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ANNUAL INFORMATION FORM(AIF)

of

AUGUSTA RESOURCE CORPORATION(the Company or
Augusta)Suite 600, 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, 2012 
Dated: March 25,
2013

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TABLE OF CONTENTS

Page

|ITEM 1:  | PRELIMINARY
      NOTES                                          | 1 
|-------- | ---------------------------------------------------------------- | --
|         | Effective Date of Information                                    | 1 
|         | Currency                                                         | 1 
|         | Note Regarding Forward
      Looking Statements                  | 1 
|         | National
      Instrument 43-101 Definitions                     | 2 
|ITEM 2:  | CORPORATE STRUCTURE                                              | 3 
|         | Incorporation
      or Organization of Company                   | 3 
|         | Subsidiaries                                                     | 4 
|ITEM 3:  | GENERAL
      DEVELOPMENT OF THE BUSINESS                        | 4 
|         | Three Year History                                               | 4 
|         | Augustas
      Objectives for 2013                              | 9 
|ITEM 4:  | NARRATIVE DESCRIPTION OF THE
      BUSINESS                      | 10
|         | Risk Factors                                                     | 11
|         | Material Mineral Property                                        | 20
|ITEM 5:  | DIVIDENDS                                                        | 30
|ITEM 6:  | DESCRIPTION OF CAPITAL
      STRUCTURE                           | 30
|ITEM 7:  | MARKET FOR
      SECURITIES                                      | 31
|ITEM 8:  | DIRECTORS AND OFFICERS                                           | 32
|ITEM 9:  | INTEREST OF
      MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 36
|ITEM 10: | TRANSFER AGENTS AND
      REGISTRARS                             | 37
|ITEM 11: | MATERIAL
      CONTRACTS                                         | 37
|ITEM 12: | INTEREST OF EXPERTS                                              | 37
|ITEM 13: | AUDIT COMMITTEE INFORMATION                                      | 38
|ITEM 14  | ADDITIONAL INFORMATION                                           | 39

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ITEM 1:PRELIMINARY NOTES

Effective Date of Information

This AIF is dated March 25, 2013, 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, 2012
being the date of the Companys most recently audited financial year end.

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

Currency

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

Note Regarding Forward Looking Statements

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

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

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

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

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National Instrument 43-101 Definitions

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

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

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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 is an individual as such term
      is defined in NI 43-101.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

ITEM 2:CORPORATE STRUCTURE

Incorporation or Organization of Company

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

The Companys registered office is at Suite 2900  Five Bentall
Centre, 550 Burrard Street, Vancouver, BC, V6C 0A3. The Companys head office is
located at Suite 600  837 West Hastings Street, Vancouver, BC, V6C 3N6. The
Company also has an executive office located at Suite 1040, 4500 Cherry Creek
Drive South, Glendale, Colorado, 80246. In addition, the Companys wholly owned
subsidiary, Rosemont Copper Company, has an office in Tucson, Arizona.

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

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

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The Company has an unlimited number of common shares without
par value authorized. At the date of this AIF, there were 144,140,396 shares
issued and outstanding.

Subsidiaries

Effective October 1, 2008, the Company re-organized its
ownership of Rosemont Copper Company and the Rosemont copper project by
interjecting US and Canadian subsidiaries (the Reorganization). The Rosemont
Copper Company remains wholly owned by Augusta, albeit indirectly through such
corporate chain (the Rosemont Corporate Chain). In September 2010, the Company
entered into an Earn-In Agreement with United Copper & Moly LLC (UCM) to
earn up to a 20% interest in the Rosemont joint venture (the Rosemont JV). At
December 31, 2012, UCM had earned a 7.95% interest in the Rosemont JV.

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

ITEM 3:GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

The Company is engaged in the acquisition, exploration and
development of natural mineral resource properties. Currently the Companys only
material property is the Rosemont copper property located in Pima County,
Arizona (Rosemont, or the Rosemont Property or the Rosemont Project)
acquired in 2005 subject to a 3% Net Smelter Return (NSR). The Rosemont
Property is currently comprised of approximately 20,100 acres of patented and
unpatented claims and fee land. Rosemont is approximately 50 kilometres
southeast of Tucson, Arizona near a number of large porphyry type producing
copper mines operated by Freeport-McMoRan Copper & Gold Inc. and ASARCO LLC
(ASARCO). Rosemont contains an open-pit mineable copper/molybdenum/silver
skarn deposit, as well as other exploration targets and is expected to be one of
the largest copper mines in the United States, accounting for approximately 10%
of total U.S. copper production.

Development of the Rosemont Project

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

Between late 2011 and early 2012, Augusta completed a 12-hole,
18,649-foot diamond drilling program, and performed metallurgical testing.
Drilling included six holes (7,698 feet) to collect metallurgical test samples,
three exploration holes (5,466 feet) drilled to test geophysical targets, and
three infill holes (4,711 feet), along with the additional sampling of core
remaining from five older holes. The updated drill hole database was used to
update the resource model in May 2012 and was the basis for the derivation of
updated mineral reserves. An updated mineral resource estimate was issued on
July 17, 2012 which included drill and assay information up to March 2012. On
July 24, 2012 the Company announced an updated mineral reserve estimate and results from its National
Instrument ("NI") 43-101 compliant feasibility study. The NI 43-101 technical
report Updated Feasibility Study is dated August 28, 2012. (the 2012
Feasibility Study).

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A summary of 2012 Feasibility Study can be found under the
section Material Mineral Property below and the full report can be found on
the Companys website and on SEDAR at www.sedar.com.

Financings and Other Corporate Initiatives

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

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

On April 21, 2010, Augusta entered into an agreement for a $43
million senior secured loan (the Red Kite Loan) and a copper concentrate
off-take agreement with RK Mine Finance Fund (the Red Kite Copper Concentrates
Sales Agreement), formerly, Red Kite Explorer Trust (Red Kite). The Red Kite
Loan bears interest at LIBOR plus 4.5% compounded quarterly and matures on the
earlier of April 21, 2012 or the date of closing of the Rosemont Project senior
debt financing facility. The Company also has a one-time option to declare, by
October 22, 2011, an extension to the maturity date by one additional year for a
2% fee. In exchange for Red Kites consent to execute the Rosemont JV Agreement
the one-time option was cancelled and the Company agreed to pay Red Kite $0.93
million for accrued interest to October 1, 2010. Under the Red Kite Copper
Concentrates Sales Agreement, Augusta will supply Red Kite with 16.125% of
Rosemonts copper concentrate production per year until 483,750 dry tonnes of
concentrate have been delivered. As part of the loan agreement the Company paid
an origination fee of 2% and issued to Red Kite 1,791,700 warrants (the
Warrants) exercisable at Cdn$3.90 per share expiring on April 22, 2013.
Proceeds from the loan were used to retire the outstanding balance payable by
Rosemont Copper Company under the Sumitomo Loan Agreement. On April 20, 2012 the
Company announced the closing of the one year extension on the US$43 million
secured loan with Red Kite thereby extending the maturity date of the loan to
the earlier of April 21, 2013 or the closing of the senior debt financing for
the Rosemont Project. In exchange for the extension, the Company agreed to
extend the expiry date of the Warrants to April 22, 2014 and Rosemont committed
to sell to Red Kite 80% of the annual copper cathode production of the Rosemont
Project at market terms.

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

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In September 2010, the Company entered into an Earn-In
Agreement with United Copper & Moly LLC (UCM) to earn up to a 20% interest
in Rosemont joint venture. Details of this transaction are described below under
The Rosemont Joint Venture.

On October 5, 2012 the Company announced the closing of an
increase in the Red Kite Loan by an additional $40 million (the Additional Red
Kite Loan) for an aggregate of US$83 million loan facility (the Red Kite Loan
and the Additional Red Kite Loan referred to herein after as the Expanded
Loan) with RK Mine Finance Trust I (also Red Kite). The terms for the
Expanded Loan include interest payable at LIBOR plus 4.50% and a final maturity
date of July 21, 2014. The 1,791,700 Warrants were split into two tranches, each
with the new exercise price of US$3.85 per share (from the Cdn $3.90) . The
expiry date for 1,374,951 Warrants was extended to July 22, 2015 and the expiry
date for the remaining 416,749 Warrants is unchanged at April 22, 2014. Since
not all of the warrants were extended, the origination fee on the additional
loan amount of US$40 million was increased from 2% to 2.2925% .

As part of this transaction Rosemont has also closed the
amendment to the Red Kite Copper Concentrates Sales Agreement (Amended Offtake
Agreement) under which Red Kite will purchase 20% of Rosemonts gross annual
copper concentrate production until 1.5 million tonnes has been delivered.

