---



|ANNUAL INFORMATION FORM             
|------------------------------------
|(AIF)                             
|                                    
|                                    
|                                    
|of                                  
|                                    
|                                    
|                                    
|AUGUSTA RESOURCE CORPORATION        
|(the Company or Augusta)        
|Suite 555, 999 Canada Place         
|Vancouver, British Columbia         
|V6C 3E1                             
|                                    
|                                    
|                                    
|Telephone: 604-687-1717             
|Facsimile: 604-687-1715             
|Website: www.augustaresource.com    
|E-mail: info@augustaresource.com    
|                                    
|For the Year Ended December 31, 2013
|Dated: March 27, 2014               

---

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  

-i-

---

ITEM
      5:
    DIVIDENDS
    30ITEM
      6:
    DESCRIPTION
      OF CAPITAL STRUCTURE
    30ITEM
      7:
    MARKET
      FOR SECURITIES
    31ITEM
      8:
    DIRECTORS
      AND OFFICERS
    32ITEM
      9:
    INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    36ITEM
      10:
    TRANSFER
      AGENTS AND REGISTRARS
    37ITEM
      11:
    MATERIAL
      CONTRACTS
    37ITEM
      12:
    INTEREST
      OF EXPERTS
    37ITEM
      13:
    AUDIT
      COMMITTEE INFORMATION
    38ITEM
      14:
    ADDITIONAL
      INFORMATION
    39


|ITEM 1: | PRELIMINARY NOTES
|------- | -----------------

Effective Date of Information

This AIF is dated March 27, 2014, 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, 2013,
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 contains information that constitutes "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 or "forward-looking information" under Canadian
securities laws. These statements and information relate to future events and
Augusta's future performance, business prospects or opportunities, which are
subject to certain risks, uncertainties and assumptions. Such forward-looking
statements and forward-looking information include, but are not limited to
statements concerning Augusta's plans at the Rosemont Project, including the
timing for obtaining final permits, construction and estimated production,
expectations surrounding future financings and re-financings, capital and
operating cash flow estimates, changes in market conditions, changes or
disruptions in the securities markets and market fluctuations in the prices for
Augusta's securities, the lack of any alternative transactions or the terms and
conditions of any alternative transactions not being acceptable.

---

- 2 -

Forward-looking statements or information is frequently, but
not always, characterized by words such as "will", "plan", "expect", "project",
"intend", "believe", "anticipate", "budget", "forecast", "schedule", "estimate"
and similar expressions, or statements that certain events or conditions "may",
"should", "could", "might" or "will" occur. The forward-looking statements or
information contained in this Directors' Circular is based on the
reasonable expectations and beliefs of management as at the date of this
Directors' Circular and involves numerous assumptions, known and unknown risks
and uncertainties, both general and specific to Augusta and the industry in
which the Company operates. Such assumptions, risks and uncertainties include,
but are not limited to Augusta's 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 and
disclosed in Augusta's documents filed from time to time with the securities
regulators in the provinces of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, New Brunswick and Newfoundland and Labrador. Should one or
more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results, performance or achievements of the
Company, or industry results, may vary materially from those described in this
AIF.

Although Augusta has attempted to identify important factors
that could cause actual actions, events, results, performance or achievements to
differ materially from those described in the forward-looking statements or
information contained in this AIF, there may be other factors that cause
actions, events, results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking statements
or information will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. Such
forward-looking statements and information are made or given as at the date of
this AIF and Augusta disclaims any intention or obligation to update or revise
any forward-looking statements or information, whether as a result of new
information, future events or otherwise, except as required under applicable
securities law. The reader is cautioned not to place undue reliance on
forward-looking statements or information and 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.

National Instrument 43-101 Definitions

Canadian reporting requirements for disclosure of mineral
properties are governed by National Instrument 43-101  Standards of
Disclosure for Mineral Projects (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.
|--------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 3 -

|Mineral Resource           | The term mineral resource refers to a concentration or
      occurrence of diamonds, natural solid inorganic material or natural solid
      fossilized organic material including base and precious metals, coal and
      industrial minerals in or on the Earths crust in such form and quantity
      and of such a grade or quality that it has reasonable prospects for
      economic extraction. The location, quantity, grade, geological
      characteristics and continuity of a mineral resource are known, estimated
      or interpreted from specific geological evidence and knowledge.                                                                                                                                                             
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Measured Mineral Resource  | The term measured mineral resource refers to that part
      of a Mineral Resource for which quantity, grade or quality, densities,
      shape and physical characteristics are so well established that they can
      be estimated with confidence sufficient to allow the appropriate
      application of technical and economic parameters, to support production
      planning and evaluation of the economic viability of the deposit. The
      estimate is based on detailed and reliable exploration, sampling and
      testing information gathered through appropriate techniques from locations
      such as outcrops, trenches, pits, workings and drill holes that are spaced
      closely enough to confirm both geological and grade continuity.
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Indicated Mineral Resource | The term indicated mineral resource refers to that part
      of a Mineral Resource for which quantity, grade or quality, densities,
      shape and physical characteristics can be estimated with a level of
      confidence sufficient to allow the appropriate application of technical
      and economic parameters, to support mine planning and evaluation of the
      economic viability of the deposit. The estimate is based on detailed and
      reliable exploration and testing information gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes that are spaced closely enough for geological and grade
      continuity to be reasonably assumed.                         
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

- 4 -

Shareholders in the United States are advised that, while such
terms are recognized and required by Canadian securities laws, the U.S.
Securities and Exchange Commission (the "SEC") does not recognize them. Under
United States standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve
determination is made. Investors are cautioned not to assume that all or any part of measured or
indicated resources will ever be converted into reserves. Further, inferred
resources have a great amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. It cannot be assumed that all
or any part of the inferred resources will ever be upgraded to a higher resource
category. Under Canadian rules, estimates of inferred mineral resources may not
form the basis of feasibility or pre-feasibility studies, except in rare cases.
Therefore, investors are also cautioned not to assume that all or any part of
the inferred resources exist, or that they can be mined legally or economically.
Disclosure of contained ounces is permitted disclosure under Canadian
regulations; however, the SEC normally only permits issuers to report resources
as in place tonnage and grade without reference to unit measures. Accordingly,
information concerning descriptions of mineralization and resources contained in
this AIF may not be comparable to information made public by U.S. companies
subject to the reporting and disclosure requirements of the SEC. Unless
otherwise indicated, all resource and technical information of Augusta contained
in this AIF or contained in any documents referenced in this AIF have been
prepared in accordance with NI 43-101 and the Canadian Institute of Mining,
Metallurgy and Petroleum Classification System.

|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 555, 999 Canada Place, Vancouver, BC, V6C 3E1. 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 under Augustas issuers
profile on SEDAR 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.

