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ANNUAL INFORMATION FORM(AIF)



of



AUGUSTA RESOURCE CORPORATION(the Company or
Augusta) Suite 400, 837 West Hastings Street Vancouver, British
Columbia V6C 3N6



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



For the Year Ended December 31, 2006

Dated: March 1, 2007

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TABLE OF CONTENTS

|                                                                         |                                                 |                                 | **Page**
|------------------------------------------------------------------------ | ----------------------------------------------- | ------------------------------- | --------
|                                                                         |                                                 |                                 |         
|ITEM 1: PRELIMINARY
      NOTES                                          | 1                                              
|                                                                         |                                                 |                                 |         
|                                                                         | Effective Date
      of Information             | 1                              
|                                                                         | Incorporation of Other 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                                    | 4                              
|                                                                         |                                                 |                                 |         
|ITEM 3: GENERAL DEVELOPMENT OF
      THE BUSINESS                        | 4                                              
|                                                                         |                                                 |                                 |         
|                                                                         | Three Year History                              | 4                              
|                                                                         |                                                 |                                 |         
|ITEM 4: NARRATIVE DESCRIPTION
      OF THE BUSINESS                      | 7                                              
|                                                                         |                                                 |                                 |         
|                                                                         | Risk Factors                                    | 8                              
|                                                                         | Mineral Projects                                | 14                             
|                                                                         |                                                 | Material Mineral Property       | 14      
|                                                                         |                                                 | Non-Material Mineral Properties | 18      
|                                                                         |                                                 |                                 |         
|ITEM 5: DIVIDENDS                                                        | 19                                             
|                                                                         |                                                 |                                 |         
|ITEM 6: DESCRIPTION
      OF CAPITAL STRUCTURE                           | 19                                             
|                                                                         |                                                 |                                 |         
|ITEM 7: MARKET
      FOR SECURITIES                                      | 19                                             
|                                                                         |                                                 |                                 |         
|ITEM 8: DIRECTORS
      AND OFFICERS                                     | 21                                             
|                                                                         |                                                 |                                 |         
|ITEM 9: INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 24                                             
|                                                                         |                                                 |                                 |         
|ITEM 10: TRANSFER
      AGENTS AND REGISTRARS                            | 24                                             
|                                                                         |                                                 |                                 |         
|ITEM 11: MATERIAL
      CONTRACTS                                        | 24                                             
|                                                                         |                                                 |                                 |         
|ITEM 12: INTEREST
      OF EXPERTS                                       | 25                                             
|                                                                         |                                                 |                                 |         
|ITEM 13: AUDIT
      COMMITTEE INFORMATION                               | 26                                             
|                                                                         |                                                 |                                 |         
|ITEM 14 ADDITIONAL
      INFORMATION                                     | 27                                             

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ITEM
1:PRELIMINARY NOTES

Effective Date of Information

This AIF is dated March 1, 2007, 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, 2006, being the date
  of the Company’s most recently audited financial year end.

Incorporation of Other Information

The information provided in this AIF is supplemented by
disclosure contained in the documents listed below which are incorporated by
reference into this AIF. These documents must be read together with the AIF. The
documents listed below are not contained within, nor attached to this AIF. The
documents may be accessed by the reader at the following locations:

Document Type as referenced on SEDAR
    Date Filed on
      SEDAR
    Location of DocumentAudited Annual Financial Statements and MD&A (For the period
        ending December 31, 2006)
      March 1, 2007
    www.sedar.com
      www.augustaresource.comMineral Resource Estimate, Revised Technical Report for the
        Rosemont Deposit, Pima County, Arizona, USA, dated April 21, 2006
      April 26, 2006
    www.sedar.com
      www.augustaresource.com


All financial information in this AIF is prepared in accordance
with accounting principles generally accepted in Canada (Canadian GAAP).

Currency

All dollar amounts are expressed in Canadian dollars unless
otherwise indicated.

Note Regarding Forward Looking Statements

Certain of the statements made and information contained herein
  and in the documents incorporated by reference may contain forward-looking statements
  or information within the meaning of the United States Private Securities
  Litigation Reform Act of 1995 and forward looking statements or information
  within the meaning of the Securities Act(Ontario). Forward looking statements
  or information include statements regarding the expectations and beliefs of
  management. Forward looking statements or information include, but are not limited
  to, statements or information with respect to known or unknown risks, uncertainties
  and other factors which may cause the actual results, performance or achievements
  of the Company, or industry results, to be materially different from any future
  results, performance or achievements expressed or implied by such forward-looking
  statements or information. 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 the Companys
  plans at its Rosemont Property and other mineral properties, the interpretation
  of drill results and the estimation of mineral resources and reserves, the geology,
  grade and continuity of mineral deposits, the possibility that future exploration,
  development or mining results will not be consistent with the Companys
  expectations, metal recoveries, accidents, equipment breakdowns, title matters,
  labor disputes or other unanticipated difficulties with or interruptions in
  production and operations, the potential for delays in exploration or development
  activities or the completion of feasibility studies, the inherent uncertainty
  of production and cost estimates and the potential for unexpected costs and
  expenses, commodity price fluctuations, currency fluctuations, failure to obtain
  adequate financing on a timely basis, the effect of hedging

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activities, including margin limits and margin calls,
regulatory restrictions, including environmental regulatory restrictions and
liability, the speculative nature of mineral exploration, dilution, competition,
loss of key employees, and other risks and uncertainties, including those
described below under Risk Factors. 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. Accordingly, readers are advised not to place undue reliance on
forward-looking statements or information. We do not expect to update
forward-looking statements or information continually as conditions change, 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.

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.

|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 might occur when the material is mined.                                                                                                                                                                                                                       
|------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Mineral Resource          | The term mineral resource refers to a concentration or
      occurrence of diamonds, natural, solid, inorganic or 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.

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|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.
|-------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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 refers to an individual who
      is an engineer or geoscientist with at least five years of experience in
      mineral exploration, mine development, production activities and project
      assessment, or any combination thereof, including experience relevant to
      the subject matter of the project or report and is a member in good
      standing of a self-regulating organization.                                                                                                                                                                                                                                                                                                               

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 2300  Four Bentall
Centre, 1055 Dunsmuir Street, Vancouver, BC, V7X 1J1. 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.

The Company is a reporting issuer under the Securities Act(British Columbia), Securities Act(Alberta), Securities Act
(Manitoba) and Securities Act(Ontario), and, as such, is required to
make filings on a continuous basis thereunder. Such material is available for
inspection through the British Columbia Securities Commission, the Alberta
Securities Commission, Manitoba Securities Commission and the Ontario Securities
Commission, and on the SEDAR website at www.sedar.com.

In April of 2003, the Company consolidated its issued and
outstanding shares on a three for one basis with no name change. The
consolidation was undertaken to assist in accessing financing.

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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 American Stock Exchange (AMEX) both under the symbol
AZC. The listing on these two senior stock exchanges was undertaken as part of
the Companys strategy to provide greater visibility and liquidity to the
Companys stock in North America. In addition, the Company commenced trading of
its common shares on the Frankfurt Stock Exchange (FWB) on September 14, 2006,
under the symbol A5R. The TSX listing commenced August 10, 2006 as the Company
graduated from the TSX Venture Exchange. The AMEX listing commenced November 30,
2006.

The Company has an unlimited number of common shares without
  par value authorized. At February 28, 2007, there were 72,749,067 shares issued
  and outstanding.

Subsidiaries

The Companys only material subsidiary is Augusta Resource
(Arizona) Corporation that was incorporated under Arizona law on April 8, 2005,
of which the Company holds all of its outstanding shares.

ITEM
3:GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

Most of 2003 was spent attempting to acquire mineral
exploration properties to complement the Companys interests held in the
Coronation Diamond District located in Nunavut, Canada. During 2003, the Company
raised $346,500 of which $195,000 was through the issue of flow-through shares,
providing the ability to undertake the initial work expenditures on certain
properties comprising over 240,000 acres. Results of the initial work program
did not prove favourable and no further work was recommended. The agreement with
respect to the properties was terminated and the Company wrote-off the costs,
effective June 30, 2004.

The Company also had four separate option agreements to acquire
working interests of 10% and 20% for four properties located in the Coronation
Diamond District in Nunavut, Canada, which aggregate about 487,300 acres in the
region. Various third party exploration companies (Optionees) were provided an
option to earn their interest by completing work over a 3 to 4 year period
providing the Company a carried interest in these properties pending the
Optionees earning their interest. However, to date, the Optionees have not
supplied the Company with reports of work performed on these properties. In
addition, as interest in the exploration area has diminished, the Company does
not plan on conducting any work on these properties. The Company wrote off the
remaining costs, effective December 31, 2005.