Also, concurrent with the closing of the Expanded Loan and
Amended Offtake Agreement, the Copper Cathode Purchase and Sale Agreement
between Rosemont and an affiliate of Red Kite and the US$10 million working
capital facility between Augusta and Red Kite were cancelled and deemed null,
with no liability to any of the parties.

At December 31, 2012, $10,735,118 of loan interest has
been accrued and is outstanding.

The Rosemont Joint Venture

On September 16, 2010, Rosemont entered into an Earn-In
Agreement with United Copper & Moly LLC (UCM), a company formed by Korea
Resources Corporation and LG International Corp to hold its interest in the
Rosemont JV. Pursuant to the Earn-In Agreement, UCM can acquire up to a 20%
interest in the Rosemont JV by funding $176 million of project expenditures. UCM
will fund a maximum $70 million for permitting, engineering, long-lead equipment
purchases and ongoing support activities (collectively, Pre-Construction Costs)
and the remaining $106 million to fund construction. UCM and Rosemont Copper
Company have also entered into a Joint Venture Agreement to establish their
roles and responsibilities in the Rosemont JV and agreed to enter into an
off-take agreement for 30% of the copper concentrates and 20% of copper cathode
and molybdenum concentrates produced annually by the Rosemont Project. As funds
for the Pre-Construction Costs are advanced UCM will earn its proportionate
interest in the Rosemont JV. At December 31, 2012 UCM has earned a 7.95%
interest in the Rosemont JV.

Environmental/Permitting

Applications for Rosemont operations permits were initiated
after delivery of the Mine Plan of Operations (MPO) to the US Forest Service
(Forest Service). As required under federal law, the acceptance of the MPO by
the Forest Service initiated the process of preparing an Environmental Impact
Statement (EIS). Because the project is located on Forest Service lands, the
Forest Service manages the EIS process and will issue the final EIS document.
The Forest Service ultimately memorializes its decision in the Record of
Decision for mining activities on public land. A Section 404 Permit will be
issued by the U.S. Army Corps of Engineers (ACOE) for mining activities within
jurisdictional waters of the United States.

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During 2010, the Forest Service announced a delay in the
release of the Draft Environmental Impact Statement (DEIS). This delay allowed
the Forest Service to complete additional studies and analysis which included a
validation of groundwater modeling of development plan impacts on all project
alternatives. This adjustment to the DEIS schedule was necessary to allow the
Forest Interdisciplinary Team and its third party contractors to produce a
complete and comprehensive evaluation.

On November 16, 2010, the internal agency review draft of the
DEIS was delivered to the Forest Service, Coronado National Forest (CNF) that
included additional analysis of plan alternatives for internal review. The
Forest Service delivered copies of the review draft of the DEIS to the State of
Arizona and other cooperating agencies for their final review on June 1, 2011.
Upon completion of the various levels of review by the Regional Forest Service
Office and the cooperating agencies, the DEIS was printed and released to the
public starting the 90-day comment period. The formal Notice of Availability
(NOA) was issued on October 19, 2011 and the first public meeting was held on
November 12, 2011. The NOA initiated the final 90 day public comment period. The
final public hearing on the Rosemont DEIS was held on January 14, 2012 with a
public comment submission deadline scheduled for January 18, 2012. Due to a
technical problem with its computer system during the last hours available for
submission of public comments, the CNF extended the comment submission period to
January 31, 2012.

The Forest Service completed their review of the over 25,000
public comments received during the DEIS public comment period in the first half
of 2012. All substantive comments were identified, coded, organized, and
responses were developed. Final impact mitigation has been developed according
to Federal and State guidelines and will also be included in the final EIS. The
staff at the Forest Service (including local, regional, and national staff) is
currently working through production of the final EIS.

During the DEIS public comment period, the ACOE completed its
own 45-day public comment period for the draft Clean Water Act 404 permit on
January 19, 2012. As part of the 404 permit comment process, the U.S.
Environmental Protection Agency (EPA), as an advisory agency, submitted an
interagency comment letter to the ACOE identifying the Rosemont permit as a
candidate project for enhanced level of review by the EPA and ACOE. The EPA
letter identified specific subject areas for the EPA to review in detail with
ACOE. The Company continues to work with the ACOE and EPA teams to ensure that
the EPAs technical questions have been addressed fully, and that the 404 permit
conditions meet the Clean Water Act compliance standards. Although the EPA plays
an important advisory role in the 404 permit development process, the EPA does
not actually issue the permit, which is reserved for the ACOE.

In Arizona, the Arizona Corporation Commission (the
Corporation Commission) regulates the location of high voltage power line
routes through their Arizona State Line Siting Committee (the Siting
Committee). The Siting Committee issued its Certificate of Environmental
Compatibility (CEC) to the Tucson Electric Power Company on December 19, 2011
and the Corporation Commission reaffirmed that decision with minor amendments on
June 12, 2012. The CEC specifies the selected route for the transmission line to
the Rosemont Project, which runs parallel to the project's water pipeline.

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The Air Quality Permit establishes the conditions for
construction and operation of facilities to ensure compliance with air quality
standards and with emissions controls specified for mining operations. In July
2010, the Company applied for an air permit from the Pima County Air Quality
Control District (AQCD) and in November 2012, the AQCD Control Officer
notified the Company that the application was complete. On June 23, 2011, the
Company filed a Notice of Intent to sue the AQCD for inaction and in August
2011, the AQCD issued a draft permit stating that the Company met the
requirements of the Pima County Department of Environmental Quality as a minor source and a
90-day public comment period ensued. The draft permit was written by the AQCD
with enforceable conditions that demonstrated compliance with all applicable
regulations as a minor source. On September 2, 2011, Rosemont filed a lawsuit to
compel the AQCD to take action on the permit application following the timelines
as stipulated in the law. One day before the court deadline for the AQCD to
respond to the Augustas filing of the lawsuit, September 29, 2011, the AQCD
issued a permit application denial, reversing its prior determination that
Rosemont qualified as a minor source. On October 7, 2011, the Company filed a
Notice of Appeal with the Pima County Air Quality Hearing Board (Pima County
AQHB). A hearing with the Pima County AQHB was conducted in November 2011 and a
decision to uphold the denial of the Rosemont air permit application was
rendered on December 1, 2011 by the Pima County AQHB. At this point the Company
took two separate paths for permitting 1) a legal path appealing the Pima County
AQHB and 2) a permitting path with the Arizona Department of Environmental
Quality (ADEQ). On November 23, 2011 the Company submitted an application for
air permit with the On January 25, 2012, the application was considered
administratively complete signifying the start of the technical review process
for the permit application. On July 5, 2012, the Superior Court issued its
ruling declaring the Pima County AQHBs decision as arbitrary and capricious
and contrary to law. By August 6, 2012 ADEQ asserted complete jurisdiction
over Rosemonts Air Quality Permit due to the confusion and uncertainty caused
by the inappropriate denial of the Air Quality Permit application by the Pima
County AQCD resulting in the receipt by Rosemont of the draft Air Quality
Permit. On January 31, 2013, the Rosemont received the Air Quality Permit from
the ADEQ. The Air Quality Permit stipulates the operating, monitoring and
reporting parameters that Rosemont must comply with to meet all federal, state
and local air quality requirements.

On April 10, 2012, the Company announced the issuance of the
Aquifer Protection Permit which establishes the operating standards and controls
so that operations do not degrade groundwater.

In November 2012, the Forest Service indicated that the
permitting process was approximately 90% complete and three major items were
needed to complete the last milestone, the issuance of the final EIS and ROD.
These three items include: the consultation with the U.S. Fish and Wildlife
Service, consultation with Native American Indian tribes and the State Historic
Preservation Office, and an update of air quality models to analyze all project
alternatives. As of March 2013, each of these three items is in its final steps.
Drafts of the US Fish and Wildlife Service documents, historic preservation
agreements, and final air modeling have been developed or are in final
review.

Project utility corridors for power and water have been
analyzed, and the preferred routes parallel existing roads across Arizona state
lands. The State Land Department process to issue right of way for utility uses
is in the final stages. The 30-day letters requesting public comment were mailed
out on August 29, 2012. Final resource appraisal and valuation will be followed
by public notice of Land Department intent to issue the formal right of way for
power and water lines.