The Company has an unlimited number of common shares without
par value authorized. At the date of this AIF, there were 145,388,035 common
shares issued and outstanding, including 347,501 restricted common shares.

Subsidiaries

Currently, the Company 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).

The
  Companys ownership of the Rosemont Copper Company which holds the Rosemont
  copper project is indirect through a chain of Canadian and US subsidiaries (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,
  2013, UCM had earned a 7.95% interest in the Rosemont JV.

---

- 5 -

|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 30,000 acres (12,140 hectares)
of patented and unpatented claims and fee land and surface grazing leases.
Rosemont is located 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 U.S., accounting for approximately 10% of total U.S. copper
production.

Rosemont Project  Updated Feasibility Study

In 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) reconfirming Rosemont as an
economically robust open pit copper/molybdenum mine with low development risk.
The 2009 Feasibility Study also 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 NI 43-101 compliant feasibility study. The NI 43-101
technical report Updated Feasibility Study is dated August 28, 2012 (the 2012
Feasibility Study).

A summary of the 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 under Augustas issuer profile on SEDAR at
www.sedar.com.

Agreement with Silver Wheaton Corporation

In February 2010, the Company 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 deposits
of $230 million and payments of $3.90 per ounce of silver and $450 per ounce of
gold delivered (escalated at 1% per annum commencing after 3 years of
production), or the prevailing market prices, if lower, during the mine life.
The drawdown of the cash deposits is subject to the Company receiving the final
required permits and the arrangement of project financing.

---

- 6 -

Red Kite Loan

In April 2010, Augusta entered into an agreement for a $43
million senior secured loan (the $43M Loan) and a copper concentrate off-take
agreement (the Red Kite Copper Concentrates Sales Agreement) with RK Mine
Finance Trust I, formerly Red Kite Explorer Trust and RK Mine Finance Fund (Red
Kite). The $43M Loan bears interest at LIBOR plus 4.5% compounded quarterly and
matured on the earlier of April 21, 2012, or the date of closing of the Rosemont
Project senior debt financing facility. The Company also had 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 (defined below) 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
$43M 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 common
share and expiring on April 22, 2013. Proceeds from the $43M Loan were used to
retire the outstanding balance payable by Rosemont under a loan agreement with
Sumitomo Corporation of America dated June 17, 2008 as amended. On April 20,
2012, the Company announced the closing of the one year extension on the $43M
Loan 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 October 5, 2012, the Company announced the closing of an
increase in the $43M Loan by an additional $40 million (the $40M Loan) for an
aggregate of US$83 million loan facility (the $43M Loan and the $40M Loan are
referred to collectively herein after as the $83M Loan) with Red Kite. The
terms for the $83M 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 common share (from
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 remained unchanged at
April 22, 2014. Since not all of the warrants were extended, the origination fee
on the $40M Loan was increased from 2% to 2.2925%.

As part of this transaction Rosemont 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 to Red Kite.

Concurrent with the closing of the $83M Loan and Amended
Offtake Agreement, the Copper Cathode Purchase and Sale Agreement between
Rosemont and an affiliate of Red Kite and the $10 million working capital
facility between Augusta and Red Kite were cancelled and deemed null, with no
liability to any of the parties.

On December 12, 2013, the Company closed a $26.6 million
increase ("Additional Commitment") to the $83M Loan with Red Kite. The
Additional Commitment and the $83M Loan total $109.6 million (are referred to collectively herein as the Expanded
Loan). The terms for the Expanded Loan are substantially the same as the $83M
Loan, including interest payable at LIBOR plus 4.50%. The Company has the
option to extend the maturity date of the Expanded Loan by up to three months to
no later than October 21, 2014, by making an extension fee payment to Red Kite.
The extension fee is equal to 1.5% of the principal amount outstanding for each
monthly period extended. In connection with the Expanded Loan, Augusta also
issued a total of 3.3 million additional Warrants to Red Kite with an exercise
price of $2.12 per common share. These additional Warrants expire on December
12, 2016.

---

- 7 -

JPAR LLC

On August 24, 2012, Cobre Verde Development Corporation, a
wholly-owned subsidiary of the Company, and SICAN Inc. entered into a joint
arrangement through the formation of JPAR LLC, an Arizona Limited Liability
Company, to fund the construction and operate the Community Water Company of
Green Valley Central Arizona Project Water Delivery System (CAP WDS), which is
estimated to cost $24 million to construct. The purpose of the CAP WDS is to
replenish Rosemonts use of groundwater for its future mining operations from
within the Town of Sahuarita and the community of Green Valley. The Company is
responsible for funding 100% of the construction of the CAP WDS.

Topolobampo Facility

On August 8, 2013, the Companys wholly-owned subsidiary, Cobre
Verde de Mexico, S.A. de C.V. (CVM) was awarded a 25 year concession by the
AdministraciÓn Portuaria Integral de Topolobampo, S.A. de C.V. (API) to build
and operate a copper concentrate export facility at the Port of Topolobampo,
Sinaloa, Mexico. The concession agreement was signed on September 6, 2013 and
officially registered on December 20, 2013, with Secretaria de Comunicaciones y
Transportes Mexico (SCT). The facility, which will be built on a 54,500 square
meters site at the Port of Topolobampo, will manage bulk concentrate receiving,
storage, and reclaim for load-out onto transport ships.

Basic engineering on the Topolobampo  facility started in September 2013, and is expected to be completed in the  second quarter of 2014 with construction expected to start in the third quarter  of 2014. Under the terms of the Topolobampo concession the Company has 18  months following the registration and transfer of the concession to CVM, to  complete engineering and construction of the facility and prepare for  operations. A default in any of the terms of the Topolobampo concession may  result in the Company losing the concession and the right to operate the facility.  The Company is currently working on  finalizing the capital cost estimate on the Topolobampo facility which is  currently estimated to be between $32 million to $40 million. To assist in  obtaining funding for construction, the Company has engaged  National Bank Financial Inc. as its financial advisor in connection with  potential transactions involving direct or indirect investment by third parties  in Cobre Verde. This process, and any  potential transaction, is expected to conclude in the first half of 2014.