In December of 2004, the Company announced it had entered into
a purchase agreement to acquire the Mount Hamilton gold project, located in
White Pine County, Nevada. On April 20, 2005, the Company executed a Share
Purchase Agreement (the Share Purchase Agreement) with Diamond Hill Investment
Corp. to acquire 100% interest in the Mount Hamilton project by purchasing 100%
of the shares (the Purchased Shares) of DHI Minerals Ltd., which owned 100% of
DHI Minerals (U.S.) Ltd., the holder of the Mount Hamilton property. The terms
of the acquisition were US $3.6 million payable with US $3,000,000 in cash
payable over a two year period and 3,750,000 units. The units had a deemed value
of US $0.16. Each unit consisted of one share and one warrant. Each warrant
entitles the holder to purchase one common share at US $0.16 for a period of two
years expiring on May 6, 2007. Forty-two percent (42%) of the Purchased Shares
are subject to an Escrow Agreement and will be released in conjunction with the
payment of the final amount outstanding payable pursuant to the Share Purchase
Agreement. The Company also assumed an underlying Net Smelter Royalties (NSR)
and minimum advance royalty payments. Prior to commencement of commercial
production the Company will pay minimum advance

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royalty payments of US$100,000 per annum commencing November
19, 2005 and continuing until November 19, 2010, when the annual payment amount
increases to US$300,000. Upon commencement of commercial production, the Company
will pay a base rate of 3% NSR, subject to increase whenever the price of gold
is greater than US$400 per ounce.

On January 24, 2005, the Company announced it had entered into
an option agreement to acquire the Shell Deposit, a molybdenum-gold property in
White Pine County, Nevada, located approximately 1,000 meters from the Mount
Hamilton property. The Company is acquiring a 100% working interest, subject to
an underlying NSR ranging from 0.5% - 4.5% for a cash payment of US$120,000, and
annual advance royalty payments commencing at US$80,000 on the first anniversary
increasing by $20,000 per year until production commences.

In March 2005, the Company entered into an option agreement to
acquire the Lone Mountain, copper-zinc-silver property in New Mexico. The
Company acquired a 100% working interest, subject to an underlying NSR ranging
from 2.0% - 3.0%, and minimum exploration commitments over a three-year period.
On May 15, 2006 the Company announced that after a detailed geological
assessment that it would not be pursuing its option to purchase the Lone
Mountain project. Capitalized costs totalling $320,183 were written-off in the
second quarter of 2006.

Under an option agreement (the Option Agreement) dated April
18, 2005 with Rosemont Ranch, LLC, Lazy Y I Ranch, LLC, TWW Investments, LLC,
DAS holdings, LLC, Habibi LLC and West Santa Rita Land, LLC, the Company secured
the right to purchase a 100% working interest in the Rosemont property, subject
to a 3% NSR, for an aggregate cash payment of US $20,800,000 payable over a
three-year period. On June 1, 2005, the Company made the first option payment of
$US 6,666,666. On March 31, 2006, the Company utilized $16,114,985 of the
proceeds of the Special Warrant Offering, described below, to pay the remaining
payments of US $13,733,582 owing under the option agreement, after adjusting for
early payment provisions, for total aggregate payments of US $20,400,248, and
thereby acquired a 100% ownership interest in the Rosemont Property, subject to
the 3% net smelter royalty referred to above.

During 2005, the Company raised approximately $17 million in
gross proceeds through private placements and a convertible debenture (the
Debenture) to complete the initial cash payments and work expenditures for the
Rosemont, Mount Hamilton, Lone Mountain and Shell projects. On June 1, 2005 the
Company issued the Debenture in the amount of $6,000,000 convertible into
2,181,818 common shares of the Company at a price of $2.75 per share bearing
interest at a rate of 9% annually, repayable in cash or shares at the option of
the Company. In connection with the Debenture, the Company issued a bonus of
363,363 common shares at a deemed value of $3.30 per common share to the
Debenture holder and a bonus of 218,181 common share purchase warrants each
exercisable for one common share at an exercise price of $2.75 per common share
at any time prior to June 14, 2006. On November 17, 2005, the Company amended
the terms of the Debenture to allow for repayment of the first repayment of
$3,000,000 in cash and common shares and subsequently paid the holder of the
Debenture $1,620,000 in cash (including $270,000 interest) and issued 1,500,000
common shares valued at $1.10 per share. The Company also issued 750,000
warrants (the Additional Warrants) to the holder of the Debenture, as
consideration for agreeing to amend the terms of the Debenture. Each Additional
Warrant is exercisable to acquire a common share of the Company at a price of
$1.44 per share for a period of one year from the date of issue, subject to an
accelerated exercise provision.

As the Company was advancing its projects through the
development process additional mining management expertise was required and the
Company hired a new President & Chief Executive Officer, VP Exploration and
VP Projects and Environment. These positions are all based in Colorado. Gil
Clausen, the President & Chief Executive Officer and Mike Clarke, VP
Exploration commenced their

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engagements in April 2005. In September 2005, James Sturgess
was hired as VP Projects and Environment.

In 2006, the Company raised $37,100 (2005 - $46,250) from the
exercise of stock options and $3,587,759 (2005- $1,130,916) from the exercise of
warrants. During the year ended December 31, 2004 the Company did not raise any
funds from the exercise of stock options or warrants.

On March 17, 2006, the Company announced the closing of an
offering of 23,210,000 special warrants (the Special Warrants) of the Company
at a price of $1.90 per Special Warrant for aggregate gross proceeds to the
Company of $44,099,000 (the Special Warrant Offering). Each Special Warrant
entitles the holder thereof to acquire, without the payment of additional
consideration and subject to adjustment, one share and one-half of one share
purchase warrant (a Warrant). Each whole Warrant will entitle the holder
thereof to purchase one common share of the Company at a price of $3.10 per
share until March 17, 2007 and thereafter at a price of $4.10 per share until
March 17, 2008.

On April 27, 2006, the Company received receipt from applicable
Canadian Securities Commissions for its Final Short Form Prospectus dated April
25, 2006, qualifying the distribution of the 23,210,000 common shares,
11,605,000 common share purchase warrants and 1,392,600 non-transferable agents
share purchase warrants in connection with the Special Warrant Offering.

In consideration for the services performed by the sales agents
in connection with the Special Warrant Offering, the Company paid the agents a
cash commission equal to 6% of the gross proceeds amounting to $2,645,940. In
addition, the agents were issued non-transferable agents Special Warrants equal
in number to 6% (1,392,000), of the number of Special Warrants. Each agents
warrant will entitle the holder thereof to purchase a common share of the
Company at a price of $3.10 per share until March 17, 2006 and thereafter at a
price of $4.10 per share until March 17, 2008.

The net proceeds of the Special Warrant Offering were used to
finance the purchase of 100% of the Rosemont property located in Pima County,
Arizona, to complete a NI 43-101 compliant feasibility study on the Rosemont
property, to advance permitting at the Rosemont deposit, to retire the balance
of $3,000,000 plus interest on the Companys Debenture and for general working
capital purposes including the acquisition costs and work expenditures related
to the Companys Mount Hamilton, Shell and Lone Mountain properties.

In August, the Company commenced a feasibility study on
Rosemont. M3 Engineering and Technology Corporation of Tucson, Arizona was
awarded the contract for the feasibility study after a due bid and selection
process. To lead the project internally, the Company appointed Mr. Lance Newman
as VP Metallurgical Operations and Mr. Mark Stevens as Chief Project Geologist.
Both Mr. Newman and Mr. Stevens are seasoned members of the team with proven
track records in project development and operations. With the increase in
Company activities in 2006, Augusta also hired a number of individuals for the
corporate office in Vancouver. This included a new Chief Financial Officer (Mr.
Bruce Nicol) and Controller (Ms Tracey Brix-Nielsen) as well as an Investor
Relations Manager (Marlo Hamer-Jackson). The individuals added to the team have
many years of professional experience in the international mining industry.

Throughout the year, the Company also continued activities on
its Mount Hamilton and Shell Deposit properties in Nevada. The Company commenced
a pre-feasibility study at Mount Hamilton to evaluate development of the
Centennial gold deposit as well as a 3,000-meter phase I exploratory drilling
program on the Shell molybdenum/tungsten deposit.

For anticipated business activities in 2007 refer to detailed
discussion in the Mineral Projects section below.