Rosemont has now received seven major permits with one major
permit remaining, the Clean Water Act Section 404 Permit from the ACOE. There
are several administrative steps to finalize the 404 permit. These steps include
concurrence by the state of Arizona that the 404 permit conditions protect
surface water standards (State 401 certification), completion of the
consultation processes named above to assure compliance with endangered species
and historic site preservation acts, and ability to rely on a Final EIS. The
Company expects to receive its 404 permit in a timely manner, subsequent to the
issuance of the Final EIS and ROD on the Plan of Operations from the USFS.

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Construction activities can commence on public lands following
the completion of the 404 permit process, publication of the notice of
availability of a final EIS and ROD, and a mandated 105-day period of time after
the ROD notice, for the public and agencies to complete an appeal resolution
process, and to allow Rosemont to finalize its MPO in response to the final
conditions included in the ROD.

Engineering and Ongoing Support Activities

In the third quarter of 2012, the Company updated its capital
cost estimate, the feasibility study and the financial model for the Rosemont
Project and released the Feasibility Study update on July 24, 2012. Detailed
engineering work has been adjusted to match the revised ROD and construction
schedule. Since the commencement of permitting activities, the Company has
maintained an active community relations program which includes maximizing the
economic benefits to the Rosemont region.

Director Change and Ongoing Support Activities

In June 2011, the shareholders of the Company elected John R.
Brodie to its Board of Directors bringing exceptional financial oversight and
governance experience to the Companys Board. In November 2012 the Company
appointed Mr. Robert P. Pirooz to its Board of Directors bringing over twenty
years of legal experience focused in the mining sector with a particular
strength in strategic transactions to the Companys Board.

Over the course of the last three years, the Company has hired
additional personnel and promoted personnel within the organization both at the
executive and operational levels and will continue to do so to meet the
construction time line for the Rosemont Project. In March 2009 the Company
appointed Gordon Jang to its executive team as Vice President, Corporate
Controller. In September 2010 the Company opened an office in Toronto, Ontario
when it hired Letitia Cornacchia as the Companys Vice President, Investor
Relations and Corporate Communications. In November 2010 the Company further
enhanced its executive team by appointing Charles Magolske as Vice President,
Business Development. Promotions within the organization during 2011 included
Rodney Pace as Executive Vice President in addition to his role as Chief
Operating Officer, James Sturgess as Senior Vice President, Corporate
Development and Government Affairs, Purni Parikh as Vice President, Corporate
Secretary and Katherine Arnold as Vice President, Environment and Regulatory
Affairs. In May 2012 the Company appointed Joseph Longpré as Senior Vice
President and Chief Financial Officer following Mr. Raghu Reddys
retirement.

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

Augustas Objectives for 2013

Augustas key objectives for
2013 is to work towards completing the EIS process and receiving the ROD on its
Rosemont Project. To accomplish this, Augusta will have to secure all remaining
required regulatory permits through the federal state and local regulatory
process while maintaining an active community relations program, including
support of local and regional activities. In addition, Augusta will need to
advance detailed engineering, including earthwork, civil and structural design
and advance project management and start construction activities upon completion
of the regulatory permits. The Company plans to hire additional project and
operations personnel as the Company gears up for the start of construction. The
Company aims to remain within budget for construction through year end while
maintaining acceptable industry safety standards. Finally, Augusta will need to
follow through with its project financing strategy that will see 65% of the estimated
capital cost to be covered by equipment, concentrate off-take and bank debt
financings. A portion of the project capital cost will come from Silver
Wheatons $230 million upfront cash payments for the sale of all of Rosemonts
silver and gold produced from Rosemont and UCMs $106 million tranche 2
investment to earn an additional 12% interest in the Rosemont Project. The
Company continues to search for growth opportunities in addition to its Rosemont
Project.

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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 or development stage and are thus
non-producing and consequently do not generate any significant operating income
or cash flows from operations. Currently, the Companys only material property
is the Rosemont Property located in Pima County, Arizona and is in the final
stages of permitting. The Company expects the ROD to be issued in the second
quarter of 2013 with construction to start in the second half of 2013. Rosemont
is expected to be one of the largest copper mines in the United States,
accounting for approximately 10% of total U.S. copper production.

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

Specialized Skill and Knowledge

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

Competitive Conditions

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

Business Cycles

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

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Economic Dependence

The Companys business is not substantially dependent on any
contract such as a contract to sell the major part of its products or services
or to purchase the major part of its requirements for goods, services or raw
materials. The Company has no revenue and does not expect to generate any
revenues until completion of construction at the Rosemont Project and Rosemont
reaches commercial production in the second half of 2015. As a result, the
Company relies on equity and debt financing to finance its business activities
and any adverse global economic crisis may cause a detrimental effect on the
Companys ability to raise equity and debt financings.

Environmental

The Company adheres to its Environmental, Health and Safety
Policy.

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

Employees

As at December 31, 2012, the Company had 8 employees in the
Vancouver, British Columbia office, 3 employees in its Toronto, Ontario office,
11 employees in the Glendale, Colorado office and 36 employees in Tucson,
Arizona. There are also 3 part time employees in the Tucson, Arizona office. As
operations require, the Company also retains geologists, engineers,
geophysicists and other consultants on a fee for service basis. Certain
employees in the Toronto, Vancouver and Glendale office also have
responsibilities with other publicly traded companies and the Company only pays
for its share of the costs of these employees. The Companys employees
operationg out of Glendale and Tucson are employed through Rosemont. Upon
finalization of the permitting process, the Company will embark on a significant
hiring program to ensure there is adequate staffing and that the staff is fully
trained in time for commercial production.

Risk Factors

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

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

The Company has historically incurred loss from operations as
evidenced by its financial statements, including the consolidated statements of
comprehensive profit (loss) contained in its annual audited consolidated financial statements for the year ending
December 31, 2012.

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As the Companys only material property is the Rosemont
Property, the Company continues to assess other strategic opportunities for
acquiring, exploring, advancing and developing mineral properties. The Company
does not anticipate that it will earn any significant revenue from its
operations until Rosemont reaches commercial production in early 2016.

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

Augusta has minimal revenue from its operations and does not
expect to generate any significant revenue until Rosemont is placed into
commercial production in early 2016. Augusta will require project
financing to be in place by the time the ROD is expected to be issued in the
second quarter of 2013. Augusta may raise additional capital through debt or
equity financing, and possibly production sharing arrangements or other means.
Recent upheavals in the financial markets worldwide, particularly within Europe,
could make it very difficult for Augusta to raise funds. Such funding may not be
available on commercially acceptable terms or at all. The Companys failure to
meet its ongoing obligations on a timely basis or raise additional funds that
may be required could result in delay or indefinite postponement of further
exploration and development of the Companys property or the loss or substantial
dilution of any of its property interests.

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

Historically, the Company has raised funds principally through
the sale of its securities. Additional equity financing would cause dilution to
Augustas existing shareholders. In addition, the unrestricted resale of
outstanding shares from the exercise of dilutive securities may have a
depressing effect on the market for the Companys common shares. As at the date
of this AIF, 144,140,396 common shares of Augusta were issued and outstanding.
In addition, Augusta had outstanding 8,412,035 convertible securities comprising
of stock options, warrants, and restricted share units, which in aggregate may
result in the issuance of 8,412,035 common shares.

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

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

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

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

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- 13 -

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

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

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

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

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

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

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

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

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

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

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- 14 -

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

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

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

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

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

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- 15 -

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

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

Production and cost estimates may be worse than
anticipated.

The decision by the Company to proceed with the development of
the Rosemont Project was initially based on economic projections determined as
part of the 2007 Feasibility Study process later supported by the 2009
Feasibility Study completed in January 2009 and updated in July/August 2012.
Included in these projections were estimates for metal production and capital
and operating costs. Failure to achieve these production, capital and operating
cost estimates or material increases in costs could have an adverse impact on
the Companys future cash flows, profitability, results of operations and
financial condition.

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

Litigation may adversely affect the Companys
assets.

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

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

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

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The Company is subject to risks related to community
action.

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

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

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

Mineral resources and proven and probable reserves are
estimates.

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

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

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

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

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- 17 -

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

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

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

The Company will require exploration and mining permits
and licences.

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

The Companys operations are subject to environmental
risks.

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

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.

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

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

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

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

The Company does not insure against all
risks.

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

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

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

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

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

The Company may incur losses associated with foreign
currency fluctuations.

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

The Company is dependent on its key
personnel.

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

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

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

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- 20 -

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

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

The Company does not intend to pay dividends.

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

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

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

Material Mineral Property

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

The Rosemont Property and the 2012 Feasibility
Update

Certain statements in the following summary of the Rosemont
Property are based on or extracted directly from the 2012 Feasibility Update
report.