Convertible Unsecured Notes

On August 14, 2013, the Company entered into a Notes Purchase
Agreement with Richard W. Warke, the Executive Chairman of the Company, and
Kestrel Holdings Ltd., one of the Company's major shareholders, providing for
the Company to issue an aggregate of Cdn$10 million in convertible unsecured
notes (the Notes). The Company issued the full amount of the Notes in four
tranches in September and October 2013. The Notes have a 5 year term, bear
interest at 7% per annum, and have a conversion price equal to a premium of 30%
above the volume weighted average trading price of the Companys Common Shares
on the TSX for the five trading days ending the last business day prior to the closing date of each
tranche. Mr. Warke and Kestrel Holdings Ltd. each hold Cdn$5 million aggregate
principal amount of the Notes.

---

- 8 -

Project Financing  Mandate Letter

On August 9, 2013, the Companys wholly-owned subsidiary,
Rosemont Copper Company, together with its joint venture partners, LG
International Corp. and Korea Resources Corporation, announced the signing of a
project financing mandate letter (the Mandate Letter) with a syndicate of 12
international financial institutions (the Mandated Lead Arrangers or MLAs).
The Mandate Letter sets out an exclusive arrangement with the MLAs describing
the activities needed to arrange a limited recourse loan facility for the
construction of the Rosemont Project. The Mandate Letter also specifies the
roles and responsibilities of the MLAs, appoints certain MLAs to agent roles and
stipulates certain fees payable to the MLAs and agents. The due diligence
process that the MLAs undertook following the signing of the Mandate Letter,
which included a review of the Rosemont project by an independent engineering
firm, has been substantially completed. The senior secured debt from the MLAs is
expected to provide all of the debt required for the Rosemont Project.

HudBay Minerals Inc.

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 Warrant. Each whole Warrant was
exercisable into one common share at a price of Cdn$3.90 per common 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.

On February 9, 2014, HudBay issued a press release that
announced its intention to commence an unsolicited offer to purchase, for
consideration of 0.315 of a common share of HudBay for each common share of
Augusta, all of the issued and outstanding Augusta common shares, other than any
such common shares held directly or indirectly by HudBay and its affiliates (the
"HudBay Offer"). On February 10, 2014, HudBay filed its offer and accompanying
take-over bid circular in respect of the HudBay Offer (the "HudBay Offer and
Circular"). On February 11, 2014, HudBay formally commenced the HudBay Offer by
advertisement.

On February 24, 2014, Augusta issued its directors' circular
(the "Directors' Circular") in response to the HudBay Offer pursuant to which
the board of directors of Augusta (the "Board of Directors" or the "Board"),
based on its review and analysis of the HudBay Offer and acting on the advice of
its legal advisors, Davies Ward Phillips & Vineberg LLP and Cravath, Swaine,
& Moore LLP, and its financial advisors, Scotia Capital Inc. and TD
Securities Inc., unanimously recommend that Augusta shareholders reject the
HudBay Offer and not tender their common shares to the HudBay Offer. For more
information on the process followed by the Board of Directors in making its
recommendation to shareholders and for detailed reasons why the Board of
Directors believes that the HudBay Offer is grossly inadequate and does not come
close to recognizing the value and potential of Augusta and its Rosemont
Project, please refer to the Directors' Circular, which is available under
Augusta's issuer profile on SEDAR at www.sedar.com. Additional information in
respect of the HudBay Offer, including a copy of the HudBay Offer and Circular
is also available under Augusta's issuer profile on SEDAR at www.sedar.com.

---

- 9 -

The Board of Directors has also given its financial advisors
and Augusta's management team a broad mandate to, among other things, manage a
process of exploring and considering alternative strategic transactions to the HudBay Offer and to make
recommendations to the Board of Directors on a regular basis in respect thereof.
Augusta and its financial advisors have been approached by, and/or have
initiated contact with, a number of third parties. These parties include those
who had previously conducted site visits to the Rosemont Project and/or who have
expressed an interest in considering a transaction. Discussions are ongoing and
Augusta has established an electronic data room for purposes of providing
confidential information to third parties who have entered into confidentiality
agreements. The Board of Directors' efforts with respect to such strategic
alternatives process are ongoing and, given the complexity of the situation, it
is not yet possible to predict whether or when an alternative transaction that
is superior to the HudBay Offer will emerge.

On March 17, 2014,  the Company responded to an announcement made  by HudBay on March 14, 2014 that it had (i) extended its Offer to acquire all  of the common shares of the Company that it does not already own to April 2,  2014, and (ii) waived the Offer’s minimum tender condition. The HudBay  announcement also stated that HudBay plans to submit an application to the  British Columbia Securities Commission to cease trade the Company’s shareholder  rights plan in due course. The Company’s response (i) confirmed that its  permitting process is progressing as planned with previous guidance remaining  unchanged for receipt of both the 404 permit from the Army Corps of Engineers  and the Final Record of Decision (“FROD”) from the U.S. Forest Service in the  second quarter of this year, (ii) reminded shareholders that as long as  Augusta's shareholder rights plan remains in effect, HudBay cannot take up any  shares that might be tendered to its offer without triggering the rights, and  (iii) noted that Augusta's

On March 27, 2014, the board of  directors of the Company met and received an update on the Company’s strategic  review process.   As of that date, nine  interested parties, including a number of significant industry players, had  signed confidentiality agreements and were in the process of conducting an  extensive review of the materials in the Company’s electronic data room.  Site visits to the Company’s Rosemont Project  are also scheduled to take place in the upcoming weeks.  In addition, the board of directors  determined that the Company will hold an annual and special meeting of its  shareholders on May 9, 2014 to have, among other things, shareholders consider  the continuation of its existing shareholder rights plan until the following  annual meeting of shareholders.

The Rosemont Copper Joint Venture

Rosemont Copper Company entered into an Earn-In Agreement on
September 16, 2010, with United Copper & Moly LLC (UCM), a company formed
by Korea Resources Corporation and LG International Corp. to hold its interest
in the Rosemont Copper joint venture (the Rosemont JV). Pursuant to such
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. To date UCM
has funded the $70 million Pre-Construction Costs earning 7.95% interest in the
Rosemont JV. The remaining $106 million will be released on a pro-rata
basis with Silver Wheatons $230 million to fund construction.

Environmental/Permitting

Applications for the Rosemont Project's operations permits were
initiated after delivery of the initial Mine Plan of Operations (MPO) to the U.S.
Forest Service (Forest Service) in July 2007. As required under US 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 ("FEIS") 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.