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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 stage and are thus non-producing
and consequently do not generate any 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 to finance its
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 geology,
drilling, metallurgy, logistical planning and implementation of exploration
programs and accounting. While recent increased activity in the resource mining
industry has made it more difficult to locate competent employees and
consultants in such fields, particularly skilled and experienced contract
drilling personnel, the Company has found that it can locate and retain such
employees and consultants and believes it will continue to be able to do so. It
is possible, however, that delays or increased costs may be experienced in order
to proceed with its planned business activities during the current period.

Competitive Conditions

Competition in the mineral exploration 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.

Components

All of the raw materials the Company requires to carry on its
business are readily available through normal supply or business contracting
channels in the US.

Business Cycles

The mining business is subject to mineral price cycles. The
marketability of minerals and mineral concentrates is also affected by worldwide
economic cycles.

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, or on any franchise or license or other agreement to use a patent,
formula, trade secret, process or trade name upon which its business depends.

Renegotiation or Termination of Contracts

It is not expected that the Companys business will be affected
in the current financial year by the renegotiation or termination of contracts
or sub-contracts.

Environmental

The Companys properties are up to date and compliant with its
environmental obligations and as such there are no material environmental
liabilities. However, as the Companys properties reach a stage of

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commercial viability, the Company will be required to comply
with federal, state and local regulations prior to entering commercial
production for its properties.

Employees

As at December 31, 2006, the Company had nine employees in the
Vancouver, British Columbia office and six employees in the Glendale, Colorado
office. As operations require, the Company also retains geologists, engineers,
geophysicists and other consultants on a fee for service basis. The nine
Vancouver office employees also have responsibilities with other publicly traded
companies. The Company only pays a pro-rata portion of the costs of these
employees.

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 participate. An investor
should carefully consider the risks described below and the other information
filed with the Canadian securities regulators before investing in the Company's
common shares. The risks described below are not the only ones faced. Additional
risks that the Company currently believes are immaterial may indeed 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.

In addition to those risk factors discussed elsewhere in this
AIF, the Company is subject to the following risk factors:

We have a history of losses and anticipate that we will
continue to incur losses for the foreseeable future.

We have historically incurred losses as evidenced by the
consolidated statements of operations for the year ending December 31, 2006. We
incurred losses from operations of $6,659,591, $5,337,837 and $866,057 for the
years ended December 31, 2006, 2005 and 2004, respectively and have accumulated
losses of $22,142,776.

Our efforts to date are focused on acquiring and exploring
mineral properties. All of our properties are in the exploration stage and none
have any known mineral reserves. We do not anticipate that we will earn any
revenue from our operations until our properties are placed into production,
which is not expected to be for several years, if at all.

We will require additional capital to fund our business
plans.

As of December 31, 2006, we had a working capital of
$6,760,921. We have no revenues from operations and do not expect to generate
any revenues from operations in the foreseeable future. Although we anticipate
the current cash balance will provide us with sufficient funding to complete the
feasibility study, our planned activities for the year anticipate expenditures
significantly in excess of our current cash reserves. We will require additional
capital to fund our business activities, including exploration and development
expenditures and property payments. Managements current plan, assuming Board of
Directors approval of the Rosemont feasibility study and the continued
development of the Rosemont property, would require approximately $20 million
additional funding post development decision for 2007. Such funding may not be
available on commercially acceptable terms or at all. In such instance we may
raise additional capital through debt or equity financing, and possibly through
joint ventures, production sharing arrangements or other means. Our failure to
meet our ongoing obligations on a timely basis or raise additional funds that
may be required could result in delay or indefinite postponement of

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- 9 -

further exploration and development of our property or the loss
or substantial dilution of our property interests (as existing or as proposed to
be acquired).

We have historically depended on distributions of our
securities to fund our working capital and funding requirements.

Historically, the principal source of funds available to us has
been through the sale of common shares. During the years ended December 31,
2006, 2005 and 2004, we raised approximately $47,724,000, $11,220,000 and
$1,580,000, respectively, by issuing equity securities. Additional equity
financing would cause dilution to our existing shareholders.

In addition, as at December 31, 2006, we had 4,801,167 common
share purchase options outstanding at an average exercise price of $1.76 of
which 1,573,667 were fully vested and 18,947,600 purchase warrants at an
outstanding average exercise price of $2.51. As a consequence of the passage of
time since the date of their original sale and issuance, none of the Company's
shares remain subject to any hold period restrictions in Canada as of December
31, 2006. The unrestricted resale of outstanding shares from the exercise of
dilutive securities may have a depressing effect on the market for our common
shares.

We have no proven or probable reserves and we may never
discover sufficient mineral deposits to justify commercialization of any of our
properties.

We have no probable or proven reserves on any of our
properties, and we have not completed a feasibility study on any of our
properties. Therefore, we cannot be certain that minerals will be discovered in
sufficient quantities and grade on any of our properties to justify commercial
operations. Whether a mineral deposit will be commercially viable depends on a
number of factors, some of which are: the particular attributes of the deposit,
such as size, grade and proximity to infrastructure; metal prices, which are
highly cyclical; and government regulations, including regulations relating to
prices, taxes, royalties, land tenure, land use, importing and exporting of
minerals labour, wages, mine safety and environmental protection. If we are
unable to upgrade our mineralized material to proven and probable reserves in
sufficient quantities to justify commercial operations, we will be unable to
develop mines and our financial condition and results of operations could be
adversely affected.

We have no history of production and may never place any
of our properties into production.

None of our properties are in commercial production, and we
have never recorded any revenues from mining operations. We expect to incur
losses unless and until such time as our properties enter into commercial
production and generate sufficient revenues to fund our continuing operations.
The development of mining operations on any of our 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 exploration, development and
commercial production of our properties are added. The amounts and timing of
expenditures will depend on the progress of ongoing exploration and 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, our acquisition of additional properties, and other
factors, many of which are beyond our control. We may not generate any revenues
or achieve profitability.

Our 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.
We are currently planning

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or conducting exploration and deposit definition drilling on
two of the properties. The success of mineral exploration is determined in part
by the following factors:

- the identification of potential mineralization based on superficial
  analysis;
- availability of exploration permits;
- the quality of our management and our geological and technical expertise;
  and
- the capital available for exploration.

Substantial expenditures are required to establish 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. We cannot assure you that any reserves or
mineralized material acquired or discovered will be in sufficient quantities to
justify commercial operations.

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

Our operations will be subject to all the hazards and risks
normally encountered in the exploration, development and production of gold and
other base or precious metals, including, without limitation, unusual and
unexpected geologic formations, seismic activity, rock bursts, pit-wall
failures, cave-ins, flooding and other conditions involved in the drilling and
removal of material, any of which could result in damage to, or destruction of,
mines and other producing facilities, damage to life or property, environmental
damage and legal liability. Milling operations, if any, are subject to various
hazards, including, without limitation, equipment failure and failure of
retaining dams around tailings disposal areas, which may result in environmental
pollution and legal liability.

The parameters used in estimating mining and processing
efficiency are based on testing and experience with previous operations. While
the parameters used have a reasonable basis, various unforeseen conditions can
occur that may materially affect the estimates. In particular, past operations
indicate that care must be taken to ensure that proper ore grade control is
employed and that proper steps are taken to ensure that the leaching operations
are executed as planned. The mining contracts for the mines include clauses
addressing these issues to help ensure planned requirements are met.
Nevertheless, unforeseen difficulties may occur in planned operations.

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

The value and price of our common shares, our financial
results, and our exploration, development and mining, if any, activities may be
significantly 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 our 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 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 positive cash flow, or it may result in
a significant change in the amount of resources. Because mining occurs over a
number of years,

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- 11 -

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 our
investments in mining properties and increased amortization, reclamation and
closure charges.

In addition to adversely affecting our mineralized material
estimates and its financial condition, declining metal prices can impact
operations by requiring a reassessment of the commercial feasibility of a
particular 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.

Title to our properties may be subject to other claims.

Although we believe we have exercised the commercially reasonable
  due diligence with respect to determining title to properties we own, control
  or have the right to acquire by option, there is no guarantee that title to
  such properties will not be challenged or impugned. Our 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 our 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.

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

Although the estimated resources at our properties 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 are only estimates which may be
unreliable.

