Rosemont Copper, Pima County, Ariz. Source: Augusta Resources.

Like offsetting penalties in football, Augusta Resources (NYSEMKT: AZC) received a ruling that could have advanced the ball further down the field, but because a simultaneous announcement that could have bigger impact on the future of its Arizona Rosemont copper project, Augusta's stock ultimately gave up more than 5% of its value.

The Rosemont mine is expected to produce 243 million pounds of copper per year when operational, which would make it this country's third-largest copper mine, behind Freeport-McMoRan's (FCX 0.47%) Morenci project in Arizona, which produces 664 million pounds annually, and Rio Tinto's (RIO -0.11%) Bingham Canyon in Utah, that until a massive and catastrophic landslide last year was supplying 465 million pounds a year. Augusta hopes to begin construction on Rosemont in the second half of this year with first production expected to occur in early 2017.

Source: Augusta Resources Rosemont fact sheet.

In February, as Augusta awaited a response from the U.S. Forest Service and Army Corps of Engineers on its permitting applications, HudBay Minerals (HBM 0.43%) swooped in with a hostile takeover offer valued at C$540 million, one which Augusta characterizes as an "opportunistic lowball bid." In response, it adopted a poison pill defense that would automatically issue new shares if more than 15% of Augusta's outstanding stock is acquired. On Friday, investors backed the miner's shareholder rights plan with more than 94% of those outside of HudBay's shares voting in favor of it.

HudBay had attempted to have British Columbia's securities regulators block the poison pill, but they ruled it could stay in effect, at list till mid-July.

While that would have given Augusta the chance to move the ball up the field, it was simultaneously dealt a setback by the Forest Service, which delayed its decision on the project till at least the end of the month to address comments it received on the miner's project, as well as the Army Corps of Engineers raising objections to Rosemont because there is a shortfall between Augusta's proposed mitigation plans and what's needed for its water use plans.

The double hit caused investors to fret it may not be able to surmount the hurdles as Augusta hadn't previously revealed the Corps' concerns that were received in February when it said it wouldn't make its decision on the project till the end of June after the Forest Service weighs in.

While Augusta has characterized HudBay's communications with investors as "misleading," the miner's failure to bring these discussions to light sooner certainly appears to lend credence to HudBay's charges Augusta was being too optimistic about its chances for getting permit approval. It said early on there was "no reasonable prospect of Augusta being fully financed and commencing construction in mid-2014" and the decision-making delays by the Forest Service and Army Corps of Engineers certainly bear that out.

The delays also raise considerable risk for the miner as it has bills coming due in July, for which it currently doesn't have the funds. While Augusta secured a $230 million commitment from Silver Wheaton (WPM -1.13%) in exchange for 100% of life-of-mine silver and gold production from Rosemont (and an additional $106 million from its joint venture partner) the silver streamer's financing is conditional on Augusta gaining permit approvals and complete the remaining $890 million in funding for the project. 

All these deadlines are converging and don't give Augusta Resources much chance to run out the clock on HudBay's offer. With the Environmental Protection Agency also not on board with Rosemont, believing the project is "out of balance with the impacts" it will cause to the environment -- not to mention that it has veto power over the Army Corps' permitting -- Augusta's plans as currently envisioned look to be in grave doubt.

HudBay Minerals' offer may not be optimal for Augusta Resources investors, but it might keep them from being penalized if the miner fails to gain regulatory approval.