---

- 10 -

Forest Service

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

On November 16, 2010, the Forest Service contractor delivered
the internal agency review draft of the DEIS to the Forest Service 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 Washington and Regional Forest
Service Offices and the cooperating agencies, the DEIS was printed and released
to the public. The formal Notice of Availability (NOA) was issued on October
19, 2011 initiating a 90-day public comment period; the first public meeting was
held on November 12, 2011. 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 Forest Service
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. The process to review and to prepare responses to the substantive
comments was extensive. This culminated on July 1, 2013, with the USFS
delivering a Preliminary Administrative FEIS for the Rosemont Project to the
Local, State and Federal Cooperating Agencies for their comments. The
Cooperating Agencies were initially given 30 days to provide their comments but
due to the volume of reports and materials to review, the comment period was
extended. This extension of the deadline to provide comments resulted in the
USFS not meeting a September 27, 2013, target date for issuance of the FEIS and
FROD. September 27, 2013 was the date when new
regulations governing the USFS decision process came into effect and applied to
all USFS decisions on Environmental Assessments and Environmental Impact
Statements, including the Rosemont Project. Under the new decision process, the
release of the FEIS and Draft Record of Decision ("DROD") starts a 45-day
objection period to allow people who had submitted comments during the prior
official comment periods during the EIS process an opportunity to file
objections to the DROD. This is followed by a 45-day review period for the USFS
to review and respond to the objections, with an option of one 30 day extension
to the review period. The total objection and review period thus has a maximum
statutory limit of 120 days after which the USFS will issue written responses to
the objections and may include recommendations for changes to the DROD. After
the review period, the FROD is issued. With this new process, there is no
opportunity for additional review or administrative appeal of the FROD. The
Company estimated that the new regulation delayed the completion of the USFS
decision process by approximately four months.

On  December 13, 2013, the Notice of Availability for the FEIS was published in the  Federal Register and on December 16, 2013, the USFS issued a DROD which  identified Alternative 4, the Barrel Alternative, as the preferred alternative  in the FEIS.  The official start to the objection period was established  as January 1, 2014.  The FEIS  contained the biological opinion that was the result of consultation with the  US Fish and Wildlife Service as well as a Memorandum of Agreement that  memorialized the Section 106 process for consultation with the Native American  Tribes. The Company now expects the FROD to  be issued in the second quarter of 2014. The FROD will include the final  conditions required for  an updated MPO, which must be submitted  to the Forest Service prior to construction commencing on the Forest Service  lands.

---

- 11 -

Corps of Engineers

During the DEIS public comment period, the ACOE completed its
own 45-day public comment period for the draft Clean Water Act 404 Permit (the
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. The FEIS
contained the ACOE 404(b)(1) alternatives analysis, which specified the barrel
alternative as the Least Environmentally Damaging Practicable Alternative and
identified the impacts that would require mitigation under the 404 Permit
process. Rosemont is currently working with the ACOE to identify sufficient
mitigation to mitigate the impacts identified.

Arizona Corporation Commission

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.

State Land Department

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. This means the land survey descriptions have been
finalized, the appraisals have been completed, and the State Land Commission is
scheduled review the application. The Commission will meet to review the
application and issue the right of way after the Forest Service issues the FROD.

Arizona Department of Environmental Quality - Air Permit

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, on 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).

---

- 12 -

On November 23, 2011, the Company submitted an application for
a Class II Air Quality Control Permit with ADEQ. 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 an
Air Quality Class II Synthetic Minor Permit from the ADEQ (Air Permit). The
Air Permit stipulates the operating, monitoring and reporting parameters that
Rosemont must comply with to meet all federal, state and local air quality
requirements.

The issuance of the Air Permit resulted in an appeal by project
opponents and a judge from the Arizona Office of Administrative Hearings (OAH)
held hearings on the issues raised. These hearings concluded in August 201,3 and
closing argument filings, which continued to November 27, 2013. Rosemont is
expecting the ruling on the Air Permit during the first quarter of 2014. The
Company intervened in this appeal and provided technical support to the Arizona
Department of Environmental Quality (ADEQ) as well as a legal defense of the
Air Permit. The Air Permit is considered final and in force, even while it is
undergoing a review as per State of Arizona administrative procedures.

Arizona Department of Environmental Quality - Aquifer
Protection Permit

On April 10, 2012, the Company announced ADEQ issued the
Aquifer Protection Permit (APP), which establishes the operating standards and
controls so that operations do not degrade groundwater. After the APP issuance,
project opponents appealed ADEQ's decision with the Arizona Water Quality
Appeals Board. A judge with the OAH heard the appeal during fall and winter of
2012 resulting in 150 findings of face and 33 conclusions of law all supporting
ADEQ's permit decision. On July 8, 2013, the Arizona Water Quality Appeals Board
upheld a judges affirmation of Rosemont's APP. After the Company received this
favorable ruling, the appellants appealed the decision and filed a lawsuit
seeking to overturn the decision. The appeal is limited to process and to those
issues raised in front of the Water Quality Appeals Board. Initial filings are
due during the first quarter of 2014; however, no date has been set for
appearances in court. The APP permit remains in force as issued, during the
challenge process.

Summary

Augusta has received seven of the eight major permits for the
Rosemont Project and expects the final major permit, the ACOE's 404 Permit will
be issued by the end of the second quarter of 2014. Negotiations with the ACOE
are presently underway to finalize mitigation for the 404 permitting process. To
date, the ACOE has completed its analysis of the impacts and has concurred with
the US Forest Service regarding the alternatives selections. After
the FEIS was released, Rosemont worked on finalizing mitigation and has provided
the ACOE with information regarding mitigation plans. Review and comments on
those plans by the ACOE is expected to be completed by early in the second
quarter of 2014 with plan finalization and permit issuance later that same
quarter.

Once  the 404 Permit and the FROD are completed, all mitigation operating,  monitoring and management plans will be submitted to the Forest Service for  approval prior to breaking ground.  To  ensure there are no delays, the  Company continues its work on updating the MPO and all associated plans to  conform them to the Record of Decision, readying them for submission upon  receipt of the FROD.  Necessary field activities such as  archaeological investigations and endangered species surveys will take place as  soon as approvals are received.  This  will allow Rosemont to  commence construction in the second half of 2014.

---

- 13 -

The completion of project financing and re-commencement of
detailed engineering is now expected to occur in the third quarter of 2014.

