2008 Mineral Resource Update for the Rosemont Project

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2008 Mineral Resource Update
for the Rosemont Project
Pima County, Arizona, USA

Date: December 4, 2008

Prepared for:
Augusta Resource Corporation
4500 Cherry Creek South Drive, Suite 1040
Denver, Colorado 80246

Prepared by:

WLR Consulting, Inc.
9386 West Iowa Avenue
Lakewood, Colorado 80232
Tel/Fax: (303) 980-8528

Principal Author and Qualified Person: William L. Rose, P.E.

Other Contributors:
Kathy Arnold – Augusta Resource Corporation
Tom Drielick, P.E. – M3 Engineering & Technology Corporation
Donald Elkin – Mine Reserves Associates, Inc.
Shea Clark Smith, P.G. – Independent Consulting Geochemist
Mark G. Stevens, C.P.G – Augusta Resource Corporation

3 SUMMARY

This technical report was prepared in support of a press release made by Augusta Resource Corporation on October 23, 2008, in which new mineral resource estimates were announced. The updated mineral resource estimates presented herein incorporate sample assays received for an additional 30 drill holes, of which 20 were drilled during the 2008 campaign and 10 were previously unsampled geotechnical holes. Augusta geologists revised the lithology interpretations to account for new drilling information and have added a small “mixed” (i.e., transitional) zone in a localized area between oxide and sulfide mineralization. At the time of this writing, an update to the Rosemont feasibility study is in progress and a new technical report is due to be filed on or before January 2, 2009, in which updated mineral reserve estimates, development plans and recommendations will be presented.

The Rosemont copper-molybdenum-silver deposit is located in Pima County, Arizona, USA approximately 30 miles (50 km) southeast of the city of Tucson, Arizona. Augusta Resource Corporation (Augusta) has recently completed a 20-hole, 17,522 feet (5,341 meters) diamond drilling program on the deposit for resource in-fill and expansion purposes. In addition, 10 previously unsampled geotechnical holes were sampled for a total of 6,176 feet (1,882 meters). In 2006, Augusta completed a 40-hole, 68,727 feet (20,948 meters) diamond drilling program on the deposit, consisting of resource, geotechnical, and metallurgical holes. In 2005, Augusta carried out a 15-hole, 27,402 feet (8,352 meters) diamond drilling program. The results of all three of these drilling and sampling campaigns have been integrated with approximately 210,000 feet (64,000 m) of previous drilling, conducted by other companies prior to Augusta’s involvement, to estimate the mineral resources presented in this report. This report provides for an updated mineral resource statement from that of the previous WLRC Technical Report dated April 26, 2007.

The Rosemont Deposit is the principal known area of mineralization on the Rosemont Property, a group of patented mining claims, unpatented mining claims and fee land that in aggregate total approximately 15,000 acres (6,070 hectares). Augusta completed the purchase of the Rosemont Property in 2006, subject to a 3% Net Smelter Return (NSR) royalty. The Rosemont Deposit is a typical representative of the porphyry copper class of deposits. Similar to many of other southwestern USA deposits in this class, Rosemont consists of broadscale skarn mineralization developed in Paleozoic-aged carbonate sedimentary rocks in and adjacent to their contact with quartz-latite or quartz-monzonite porphyry intrusive rocks. The deposit has been extensively drilled using diamond core holes.

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

Updated measured and indicated mineral resource estimates for the Rosemont Deposit are summarized in Tables 3.1 and 3.2, respectively. The combined measured and indicated mineral resource estimates are presented in Table 3.3. Inferred mineral resource estimates are shown in Table 3.4. Imperial units are used in these estimations, where tons refer to short tons (2000 lbs). For comparison with the previous mineral resource estimates by WLRC (2007 and 2006), copper equivalent (CuEqv) values are based on prices of $1.25/lb Cu, $18.00/lb Mo and $8.50/oz Ag, with no applied recovery factors.

Augusta’s recent drilling campaign at the Rosemont deposit has increased both the quantity and confidence level of the estimated mineral resources above a 0.20% Cu cutoff, which presently total about 562 million tons of measured and indicated combined-mixed-plus-sulfide mineral resources grading 0.50% Cu, 0.015% Mo and 0.12 opt Ag. An additional 180 million tons of inferred combined-mixed-plus-sulfide mineral resources are estimated at a grade of 0.44% Cu, 0.008% Mo and 0.06 opt Ag using the same cutoff. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The 2008 drilling and sampling has significantly increased the oxide mineral resources above a 0.10% Cu cutoff by almost 29 million tons (+39%). At this cutoff, measured and indicated oxide mineral resources are estimated at over 103 million tons grading 0.20% Cu. An additional 30 million tons of inferred oxide mineral resources are estimated at a grade of 0.24% Cu using a 0.10% Cu cutoff.