Although the mineralized material figures included or
referenced in this AIF have been carefully prepared by independent engineers,
these amounts are estimates only, and we cannot be certain that any specified
level of recovery of copper, molybdenum, silver, gold or other mineral from
mineralized material will in fact be realized or that any of our properties or
any other identified mineral deposit will ever qualify as a commercially
mineable (or viable) ore body that can be economically exploited. Mineralized
material, which is not mineral reserves, does not have demonstrated economic
viability. Any material change in the quantity of mineralization, grade or
stripping ratio, or mineral prices may affect the economic viability of our
properties. In addition, we 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 an unmined deposit is actually
mined and processed the quantity of mineral resources and reserves, if any, and
grades must be considered as estimates only.

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Government regulation may adversely affect our business
and planned operations.

We believe our exploration projects currently comply with
existing environmental and mining laws and regulations affecting its operations.
Our mining, processing, development and mineral exploration activities, if any,
are 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.
We cannot assure you 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. At present, there is no royalty payable to
the US on production from unpatented mining claims, although legislative
attempts to impose a royalty have occurred in recent years.

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 our 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.

Our operations are subject to environmental risks.

All phases of our operations, if any, will be subject to
federal, state and local environmental regulation in the various jurisdictions
in which it 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. We cannot be certain that future
changes in environmental regulation, if any, will not adversely affect our
operations, if any. Environmental hazards may exist on the properties on which
we hold and will hold interests which are unknown to us at present and which
have been caused by previous or existing owners or operators of the properties.

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 our mines will involve the use of
hazardous materials. Should these materials leak or otherwise be discharged from
their containment systems then we may become subject to liability for hazards
that we may not be insured against or for clean up work that may not be insured.

Our stock price is subject to volatility.

During the year ended December 31, 2006, our share price ranged
from $1.23 to $3.10 per share, first on the TSX Venture Exchange then commencing
August 10, 2006 on the TSX Exchange. On November 30, 2006 the Company commenced
trading on AMEX, the price range during 2006 was from US $1.89 to US $2.32. The
market price of a publicly traded stock, especially a junior resource issuer, is
affected by many variables not directly related to our exploration success,
including the market for junior resource stocks, commodity prices, the strength
of the economy generally, 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

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- 13 -

the market price of the common shares on the stock exchanges on
which the Company trade, suggest the Company's shares will continue to be
volatile.

We do not insure against all risks.

Our insurance will not cover all the potential risks associated
with a mining companys operations. We 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 us or to other companies in the mining industry on acceptable
terms. We might also become subject to liability for pollution or other hazards
which may not be insured against or which we may elect not to insure against
because of premium costs or other reasons. Losses from these events may cause us
to incur significant costs that could have a material adverse effect upon our
financial condition and results of operations.

We compete with larger, better capitalized competitors in
the mining industry.

The mining industry is competitive in all of its phases. We
face 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 us. As a result of this competition,
we may be unable to maintain or acquire attractive mining properties on terms it
considers acceptable or at all. Consequently, our revenues, operations and
financial condition could be materially adversely affected.

We are dependent on our key personnel.

Our success depends on our key executives: Gil Clausen,
President; Mike Clarke, VP Exploration; James Sturgess, VP Projects and
Environment; Lance Newman, VP Metallurgical Operations and Richard Warke,
Chairman,. The loss of the services of one or more of such key management
personnel could have a material adverse effect on the Company. Our ability to
manage its exploration and development activities, and hence our success, will
depend in large part on the efforts of these individuals. We face intense
competition for qualified personnel, and we cannot be certain that we will be
able to attract and retain such personnel.

Our officers and directors may have potential conflicts
of interest.

Our directors and officers may 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 we are 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, our
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 our 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 we will participate in a particular program and the interest

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- 14 -

therein to be acquired by it, it is expected that our directors
will primarily consider the degree of risk to which the Company may be exposed
and its financial position at the time.

We provide indemnity and protection to our directors and
officers.

Section 7 of our By-Law No.1 states in part that:

> The Company shall indemnify a director or officer,
>       a former director or officer, or a person who acts or acted at the Companys
>       request as a director or officer of a body corporate of which the Company
>       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, we 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.

**In the event that your investment in our shares is for the purpose of
deriving dividend income or in expectation of an increase in market price of our
shares from the declaration and payment of dividends, your investment will be
compromised because we do not intend to pay dividends.**

We have never paid a dividend to our shareholders, and we
intend to retain our cash for the continued development of our business. We do
not intend to pay cash dividends on our common stock in the foreseeable future.
As a result, your return on investment will be solely determined by your ability
to sell your shares in a secondary market.

Mineral Projects

Material Mineral Property

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

The Rosemont Property

The Company entered into an Option Agreement dated April 18,
2005 with Rosemont Ranch, LLC, Lazy Y I Ranch, LLC, TWW Investments, LLC, DAS
holdings, LLC, Habibi LLC and West Santa Rita Land, LLC for the right to
purchase a 100% working interest in the Rosemont property, Pima County, Arizona,
US (which includes patented and unpatented claims, fee land and surface grazing
rights), subject to a 3% NSR, for cash payment of US$20,800,000 payable over a
three year period. On June 1, 2005, the Company made the first option payment of
US $6,666,666. On March 31, 2006, the Company utilized $16,114,985 of the
proceeds of the Special Warrant Offering to pay the remaining payments of US
$13,733,582 owing under the Option Agreement, after adjusting for early payment
provisions, for total aggregate payments of US $20,400,248, and thereby acquired
a 100% ownership interest in the Rosemont property, subject to the 3% NSR
referred to above.

Rosemont Property Technical Report Summary

The following information on the Rosemont property is a summary
taken from a technical report dated April 21, 2006 entitled Mineral Resources
Estimate  Revised Technical Report for the Rosemont Deposit, Pima County,
Arizona (the "Rosemont Technical Report"). The principal author responsible for
the overall preparation of the Rosemont Technical Report is William L. Rose,
P.E., a "Qualified Person", as such term is defined in National Instrument
43-101 ("NI 43-101"), and other contributors to the Rosemont Technical Report
include: Michael Clarke, PhD (non-independent), Michael Pawlowski, MSc, James A.
Sturgess (non-independent) and Shea Clark Smith, P.G., MSc, each a Qualified
Person

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and Donald Elkin, BS Geological Engineering and Donald
Podobnik, who are not Qualified Persons. Additional details regarding the
Rosemont property may be obtained from the Rosemont Technical Report which is
incorporated by reference into this AIF and is available on SEDAR at
www.sedar.com, which readers are encouraged to review in its entirety.

The Company completed a 15-hole, 8,352 meters diamond drilling
program on the Rosemont copper/ molybdenum/silver (Cu-Mo-Ag) deposit, located
approximately 50 kilometers southeast of the city of Tucson, Arizona. The
results of this drilling have been integrated with approximately 56,100 meters
of previous drilling, conducted by other companies prior to Augustas
involvement, to estimate the mineral resources presented in the 2006 Rosemont
Technical Report.

The Rosemont deposit is the principal known mineral deposit on
the Rosemont property, a group of patented mining claims, unpatented mining
claims and fee land that in aggregate total approximately 6,026 hectares.

The Rosemont deposit is a typical representative of the
porphyry copper class of deposits. Similar to many other southwestern US
deposits in this class, Rosemont consists of large scale skarn mineralization
developed in Palaeozoic-aged carbonate sedimentary rocks around their contact
with quartz-latite or quartz-monzonite porphyry intrusive rocks. The deposit has
been extensively drilled using predominantly diamond core holes.

A block model of the Rosemont deposit was constructed using
MEDSystem® software and geologic plan maps and cross sections developed 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-ft composited data and ordinary kriging interpolation
methods. Blocks were also classified into measured, indicated and inferred
resources in a manner that conforms to Canadian National Instrument 43-101
standards. The modeling and 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 Canadian NI 43-101.

Measured and indicated mineral resource estimates for the
Rosemont deposit are summarized in Tables 3.1 and 3.2, respectively. The
combined measured and indicated mineral resource estimates are presented in
Table 3.3. Inferred mineral resource estimates are shown in Table 3.4. Imperial
units are used in these estimations, where tons refer to short tons (2000 lbs).
Copper equivalent (CuEq) values are based on three-year trailing average prices
of $1.25/lb Cu and $18.00/lb Mo, with no applied recovery factors.

Table 3.1: Measured Resources

Cutoff
    Tons (thousands)
    %Cu
    %Mo
    %Cu Eq.*
    lbs Cu (millions)
    lbs Mo (millions)
    lbs Cu Eq.* (millions)0.20% Cu 0.25% Cu 0.30% Cu
    94,000 87,000 80,000
    0.55 0.58 0.60
    0.015 0.015 0.015
    0.77 0.79 0.82
    1,040 1,000 970
    28 26 24
    1,440 1,380 1,310


* Equivalency based on prices of $1.25/lb Cu and $18/lb Mo with no applied
    recovery factors.