Engineering

Detailed engineering, including earthwork, civil and structural
design, have been adjusted to the revised permitting timeline. The project
management team continues to work on the project execution plan. M3 Engineering,
CDM Smith and Schedule Corp. LLC have been engaged to provide, respectively,
engineering and procurement, construction management and project management
services.

Ongoing discussions with vendors are being held with respect to
transportation, storage, offloading facilities, and smelters for the copper and
molybdenum concentrates as well as logistics for deliveries during the
construction phase of the project.

Director Change and Human Resource 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 and Audit Committee. 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.

Following Mr. Brodies passing in February 2013, the Board
appointed Lenard F. Boggio to the Board of Directors on June 26, 2013 replacing
Mr. Brodies as the Chairman of the Audit Committee. Mr. Boggio was the Mining
Leader for PricewaterhouseCoopers (PwC) and a senior member of PwCs Global
Mining Industry Practice until his retirement in May 2012. Mr. Boggio holds a
B.A. and B. Comm. from the University of Windsor, Ontario and is a member of the
Institute of Chartered Accountants of British Columbia and Ontario. He also
holds a CPA in Illinois and is a member of the State Boards of Accountancy of
Illinois and Washington State and holds an ICD.D designation and is a member of
the Institute of Corporate Directors.

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 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.

---

- 14 -

Ongoing Support Activities

Since the commencement of permitting activities, the Company
has maintained an active community relations program that includes emphasizing
the economic benefits of the Rosemont Project to the region, supporting local
and regional activities, and maintaining a community outreach program.

Augustas Objectives for 2014

Augustas key objectives for 2014 are to work towards
completing the EIS process and receiving the FROD necessary to construct and
operate the 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 prepares for the start of
construction. The Company aims to remain within budget for construction through
year end while maintaining acceptable industry safety standards. In addition
basic engineering on the Topolobampo facility is expected to be completed
in the second quarter of 2014 with construction expected to start in the third
quarter of 2014. The Company will also continue to advance project financing for
the Rosemont Project 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 Rosemont project capital cost will come from Silver Wheatons $230
million upfront cash deposits 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.

|ITEM 4: | NARRATIVE DESCRIPTION OF THE BUSINESS
|------- | -------------------------------------

The Company is engaged in the acquisition, exploration and
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 Project located in Pima County, Arizona, which is in the final
stages of permitting. The Company expects the FROD to be issued in the second
quarter of 2014 with construction scheduled to start in the second half of 2014.
Rosemont is expected to be one of the largest copper mines in the U.S.,
accounting for approximately 10% of total U.S. copper production.

Specialized Skills 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.

---

- 15 -

Competitive Conditions

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

Business Cycles

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

Economic Dependence

The Companys business is not substantially dependent on any
contract such as a contract to sell the major part of its products or services
or to purchase the major part of its requirements for goods, services or raw
materials. The Company has no revenue and does not expect to generate any
revenues until completion of construction at the Rosemont Project and Rosemont
reaches commercial production in 2017. 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, 2013, the Company had 7 employees in the
Vancouver, British Columbia office, 3 employees in its Toronto, Ontario office,
10 employees in the Glendale, Colorado office and 38 employees in Tucson,
Arizona office of which 2 are part time employees. 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 offices 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 operating 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.

---

- 16 -

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
set out in its financial statements, including the consolidated statements of
comprehensive loss contained in its annual audited consolidated financial
statements for the year ending December 31, 2013.

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 2017.

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 2017. Augusta will require project financing to be in
place by the time the FROD is issued, which is expected to occur in the second
quarter of 2014. 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 common 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, 145,388,035 common shares of Augusta were issued and outstanding,
including 347,501 restricted common shares. In addition, Augusta had outstanding
211,668 restricted share units, 5,949,834 stock options, 5,091,700 Warrants
convertible into common shares; and Cdn$10 million aggregate principal amount of
Notes which if exercised for common shares on the date of this AIF, the Company
would have to issue 3,699,520 common shares.

---

- 17 -

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 loan agreement entered into
with Red Kite are secured by the common shares and assets of Rosemont Copper
Company, which holds title to the Companys only material property, The Rosemont
Project. In the event of a default in which the Company is unable to immediately
pay all accrued and unpaid interest and principal debt under the Expanded Loan,
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.

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:

---

- 18 -

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

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

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

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

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

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

---

- 19 -

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

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

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

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

Production and cost estimates may be worse than
anticipated.

The decision by the Company to proceed with the development of
the Rosemont Project was initially based on economic projections determined as
part of a feasibility study completed in mid 2007 which was later supported by
an updated feasibility study completed in January 2009 and further 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.

---

- 20 -

Litigation may adversely affect the Companys assets.

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

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

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

The Company is subject to risks related to community
action.

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

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

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

Mineral resources and proven and probable reserves are
estimates.

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

---

- 21 -

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

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

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

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

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

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

---

- 22 -

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.

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.

---

- 23 -

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.

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 reports its financial statements in U.S. Dollars
(USD) with operations in the U.S., Canada and Mexico. As a consequence, the
financial results of our operations, as reported in USD, are subject to changes
in the value of the USD relative to local currencies. A portion of the operating
and capital expenditures are in local currencies any may negatively impact our
financial results by strengthening local currencies relative to the USD and
positively impacted by the inverse. The local currencies that the Company is
exposed to are the Canadian dollar and the Mexican pesos. In order to mitigate
this exposure, the Company maintains a portion of its cash balances in these
currencies. The Companys balance sheet also includes various monetary assets
and liabilities, some of which are denominated in foreign currencies. These
balances are fair valued at the end of each period, with resulting
adjustments being reflected as foreign exchange gains or losses on our
consolidated statements of comprehensive loss.

---

- 24 -

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. 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.

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.

---

- 25 -

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 404andNational
Instrument 52-109 of the Canadian Securities Administrators(NI
52-109).Any failure to effectively implement internal controls, or to
resolve difficulties encountered in their implementation, could harm the
Companys operating results, cause the Company to fail to meet reporting
obligations or result in management being required to give a qualified
assessment of the Companys internal controls over financial reporting or the
Companys independent auditors providing an adverse opinion regarding
managements assessment. Any such result could cause investors to lose
confidence in the Companys reported financial information, which could have a
material adverse effect on the trading price of the Companys common shares.
These rules and regulations have made it more difficult and more expensive for
it to obtain director and officer liability insurance, and the Company may be
required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage in the future. As a result,
it may be more difficult for the Company to attract and retain qualified
individuals to serve on its board of directors or as executive officers. If the
Company fails to maintain the adequacy of its internal control over financial
reporting, the Companys ability to provide accurate financial statements and
comply with the requirements of the Sarbanes-Oxley Act of 2002and/or NI
52-109could be impaired, which could cause the Companys stock price to
decrease.

