UPDATE 1-Augusta asks shareholders to reject HudBay's buyout offer

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Feb 24 (Reuters) - Canadian exploration company Augusta Resource Corp AZC.TO AZC.N has asked its shareholders to reject base metal miner HudBay Minerals Inc's HBM.TO hostile offer to buy all the shares in Augusta it does not own.

Augusta's Rosemont copper project in Arizona is considered to be one of the most promising in the United States.

"The unsolicited offer is grossly inadequate and does not come close to recognizing the full and fair value of Augusta and the world-class Rosemont project," Augusta Executive Chairman Richard Warke said in a statement on Monday. News Search ID:nPn4bM5SJ

Augusta said the timing of the offer was "highly opportunistic." The company is expected to receive final approval to start work at Rosemont in a few weeks.

Rosemont is expected to be the third-largest U.S. copper mine and account for as much as 10 percent of the country's copper output.

According to HudBay's offer, Augusta shareholders will get 0.315 of a HudBay share for each share held.

HudBay, which owns about 16 percent of Augusta's outstanding shares, said earlier this month that the enterprise value of the all-stock deal could be about C$540 million ($485 million).

($1 = 1.11 Canadian dollars)

(Reporting by Ashutosh Pandey in Bangalore; Editing by Joyjeet Das)

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Keywords: AUGUSTA HUDBAY/OFFER