the Company between August 2006 and November 2008;
    December 1, 2008
    Not Applicable


|(1) | Member of the Audit Committee                                    
|--- | -----------------------------------------------------------------
|(2) | Member of the Compensation Committee                             
|(3) | Member of the Nominating and Corporate Governance
      Committee

Directors are elected at each annual meeting of shareholders
and serve until the next annual meeting or until their successors are elected or
appointed.

As at the date of this AIF, the directors and officers of the
Company, as a group owned, directly or indirectly, or exercised control or
direction over 18,190,769 common shares representing 12.82% of the total number
of common shares outstanding.

Cease Trade Orders and Bankruptcies

Except for as provided below, no director or executive officer
of the Company is, as at the date of the AIF, or was within 10 years before the
date of the AIF, a director, chief executive officer or chief financial officer
of any company (including the Company), that (a) was subject to an order that
was issued while the director or executive officer was acting in the capacity as
director, chief executive officer or chief financial officer, or (b) was subject
to an order that was issued after the director or executive officer ceased to be
a director, chief executive officer or chief financial officer and which
resulted from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial officer:

Cybercom Systems Inc. (Cybercom) was
issued a cease trade order on October 23, 2002 due to failure to file
comparative annual financial statements and quarterly report for the period
ended January 31, 2002. Cybercoms failure to file the above resulted from its
inability to pay filing fees associated with such filing due to a lack of
funding. Cybercom is currently inactive and remains under cease trade order.
Richard Warke, Executive Chairman of the Company and Donald Clark, Director of
the Company, are and were at the time the order was issued directors of
Cybercom.

Wildcat Silver Corporation (Wildcat)
requested and received notice from the British Columbia Securities Commission of
the issuance of a management cease trade order (the MCTO) on October 30, 2007
in connection with the late filing of its annual audited consolidated financial
statements for the fiscal year ending June 30, 2007. Wildcats failure to make
the filing within the required time frame was due to the need to clarify
potential foreign tax obligations relating to an acquisition it made. The
required filing was made on January 7, 2008 and the MCTO was revoked on January
8, 2008. Donald Clark and Robert Wares, directors of the Company, are and were
at the time the order was issued directors of Wildcat.

---

- 37 -

Except as provided below, no director of the Corporation, is or
has been within the 10 years before the date of this AIF, a director or
executive officer of any company (including the Corporation) that while that
person was acting in that capacity or within a year of that person ceasing to
act in that capacity became bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, or was subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold its assets:

Cross Lake Minerals Limited (Cross
Lake) filed for protection under the Companies Creditors Arrangement Act on
October 14, 2008. On October 24, 2008, John R. Brodie, a director of the
Company, was appointed to the board of directors of Cross Lake to assist in its
corporate reorganization subsequent to its commencement of insolvency
proceedings. Cross Lake required time to develop a reorganization plan with its
creditors. PricewaterhouseCoopers was appointed as Monitor of Cross Lakes
business affairs to assist Cross Lake in developing the reorganization plan. Mr.
Brodie was appointed to the board of Cross Lake to take advantage of his
experience and expertise in corporate restructurings. Upon completion of the
successful reorganization Mr. Brodie resigned as a director.

Personal Bankruptcies

No director or executive officer of the Company, or a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company, (a)is, at the date of this AIF, or has
been within the 10 years before the date of this AIF, a director or executive
officer of any company (including the Company) that while that person was acting
in that capacity or within a year of that person ceasing to act in that capacity
became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or was subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the director or officer; or (b) has, within the
10 years before the date of the AIF, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject to or
instituted any proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager or trustee appointed to hold the assets of the
director, executive officer or shareholder.

Penalties or Sanctions

No director or executive officer of the Company, or a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company, has (a) been subject to any penalties or
sanctions imposed by a court relating to securities legislation or by a
securities regulatory authority or has entered into a settlement agreement, with
a securities regulatory authority; or (b) been subject to any other penalties or
sanctions imposed by a court or regulatory body that would likely be considered
important to a reasonable investor in making an investment decision.

Conflicts of Interest

Directors and/or officers of the Company serve as directors
and/or officers of other public and private companies and devote a portion of
their time to manage other business interests. This may result in certain
conflicts of interest. The laws of Canada require the directors and officers to
act honestly, in good faith, and in the best interests of the Company and its
shareholders. Please refer to the subheading entitled Risk Factors  Augustas
officers and directors may have potential conflicts of interest under Item 4 of
this AIF for further details.

