Fellow Shareholders,

I am pleased to provide you with an update on Augusta’s activities for 2008 along with an outlook for what lies ahead in 2009.

During 2008 we delivered on a number of our corporate objectives and continued to lay the foundation for what we believe will be an exciting future for our company.

Updated Resource Estimate and Bankable Feasibility Study
In October we completed an updated resource calculation for the Rosemont project based on results from 20 new core holes drilled during 2008, as well as the sampling of 10 previously un-sampled geotechnical holes from 2006. The update outlined a 14% increase in reserves and a 16% reduction in strip ratio. Rosemont’s total measured and indicated mineral resource (oxide, mixed, and sulfide) is now estimated at 7.7 billion pounds of copper, including a reserve of 5.2 billion pounds. Once in production in late 2011, Rosemont will account for 10% of all US copper output.

This updated resource calculation was followed by the completion of an updated bankable feasibility study in early January that verified Rosemont’s robust economics. Using long-term metal pricing of US$1.85 per pound of copper, US$15 per pound of molybdenum, and US$12 per ounce of silver, the project generates an NPV (5%) of US$1.2 billion, an after-tax IRR of 17.8%, and a payback of five years on an after-tax basis. Even applying the average spot metal prices witnessed in December 2008 of $1.36 per pound copper, $11.00 per pound of molybdenum and $10.79 per ounce of silver, the project generates an after-tax IRR of 7.7%.

Cash costs are estimated at US$0.62 per pound of copper, net of by-product credits, while the total capital cost is estimated at US$897 million. The mine life based on current mineral reserves is 21 years, with cathode production commencing in Q4 2011 and concentrate production in Q1 2012.

This updated feasibility confirmed Rosemont is a low-cost, low-risk, large-scale project that incorporates the best in sustainability and environmental practices. Rosemont is well serviced with existing infrastructure. The project is accessible by paved highway and lies within 15 kilometres of a major transmission line and the main rail lines connecting with smelting facilities and a major ocean port.

Metallurgical Update
Ongoing flotation test work in 2008 was conducted using representative composite samples prepared from the drill holes that approximate the first three years of mine production and another composite suite of samples representing the next four years.

The aim of the test work was firstly to vary the operating conditions in the flotation circuit to optimize and improve the recoveries for copper, molybdenum and silver; secondly to produce concentrate samples for marketing purposes; and finally to produce tailings samples for further filtration characterization test work for the final engineering design. The results, using a newly developed set of reagents, have been encouraging to date and have produced the following overall recovery ranges for the individual metals: molybdenum 65% to 75%, silver 77% to 80% and copper 83% to 86%.

Permitting
Significant progress was made in advancing Rosemont’s permitting plan during 2008, including:

• The United States Forest Service (USFS) completion of the Environmental Impact Study (EIS) scoping process with extensive public hearings and comment gathering on the company’s Plan of Operation
   
• Initiation of detailed mitigation planning by Rosemont
   
• Modification of the Memorandum of Understanding between the USFS and the Company’s wholly owned subsidiary Rosemont Copper Company, incorporating a revised schedule for the EIS and with a date established for issuance of the Record of Decision
   
• Acceptance of the Rosemont Mine Land Reclamation Plan as administratively complete by the Arizona State Mine Inspector, and completion of a groundwater monitoring well system

The revised EIS timeline issued by the USFS sets out detailed specific steps in the process and calls for a Record of Decision on Rosemont in July 2010. This is positive news for the project as the new schedule now includes USFS Regional Office review of each step in the process, additional public participation, and for the first time sets a date for the Record of Decision.

Credit Facility
In 2008 we secured a US$40 million credit facility through Sumitomo to fund major equipment contracts and general working capital. To date we have drawn about $32 million and have paid deposits on all critical long lead-time capital equipment. Interest on the facility accrues at LIBOR plus 1.5% and is payable along with the principle when the facility matures at the end of June 2010, by which time we expect to have full project financing in place.

In exchange for the loan, Augusta granted Sumitomo certain rights to negotiate a minority ownership interest in the Rosemont project.

ASARCO Lawsuit
Subsequent to the end of 2008 we reached an agreement to settle the lawsuit filed by ASARCO in 2007 under which ASARCO sought to have the Rosemont property returned to them. We believe ASARCO’s complaint was completely unfounded, but recognized that continued litigation could have taken months or years and potentially cost millions of dollars in court fees, experts, and other expenses. Under the settlement, we will pay $250,000 dollars up front and at our election, will pay either $2.6 million in 2009, or $2.68 million in 2010, or a production payment stream, when the mine is in production, that equals $9 million spread out over eight years. Under this option, the payments would come solely out of net profits from the mine and would not, in any year, exceed 25% of net profits. The settlement minimizes costs to Augusta and eliminates a cloud over our ownership of the property. We are extremely pleased this distraction has been resolved as it allows us to turn our full attention toward developing the mine.

Marketing
We continue to meet with investors to keep them apprised on development activities, participating in several North American conferences and road shows. In addition, TD Newcrest, CIBC and Wellington West initiated research coverage on Augusta during 2008 bringing the number of analysts following the company to six. We are working to achieve greater exposure to institutional and retail investors and generate a broader shareholder base. While our share price is not at a level we believe accurately reflects the value of our asset, we are confident in our ability to deliver value to shareholders as the project moves forward. We are working hard to communicate openly with investors and customers in order to return the share price to a fair valuation level.

2009 Objectives

As we look forward to 2009 our most important objective will be to finalize a project financing structure for Rosemont. We have retained TD Securities as our financial advisor to assist in assessing the various financing alternatives for the project.

Also during 2009 we will continue to advance detailed engineering work with an eye to being ready for construction when the USFS sets their Record of Decision on Rosemont in July 2010. We will also be working this year to secure major environmental approvals required before construction, and will complete the draft EIS.

Board and Management Appointments
We have an accomplished and proven management team with extensive experience in operations, exploration and development. Early in the year we appointed Rod Pace to the role of Vice President, Operations. Rod has extensive experience with mine start-up and operations. In November we promoted Raghu Reddy to Vice President and Chief Financial Officer. Raghu has more than 25 years experience in the development and financing of mining, power generation and infrastructure projects. Also in November we promoted Mark Stevens to the position of Vice-President, Exploration. Mark has more than 27 years of technical and managerial experience in the exploration, evaluation, and mining of base and precious metals and at the time of his appointment had been with Augusta for two years as Chief Geologist. And finally, we were pleased to have Tim Baker join our Board of Directors. Tim is Executive Vice President and Chief Operating Officer of Kinross Gold Corporation, and has extensive experience in mine operations following a lengthy career with Placer Dome. Each of these individuals will be a tremendous asset to Augusta as we move Rosemont through development and into production.

Sincerely,
Gil Clausen
President and Chief Executive Officer
March 30, 2009