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- 21 -

Property

The Rosemont Copper Project is a planned copper mining
development, containing appreciable molybdenum and silver by-products that is
being developed by Augusta. The development is situated within the Rosemont
Mining District on the northeastern flank of the Santa Rita mountain range and
extends into the Helvetia Mining District on the western flank of the range. The
Rosemont Property consists of patented lode claims, unpatented lode claims, and
fee lands comprising approximately 19,800 acres (8,012 hectares). Rosemont has
also acquired 15 parcels that are more distal from the project area for
infrastructure purposes, comprising an additional 300 acres (121 hectares).

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

The copper mineralization of the Rosemont deposit is primarily
sulfide with an overlaying cap of oxide mineralization. The sulfide ore will be
mined through conventional open pit mining techniques. Sulfide ore will be
processed by crushing, grinding, and flotation to produce a copper concentrate
product and a molybdenum concentrate product for market. This property will
employ a conventional SAG mill/flotation circuit processing 75,000 short tons
per day, equivalently indicated as either stpd or tpd.

Ownership

Augusta signed an option agreement on the Rosemont Property in
2005. During the option period, Augusta completed a two-phase drilling program
in 2005 and 2006. With the potential at the property, in March of 2006 Augusta
completed the purchase of a 100% interest in the Rosemont property subject to a
3% Net Smelter Return (NSR).

Location

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

Accessibility, Climate, Local Resources Infrastructure and
Physiography

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

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- 22 -

Weather presents no significant difficulties to mining
operations in the area. The semi-arid climate, typical of the Arizona-Sonoran
Desert, produces an average of about 17.7 inches annual rainfall within a 30
mile radius of the project area, mostly during the monsoon season from July
through September. Temperatures range from about 25oF to 115oF (-4oC to
45oC).

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

The project site is on Arizona State Route 83 (South Sonoita
Highway), approximately eleven miles south of Interstate 10 (I-10). The Union
Pacific mainline east-west railroad route passes through Tucson, Arizona and
generally follows Interstate I-10. The Port of Tucson has rail access from the
Union Pacific mainline consisting of a two mile siding complimented by an
additional 3,000 foot siding. The Port of Tucson is approximately 24 miles from
the project site and can trans-load materials and supplies received by rail to
trucks for delivery to the site. The Tucson International Airport is located
approximately 29 miles from the project site and in close proximity to
Interstate highways I-10 and I-19. The power supply to the Rosemont mine and
production facilities falls within the Tucson Electric Power Company and TRICO
Electric Cooperate Inc. service territories. The most viable source of water
supply for the project is from groundwater from various aquifers in the
region.

The Rosemont Property is located within the northern portion of
the Santa Rita Mountains that form the western edge of the Mexican Highland
section of the Basin and Range Physiographic Province of the southwest Unite
States. Vegetation in the project area ranges from mesquite and grasses in the
lower elevations to oak, pine and juniper in the mountains.

Geology and Mineralization

The Rosemont deposit is typical of the porphyry/skarn copper
class of deposits. Similar to many other southwestern USA deposits in this
class, Rosemont consists of broad-scale skarn mineralization developed in
Paleozoic-aged carbonate sedimentary rocks adjacent to their contact with
quartz-latite or quartz-monzonite porphyry intrusive rocks. Disseminated sulfide
mineralization occurs primarily in the altered Paleozoic skarn units and to a
lesser extent in the altered intrusive units. Near surface weathering has
resulted in the oxidation of the sulfides in the overlying Mesozoic units.

Exploration and Sampling

Exploration of the Rosemont deposit by previous companies
consisted of 179 drill holes for a total of 210,200 feet. Since 2005, Augusta
has drilled an additional 87 holes for a total of 132,525 feet. In 2005, Augusta
carried out a 15-hole, 27,402-foot diamond drilling program. In 2006, Augusta
completed a 40-hole, 68,727-foot diamond drilling program, consisting of
resource, geotechnical, and metallurgical holes. Also in 2006, Augusta did
extensive resampling and assaying of historic drill holes to fill-in missing
data needed for resource calculations. In 2008, Augusta completed a 20-hole,
17,522-foot diamond drilling program, along with the sampling of ten
geotechnical holes that had been drilled in 2006, but had not been sampled.
Augusta recently completed a 12-hole, 18,649-foot diamond drilling program,
along with the additional sampling of core from five older holes. The recent
drilling included six holes (7,698 feet) drilled to collect metallurgical test
samples, three exploration holes (5,466 feet) drilled to test geophysical
targets, and three infill holes (4,711 feet) drilled in support of a revised
resource calculation. The results of all of these drilling programs have been
used to estimate the mineral resources presented in this report.

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- 23 -

The historic drilling was conducted by major companies using
industry standard procedures of the time and has since been validated by Augusta
under the direction of various Qualified Persons. The newer Augusta work has
been conducted using standard industry protocols, including Quality
Assurance/Quality Control procedures, all under the supervision of Qualified
Persons. It is believed that the resulting drill hole database is reliable and
can be confidently used in the estimation of the Rosemont resource and
reserves.

Additional exploration conducted in 2011 included
deep-penetrating induced polarization geophysical surveys (Titan 24). The
results identified a number of anomalous responses that may be indicative of
potential mineralization. During late 2011/early 2012 the western end of one of
the anomalies was partially drill tested, intercepting variable mineralization
near the top of the anomaly.

Mineral Resource

The mineral resource estimation work was performed by Susan
Bird, M.Sc., P. Eng. a Senior Associate at MMTS and an independent Qualified
Person under the standards set forth by NI 43-101 (CIM, 2005). The resource is
estimated using a 3-dimensional geologic model of all known lithologies and
zones to create a block model encompassing the project area. The mineral
resource estimates are effective as of July 17, 2012.

Drill hole data including Cu, Mo and Ag grades is incorporated
into the modeling by creating 50 bench composites, corresponding to the planned
bench height and elevations. Statistical and geostatistical analyses have been
used to:

| | 1. | determine domain boundaries                                                                                                                                                                               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | determine the capping values used to restrict the outlier
      range of influence during interpolation,                                                                                                  
| | 3. | determine the rotational and kriging parameters required
      for interpolation                                                                                                                          
| | 4. | determine appropriate sets of composites to use during
      interpolation that will preserve the tonnage-grade distribution of the
      data while allowing internal smoothing to account for
  dilution

In addition, several validation procedures have been performed
on the Rosemont resource model. These checks include a c o m p a ri s o n o f m
e a n g r a d e s a s a global grade bias check, a set of swath plots to compare
the nearest neighbor grades to the modeled Cu, Mo, and Ag grades, visual
comparisons of drill hole assay and composite data with the modeled grades in
section and plan, and verification of the change of support adjustment. Based on
the results of this validation, it is the Qualified Persons opinion that the
Rosemont resource model is globally unbiased and is appropriate for use in pit
optimization and long range mine planning.

A Lerchs-Grossman (LG) pit shell having a 45-degree slope
angle has been applied to the three dimensional block model to ensure reasonable
prospects of economic extraction for the reported mineral resources. Metal
prices used for the resource pit are $3.50/lb Cu, $15/lb Mo and $20/oz Ag. The
mining costs used in the resource pit optimization for ore are $0.777/ton and
for waste is $0.882/ton, with processing plus general and administration
(G&A) costs of $4.90/ton for sulfide/mixed material and processing costs
of $3.03/ton for oxide material. These costs are in line with those developed
for use in the mineral reserves.

For the reporting of the in-situ resource by equivalent copper
(EqvCu) within the LG pit shell, the metallurgic recoveries, metal prices, and
resulting net smelter prices (NSPs) used, are summarized in Table 1.