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Table 3.2: Indicated Resources

Cutoff
    Tons (thousands)
    %Cu
    %Mo
    %Cu Eq.*
    lbs Cu (millions)
    lbs Mo (millions)
    lbs Cu Eq.* (millions)0.20% Cu 0.25% Cu 0.30% Cu
    348,000 311,000 277,000
    0.50 0.54 0.57
    0.015 0.016 0.016
    0.72 0.77 0.80
    3,500 3,350 3,160
    104 100 90
    5,010 4,800 4,450




Table 3.3: Total Combined Measured and Indicated Resources

Cutoff
    Tons (thousands)
    %Cu
    %Mo
    %Cu Eq.*
    lbs Cu (millions)
    lbs Mo (millions)
    lbs Cu Eq.* (millions)0.20% Cu 0.25% Cu 0.30% Cu
    442,000 398,000 357,000
    0.51 0.55 0.58
    0.015 0.016 0.016
    0.73 0.78 0.81
    4,540 4,350 4,130
    132 126 114
    6,450 6,180 5,760




Table 3.4: Inferred Resources

Cutoff
    Tons (thousands)
    %Cu
    %Mo
    %Cu Eq.*
    lbs Cu (millions)
    lbs Mo (millions)
    lbs Cu Eq.* (millions)0.20% Cu 0.25% Cu 0.30% Cu
    145,000 116,000 96,000
    0.45 0.51 0.56
    0.015 0.016 0.017
    0.67 0.74 0.80
    1,300 1,170 1,070
    43 37 33
    1,930 1,710 1,540




Augustas drilling campaign at the Rosemont deposit has
increased both the quantity and confidence level of the estimated mineral
resources, which presently totals about 442 million tons of measured and
indicated material grading 0.51% Cu at a 0.20% Cu cutoff. An additional 145
million tons of inferred mineral resources are estimated at a grade of 0.45% Cu
using the same cutoff. Augustas drilling program was successful in converting
significant tonnages of inferred material into measured and indicated
classifications. Additional potential for such conversion still exists as
evidenced by the 145 million tons of estimated inferred resources.

WLRC and the other qualified persons who worked on this study
recommended that Augusta proceed with a calculation of mineral reserves and the
completion of a prefeasibility study of the Rosemont project. These evaluations
should include the possible treatment of low-grade oxide mineralization to
supplement traditional sulfide milling and concentration.

Additional Exploration and Development Activity at the Rosemont
  Property

Following up on the new resource estimate, the Company commenced
  a 20,000-meter drill program during the latter part of the second quarter with
  emphasis on moving inferred resources into the measured and indicated category.
  The drill program and a concurrent program of re-logging and re-assay of historic
  drill core will define potential oxide copper zones and quantify a silver resource
  for the deposit, in addition to upgrading the sulfide copper-molybdenum resource.

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- 17 -

In early May, the Company announced positive results from metallurgical
  test work that would impact production and process techniques at Rosemont. The
  new findings had a major positive impact on flow sheet design and the financial
  performance of the project. The Preliminary Assessment and Economic Evaluation
  for the Rosemont Deposit (the “PA”) was filed on SEDAR in June 2006.
  The Company believes that it demonstrates that the Rosemont Cu/Mo/Ag deposit
  could be developed as a low cost open pit mine with potentially robust project
  economics. With the project economics noted in the PA and the continued buoyant
  market for these strategic metals, management decided to move the Rosemont project
  to full feasibility study and awarded the contract to M3 Engineering in early
  August.

The planned mine operations at Rosemont will incorporate water-miser
  design principles and are expected to use less than 5,000 acre-feet per year,
  approximately one third the water consumption of similar sized operations in
  Arizona. The Company obtained a sustainable water supply source for Rosemont
  when it signed two contracts with the Central Arizona Water Conservation District
  (“CAWCD”) in June. The purchase contract allows Augusta to become
  a water user in the CAWCD system, allowing the Company to request up to 10,000
  acre-feet of water per year for the five-year term of the contract. The storage
  contract allows the Company to store the water in the Pima Mine Storage and
  Retrieval Facility in Pima County, Arizona. The pre-stored water will accumulate
  in a water-bank account to offset groundwater removed from the aquifer once
  mine operations begin on the Rosemont property.

In late 2006, Augusta signed additional storage contracts with
  the CAWCD allowing storage of Central Arizona Project canal system (“CAP”)
  water at two additional storage and retrieval facilities within the Santa Cruz
  basin. In accordance with the CAWCD purchase contract, Augusta agreed to purchase
  an initial 10,000 acre-feet of water in early 2007. At the same time the Company
  also agreed to purchase an available surplus of 5,000 acre-feet of water. The
  total amount of 15,000 acre-feet will be stored in the three specified storage
  facilities, and is enough to carry the operation through its first three to
  four years of production.

The Company also filed Rosemont’s initial Plan of Operations
  with the US Forest Service in July. Stakeholder response to this document is
  being used to modify the on-going feasibility study, and a final comprehensive
  Plan of Operations will be filed when the feasibility study is complete. This
  plan will be the basis for permitting after review under the National Environmental
  Policy Act (“NEPA”), a process managed by the US Forest Service.

With five drill rigs on the property, the Company was pleased
  to complete the 20,000-meter drill program in late September. Initial assay
  results were announced in July, followed up by more results in September. After
  the remaining assays had been processed in the first half of the fourth quarter,
  the full set of drill results was published in early December. Highlights of
  oxide results included 70 meters at 0.55% Cu from a 6 meter depth, 79 meters
  at 0.40% Cu from a 19 meter depth, and 78 meters at 0.50% Cu from surface. Notable
  sulfide results included 89.9 meters at 1.0% Cu - 0.02% Mo - 6.4 g/t Ag; 105.2
  meters at 0.99% Cu - 0.02% Mo - 7.2 g/t Ag; 260.6 meters at 0.81% Cu - 0.02%
  Mo - 5.5 g/t Ag; and 172 meters at 0.91% Cu - 0.01% Mo - 5.4 g/t Ag. For a detailed
  table of drill results, please refer to the news release dated December 1, 2006
  at www.augustaresource.com.

After publishing the final drill results from the 20,000-meter
  drill program in December, Augusta expects to publish an updated resource statement
  in early March 2007. While the statement was originally scheduled for completion
  before the end of the year, third party assay processing delays have impacted
  the completion date.

The Company continues to work with consultants to advance the
  feasibility study, which is now expected for completion in the second quarter
  as a result of the delay in completing the updated resource statement. Metallurgical
  test work has largely been completed, and engineering is now 90% complete. The
  feasibility study will evaluate the project economics associated with processing
  sulfide ores as well as oxide copper processing.

**Note on Pima County Opposition**

In January 2007, the Pima County Board of Supervisors passed
  a resolution opposing the development of mineral resources at Rosemont. This
  was done prior to Augusta’s completion of its final feasibility study
  and comprehensive Plan of Operations, which will be filed in the second quarter
  of 2007. The County also requested that all public land in the County be considered
  for withdrawal from mineral entry, and questioned the validity of Augusta’s
  mining claims. In February 2007, the US Forest Service responded to the Pima
  County Administrator’s request to challenge the validity of Augusta’s
  mining claims for the Rosemont deposit. In the public letter, Forest Supervisor
  Jeanine A. Derby states the following:

*“Your argument for claim validity
  challenge was based primarily on the fact that the company intends to use many
  of the claims for mill tailings and waste rock placement. I have received opinions
  on this topic from our Office of General Counsel and also from our Regional
  Geologist in Albuquerque. Both opinions state that it is not common practice,
  nor is it Forest Service policy, to challenge mining claim validity, except
  when a) proposed operations are within an area withdrawn from mineral entry,
  b) when a patent application is filed, and c) when the agency deems that the
  proposed uses are not incidental to prospecting, mining, or processing operations.
  This last category includes such management concerns as illegal occupancy or
  use of mining claims for non-mining or non-mineral processing purposes.*

*For operations proposed in accordance
  with our regulations, and where the above situations do not exist, there is
  no basis for pursuing a validity exam. The placement of waste rock and mill
  tailings on the Forest are considered to be activities connected to the mining
  and mineral processing per regulation 36CFR228 subpart A, and as such they are
  authorized activities regardless of whether they are on or off mining claims.*

*I appreciate your interest in protecting
  the environment. I have the same interest and will be giving particular attention
  to having an effective design for mine reclamation when we address the mine
  operating plan.”*

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- 18 -

The Company notes that the permits and permit review procedures
  to develop Rosemont are the responsibility of federal and state agencies. These
  procedures are well developed and allow for public and County input, however
  the County does not have jurisdiction over mining. The Company remains committed
  to work with local groups and officials in order to provide for the most effective
  design and mitigation of impacts. The Company is advancing a very progressive
  plan that considers conservation/open land protection, water protection, water
  miser design, advanced reclamation technologies and minimal viewscape impairment.

