Augusta Resource Corp (AZC)

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Polluted Italy site a window to Rosemont

A new video documentary portrays a sister company of Rosemont Copper's Canadian parent as unwilling to clean up a polluted Italian gold mine site and willing to walk away from it.

"Cyanide Beach" - a film financed by Farmers Investment Co., a leading opponent of the proposed Rosemont Mine - will be shown in Tucson Thursday.

The film was made by longtime investigative reporter John Dougherty, who has been paid by FICO to investigate Rosemont Copper's parent, Augusta Resource Corp.

FICO, which grows pecan trees in Sahuarita, opposes the mine partly because of competition for water. The mine would be built in the Santa Rita Mountains southeast of Tucson. Dougherty said FICO executives Dick and Nan Walden didn't review or have input into his documentary.

Dougherty's research included trips to Sardinia, Italy, and Vancouver, British Columbia. He estimated the film's cost at $25,000.

The movie is about Sargold Resource Corp., which for several years held a 90 percent interest in a gold mine on the island of Sardinia. Sargold, based in Vancouver, had five of the same directors who now sit on the governing board of Augusta Resource Corp., Dougherty said, including Augusta President-CEO Gil Clausen and Augusta board Chairman Richard Warke. Sargold used the same street address as Augusta, which owns the Rosemont Mine site's private land.

An Augusta Resource Corp. spokeswoman denounced the film as "simply another attack by those opposed to the development of a 21st-century copper project."

"There's very little for us to say that we have not said about the continuous waves of proven false personal attacks upon Rosemont and our team by opponents," said Letitia Cornacchia, Augusta's vice president for investor relations and corporate communications.

Rosemont proposes to mine copper and not gold, and Italy has different environmental rules than the U.S. But Dougherty said Sargold's behavior is what's relevant to the Rosemont controversy. The film's trailer spells out his point: "Two communities, separated by thousands of miles, and one common problem: Canadian mining speculators."

"Sargold passed the buck along, and the end result is a bankrupt operation with an environmental mess that will be foisted upon taxpayers," Dougherty said.

Dougherty said the video shows Sargold made a bunch of business-related promises it didn't keep after buying the mine in 2003. Sargold inherited the pollution. It involved cyanide used to leach the gold from ore leaking into the ground through a tailings dam, Dougherty said.

Sargold told the Sardinian government it would not clean the pollution unless the government let it mine other Sardinia sites, Dougherty said. The government refused, and the pollution wasn't cleaned, even though Sargold had a legal obligation to do it, he said.

Sargold merged with the company Buffalo Gold in 2007, and the merged company folded in late 2008, he said. Dougherty repeatedly offered to interview Augusta officials, but they refused, he said.

Augusta spokeswoman Cornacchia called the film and Dougherty's statements "biased, misleading and inaccurate." Cornacchia, who has not seen the film, declined to elaborate, adding, "The film is based on a flawed premise - produced by one paid by a leading opponent. It is not journalism. Remember that he is the same individual who provided flawed research for a complaint that was filed with the state and was proven wrong and rejected. We will not engage a back and forth."

Cornacchia was referring to the Arizona Corporation Commission's rejection last May of a complaint, filed by mine opponents and based on Dougherty's research, that Augusta broke state law by failing to disclose a bankruptcy filed in Canada by a company of which Warke and another, former Rosemont Copper board member were officers.

In response, Dougherty noted that the ACC didn't find his research factually incorrect; it found the bankruptcy wasn't required to be disclosed in Arizona because it happened outside the U.S.

IF YOU GO

"Cyanide Beach" will be shown at 7 p.m. Thursday at Crossroads Festival Cinema, 4811 E. Grant Road. Admission is free but advance, online RSVPs are requested at http://www.investigativemedia.com/rsvp-for-august-23rd-premiere-of-cyanide-beach/

Contact reporter Tony Davis at [e-mail] or 806-7746.