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- 24 -

Table 1: Base Case Recoveries, Metal Prices and Resulting
Net Smelter Prices

Metal
    MetalPrice
    Oxides
    Mixed
    SulfideNSP
    Recovery
    NSP
    Recovery
    NSP
    RecoveryCu
    $2.50 /lb
    $2.425 /lb
    65%
    $2.078 /lb
    40%
    $2.078 /lb
    86%Mo
    $15 /lb
    0
    0
    $13.095 /lb
    30%
    $13.095 / lb
    63%Ag
    $20 /oz
    0
    0
    $17.111 /oz
    38%
    $17.111/oz
    80%


The equivalent copper grades are calculated based on the above
information, resulting in the following equations for each metallurgical
zone:

|Sulfide: | EqvCu% | = | Cu% | + | (Mo% * 0.63 *
      13.095)    + | (AgOPT * 0.80 * 17.111) | 
|-------- | ------ | - | --- | - | -------------------------------- | ----------------------- | 
|         |        |   |     |   | (0.86 * 2.078)                   | (0.86 * 2.078 * 20)     | 
|         |        |   |     |   |                                  |                         | 
|Mixed:   | EqvCu% | = | Cu% | + | (Mo% * 0.30 * 13.095)   +        | (AgOPT * 0.38 * 17.111) | 
|         |        |   |     |   | (0.40 * 2.078)                   | (0.40 * 2.078 * 20)     | 
|         |        |   |     |   |                                  |                         | 
|Oxide:   | EqvCu% | = | Cu% |   |                                  |                         | 

The in-situ resource is classified as Measured, Indicated or
Inferred corresponding to Canadian National Instrument 43-101 standards (CIM,
2005). The resource by equivalent copper grade for the Rosemont deposit is
summarized in Table 2 for Measure, Indicated, Measured+Indicated, and Inferred
mineral resources, along with the base case equivalent copper values for each
zone (oxide, mixed, sulfide). These cutoffs are sufficient to cover the
processing plus G&A costs for the sulfide and mixed material ($4.90/ton) and
the processing costs of the oxide material ($3.03/ton), at the expected
metallurgical recoveries.

The measured and indicated mineral resource presented here
is inclusive of the mineral reserve presented in the Mineral Reserve section.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.

Due to the uncertainty that may be associated with Inferred
mineral resources it cannot be assumed that all or any part of inferred mineral
resources will be upgraded to an Indicated or Measured resource.

Table 1: Base Case Mineral Resource by Classification and
Zone

Class
      Zone
      Tons(millions)
      Cu Eqv (%)
      Cu (%)
      Mo (%)
      Ag (opt)Measured
      Oxide 
        Mixed 
        Sulfide
      30.3 
        13.1 
        334.6
      0.17 
        0.64 
        0.56
      0.17 
        0.59 
        0.44
      --- 
        0.006 
        0.015
      --- 
        0.05 
        0.12Indicated
      Oxide 
        Mixed 
        Sulfide
      33.1 
        36.8 
        534.7
      0.16 
        0.56 
        0.48
      0.16 
        0.51 
        0.37
      --- 
        0.007 
        0.014
      --- 
        0.05 
        0.11Measured+Indicated
      Oxide 
        Mixed 
        Sulfide
      63.4 
        50.0 
        869.4
      0.17 
        0.58 
        0.51
      0.17 
        0.53 
        0.40
      --- 
        0.007 
        0.014
      --- 
        0.05 
        0.11Inferred
      Oxide 
        Mixed 
        Sulfide
      1.1 
        10.1 
        128.5
      0.15 
        0.43 
        0.49
      0.15 
        0.39 
        0.40
      --- 
        0.006 
        0.013
      --- 
        0.02 
        0.10


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- 25 -

Base Case cutoff grades: oxide 0.10%CuEqv, mixed 0.30% CuEqv,
sulfide 0.15%CuEqv.

Augustas 2012 drilling campaign at the Rosemont Deposit has
increased both the quantity and confidence level of the estimated mineral
resources, which presently totals about 919.3 million tons of measured and
indicated, sulfide and mixed mineral resources grading 0.51% CuEqv, 0.41% Cu,
0.014% Mo, and 0.11 ounces per ton Ag, at a 0.15% CuEqv cutoff for sulfide and
0.30% CuEqv cutoff for a minor mixed component. An additional 138.6 million tons
of inferred sulfide and mixed mineral resources are estimated at a grade of
0.49% CuEqv, 0.40% Cu, 0.012% Mo, and 0.10 ounces per ton Ag, at the same
cutoffs. Sulfide and mixed material can be combined as metallurgical testwork of
the mixed material indicates that it can be processed with the sulfide material
to produce a concentrate. Augustas recent drilling program and resource
modeling was successful in converting significant tonnages of material
previously classified as inferred into measured and indicated resource.

In addition, geologic and metallurgical studies conducted by
Augusta have shown the potential for considering the oxide copper mineralization
that overlies the sulfide deposit. Estimated measured and indicated oxide
mineral resources total 63.4 million tons grading 0.17% Cu, at a 0.10% CuEqv
cutoff (for oxide % CuEqv = % Cu). An additional inferred oxide mineral resource
of 1.1 million tons grading 0.15% Cu is present, using the same cutoff. Oxide
material could potentially be processed by heap leaching to recover the
copper.

The classification of currently inferred sulfide and oxide
mineral resources can potentially be improved with further drilling. Additional
mineral resources may be found in extensions to the north and down-dip of the
Rosemont deposit. Mineralization is also known to occur at Broadtop Butte, which
could potentially be added as a satellite development. Further mineralization
also occurs in the Copper World and Peach-Elgin deposits on the Rosemont
Property.

Mine Reserves & Mine Plan

The Rosemont deposit is a large tonnage, copper-molybdenum
deposit located in close proximity to the surface and amenable to open pit
mining methods. The proposed pit operations will be conducted from 50-foot high
benches using large-scale mining equipment.

The mine has a 21-year life, with sulfide ore to be delivered
to the processing plant at an initial rate of 75,000 tpd. Provisions are
included to increase production to 90,000 tons of ore per day (tpd) in year 12
of operations. Seven mining phases have been defined for the extraction sequence
for the Rosemont deposit. The phase development strategy consists of extracting
the highest metal grades along with the minimum strip ratios during the initial
years to maximize the economic benefits of the ore-body.

The mineral reserve estimates presented in this report were
prepared by Mr. Robert Fong, P.Eng., Principal Mining Engineer for Moose
Mountain Technical Services. Mr. Fong meets the requirements of an independent
Qualified Person under NI 43-101 standards. The mineral reserve estimates are
effective as of July 24, 2012.

Proven and probable mineral reserve estimates and waste rock
for the Rosemont deposit are summarized by mining phase in Table 3.

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- 26 -

Table 3: Combined Proven and Probable Mineral Reserves by
Phase

TotalSulfides >= 4.90 $/ton NSR
      Cut-off
    Waste
    Material
    StripPhase
    Ktons
    NSR
      $/t
    TCu
      %
    Mo %
    Ag
      oz/t
    Ktons
    Ktons
    Ratio1
    61,546
    22.38
    0.50
    0.016
    0.14
    142,729
    204,275
    2.322
    27,169
    17.24
    0.40
    0.011
    0.09
    84,526
    111,695
    3.113
    42,418
    19.37
    0.40
    0.020
    0.13
    59,553
    101,971
    1.404
    42,699
    21.54
    0.49
    0.013
    0.14
    100,709
    143,408
    2.365
    79,845
    21.64
    0.50
    0.013
    0.13
    156,603
    236,448
    1.966
    241,477
    17.99
    0.42
    0.014
    0.12
    411,973
    653,450
    1.717
    172,052
    19.16
    0.42
    0.015
    0.11
    287,362
    459,414
    1.67Total
    667,206
    19.42
    0.44
    0.015
    0.12
    1,243,455
    1,910,661
    1.86


(NSR values are based on metal prices of
$2.50/lb Cu, $15.00/lb Mo and $20.00/oz Ag.)

The pit design reflects an optimum pit at metal price of $1.88
/lb Cu, $11.07 /lb Mo, and $14.87/oz Ag. Proven and probable sulfide mineral
reserves within the designed final pit total 667 million tons grading 0.44% Cu,
0.015% Mo and 0.12 oz Ag/ton. There are 1.24 billion tons of waste materials,
resulting in a stripping ratio of 1.9:1 (tons waste per ton of ore). Total
material in the pit is 1.9 billion tons. Contained metal in the sulfide (proven
and probable) mineral reserves is estimated at 5.88 billion pounds of copper,
194 million pounds of molybdenum and 80 million ounces of silver. No mineralized
oxide materials are in the ore reserves, they are included with the waste
materials.

Nearly 46% of the sulfide mineral reserves in the Rosemont
ultimate pit are classified as proven and the remainder (54%) is considered
probable. The classifications are based on the exploration drilling in the
Rosemont deposit. All of the mineral reserve estimates reported above are
contained in the mineral resource estimates presented in Section 14.

The Rosemont ultimate pit contains approximately 24 million
tons of inferred sulfide mineral resources that are above the $4.90/ton NSR
cutoff value for sulfides. These resources are included in the waste estimates
presented in Table 3. Inferred mineral resources are considered too
speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves. Inferred mineral
resources have a great amount of uncertainty as to their existence and as to
whether they can be mined economically. It cannot be assumed that all or any
part of inferred mineral resources will ever be upgraded.