Concurrent with completing the feasibility study at Rosemont,
  the Company is preparing a detailed and comprehensive Plan of Operations for
  submission to the US Forest Service in the second quarter of 2007. Using this
  plan as a basis for permitting, Augusta will then move through the National
  Environmental Policy Act permitting process, whereby the US Forest Service initiates
  an Environmental Impact Statement and public review process. The company continues
  to work with local interests to address relevant factual concerns and issues
  as part of the NEPA process.

The US Forest Service is the official agency in charge of leading
  the process of reviewing potential project impacts and identifying relevant
  mitigation plans resulting from the Plan of Operations. As such, the US Forest
  Service is responsible for issuing the final EIS and “Record of Decision”
  after pubic review and comment. These documents and findings are then considered
  by other federal and state agencies as they review the permits required to initiate
  mineral development on the property.

It normally takes anywhere from 12 to 18 months to complete
  the draft EIS and the initial public review process. Another three to six months
  are typically required to respond to public comments and prepare the final EIS,
  after which the US Forest Service will issue a “Record of Decision”
  either approving the plan or providing recommendations for modifications to
  the plan. Subsequent to the “Record of Decision”, the Company will
  file a final Plan of Operations (incorporating any necessary modifications).
  It is then that permits would be issued allowing the Company to commence construction.
  Upon completion of this process, Augusta expects to receive approval to construct
  the mine in 2009 and to produce copper at Rosemont in 2010.

With approximately $10 million in cash on hand as at December
  31, 2006, the Company has commenced discussions with various financial intermediaries
  in preparation for an expected release of a positive feasibility study and the
  subsequent Board of Directors decision to proceed with the development of Rosemont.
  The objective is to initially secure sufficient funding to cover expenditures
  through to the expected completion of the permitting process.

Non-material Mineral Properties

Mount Hamilton and Shell Properties, Nevada

The Company announced the acquisition of the Mount Hamilton
property located in Nevada in December 2004, and announced the option of the
Shell Deposit property in January 2005. The Shell Deposit property is situated
in close proximity to the Mount Hamilton property, approximately 50 kilometers
west of Ely, Nevada.

The Mount Hamilton property contains a historical resource of
gold, molybdenum, tungsten and copper and the Shell Deposit property contains a
historical resource of molybdenum, gold and tungsten. Compilation of data from
prior programs has been completed and an updated geological model developed.

An independent Technical Report was filed in March 2005, which
identified a National Instrument 43-101 compliant resource of 309,000 ounces Au
in an indicated resource of 6.7 million tonnes of 1.31 g/t gold ounces, using a
cut-off grade of 0.078 g/t gold. Mineralization appears to be open in several
directions, and potentially amenable to open pit mining. On May 11, 2006, the
Company announced it had retained Pincock, Allen & Holt, to conduct a
pre-feasibility study at Mount Hamilton. The study is evaluating the development
of the Centennial Deposit as an open-pit heap leach gold mine. The study is
being expanded to assess run of mine heap leaching methods. Additional
metallurgical testing will be

---

- 19 -

required to quantify grade/recovery characteristics of run of
mine leach versus crushed ore, therefore final study results are not expected
until the fourth quarter 2007.

Also in May, the Company announced a 3,000-meter Phase I
Exploratory Drilling Program at the Shell Deposit. The drilling program
commenced in August. The Shell Deposit property contains a historical resource
of molybdenum, gold and tungsten, including 469,157 tonnes of 7.4 g/t gold.
Compilation of data from prior programs has been completed and an updated
geological model developed. To date the Company has completed three drill holes,
and final assay results are pending.

Lone Mountain Property, New Mexico

On May 15, 2006 the Company announced that after completing a
detailed geological assessment, the Company has elected not to pursue its option
to purchase the Lone Mountain project located in Grant County, south western New
Mexico.

The Company will continue to fund its operations as it has in
the past by way of equity financings and other means that are available in the
market place to make its property acquisition and option agreement payments, for
exploration and development expenditures on its properties and for working
capital and overhead purposes on an ongoing basis as required.

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, 2006 there
were 72,749,067 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.

ITEM
7:MARKET FOR SECURITIES

The common shares of the Company currently trade on the TSX and
AMEX. The graduation of the Company from the TSX Venture Exchange to the TSX
occurred on August 10, 2006 and the AMEX listing occurred on November 30, 2006.
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 Venture Exchange and
TSX.

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- 20 -

High and Low Prices and Volume for Fiscal 2006Period
      High
      Low
      VolumeDecember 2006
      2.65
      2.25
      3,171,000November 2006
      2.61
      1.93
      4,702,400October 2006
      2.47
      2.00
      4,411,800September 2006
      2.30
      1.70
      2,965,100August 2006
      2.10
      1.76
      2,512,100July 2006
      1.98
      1.65
      2,827,,500June 2006
      2.22
      1.60
      5,249,200May 2006
      2.99
      1.91
      4,923,900April 2006
      3.10
      2.15
      4,585,100March 2006
      2.28
      1.89
      3,178,048February 2006
      2.32
      1.72
      3,462,740January 2006
      2.38
      1.23
      4,358,834


For the period that Augusta traded on AMEX, from November 30,
2006 until year end, the range of share prices was US $1.89 to US $2.32 with a
volume of 2,893,300 shares.

The following table provides each class of the Companys
securities that was outstanding but not listed or quoted on a marketplace as at
December 31, 2006:

Type of Security
    Number Outstanding
    Exercise or Conversion Price
    Expiry DateStock Options
    66,667 104,500 450,000 125,000
      100,000 2,035,000 86,000 150,000 730,000 539,000
      365,000 50,000
    $0.33 $0.10 $2.05 $1.96 $2.30
      $1.56 $2.07 $1.55 $2.07 $2.20 $1.78 $1.90
    May 14, 2007 November 15, 2009 March
      28, 2010 April 13, 2010 June 23, 2010 August 22, 2010
      August 22, 2010 September 28, 2010 April 11, 2011 May 15,
      2011 August 2, 2011 August 8,2001Warrants
    3,750,000 12,997,600(1)2,200,000
    US$0.16 $3.10/$4.10 $3.00
    May 6, 2007 March 17, 2007/2008 June
      29, 2007


(1)
    Each warrant entitles the holder to acquire one common
      share of the Company at a price of $3.10 per share until March 17, 2007
      and thereafter at a price of $4.10 per share until March 17,
  2008.


As of the date of this AIF 4,801,167 options were outstanding
of which 1,573,667 were fully vested and exercisable. Each of the Companys
options is exercisable for one common share.

As of the date of this AIF there were 18,947,600 warrants
outstanding, each exercisable for one common share of the Company.