Material Mineral Property

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

The Rosemont Property and the 2012 Feasibility Study

The following summary of the Rosemont Property is based on or
extracted directly from the 2012 Feasibility Study.

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.

---

- 26 -

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). Pursuant to an Earn-in Agreement, UCM can acquire
up to 20% interest in the Rosemont JV. To date UCM has earned 7.95% interest.
For more details regarding the Rosemont JV refer to the Rosemont Joint Venture
under General Development of the Business.

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 kms) 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.

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 with
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.

---

- 27 -

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 US deposits in this class,
Rosemont consists of broad-scale skarn mineralization developed in
Paleozoic-aged carbonate sedimentary rocks adjacent to their contact with
quartz-latite or quartz-monzonite porphyry intrusive rocks. 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.

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.

---

- 28 -

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 comparison of mean grades
as a global grade bias check, a set of swath plots to compare the nearest
neighbor grades to the modeled copper (Cu), molybdenum (Mo), and silver (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:

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

Metal
    Metal Price
    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%


---

- 29 -

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 Measured, 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 2: 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


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.

---

- 30 -

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.

Table 3: Combined Proven and Probable Mineral Reserves by
Phase

Phase
    Sulfides >= 4.90 $/ton NSR
      Cut-off
    Waste Ktons
    Total Material Ktons
    Strip RatioKtons
    NSR
      $/t
    TCu
      %
    Mo %
    Ag oz/t1
    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.)

---

- 31 -

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 to 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.

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.

---

- 32 -

Table 4: Estimated Metal Recovery by Year of
Production

Estimated Metal Recovery by Year
      of ProductionProduction Year
    Recovery %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 rail transloading facility.  The majority of the copper concentrate is  then expected to be transported by rail to port export facilities at either  Guaymus, Mexico, or the Company’s Topolobampo facility, where it will be loaded  onto ocean-going vessels for delivery to overseas markets.  Some portion of the copper concentrate may be  delivered by either truck or rail to North American concentrate smelters and metal refineries.  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.

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.

---

- 33 -

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%.

Table 5: Summary of Average Life of Mine Operating Costs

Annual Cost ($000
    )Mining
    $
    106,000MillOperations&Maintenance
    $
    134,407SupportFacilitiesandG&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.

---

- 34 -

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

---

- 35 -

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
|------- | --------------------------------

Common Shares

The Companys authorized share capital consists of an unlimited
number of common shares without par value of which 144,552,776 common shares,
including 505,001 restricted common shares, were issued an outstanding as at
December 31, 2013 and 145,388,035 common shares, including 347,501 restricted
common shares, were issued an outstanding as at March 27, 2014.

---

- 36 -

Each common share of the Company has the following rights,
privileges, restrictions and conditions attached thereto:

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

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

Shareholder Rights Plan and Issuance of Share Purchase
Rights

On April 18, 2013, the Board of Directors adopted a Shareholder
Rights Plan and authorised the issue of one right (a "SRP Right") in respect of
each outstanding common share of the Company to shareholders of record as at
5:00 p.m. (Vancouver time) on April 30, 2013. The Shareholder Rights Plan was
ratified, confirmed and approved by the shareholders of Augusta at a special
meeting held for such purpose on October 17, 2013. The Shareholder Rights Plan
is intended to ensure, to the extent possible, that all shareholders and the
Board of Directors have adequate time to consider and evaluate any unsolicited
take-over bid for the common shares of the Company, to provide the Board of
Directors with adequate time to identify, solicit, develop and negotiate
value-enhancing alternatives, as considered appropriate, to any unsolicited
take-over bid and encourage the fair treatment of Shareholders in connection
with any unsolicited take-over bid. The Shareholder Rights Plan also encourages
any potential acquirer to proceed either by way of a Permitted Bid (as such term
is defined in the Shareholder Rights Plan), which requires the take-over bid to
satisfy certain minimum standards designed to promote fairness, or with the
concurrence of the Board of Directors.

The Shareholder Rights Plan is hereby incorporated by reference
and can be found under Augusta's issuer profile on SEDAR at www.sedar.com.

As of the date of this AIF, the Board of Directors has
determined to temporarily defer the separation time for the SRP Rights from the
common shares of the Company in respect of the HudBay Offer, which is not a
Permitted Bid under the Shareholder Rights Plan, in accordance with the terms of
the Shareholder Rights Plan.

|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.

---

- 37 -

High and Low Prices and Volume on a Monthly
      Basis for Fiscal 2013TSX
    NYSE MKTPeriod
    HighCdn$
    LowCdn$
    Volume
    HighU.S.$
    LowU.S.$
    VolumeDecember 2013
    1.81
    1.30
    1,236,900
    1.70
    1.20
    3,549,600November 2013
    2.24
    0.48
    11,143,100
    1.93
    1.01
    10,467,800October 2013
    2.18
    1.85
    2,120,700
    2.11
    1.81
    2,566,900September 2013
    2.25
    1.80
    2,541,100
    2.19
    1.72
    2,339,800August 2013
    2.35
    1.95
    929,600
    2.25
    1.85
    2,775,000July 2013
    2.41
    2.06
    574,400
    2.38
    2.10
    1,361,900June 2013
    2.60
    2.13
    693,300
    2.49
    1.90
    1,511,700May 2013
    2.72
    2.31
    1,379,400
    2.67
    2.21
    1,454,900April 2013
    2.76
    2.13
    3,564,200
    2.74
    2.07
    2,235,600March 2013
    2.79
    2.59
    1,266,600
    2.72
    2.51
    986,100February 2013
    2.90
    2.53
    2,749,400
    2.91
    2.48
    1,467,900January 2013
    2.71
    2.26
    803,300
    2.76
    2.25
  2,408,900


Prior Sales

During the year ended December 31, 2013, the Company granted
1,525,000 stock options exercisable at between Cdn$2.16 and Cdn$2.62 and which
expires between March 26, 2018 and June 26, 2018. During this same period the
Company also granted 170,000 of restricted share units and Cdn$10 million
aggregate principal amount of Notes. At the date of this AIF Augusta had
outstanding 5,949,834 stock options, 5,091,700 Warrants, 211,668 restricted
share units and Cdn$10,000,000 aggregate principal amount of Notes. In respect
of the stock options, 4,204,488. The outstanding stock options are exercisable
at between Cdn$0.97 and Cdn$4.45 and expire between December 16, 2004 and
December 3, 2018. The Company also issued 3,300,000 Warrants, in connection with
the closing of a loan facility with Red Kite, at an exercise price of US$2.12
per share expiring on December 12, 2016.