Mineral Processing & Metallurgical Testing

The earliest existing records of metallurgical testing are from
the period 1974 - 1975, at which time grinding and flotation tests were
performed. In the first half of 2006, Augusta initiated test work to provide a
better understanding of the metallurgy of the Rosemont deposit and establish the
design criteria for the design of a process facility. Additional test work was
conducted in 2012 on new drill core obtained from the Augusta drilling program
in December 2011.

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

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- 27 -

An estimate of metal production in concentrate for the first 21
years of plant operation was prepared from the results of flotation test work.
The estimates of annual metal recovery are presented in Table 4.

Table 4: Estimated Metal Recovery by Year of Production

Estimated Metal Recovery by Year of ProductionRecovery %Production Year
    Cu
    Mo
    Ag1
    89.8
    65.0
    77.52
    89.8
    65.0
    77.53
    89.8
    65.0
    77.54
    84.1
    34.2
    72.65
    84.1
    34.2
    72.66
    84.1
    34.2
    72.67
    84.1
    34.2
    72.68
    90.6
    78.7
    78.29
    90.6
    78.7
    78.210
    84.8
    74.3
    73.911
    82.1
    72.2
    71.812
    84.4
    73.9
    73.513
    84.0
    56.7
    73.114
    85.5
    57.2
    74.315
    89.1
    58.6
    76.916
    89.1
    58.6
    76.917
    89.1
    58.6
    76.918
    89.1
    58.6
    76.919
    89.1
    58.6
    76.920
    89.1
    58.6
    76.921
    89.1
    58.6
    76.9


Recovery Methods

Sulfide ore will be transported from the mine to the primary
crusher by off-highway haulage trucks then conveyed to the concentrator
facilities. Copper concentrate produced at the concentrator facility will be
loaded into highway haul trucks and transported to a concentrate smelter and
metal refinery. Molybdenum concentrate produced at the concentrator facility
will be bagged and loaded onto trucks for shipment to market.

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

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- 28 -

Environmental

Permitting for the Rosemont Copper Project involves federal
approvals and requires compliance with the National Environmental Policy Act.
This in turn requires an Environmental Impact Statement and compliance with the
Endangered Species Act and the National Historic Preservation Act. A Mine Plan
of Operation was submitted to the US Forest Service on July 11, 2007 to initiate
the EIS and start the permitting process. Major federal permits required to
construct and begin operation of the Rosemont Project includes an Environmental
Impact Statement Record of Decision from the USFS permitting the use of Federal
lands and a Clean Water Act Section 404 permit for discharge of fill material to
on-site washes. Major state permits include an Aquifer Protection Permit, a 401
Certification, and an Arizona Pollution Discharge Elimination System general
storm water permit. The only major local permit required is a Pima County Clean
Air Act Title V air quality permit. Other permits which do not affect the
timeline for project permitting and subsequent start up include explosives
permits, nuclear instrumentation licenses, hazardous waste identification,
tracking numbers and spill control plans. A list of permits is provided in
Section 20 NI 43-101 Technical Report for the Rosemont Copper Project Updated
Feasibility Study, Pima County, Arizona, USA, dated August 28, 2012.

Economic analysis

Operating Costs

The mine operating costs were derived from equipment hours and
cycle times developed by Moose Mountain from their mine plan. Rebuild costs for
major equipment were generated from vendor supplied component replacement
schedules and URS Energy and Constructions data base for similar projects and
equipment. Mining costs supplied by others were checked by URS who built the
estimate and is the responsible Qualified Person. The average life of mine
operating costs for the mining operation is $1.23 per ton mined. These costs
include: clearing of vegetation, removal of topsoil, drilling, blasting,
loading, hauling, road and dump maintenance, re-grading, mine operations
supervision, craft labor and subcontractor costs.

Mill process operating costs for the life of mine average
$4.27/ton of mill ore which includes crushing and conveying, grinding and
classification, flotation and regrind, concentrate thickening, filtration and
dewatering, tailings disposal and mill ancillary services.

The average life of mine operating cost for the supporting
facilities and general administrative expenses is $0.59/ton of mill ore. The
supporting facilities include laboratory, safety and environmental, accounting,
human resources, security and the general managers office. Also included is an
endowment, railcar lease, and CAP water.

The life of mine average site direct operating cost estimate by
cost center is shown in Table 5 below. All costs are estimated in second quarter
2012 Dollars at an accuracy of ± 10%.

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- 29 -

Table 5: Summary of Average Life of Mine Operating Costs

Annual Cost ($000)Mining
    $106,000Mill Operations & Maintenance
    $134,407Support Facilities and G&A
    $18,484Total
    $258,891


Initial Capital Cost

The total capital cost estimate to design, construct and
commission the Rosemont facilities is estimated to be $1,060.4 million for the
sulfide plant. The estimate includes the direct field cost for constructing the
project at $870.6 million as well as $189.8 million for the indirect costs
associated with the design engineering, procurement and construction,
commissioning, spare parts, contingency, power line gross-up tax, and excludes
owners cost. All costs are expressed in second quarter 2012 Dollars at an
accuracy of ± 10% with no allowance provided for escalation, interest, foreign
currency, hedging, or financing during construction.

Financial Analysis

The Rosemont Project economics were prepared using a discounted
cash flow model. Costs are in constant second quarter 2012 Dollars with no
provisions for escalation. The financial indicators examined for the project
included the Net Present Value (NPV), Internal Rate of Return (IRR) and payback
period (time in years to recapture the initial capital investment). Annual cash
flow projections were estimated over the life of the mine based on capital
expenditures, production costs, transportation and treatment charges and sales
revenue. The life of the mine is 21 years.

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

Metal sales prices used in the evaluation are listed in Table
6.

Table 6: Base Case and Historical Metals Prices

60/40 Weighted Average *
    3 Year Historical AverageCopper
    $3.50 / pound
    $3.56 / poundMolybdenum
    $14.19 / pound
    $15.06 / poundSilver
    $3.90 / ounce
    $3.90 / ounceGold
    $450.00 / ounce
    $450.00 / ounce


*60/40 weighted average of the 36 month historic price and
the 24 month futures price forecast Silver and gold metal prices are set from
the Silver Wheaton agreement

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- 30 -

In addition to the above metal sales price cases, a case of
long term metal prices was also evaluated. Long term metal prices are shown in
Table 7 below.

Table 7: Long Term Metals Prices

Copper
    $2.62/lbMolybdenum
    $15.00/lbSilver
    $3.90/ozGold
    $450.00/oz


The after-tax financial results for the three metal pricing
scenarios are shown in Table 8.

Table 8: Financial Indicators (After Tax)

Base Case (60/40 split)
    Historical 36 Months
    Long Term Metal PricesNPV 0%
    $7,257.5
    $7,498.4
    $4,554.4NPV 5%
    $3,645.8
    $3,776.4
    $2,256.0NPV 8%
    $2,507.6
    $2,603.1
    $1,529.4IRR
    37.9%
    38.8%
    30.9%Payback Years
    2.3
    2.2
    2.4


Conclusions & Recommendations

The Rosemont deposit resource and mineral reserves have
increased with the additional drilling campaign in 2012. Metallurgical
recoveries improved slightly for copper with the additional metallurgical
testing. Metal prices have improved since the 2009 Feasibility Study update;
however, silver and gold prices used in this update are lower reflecting an
agreement with Silver Wheaton for a forward sale of gold and silver. The
after-tax NPV, IRR, and payback indicators are also improved over the previous
2009 update.

With the improved economic indicators, the Rosemont Copper
Project should continue with the design engineering and construction of the
facilities as soon as the permitting effort allows.