---

ITEM 8:DIRECTORS AND OFFICERS

- 21 -

Name, Municipality ofResidence
    Present and Principal
      OccupationDuring the Last Five Years
    Date Appointedas Officer
    Date Appointedas DirectorDonald B. ClarkRichmond, BC,
      Canada
    VP Administration and Directorof the Company and
      VP Administration and Director of Sargold Resource Corporation, President
      and CEO and Director of Wildcat Silver Corporation and Ventana Gold
      Corporation, mineral exploration and development companies.
    June 21, 2002
    February 1, 1996Gil ClausenDenver, CO, USA
    President, CEO and Directorof the Company;
      Executive VPof Washington Group International, Inc., providers of
      integrated engineering, construction, and management solutions, between
      2001 to March 2005.
    April 18, 2005
    March 28, 2005W. Durand Eppler(1) (2) (3)Denver, CO, USA
    Director of the Company; CEO of Sierra Partners,
      LLC since April 2005 and President of New World Advisors, LLC since August
      2004. Both Sierra Partners and New World Advisors provide strategic and
      business advisory services to global resource companies. Since July 2005,
      Chief Executive Officer of Coal International, Plc, a London (AIM) listed
      company with global coal operations and investments. VP of Newmont Mining
      Corporation between May 1995 and August 2004 and President of Newmont
      Indonesia between 1998 and 2001, each of which are mining companies.
    Not Applicable
    June 15, 2005Christopher M.H. Jennings(2)(3)Grand Cayman, Cayman Islands, BWI
    Directorof the Company; Chairman of SouthernEra
      Diamonds Inc., a company engaged in diamond exploration in Canada, South
      Africa, Gabon, Australia and the Democratic Republic of Congo, Director of
      Southern Platinum Corp., a mineral exploration and development company,
      between September 2004  June 2005; President and CEO of SouthernEra
      Resources Limited, a mineral exploration and development company, between
      April 1992 to April 2001.
    Not Applicable
    April 2002Michael A. Steeves(1)(2)Reno, Nevada, USA
    Directorof the Company; Currently a consultant to
      the base metal industry. VP Investor Relations of Glamis Gold Ltd., a
      mining company, between June 2002 and August 2005. Director of Investor
      Relations of Coeur d'Alene Mines Corporation, a mining company, between
      October 1999 to June 2002.
    Not Applicable
    June 8, 1999


---

- 22 -

Name, Municipality of
      Residence
    Present and Principal
      Occupation During the Last Five Years
    Date Appointed as Officer
    Date Appointed as DirectorRobert P. Wares(1)(3)
      Montreal, QC, Canada
    Directorof the Company, Chairman, Executive VP
      and Chief Operating Officer of Osisko Exploration Ltd. (Osisko) since
      early 2006. He was President of Osisko from September 1998 to early 2006.
      Osisko is a Canadian junior exploration company holding interests in
      several properties located in Quebec, Canada and Brazil, South America.
    Not Applicable
    April 26, 1999Richard W. Warke West Vancouver,
      BC, Canada
    VP Corporate Development and Chairmanof
      the Company and CEO and Chairman of Sargold Resource Corporation, a
      mineral exploration and development company.
    February 1, 1996
    February 1, 1996Mike Clarke Lakewood, CO, USA
    VP Explorationfor the Company and Sargold
      Resource Corporation, a mineral exploration and development company;
      Manager, Exploration for First Quantum Minerals Ltd., a mining company,
      between July 2004 and April 2005; Director of Exploration for the Saudi
      Arabian Mining Company between October 1999 to June 2004.
    April 13, 2005
    Not ApplicableBruce B. Nicol Delta, B.C. Canada
    Senior VP and CFO for the Company, VP &
      Controller Placer Dome March 1996 to May 2006
    September 1, 2006
    Not ApplicableLance C. Newman Highlands Ranch,
      CO, USA
    VP Metallurgical Operationsfor the Company;
      Refinery Manager for Stillwater Mining Company from March 1997 to August
      2006
    August 2, 2006
    Not ApplicableJames A. Sturgess Centennial, CO,
      USA
    VP Projects and Environmentfor the Company;
      Senior Associate for Stantec Consulting Inc., an environmental consulting
      firm, between December 2000 and October 2005.
    October 1, 2005
    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.

To the knowledge of the Company, the number of common shares
  of the Company which were beneficially owned, directly or indirectly, or over
  which control or direction was exercised by all directors and executive officers
  of the Company as a group as at the date of this AIF was 15,925,796 representing
  21.89%.

---

- 23 -

Cease Trade Orders and Bankruptcies

No director or officer of the Company, or a shareholder holding
a sufficient number of securities of the Company to affect materially the
control of the Company, is, or within the 10 years before the date of this AIF
has been, a director or officer of any other company that, while that person was
acting in that capacity,

| | (a) | was the subject of a cease trade or similar order, or an
      order that denied the other company access to any exemption under
      securities legislation, for a period of more than 30 consecutive
    days;                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) | was subject to an event that resulted, after the director
      or executive officer ceased to be a director or executive officer, in the
      company being the subject of a cease trade or similar order or an order
      that denied the relevant company access to any exemption under securities
      legislation, for a period of more than 30 consecutive days; or     
| |     |                                                                                                                                                                                                                                                                                                                                                                                  
| | (c) | 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, except as
      follows:

Richard W. Warke, the Chairman of the Company, is the President
and Director of Cybercom Systems Inc. (Cybercom) and Donald B. Clark, VP
Administration of the Company, is a Director of Cybercom. 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 filing 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. In addition, 2973090 Canada Inc.,
a Quebec based company, filed a motion with the Quebec Court dated August 18,
1997 to petition Cybercom (Augusta Metals Incorporated at the time) into
bankruptcy. The case was heard November 5, 1997. The Court rendered judgement
January 19, 1998, dismissing the plaintiffs motion.

Michael Clarke, VP Exploration of the Company, was VP
Exploration for Real del Monte Mining Corporation (RMM) between October 1997
and June 1999. Within a year after Mr. Clarke ceased to act in that capacity RMM
announced insolvent liquidation. As a result RMM, was delisted from the
exchanges it was then listed on. To the best of Mr. Clarkes knowledge there
were no charges of misconduct and the bankruptcy proceedings have come to
conclusion.

Personal Bankruptcies

Other than as described below, no director or officer of the
Company, or a shareholder holding a sufficient number of securities of the
Company to affect materially the control of the Company, or a personal holding
company of any such persons has, within the 10 years before the date of this
AIF, become 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.

Richard Warke filed a proposal (the Proposal) with the
Official Receiver under the Bankruptcy and Insolvency Act on September
15, 1998. Despite filing the Proposal, by letter dated August 7, 2002 the TSX
Venture Exchange confirmed that Mr. Warke is acceptable to act as a director of
the Company.

Penalties or Sanctions

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- 24 -

No director or 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 since December 31,
      2000 that would likely be important to a reasonable investor in making an
      investment decision, 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 - Our
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, 2006 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, 2006 which is
incorporated here by reference and available on SEDAR at www.sedar.com.

ITEM
10:TRANSFER
AGENTS AND REGISTRARS

The registrar and transfer agent for the Company is
Computershare Trust Company of Canada, 510 Burrard Street - 3rd Floor,
Vancouver, BC V6C 3B9, Canada.

ITEM
11:MATERIAL
CONTRACTS

Other than in the ordinary course of the Companys business,
there are no material contracts that have been entered into by the Company since
the beginning of the Companys most recently completed financial year or that
are still in effect, other than as set out below:

1. ****The
Special Warrant Indenture dated March 17, 2006 entered into between the Company
and Computershare Trust Company of Canada as described under the heading
General Development of the Business  Three Year History.

2. ****The
Warrant Indenture dated as of March 17, 2006 entered into between the Company
and Computershare Trust Company of Canada as described under the heading
General Development of the Business  Three Year History.

ITEM 12:INTEREST
  OF EXPERTS

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- 25 -

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 of 23rd Floor, 700 West Georgia Street,
        Vancouver BC, V7Y 1C7 provided an auditor’s report dated February
        14, 2007, except as to Note 16(b) which is as of February 23, 2007, in
        respect of the Company's financial statements for the years ended December
        31, 2006 and 2005.
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                             
| | (ii)   | Mr. John A. Ajie of Washington Group International, Inc.
      was the principal author responsible for the overall preparation of the
      Preliminary Assessment and Economic Evaluation for the Rosemont Deposit,
      Pima County, Arizona, USA dated June 13, 2006;                                                  
| |        |                                                                                                                                                                                                                                                                                                                             
| | (iii)  | Mr. William L. Rose of WLR Consulting Inc., was a
      co-author of the Preliminary Assessment and Economic Evaluation for the
      Rosemont Deposit, Pima County, Arizona, USA dated June 13, 2006;                                                                                                                      
| |        |                                                                                                                                                                                                                                                                                                                             
| | (iv)   | Mr. James A. Sturgess was a co-author of the Preliminary
      Assessment and Economic Evaluation for the Rosemont Deposit, Pima County,
      Arizona, USA dated June 13, 2006;                                                                                                                                            
| |        |                                                                                                                                                                                                                                                                                                                             
| | (v)    | Mr. William L. Rose of WLR Consulting Inc. was the
      principal author responsible for the overall preparation of the Mineral
      Resource Estimate, Revised Technical Report for the Rosemont Deposit, Pima
      County Arizona, USA (the Revised Rosemont Technicial Report) dated April
      21, 2006.          
| |        |                                                                                                                                                                                                                                                                                                                             
| | (vi)   | Michael Clarke, PhD was a co-author of the Revised
      Rosemont Technical Report dated April 21, 2006.                                                                                                                                                                                                                    
| |        |                                                                                                                                                                                                                                                                                                                             
| | (vii)  | Michael Pawlowski, MSc, was a co-author of the Revised
      Rosemont Technical Report dated April 21, 2006.                                                                                                                                                                                                                
| |        |                                                                                                                                                                                                                                                                                                                             
| | (viii) | James A. Sturgess was a co-author of the Revised Rosemont
      Technical Report dated April 21, 2006.                                                                                                                                                                                                                      
| |        |                                                                                                                                                                                                                                                                                                                             
| | (ix)   | Shea Clark Smith, P.G., MSc, was a co-author of the
      Revised Rosemont Technical Report dated April 21, 2006.                                                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                             
| | (x)    | Donald Elkin, BS Geological Engineering was a contributor
      to the Revised Rosemont Technical Report dated April 21, 2006.                                                                                                                                                                                              
| |        |                                                                                                                                                                                                                                                                                                                             
| | (xi)   | Donald Podobnik was a contributor to the Revised Rosemont
      Technical Report dated April 21, 2006.                                                                                                                                                                                                                      

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

---

- 26 -

received by such experts, other than Michael Clarke and James
Sturgess who, as officers of the Company, hold stock options, in each case
representing less than 1% of the outstanding shares of the Company.