ITEM
9:INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Within the three most recently completed financial years ended
December 31, 2011 and up to the date of this AIF, none of the following (a) a
director or executive officer of the Company; (b) a person or company that is direct or indirect beneficial owner of, or who exercises
control or direction over, more than 10% of any class or series of outstanding
voting securities of the Company; and (c) an associate or affiliate of any of
the persons or companies referred to in the above paragraphs (a) or (b), has any
material interest, direct or indirect, in any transaction that has materially
affected or will materially affect the Company other than as stated in the
Companys annual audited financial statements for the year ending December 31,
2011 which is incorporated here by reference and available on SEDAR at
www.sedar.com.

---

- 38 -

Legal Proceedings and Regulatory Actions

To the best of the Company's knowledge, the Company is not aware of any material legal proceedings to which it is a party or to which its property or properties is subject, nor is it aware that any such proceedings are contemplated. During the Company’s most recently completed financial year, there are no: (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during its most recently completed financial year; (b) other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision in the Company; and (c) settlement agreements the Company entered into before a court relating to securities legislation or with a securities regulatory authority.

ITEM
10:TRANSFER
AGENTS AND REGISTRARS

The registrar and transfer agent for the Company is
Computershare Investor Services Inc. located at 510 Burrard Street - 3rd Floor,
Vancouver, B.C. V6C 3B9, Canada with co-agent offices in Toronto, Ontario and
Glendale, Colorado.

ITEM
11:MATERIAL
CONTRACTS

The only material contracts entered into by the Company during
  the year ended December 31, 2011 or since such time or before such time that
  are still in effect, other than in the ordinary course of business, are as follows:

|(a) | Precious Metals Purchase Agreement between the Company,
      Augusta Resource (Barbados) SRL, Silver Wheaton (Cayman) Ltd. and Silver
      Wheaton Corp. dated as of February 10, 2010 described under the heading
      General Development of the Business;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                  
|(b) | Joint Venture Agreement made between Rosemont Copper
      Company and United Copper & Moly LLC dated September 16, 2010
      described under the heading General Development of the Business;
    and                                                        
|    |                                                                                                                                                                                                                                                                  
|(c) | Earn-In Agreement made between Rosemont Copper Company
      and United Copper & Moly LLC in respect of the Rosemont Project, Pima
      County Arizona made as of September 16, 2010 described under the heading
      General Development of the Business;   

---

- 39 -

Each of these contracts is available under the Companys
profile on SEDAR at www.sedar.com.

ITEM
12:INTEREST OF EXPERTS

Name of Experts

The following are names of persons or companies (a) that have
prepared or certified a statement, report or valuation described or included in
a filing, or referred to in a filing made under National Instrument 51-102 by
the Company during, or relating to, the Companys most recently completed
financial year; and (b) whose profession or business gives authority to the
statement, report or valuation made by the person or company:

| | (i)   | Ernst & Young LLP of 23rd Floor, 700 West Georgia
      Street, Vancouver BC, V7Y 1C7, and the Companys independent auditors
      provided an auditors report dated March 19, 2012, in respect of the
      Companys consolidated financial statements for the years ended December
      31, 2011 and 2010.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                 
| | (ii)  | Dr. Conrad Huss, P.E., of M3 Engineering & Technology
      Corporation was the principal author responsible for the overall
      preparation of the NI 43-101 Technical Report for the Rosemont Copper
      Project Updated Feasibility Study, Pima County, Arizona, USA, dated
      January 14, 2009;      
| |       |                                                                                                                                                                                                                                                                                                                 
| | (iii) | Mr. William L. Rose, P.E. of WLR Consulting Inc., was a
      co- author of the NI 43-101 Technical Report for the Rosemont Copper
      Project Updated Feasibility Study, Pima County, Arizona, USA, dated
      January 14, 2009;                                                                            
| |       |                                                                                                                                                                                                                                                                                                                 
| | (iv)  | Mr John Ajie, P.E. of URS Washington Division, was a co-
      author of the NI 43-101 Technical Report for the Rosemont Copper Project
      Updated Feasibility Study, Pima County, Arizona, USA, dated January 14,
      2009;                                                                               
| |       |                                                                                                                                                                                                                                                                                                                 
| | (v)   | Mr. Thomas L. Drielick, P.E. of M3 Engineering &
      Technology Corporation was a co- author of the NI 43-101 Technical Report
      for the Rosemont Copper Project Updated Feasibility Study, Pima County,
      Arizona, USA, dated January 14, 2009;                                                      
| |       |                                                                                                                                                                                                                                                                                                                 
| | (vi)  | Mr. Robert Fong, P.E. of Moose Mountain Technical
      Services was a co- author of the NI 43-101 Technical Report for the
      Rosemont Copper Project Updated Feasibility Study, Pima County, Arizona,
      USA, dated January 14, 2009.                                                                   

The disclosure of additional exploration results, that was not part of the 2009 Feasibility Study has been reviewed and confirmed by the Company’s Vice President Exploration Mark Stevens, a Qualified Person as defined under NI-43-101.