|ITEM 8: | DIRECTORS AND OFFICERS
|------- | ----------------------

The following were the directors and officers of Augusta at
December 31, 2013:

Name, Municipality ofResidence
    Position with the Company;Present and Principal OccupationDuring the Last
      Five Years
    Date FirstAppointed asOfficer
    Date Appointedas DirectorTimothy C. Baker(2)(3)Toronto, ON, Canada
    Directorof the Company; Corporate
      Director since December 2010. Executive VP and Chief Operating
      Officer of Kinross 
      Gold Corporation to October 2010.
    Not Applicable
    September 11, 2008Lenard F. Boggio(1)(4)North Vancouver, BC, Canada
    Directorof the Company; Partner of
      PricewaterhouseCoopers LLP from 1988 and senior member of the
      firms mining industry group in Vancouver until his retirement
      from the firm in May 2012.
    Not Applicable
    June 26, 2013Gilmour ClausenDenver, CO, USA
    President, CEO and Directorof the
      Company.
    April 18, 2005
    March 28, 2005


---

- 38 -

Name, Municipality ofResidence
    Position with the Company;Present and Principal OccupationDuring the Last
      Five Years
    Date FirstAppointed asOfficer
    Date Appointedas DirectorW. Durand Eppler(1)(2) (3)Denver, CO, USA
    Directorof the Company; Founding
      partner of New World Advisors, LLC and Sierra Partners, LLC.
    Not Applicable
    June 15, 2005ChristopherM.H.Jennings(1)Grand Cayman, Cayman Islands, BWI
    Lead Directorof the Company;
      Corporate Director since 2007.
    Not Applicable
    April 15, 2002Robert P. Pirooz(3)(4)Vancouver, BC, Canada
    Directorof the Company; General
      Counsel and Director for Pan American Silver Corp.
    Not Applicable
    November 9, 2012Robert P. Wares(2)Montreal, QC,
      Canada
    Directorof the Company; Various
      capacities for Osisko Exploration Ltd. including Executive VP
      Resource Development, Executive VP and Chief Operating Officer,
      and Chief Geologist during the past five years.
    Not Applicable
    April 26, 1999Richard W. WarkeWest Vancouver, BC, Canada
    Executive Chairman and Directorof the
      Company; Chairman and CEO of Wildcat Silver Corporation; Executive
      Chairman of Ventana Gold Corp. to March 2011;
    February 1, 1996
    February 1, 1996Joseph LongpréToronto, ON, Canada
    Senior VP and CFOfor the Company;
      Corporate Vice President advising on M&A and project finance
      transactions at URS Corporation to April 2012.
    May 7, 2012
    Not ApplicableJames A. SturgessCentennial, CO, USA
    Senior VP Corporate Development andGovernment Affairsof the Company;
    October 1, 2005
    Not ApplicableRodney O. PaceTucson, AZ, USA
    Executive VP and Chief OperatingOfficerof the Company and President and CEO of
      Rosemont Copper Company.
    January 1, 2008
    Not ApplicableKatherine ArnoldTucson, AZ, USA
    VP, Environment and RegulatoryAffairsof the Company; Director of Environmental and
      Regulatory Affairs of the Company to April 2011;
    April 1, 2011
    Not ApplicableLetitia CornacchiaToronto, ON, Canada
    VP, Investor Relations and CorporateCommunicationsof the Company, Wildcat Silver
      Corporation and Plata Latina Minerals Corporation since September
      2010 for Riva Gold Corp to May 2013 and for Ventana Gold Corp. to
      March 2011. Director of Investor Relations at Yamana Gold. to
      September 2010.
    September 27, 2010
    Not ApplicableGordon JangVancouver, BC, Canada
    VP, Corporate Controllerof the
      Company.
    March 1, 2009
    Not Applicable


---

- 39 -

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
      DirectorCharles Magolske Denver, CO, USA
    VP, Corporate Development and
      Marketingof the Company since November 2010. Vice
      President of Business Development and Strategy for FreightCar
      America to 2009.
    September 15, 2010
    Not ApplicableLance C. Newman Highlands Ranch, CO, USA
    VP, Project Development of the
      Company.
    August 2, 2006
    Not ApplicablePurni Parikh Burnaby, BC, Canada
    VP, Corporate Secretary of the
      Company, Wildcat Silver Corporation and Plata Latina Minerals and
      for Ventana Gold Corporation to March 2011.
    July 22, 1999
    Not ApplicableMark G. Stevens Denver, CO, USA
    VP, Explorationof the Company.
    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. On June 8, 2013, upon his
      appointment to the Board of Directors, Mr. Boggio was appointed to the
      Audit Committee.

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

As at the date of this AIF, the directors and officers of the
Company, as a group owned, directly or indirectly, or exercised control or
direction or voting rights over 14,464,392 common shares representing 9.94% of
the total number of common shares outstanding. In addition, the directors and
officers of the Company, as a group held, held 347,501 restricted common shares,
5,115,000 stock options, 211,668 restricted share units and a Cdn$5.0 million
aggregate principal amount of Notes.

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. Robert Wares, director of the
Company, is and was at the time the order was issued a director of Wildcat.

---

- 40 -

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:

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.

Gil Clausen, the  CEO and a director of the Company was formerly a director of Jaguar Mining Inc.  (“Jaguar”). On December 23, 2013, approximately 9 months after Mr. Clausen notified the board of  directors of Jaguar that he would not stand for re-election at its annual  shareholders’ meeting in June 2013, Jaguar commenced proceedings under the Companies’ Creditors Arrangement  Act ;in respect of a  restructuring of its debt. As at the date of this AIF, the proceedings  are continuing.

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. 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.