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 other than Michael Clark and James Sturgess who are officers of the
Company.

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 exernal 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, Robert P. Wares, Michael A. Steeves, 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. Steeves, the Chairman of the Audit Committee, is a
Chartered Financial Analyst, earned at the University of Virginia, and also
earned a MSC from the University of Manitoba. He has had a long career in the
mining industry as Senior Mining Analyst for Loewen Ondaatje McCutcheon and
Scotia McLeod for six years and latterly as VP / Director Investor Relations for
various mining/resource companies for fifteen years, including Glamis Gold Ltd.
from 2002 to 2005.

Mr. Wares earned a BSC at McGill University and a P. Geo from
the Quebec Order of Geologists. He has been Chairman and Executive VP and Chief
Operating Officer of Osisko Exploration Ltd. (Osisko) since early 2006 prior
to which he was President of Osisko since September 1998. Osisko is listed on
the TSX Venture Exchange.

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.
Newmont is currently the second largest gold mining company worldwide. He earned
a BA from Middlebury College and a MS from the Colorado School of Mines.

Reliance on Certain Exemptions

Between January 1, 2006 to August 9, 2006 the Company was a
Venture Issuer as that term is defined in NI 52-110 and relied upon the
exemption in section 6.1 of NI 52-110 which allows Venture Issuers an exemption
from Part 3 (Composition of the Audit Committee) and 5 (Reporting
Obligations). On August 10, 2006, the Company obtained a listing on the
Toronto Stock Exchange and no longer relies on such exemption.

Pre-approval Policy

---

- 27 -

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

The aggregate fees billed 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
    All Other Fees2005
    $42,000
    $10,000
    Nil
    Nil2006
    $55,000
    $64,000
    Nil
    Nil


|(1) | The aggregate audit fees billed.                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                       
|(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. Services provided include work on the prospectus issued in
      2006 as well as the AMEX and TSX listings.

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.
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|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.
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ARTICLE 3FUNDING

|3.1 | The Corporation will provide appropriate funding, as
      determined by the committee, for payment of:
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(a)        compensation to the
Corporation's external auditors, as well as any other accounting firm engaged to
perform audit, review or attest services for the Corporation;

(b)        any independent
counsel or other adviser retained by the committee; and

(c)        ordinary
administrative expenses of the committee that are necessary or appropriate in
carrying out its duties.

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

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ARTICLE 4ORGANIZATION

4.1        Membership.

(a)        The Committee
will be comprised of not less than three members of the Board.

(b)        All of the
members of the committee will meet the applicable independence and experience
requirements of the law, including MI 52-110 of the Canadian Securities
Administrators (MI 52-110), Sarbanes-Oxley, the rules promulgated by the
Securities and Exchange Commission (the SEC), and rules promulgated by the
American Stock Exchange (the AMEX) (except in the circumstances, and only to
the extent, permitted by all applicable legal and regulatory requirements).

(c)        One of the
members of the committee will be an audit committee financial expert pursuant
to the requirements of the SEC and AMEX (except in the circumstances, and only
to the extent, permitted by all applicable legal and regulatory requirements).

(d)        No director who
serves on the audit committees of more than three public corporations other than
the Corporation will be eligible to serve as a member of the committee.

(e)        Each member of
the committee will be appointed by the Board on annual basis immediately
following each annual general meeting of the shareholders of the Corporation,
and will serve at the pleasure of the Board or until the earlier of:

|(i)   | the commencement of the next annual meeting of the
      shareholders of the Corporation at which the members term of office
      expires;
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|(ii)  | the death of the member; or                                                                                                                 
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|(iii) | the resignation, disqualification or removal of the
      member from the committee or from the Board.                                      

The Board may fill any vacancy in the membership of
  the committee.

(f)        If not
appointed by the Board, the chairman of the committee will be elected by the
committee from among their number time to time.

(g)        A quorum for any
meeting will be a majority of the members of the committee, present in person or
by telephone or other telecommunication device that permits all persons
participating in the meeting to speak and to hear each other. Decisions by the
committee will be by the affirmative vote of a majority of the members of the
committee, or by consent resolutions in writing signed by each member of the
committee.

(h)        The secretary of
the committee will be such person as may be appointed by the committee.

4.2        Attendance at
Meetings.

(a)        The committee may
invite such other persons (e.g. the CEO and/or the CFO) to its meetings, as it
deems appropriate.

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(b)        The external
auditor is entitled to receive notice of, and to be present and participate at,
all meetings of the committee, and may be expected to comment on the financial
statements in accordance with best practices.

(c)        Meetings of
the committee will be held at least on a quarterly basis. Special meetings may
be convened by any member of the committee, by either the Chief Executive
Officer or the Chief Financial Officer of the Corporation, or by the external
auditors, as required.

(d)        The
proceedings of all meetings of the committee will be minuted.

ARTICLE 5ROLES AND RESPONSIBILITIES

5.1        The
committee will:

(a)        be directly
responsible for:

|(i)   | the selection of a firm of external auditors to be
      proposed for election as the external auditors of the
  Corporation,                                                                                 
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|(ii)  | the oversight of the work of the Corporations external
      auditors, who will be required to report directly to the
  committee,                                                                           
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|(iii) | subject to the grant by the shareholders of the authority
      to do so, if required, fixing the compensation of the external auditors of
      the Corporation, and                                         
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|(iv)  | if deemed appropriate by the committee, the replacement
      of the incumbent external auditors;                                                                                                             
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|(b)   | consider and oversee the independence of the external
      auditors, including:                                                                                                                              
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|(i)   | reviewing the range of services provided in the context
      of all consulting services bought by the Corporation,                                                                                           
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|(ii)  | requiring receipt by the committee of an annual formal
      written statement from the Corporation's external auditors delineating all
      relationships between the external auditors and the Corporation,
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|(iii) | discussing with the external auditors any such
      relationships that may impact the objectivity and independence of the
      external auditors, and                                                       
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|(iv)  | otherwise taking all appropriate actions as required to
      oversee the independence of the external auditors;                                                                                              

(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 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

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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 AMEX;

(g)        establish
procedures for:

|(i)  | the receipt, retention and treatment of complaints
      received by the Corporation regarding accounting, internal accounting
      controls, or auditing matters, and
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|(ii) | the confidential, anonymous submission by employees of
      the Corporation of concerns regarding questionable accounting or auditing
      matters,                  

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 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;

(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 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

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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)   | actual financial results for the interim period varied
      significantly from budgeted or projected results,                                                                                                                                                             
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|(ii)  | generally accepted accounting principles have been
      consistently applied,                                                                                                                                                                                             
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|(iii) | there are any actual or proposed changes in accounting or
      financial reporting practices,                                                                                                                                                                             
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|(iv)  | there are any significant or unusual events or
      transactions which require disclosure and, if so, consider the adequacy of
      that disclosure;                                                                                                                     
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|(u)   | review, prior to the commencement of each annual
      audit:                                                                                                                                                                                                              
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|(i)   | the external auditors' proposed audit plan (including the
      scope, focus areas, timing and key decisions, and general approach
      underlying the audit plan) and ensure no unjustifiable restriction or
      limitations have been placed on the scope thereof, and
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|(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;

(y)        ensure that
the Board is aware of matters which may significantly impact the financial
condition or affairs of the business of the Corporation;

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(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 May 20, 2006

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