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, 2012 there
were 144,086,728 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;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------

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| | (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

Trading Price and Volume

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

High and Low Prices and Volume on aMonthlyBasis for Fiscal 2012TSX
    NYSE MKT**Period**
    High Cdn$
    Low Cdn$
    Volume
    High U.S.$
    Low U.S.$
    VolumeDecember 2012
    2.65
    2.17
    1,009,100
    2.68
    2.17
    1,669,900November 2012
    2.95
    2.32
    4,003,800
    2.97
    2.31
    4,838,200October 2012
    2.99
    2.54
    1,752,600
    3.05
    2.59
    1,937,300September 2012
    3.06
    2.56
    1,690,400
    3.13
    2.59
    2,758,800August 2012
    2.97
    1.79
    1,374,800
    3.00
    1.76
    3,147,800July 2012
    1.95
    1.63
    1,349,900
    1.97
    1.60
    1,751,300June 2012
    2.11
    1.54
    2,525,200
    2.09
    1.50
    2,301,000May 2012
    2.58
    1.53
    2,998,600
    2.60
    1.48
    3,274,700April 2012
    2.98
    2.11
    2,841,300
    2.97
    2.10
    5,518,700March 2012
    2.99
    2.65
    1,541,900
    3.04
    2.65
    2,659,800February 2012
    3.66
    2.89
    5,911,200
    3.65
    2.92
    4,206,300January 2012
    3.65
    2.75
    6,744,400
    3.59
    2.72
    5,669,900


Prior Sales

At the date of this AIF Augusta had outstanding 6,408,668 stock
options, 1,791,700 warrants, and 211,667 restricted share units, which in
aggregate may result in the issuance of 8,412,035 common shares. In respect of
the stock options, 4,408,652 are vested. During the year ended December 31, 2012
the Company granted 1,183,500 options exercisable at between Cdn$2.02 and
Cdn$3.03 and expire between January 30, 2017 and November 9, 2017 and granted
170,000 of restricted share units. The outstanding
stock options are exercisable at between Cdn$0.68 and Cdn$4.97 and expire between January 4, 2013 and December 3,
2018. The 1,791,700 Warrants were issued in connection with the Red Kite
transaction were split into two tranches, each with the new exercise price of
US$3.85 per share. The expiry date for 1,374,951 Warrants was extended to July
22, 2015 and the expiry date for the remaining 416,749 Warrants is unchanged at
April 22, 2014.

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ITEM 8:DIRECTORS AND OFFICERS

The following were the directors and officers of Augusta at
December 31, 2012:

Name, Municipality ofResidence
    Position with the Company;Present and Principal OccupationDuring the Last
      Five Years
    Date FirstAppointed asOfficer
    DateAppointed asDirectorTimothy C. Baker(2)(3)Toronto, ON, Canada
    Directorof the Company; Executive VP
      and Chief Operating Officer of Kinross Gold Corporation between
      June 2006 and December 2010.
    Not Applicable
    September 11, 2008John R. Brodie(1)(3)(4)West
      Vancouver, BC, Canada
    Directorof the Company and President
      of John R. Brodie Capital Inc.; Since 2003, Mr. Brodie has been
      serving on the Board of various public companies in the resource
      and manufacturing sector.
    Not Applicable
    June 8, 2011Gilmour ClausenDenver, CO, USA
    President, CEO and Directorof the
      Company;
    April 18, 2005
    March 28, 2005W. Durand Eppler(1)(2) (3)Denver, CO, USA
    Directorof the Company; Founding
      partner of New World Advisors, LLC (since August 2004) and Sierra
      Partners, LLC (since May 2005), CEO and Director of Coal
      International, Plc. between July 2005 and August 2008.
    Not Applicable
    June 15, 2005Christopher M.H. Jennings(1)Grand
      Cayman, Cayman Islands, BWI
    Lead Directorof the Company; Director
      of North Arrow since December 2012
    Not Applicable
    April 2002Robert P. PiroozVancouver, BC, Canada
    Directorof the Company; General
      Counsel for Pan American Silver Corp. since 1998 and Director
      since April 30, 2007; previously Corporate Secretary for Pan
      American between 1998 and 2010.
    Not Applicable
    November 9, 2012Robert P. Wares(2)Montreal, QC,
      Canada
    Directorof the Company; Chief
      Geologist of Osisko Exploration Ltd. (Osisko) since November
      2012; Executive VP Resource development between April 2011 to
      October 2012; Executive VP and Chief Operating Officer of Osisko
      between September 2006 to March 2011.
    Not Applicable
    April 26, 1999


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- 33 -

**Name, Municipality of**
      **Residence**
    Position with the Company;
      Present and Principal Occupation During the Last Five
      Years
    Date First Appointed as
      Officer
    Date Appointed as
      Director**Richard W. Warke**West Vancouver, BC,
      Canada
    Executive Chairman and Directorof the
      Company; Chairman of the Company between April 2005 and July 2008;
      VP Corporate Development of the Company between May 2006 and July
      2008; Chairman of Wildcat Silver Corporation since July 2008;
      Chairman of Ventana Gold Corp. since July 2008 and CEO between
      July 2008 and August 2009; CEO and Chairman of Sargold Resource
      Corporation between May 1998 to October 2007 and President between
      May 2007 and October 2007.
    February 1, 1996
    February 1, 1996**Joseph Longpré**Toronto, ON,
      Canada
    Senior VP and CFOfor the Company; Corporate
      Vice President advising on M&A and project finance transactions at
      URS Corporation between July 2003 and April 2012.
    May 7, 2012
    Not Applicable**James A. Sturgess** Centennial, CO,
      USA
    Senior VP Corporate Development and
      Government Affairsfor the Company; VP Projects and
      Environment for the Company between September 2005 and February
      2008;
    October 1, 2005
    Not Applicable**Rodney O. Pace**Tucson, AZ,
      USA
    Executive VP and Chief Operating Officerof the Company and President and CEO of Rosemont Copper Company.
      VP Operations and General Manager of Rosemont Copper Company
      between January 2008 and May 2009; Consultant to the Mining
      Industry between September 2006 and December 2007;
    January 1, 2008
    Not Applicable**Katherine Arnold** Tucson, AZ,
      USA
    VP, Environment and Regulatory Affairsof the Company; Director of Environmental and Regulatory Affairs
      of the Company between February 2008 and April 2011; Project
      Manager for Tetra Tech, Inc. between July 2005 and February 2008.
    April 1, 2011
    Not Applicable


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- 34 -

Name, Municipality of Residence
    Position with the Company;
      Present and Principal Occupation During the Last Five
      Years
    Date First Appointed as
      Officer
    Date Appointed as
      DirectorLetitia Cornacchia Toronto, ON, Canada
    VP, Investor Relations and Corporate
      Communicationssince September 2010; Director of Investor
      Relations at Yamana Gold. between December 2007 and September
      2010. Finance and Investor Relations TELUS between May 2002 and
      December 2007
    September 27, 2010
    Not ApplicableGordon Jang Vancouver, BC, Canada
    VP, Corporate Controllerof the
      Company; Corporate Controller for EuroZinc/Lundin Mining
      Corporation between March 2005 and February 2009;
    March 1, 2009
    Not ApplicableCharles Magolske Denver, CO, USA
    VP, Corporate Development and
      Marketingof the Company since November 2010. Vice
      President of Business Development and Strategy for FreightCar
      America between 2007 through all of 2009 (employed at FreightCar
      America between 2002 to 2009);
    September 15, 2010
    Not ApplicableLance C. Newman Highlands Ranch, CO, USA
    VP, Project Developmentof the
      Company; VP Metallurgical Operations for the Company between
      August 2006 and November 2007;
    August 2, 2006
    Not ApplicablePurni Parikh Burnaby, BC, Canada
    VP, Corporate Secretaryof the 
      Company; VP Corporate Secretary for Wildcat
      Silver Corporation since February 2010 and previously between
      November 2006 and February 2009 and for Ventana Gold Corporation
      between February 2010 and March 2011 and between April 2007 and
      February 2009 and for Sargold Resource Corp. between June 2000 and
      October 2007.
    July 1999
    Not ApplicableMark G. Stevens Denver, CO, USA
    VP, Explorationof the Company; Chief
      Geologist for the Company between August 2006 and November 2008;
    December 1, 2008
    Not Applicable


|(1) | Member of the Audit Committee                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Member of the Compensation Committee                                                                                                                                                         
|(3) | Member of the Nominating and Corporate Governance
      Committee                                                                                                                            
|(4) | Mr. John Brodie passed away on February 24, 2013. Due to
      the unexpected passing of Mr. Brodie the Company appointed Mr. Robert
      P. Pirooz to the Audit Committee on
March 8, 2013.

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- 35 -

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

As at the date of this AIF, the directors and officers of the
Company, as a group owned, directly or indirectly, or exercised control or
direction over 13,613,708 common shares representing 9.44% of the total number
of common shares outstanding.

Cease Trade Orders and Bankruptcies

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

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

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

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

Robert P.
Pirooz, a director of the Company, was formerly a director of Pacific
Ballet British Columbia Society (the Ballet). On December 23, 2008, within a
year following Mr. Piroozs resignation from the board of directors of the
Ballet, the Ballet filed a Notice of Intention to Make a Proposal under
subsection 50.4(1) of the Bankruptcy and Insolvency Act. Subsequently, on
January 9, 2009, the proposal was unanimously accepted by the creditors of the
Ballet.