Interests of Experts

To the best of the Companys knowledge, the experts named under
this Item 12 did not have any registered or beneficial interest, direct or
indirect, in any securities or other property of the Company or one of its
associates or affiliates, when the experts prepared their respective reports,
and no securities or other property of the Company or one of its associates or
affiliates were subsequently received or to be received by such experts except
for Mark Stevens who holds 10,766 common shares of the Company, stock options to
purchase 235,000 shares of the Company and 29,168 restricted shares of the
Company.

---

- 40 -

No person or director, officer or employee of a company named
under this Item 12 is expected to be elected, appointed or employed as a
director, officer or employee of Augusta or any associate or affiliate of
Augusta, except for Mark Stevens.

ITEM
13:AUDIT COMMITTEE INFORMATION

Audit Committee Information

Under MI 52-110 companies are required to provide disclosure
with respect to their audit committee including the text of the audit
committees charter, the composition of the audit committee and the fees paid to
the external auditor. The text of the Companys audit committees charter is
attached as Appendix 1 to this AIF.

The Companys current audit committee is comprised of the
following directors, John R. Brodie, (Chair), Christopher Jennings and W. Durand
Eppler. All are independent and financially literate as defined in Multilateral
Instrument 52-110 (MI 52-110).

The education and experience of each Audit Committee member
that is relevant to the performance of his responsibilities as a member of the
Audit Committee are as follows:

Mr. Brodie, the Chairman of the Audit Committee is a FCA and
was a Senior Partner with KPMG for 28 years. In his capacity as an audit
partner, he served many public companies, and was involved in a number of public
offerings. He was elected as a Fellow of the Institute of Chartered Accountants
of British Columbia in 2003 for distinguished service to the community and
profession. He serves as a Director and Audit Committee Chair for a number of
public companies in the mining industry.

Mr. Eppler is currently CEO of Sierra Partners, LLC and
president of New World Advisors, both of which provide strategic and business
advisory services to global resource companies. Previously, he was a VP of
Newmont Mining Corp. from 1995 to 2004. He was VP Corporate Planning from 1995
to 1998; President of Newmont Indonesia from 1998 to 2001; VP Corporate
Development from 2001 to 2002; and VP Newmont Capital, Ltd. from 2002 to 2004.
He earned a BA from Middlebury College and a MS from the Colorado School of
Mines. He serves as a director of Vista Gold Corporation and Golden Minerals
Company.

Dr. Jennings brings more than 50 years experience in geology,
mineral exploration, and mine development and operations to the Augusta Board.
He has directed exploration projects throughout the world, and has been involved
in the discovery of several gold mines and diamond and base metal deposits.
Formerly the President and Chairman of Southern Era Resources and the Chairman
of Southern Era Diamonds Inc., Dr. Jennings has served on the Boards and
Committees of the Board of numerous exploration and mining companies, publicly
listed and private companies in Canada, U.K., Australia and South Africa
throughout his lengthy career. These include Augusta Resources, SouthernEra
Resources, SouthernEra Diamonds, Messina Ltd, Southern Platinum, Tsodilo
Resources, Kimberley Diamond Coy, Tribute Minerals Corp., Naka Ltd, Repadre
Resources, Reunion Resources, Aber Resources Life Science Nutritionals among
others. He has taken course work in Financial and Managerial Accounting through
the University of S. Africa.

Pre-approval Policy

The Audit Committee nominates and engages the independent
auditors to audit the financial statements and approves all audit, audit-related
services, tax services and other services provided by the Companys external
auditors. Any services provided by the Companys external auditors that are not
specifically included within the scope of the audit must be pre-approved by the
audit committee prior to any engagement. The Chairman of the audit committee is
permitted to pre-approve work undertaken by the Companys external auditors
between audit committee meetings of up to C$25,000 per engagement.