---

- 41 -

In addition, the Company issued a Cdn$5.0 million aggregate
principal amount of Notes to Richard W. Warke, the Executive Chairman of the
Company, pursuant to the Notes Purchase Agreement entered into on August 14,
2013. Please refer to the subheading entitled Three-Year History  Convertible
Unsecured Notes under Item 3 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, 2013, 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, 2013,
which is incorporated here by reference and available under Augustas issuer
profile 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.

|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, 2013, 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;                                                              

---

- 42 -

|(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; and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                    
|(d) | Shareholder Rights Plan adopted by the Board of Directors
      on April 18, 2013, described under the heading Description of Capital
      Structure.                                                                                                           

Each of these contracts is available under Augustas issuer
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 
Continuous Disclosure Obligations 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 B.C., V7Y 1C7, and the Companys independent auditors
      provided an auditors report dated March 31, 2014, in respect of the
      Companys consolidated financial statements for the years ended December
      31, 2013 and 2012;  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                     
|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;           
|   |                                                                                                                                                                                                                                                                                                                     
|c) | Ms. 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 Sections 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.

---

- 43 -

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  Audit Committees
(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 the year ended December 31, 2013, the Companys audit
committee was comprised of the following directors, Lenard F. Boggio, (Chair,
since June 26, 2013), Christopher M.H. 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. Boggio, the Chair of the Audit Committee was
the Mining Leader for PricewaterhouseCoopers (PwC) and a senior member of
PwCs Global Mining Industry Practice until his retirement in May 2012. Mr.
Boggio holds a B.A. and B. Comm. from the University of Windsor, Ontario and is
a member of the Institute of Chartered Accountants of British Columbia and
Ontario. He also holds a CPA in Illinois and is a member of the State Boards of
Accountancy of Illinois and Washington State and holds an ICD.D designation and
is a member of the Institute of Corporate Directors.

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

Dr. Jennings brings more than 50 years 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 Resource,
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

---

- 44 -

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 Chair of the
audit committee is permitted to pre-approve work undertaken by the Companys
external auditors between audit committee meetings of up to Cdn$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:

FinancialYearEnding
    Audit Fees(1)
    Audit related Fees(2)
    Tax Fees(3)
    All Other Fees2012
    $290,909
    -
    $61,360
    -2013
    $310,000
    $32,373
    $46,100
    -


|(1) | The aggregate audit fees billed and accrued.                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The aggregate fees billed for audit related services that
      are reasonably related to the performance of the audit or review of the
      Companys 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 under Augustas issuer profile on SEDAR at
www.sedar.com.

In addition, copies of documents may be obtained from the
Company by contacting the Company at Suite 555, 999 Canada Place, Vancouver,
B.C., V6C 3E1, telephone (604) 687-1717, fax (604) 687-1715.

---

APPENDIX 1

AUGUSTA RESOURCE CORPORATION(the Corporation)

AUDIT COMMITTEE CHARTER

ARTICLE 1OVERALL PURPOSE/OBJECTIVES

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

ARTICLE 2AUTHORITY

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

ARTICLE 3FUNDING

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

---

- 2 -

| | (b) | any independent counsel or other adviser retained by the
      committee; and                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                      
| | (c) | ordinary administrative expenses of the committee that
      are necessary or appropriate in carrying out its
duties.

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

ARTICLE 4ORGANIZATION

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

---

- 3 -

|    | (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.                                                                                                                                                                                                                                                                                                                                         
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | (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)                
|    |                    
|    |                    

---

- 4 -

| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | requiring receipt by the committee of an annual formal
      written statement from the Corporation's external auditors delineating all
      relationships between the external auditors and the Corporation,
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | discussing with the external auditors any such
      relationships that may impact the objectivity and independence of the
      external auditors, and                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | otherwise taking all appropriate actions as required to
      oversee the independence of the external auditors;                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| | (c) | assure the regular rotation of the lead audit partner and
      the concurring partner every five years (with a five year time-out period
      after rotation), and the regular rotation of other audit partners engaged
      in the annual audit of the Corporation every seven years (with a two year
      time-out period after rotation), or as otherwise required by law or the
      rules of the 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 1934 Act, and the
      rules of the SEC promulgated thereunder, provided that such pre-approval
      authority may be delegated by the committee to any member of the committee
      who is both independent and unrelated on the condition that any such
      pre-approval must be presented to the committee at its first scheduled
      meeting following any such approval;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| | (e) | consult with the external auditors, senior management,
      internal auditing staff (if any) of the Corporation and such other
      advisers as the committee may deem necessary regarding their evaluation of
      the adequacy of the Corporation's internal controls over financial
      reporting and disclosure controls and procedures (as such terms are
      defined by the SEC), and make specific recommendations to the Board in
      connection therewith;                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| | (f) | be responsible for the review and oversight of all
      related-party transactions, as such term is defined by the rules of the
      NYSE MKT and the SEC;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                               
| | (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) | ensure that the Corporation follows regulatory
      requirements with regards to the hiring of employees or former employees
      of the Corporations external auditors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

- 5 -

| | (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;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (p) | pay particular attention to complex and/or unusual
      transactions such as those involving derivative instruments and consider
      the adequacy of disclosure thereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (q) | focus on judgmental areas, for example those involving
      valuation of assets and liabilities and other commitments and
      contingencies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (r) | review audit issues related to the Corporation's material
      associated and affiliated companies that may have a significant impact on
      the Corporation's equity investment;                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (s) | meet with management and the external auditors to review
      the annual financial statements, the results of the annual audit and any
      recommendations by the auditors in connection therewith;                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (t) | assess the fairness of the interim financial statements
      and disclosures, and obtain explanations from management on
  whether:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

- 6 -

| |      | (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)                                                                                                                                                                                                                                                                                                              | the external auditors' proposed audit plan (including the
      scope, focus areas, timing and key decisions, and general approach
      underlying the audit plan) and ensure no unjustifiable restriction or
      limitations have been placed on the scope thereof, and
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| |      | (ii)                                                                                                                                                                                                                                                                                                             | the appropriateness and reasonableness of the proposed
      audit fee;                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (v)  | meet separately with the external auditors to discuss any
      matters that the committee or auditors believe should be discussed
      privately, including the results of the external auditors review of the
      adequacy and effectiveness of the Corporations accounting and financial
      controls;
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (w)  | endeavour to cause the receipt and discussion, on a
      timely basis, of any significant findings and recommendations made by the
      external auditors;                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (x)  | ensure that the Board is aware of matters which may
      significantly impact the financial condition or affairs of the business of
      the Corporation;                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (y)  | if necessary, institute special investigations and, if
      appropriate, hire special counsel or experts to assist in any such
      investigations;                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (z)  | 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;                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (aa) | 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                                   
| |      |                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                            
| | (bb) | generally, perform other functions as may be requested
      from time to time by the Board.                                                                                                                                                                                                                    

Adopted by the Board of Directors 
  on May 17, 2013

---