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- 36 -

Personal Bankruptcies

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

Penalties or Sanctions

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

Conflicts of Interest

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

ITEM 9:INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

Within the three most recently completed financial years ended
December 31, 2012 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 consolidated financial statements for
the year ending December 31, 2012 which is incorporated here by reference and
available on SEDAR at www.sedar.com.

Legal Proceedings and Regulatory Actions

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

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- 37 -

ITEM 10:TRANSFER AGENTS AND REGISTRARS

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

ITEM 11:MATERIAL CONTRACTS

The only material contracts entered into by the Company during
the year ended December 31, 2012 or since such time or before such time that are
still in effect, other than in the ordinary course of business, are as follows:

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

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

ITEM 12:INTEREST OF EXPERTS

Name of Experts

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

|a) | Ernst & Young LLP of 23rd Floor, 700 West Georgia
      Street, Vancouver BC, V7Y 1C7, and the Companys independent auditors
      provided an auditors report dated March 25, 2013, in respect of the
      Companys consolidated financial statements for the years ended December
      31, 2012 and 2011;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                 
|b) | Dr. Conrad Huss, P.E., of M3 Engineering & Technology
      Corporation was the principal author responsible for the overall
      preparation of the NI 43-101 Technical Report for the Rosemont Copper
      Project Updated Feasibility Study, Pima County, Arizona, USA, dated August
      28, 2012;       

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- 38 -

|c) | Susan C. Bird, M. Sc. P. Eng., of Moose Mountain
      Technical Services was responsible for Sections 7 through 12, Section 14,
      and Section 23 of the NI 43-101 Technical Report for the Rosemont Copper
      Project Updated Feasibility Study, Pima County, Arizona, USA, dated August
      28, 2012;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                 
|d) | Mr John Ajie, P.E. of URS Washington Division, was
      responsible for the mining capital and operating costs in Section 21 of
      the NI 43-101 Technical Report for the Rosemont Copper Project Updated
      Feasibility Study, Pima County, Arizona, USA, dated August 28,
  2012;                      
|   |                                                                                                                                                                                                                                                                                                                 
|e) | Mr. Thomas L. Drielick, P.E. of M3 Engineering &
      Technology Corporation was responsible for Section 13 and Section 17 of
      the NI 43-101 Technical Report for the Rosemont Copper Project Updated
      Feasibility Study, Pima County, Arizona, USA, dated August 28, 2012;
      and                
|   |                                                                                                                                                                                                                                                                                                                 
|f) | Mr. Robert Fong, P.E. of Moose Mountain Technical
      Services was responsible for Section 15 and Section 16.1 to 16.6 of this
      report of the NI 43-101 Technical Report for the Rosemont Copper Project
      Updated Feasibility Study, Pima County, Arizona, USA, dated August 28,
      2012.        

Interests of Experts

To the best of the Companys knowledge, the experts named under
this Item 12 did not have any registered or beneficial interest, direct or
indirect, in any securities or other property of the Company or one of its
associates or affiliates, when the experts prepared their respective reports,
and no securities or other property of the Company or one of its associates or
affiliates were subsequently received or to be received by such experts.

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.

ITEM 13:AUDIT COMMITTEE INFORMATION

Audit Committee Information

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

During fiscal 2012, the Companys audit committee was comprised
of the following directors, John R. Brodie, (Chair), Christopher Jennings and W.
Durand Eppler. All are independent and financially literate as defined in MI
52-110.

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

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

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- 39 -

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

Pre-approval Policy

The Audit Committee nominates and engages the independent
auditors to audit the consolidated 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 in Canadian dollars by the Companys
external auditors in each of the last two fiscal years are as follows:

Financial Year Ending
    Audit Fees(1)
    Audit related Fees(2)
    Tax Fees(3)
    All Other Fees2011
    $327,200
    $2,000
    $73,504
    -2012
    $290,909
    -
    $61,360
    -


|(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 consolidated financial
      statements, which are not included under the heading Audit
  Fees.
|(3) | Corporate income tax advisory and planning
  fees.                                                                                                                                                                                                       

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.

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- 40 -

In addition, copies of documents, may be obtained from the
Company by contacting the Company at Suite 600  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 1                   
|OVERALL PURPOSE/OBJECTIVES  

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

ARTICLE 2AUTHORITY

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

ARTICLE 3FUNDING

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

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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- 2 -

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 NYSE MKT Equities
      (the NYSE MKT) (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
      NYSE MKT (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 an 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |     | 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 members from
      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.
| | --- | -------------------------------------------------------------------------------------------------------------------------

---

- 3 -

| | (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)                
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    
|    |                    

| | (b) | consider and oversee the independence of the external
      auditors, including:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c) | assure the regular rotation of the lead audit partner and
      the concurring partner every five years (with a five year time-out period
      after rotation), and the regular rotation of other audit partners engaged
      in the annual audit of the Corporation every seven years (with a two year
      time-out period after rotation), or as otherwise required by law or the
      rules of the NYSE MKT;                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | be responsible for the pre-approval of all audit services
      and permissible non-audit services to be provided to the Corporation (or
      any of its subsidiaries) by the external auditors, subject to any
      exceptions provided by applicable laws, including the Securities
      Exchange Act of 1934, as amended (the 1934 Act), and the rules of the SEC
      promulgated thereunder, provided that such pre-approval authority may be
      delegated by the committee to any member of the committee who is both
      independent and unrelated on the condition that any such pre-approval
      must be presented to the committee at its first scheduled meeting
  following any such approval;

---

- 4 -

| | (e) | consult with the external auditors, senior management,
      internal auditing staff (if any) of the Corporation and such other
      advisers as the committee may deem necessary regarding their evaluation of
      the adequacy of the Corporation's internal controls over financial
      reporting and disclosure controls and procedures (as such terms are
      defined by the SEC), and make specific recommendations to the Board in
      connection therewith;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (f) | be responsible for the review and oversight of all
      related-party transactions, as such term is defined by the rules of the
      NYSE MKT;                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (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
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                        
| | (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 NYSE MKT;                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (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 or
      management and meet with outside counsel whenever deemed
    appropriate;                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (o) | review the annual and quarterly financial statements, the
      related management discussion and analysis and any related news releases
      and determine whether they are complete and consistent with the
      information known to committee members; determine that the auditors are
      satisfied that the financial statements have been prepared in accordance
      with generally accepted accounting principles, and, if appropriate,
      recommend to the Board that the annual and quarterly
  financial statements, the related management discussion and
  analysis and news releases be approved and issued;

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- 5 -

| | (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,                                        
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                       
| | (ii)  | generally accepted accounting principles have been
      consistently applied,                                                                        
| |       |                                                                                                                                                       
| | (iii) | there are any actual or proposed changes in accounting or
      financial reporting practices,                                                        
| |       |                                                                                                                                                       
| | (iv)  | there are any significant or unusual events or
      transactions which require disclosure and, if so, consider the adequacy of
      that disclosure;

| | (u) | review, prior to the commencement of each annual
      audit:                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                           
| |     | (i)                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                           
| |     | (ii)                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                           
| | (v) | meet separately with the external auditors to discuss any
      matters that the committee or auditors believe should be discussed
      privately, including the results of the external auditors review of the
      adequacy and effectiveness of the Corporations accounting and financial
      controls;                          
| |     |                                                                                                                                                                                                                                                                                                                                           
| | (w) | endeavour to cause the receipt and discussion, on a
      timely basis, of any significant findings and recommendations made by the
      external auditors;                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                           
| | (x) | obtain regular updates from management and the company's
      legal counsel regarding compliance matters, as well as certificates from
      the Chief Financial Officer as to required statutory payments and bank
      covenant compliance and from senior operating personnel as to permit
      compliance to the extent applicable;
| |     |                                                                                                                                                                                                                                                                                                                                           
| | (y) | ensure that the Board is aware of matters which may
      significantly impact the financial condition or affairs of the business of
      the Corporation;                                                                                                                                                                               

---

- 6 -

| | (z)  | if necessary, institute special investigations and, if
      appropriate, hire special counsel or experts to assist in any such
      investigations;                                                                                                                        
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                              
| | (aa) | review and assess the adequacy of this charter, on an
      annual basis, and provide any suggested amendments or updates to the Board
      for review and approval;                                                                                                        
| |      |                                                                                                                                                                                                                                                                              
| | (bb) | work with the Board to determine an appropriate annual
      budget for the committee and its required activities, including but not
      limited to the compensation of the external auditors and any outside
      counsel or other experts retained by the committee; and
| |      |                                                                                                                                                                                                                                                                              
| | (cc) | generally, perform other functions as may be requested
      from time to time by the Board.                                                                                                                                                                                 

Adopted November 13, 2009

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