External Auditor Service Fees

---

- 41 -

The aggregate fees billed in Canadian dollars by the Companys
external auditors in each of the last two fiscal years are as follows:

Financial Year Ending
    Audit Fees(1)
    Audit related Fees(2)
    Tax Fees(3)
    All Other Fees(4)2010
    $380,000
    $58,500
    $69,120
    $57,8502011
    $327,200
    $2,000
    $73,504
    -


|(1) | The aggregate audit fees billed and accrued.                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The aggregate fees billed for audit related services that
      are reasonably related to the performance of the audit or review of the
      Companys financial statements, which are not included under the heading
      Audit Fees.
|(3) | Corporate income tax advisory and planning
fees.                                                                                                                                                                                          
|(4) | Prospectus, IFRS and due diligence work.                                                                                                                                                                                                  

ITEM
14:ADDITIONAL
INFORMATION

Additional information, including directors' and officers'
remuneration and indebtedness, principal holders of the Company's securities,
options to purchase securities and interests of insiders in material
transactions, where applicable, is contained in the Company's Information
Circular for its most recent annual meeting of shareholders that involved the
election of directors, and additional financial information is provided in the
Company's comparative financial statements and MD&A for its most recently
completed financial year is available on SEDAR at www.sedar.com.

In addition, copies of documents, may be obtained from the
Company by contacting the Company at Suite 400  837 West Hastings Street,
Vancouver, BC, V6C 3N6, telephone (604) 687-1717, fax (604) 687-1715.

---

APPENDIX 1

Augusta Resource Corporation(the Corporation)

Audit Committee Charter

ARTICLE 1OVERALL
PURPOSE/OBJECTIVES

|1.1 | The Audit Committee (the committee) will provide
      independent review and oversight of the Corporations financial reporting
      process, the system of internal control and management of financial risks,
      and the audit process, including the selection, recommendation, oversight
      and compensation of the Corporations external auditors. The committee
      will also assist the board of directors of the Corporation (the Board)
      in fulfilling its responsibilities in reviewing the Corporation's process
      for monitoring compliance with laws and regulations and its own code of
      business conduct. In performing its duties, the committee will maintain
      effective working relationships with the Board, management, and the
      external auditors and monitor the independence of the external auditors.
      The committee will also be responsible for reviewing the Corporations
      financial strategies, its financing plans and its use of the equity and
      debt markets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.2 | To perform his or her role effectively, each committee
      member will obtain an understanding of the responsibilities of committee
      membership as well as the Corporations business, operations and
    risks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

ARTICLE 2AUTHORITY

|2.1 | The Board authorizes the committee, within the scope of
      its responsibilities, to seek any information it requires from any
      employee and from external parties, to retain outside legal or
      professional counsel and other experts and to ensure the attendance of
      company officers at meetings as appropriate. The committee will have the
      authority to engage such independent counsel and other advisers as it
      deems necessary to carry out its duties. The committee will also have
      authority to obtain advice and assistance from any officer or employee of
      the Corporation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ARTICLE 3FUNDING

|3.1 | The Corporation will provide appropriate funding, as
      determined by the committee, for payment of:
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | (a)                                                                                                    
|    |                                                                                                        
|    | (b)                                                                                                    
|    |                                                                                                        
|    | (c)                                                                                                    

---

- 2 -

The committee will promptly report to the Board its engagement
of any advisor, including the scope and terms of such engagement.

ARTICLE 4ORGANIZATION

|4.1 | Membership.
|--- | -----------
|    |            
|    | (a)        
|    |            
|    | (b)        
|    |            
|    | (c)        
|    |            
|    | (d)        
|    |            
|    | (e)        
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    | (f)        
|    |            
|    | (g)        
|    |            
|    | (h)        

---

- 3 -

|4.2 | Attendance at Meetings.
|--- | -----------------------
|    |                        
|    | (a)                    
|    |                        
|    | (b)                    
|    |                        
|    | (c)                    
|    |                        
|    | (d)                    

ARTICLE 5ROLES AND RESPONSIBILITIES

|5.1 | The committee will:
|--- | -------------------
|    |                    
|    | (a)                
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    | (b)                
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    

---

- 4 -

| | (c) | assure the regular rotation of the lead audit partner and
      the concurring partner every five years (with a five year time-out period
      after rotation), and the regular rotation of other audit partners engaged
      in the annual audit of the Corporation every seven years (with a two year
      time-out period after rotation), or as otherwise required by law or the
      rules of the NYSE Amex;                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (d) | be responsible for the pre-approval of all audit services
      and permissible non-audit services to be provided to the Corporation (or
      any of its subsidiaries) by the external auditors, subject to any
      exceptions provided by applicable laws, including the Securities
      Exchange Act of 1934, as amended (the 1934 Act), and the rules of
      the SEC promulgated thereunder, provided that such pre-approval authority
      may be delegated by the committee to any member of the committee who is
      both independent and unrelated on the condition that any such
      pre-approval must be presented to the committee at its first scheduled
      meeting following any such approval;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (e) | consult with the external auditors, senior management,
      internal auditing staff (if any) of the Corporation and such other
      advisers as the committee may deem necessary regarding their evaluation of
      the adequacy of the Corporation's internal controls over financial
      reporting and disclosure controls and procedures (as such terms are
      defined by the SEC), and make specific recommendations to the Board in
      connection therewith;                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (f) | be responsible for the review and oversight of all
      related-party transactions, as such term is defined by the rules of the
      NYSE Amex;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (g) | establish procedures for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | and review periodically with management these procedures
      and, if appropriate, any significant complaints received, to the extent
      required by the 1934 Act, the rules of the SEC or the NYSE Amex;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (h) | set clear hiring policies for employees or former
      employees of the Corporations external auditors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (i) | gain an understanding of whether internal control
      recommendations made by the external auditors have been implemented by
      management;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (j) | gain an understanding of the current areas of greatest
      financial risk and whether management is managing these
  effectively;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (k) | review the Corporations strategic and financing plans to
      assist the Boards understanding of the underlying financial risks and the
      financing alternatives;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l) | review managements plans to access the equity and debt
      markets and to provide the Board with advice and commentary
  thereon;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

- 5 -

| | (m) | review significant accounting and reporting issues,
      including recent professional and regulatory pronouncements, and
      understand their impact on the Corporations financial
  statements;                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (n) | review any legal matters which could significantly impact
      the financial statements as reported on by the general counsel or
      management and meet with outside counsel whenever deemed
    appropriate;                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (o) | review the annual and quarterly financial statements, the
      related management discussion and analysis and any related news releases
      and determine whether they are complete and consistent with the
      information known to committee members; determine that the auditors are
      satisfied that the financial statements have been prepared in accordance
      with generally accepted accounting principles, and, if appropriate,
      recommend to the Board that the annual and quarterly financial statements,
      the related management discussion and analysis and news releases be
      approved and issued;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (p) | pay particular attention to complex and/or unusual
      transactions such as those involving derivative instruments and consider
      the adequacy of disclosure thereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (q) | focus on judgmental areas, for example those involving
      valuation of assets and liabilities and other commitments and
      contingencies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (r) | review audit issues related to the Corporation's material
      associated and affiliated companies that may have a significant impact on
      the Corporation's equity investment;                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (s) | meet with management and the external auditors to review
      the annual financial statements, the results of the annual audit and any
      recommendations by the auditors in connection therewith;                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (t) | assess the fairness of the interim financial statements
      and disclosures, and obtain explanations from management on
  whether:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (u) | review, prior to the commencement of each annual
      audit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

- 6 -

| | (ii) | the appropriateness and reasonableness of the proposed
      audit fee;
| | ---- | -----------------------------------------------------------------------

| | (v)  | meet separately with the external auditors to discuss any
      matters that the committee or auditors believe should be discussed
      privately, including the results of the external auditors review of the
      adequacy and effectiveness of the Corporations accounting and financial
      controls;                          
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (w)  | endeavour to cause the receipt and discussion, on a
      timely basis, of any significant findings and recommendations made by the
      external auditors;                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (x)  | obtain regular updates from management and the company's
      legal counsel regarding compliance matters, as well as certificates from
      the Chief Financial Officer as to required statutory payments and bank
      covenant compliance and from senior operating personnel as to permit
      compliance to the extent applicable;
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (y)  | ensure that the Board is aware of matters which may
      significantly impact the financial condition or affairs of the business of
      the Corporation;                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (z)  | if necessary, institute special investigations and, if
      appropriate, hire special counsel or experts to assist in any such
      investigations;                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (aa) | review and assess the adequacy of this charter, on an
      annual basis, and provide any suggested amendments or updates to the Board
      for review and approval;                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (bb) | work with the Board to determine an appropriate annual
      budget for the committee and its required activities, including but not
      limited to the compensation of the external auditors and any outside
      counsel or other experts retained by the committee; and                                                             
| |      |                                                                                                                                                                                                                                                                                                                                           
| | (cc) | generally, perform other functions as may be requested
      from time to time by the Board.                                                                                                                                                                                                                                              

Adopted November 13, 2009

---