AQUILA RESOURCES ANNOUNCES LETTER OF INTENT FOR SALE OF ITS BEND AND REEF PROPERTIES

Highlights

  • Total consideration of $7,000,000 payable to Aquila will consist of:
    • Cash consideration of $3,000,000, of which $1,000,000 will be advanced immediately as a deposit (the “Deposit”); and
    • Shares in Newco with an estimated value on completion of the go-public transaction of $4,000,000.

TORONTO–(BUSINESS WIRE)–

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to announce that it has entered into a non-binding letter of intent (the “LOI”) to sell its interest in the Bend and Reef exploration properties located in Wisconsin, USA to a private company (“Newco”) (the “Transaction”). Subject to necessary approvals, Newco intends to list on the TSX Venture Exchange (the “TSX-V”) concurrent with the closing of the Transaction. All dollar amounts are reported in Canadian dollars.

Total consideration of $7,000,000 payable to Aquila will consist of:

  • Cash consideration of $3,000,000, of which $1,000,000 will be advanced immediately as a deposit (the “Deposit”); and
  • Shares in Newco with an estimated value on completion of the go-public transaction of $4,000,000.

Guy Le Bel, President & CEO of Aquila, commented, “We are very pleased to have reached an agreement in principle to monetize our non-core Wisconsin assets. The Transaction provides Aquila with immediate cash without diluting Aquila shareholders. It also provides us with meaningful upside exposure to an exciting new exploration focused company with the resources to explore the Bend and Reef properties as Aquila focuses on the development of Back Forty.”

Completion of the Transaction is subject to certain conditions including, but not limited to, the completion of definitive documentation, completion of financing by Newco, listing of Newco on the TSX-V and receipt of all necessary third-party consents and approvals, including the approval of the TSX-V. In the event the Transaction does not close, Aquila will return the Deposit in shares of Aquila (subject to the receipt of all necessary approvals of the Toronto Stock Exchange) or in cash, depending on the circumstances.

ABOUT AQUILA
Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development‐stage company focused on high grade polymetallic projects in the Upper Midwest, USA. Aquila’s experienced management team is currently advancing pre-construction activities for its flagship 100%‐owned gold and zinc‐rich Back Forty Project in Michigan.

The Back Forty Project is a volcanogenic massive sulfide deposit with open pit and underground potential located along the mineral‐rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional exploration upside. An optimized Feasibility Study for the Project is underway.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold.

Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. In particular, this news release contains forward-looking information pertaining to the following: the ability of the Company to close the Transaction on the terms outlined in the LOI or at all, the ability of Newco to list on the TSX-V, and other development plans and objectives. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210601005209/en/

Guy Le Bel, President & CEO
Tel: 450.582.6789
glebel@aquilaresources.com

David Carew, VP Corporate Development & Investor Relations
Tel: 647.943.5677
dcarew@aquilaresources.com

Source: Aquila Resources Inc.


AQUILA RESOURCES - BACK FORTY UPDATE

Highlights

  • Key objectives of optimized Feasibility Study identified
  • Not proceeding with appeal of the January 2021 Administrative Law Judge denial of prior issuance of Wetlands Permit
  • Not proceeding with the contested case of the amended Mining Permit
  • Withdrawal of the Dam Safety Permit application
  • The company is maintaining its Air Permit and NPDES Permit

TORONTO, ON – May 11, 2021 – Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the
“Company”) is pleased to provide an update on its Back Forty Project in Michigan.

Optimized Feasibility Study 

In March 2021, Aquila engaged Osisko Technical Services (“OTS”) to lead an optimized feasibility study (the “Feasibility Study”) for the Back Forty Project. Aquila is leveraging OTS’ combined engineering, permitting, construction and operating expertise to unlock value and advance the Back Forty Project through its next phase of development.

A key objective of the optimized Feasibility Study is to reflect feedback from the Michigan Department of Environment, Great Lakes & Energy (“EGLE”) and the local community since the original Back Forty permits were issued. By incorporating the underground mine plan in the Feasibility Study and modifying the Project footprint, the Company expects to demonstrate substantially reduced surface impact, including wetland impacts, and a longer mine life for the benefit of all stakeholders.

Current Feasibility Study activities are focused on:

  • Evaluating open pit configurations and surface infrastructure layouts that avoid direct impact to regulated wetlands;
  • Progressing underground mine planning including ore delivery scheduling, ventilation, and confirming the location of the box cut;
  • Updating the mineral resource estimate using current metal prices and Net Smelter Return calculations; and
  • Preparing samples for additional metallurgical tests to support a simplified process flowsheet and enhanced gold recoveries.

Subject to securing additional funding, the Company’s objective is to complete the Feasibility Study in Q4 2021.

Guy Le Bel, President & CEO, commented, “We are committed to advancing the Back Forty Project with a collaborative approach that integrates feedback from the community. Our goal is to design, build and operate a 21st century mine in sync with American values of safety, quality work, leading-edge technology, and environmentally responsible mineral extraction. The resulting mine will offer over a decade of net benefits to local and regional communities while being protective of the environment.”

Permitting

The Feasibility Study design will build on the substantial technical and environmental work that Aquila has completed since the submission of the original permit applications and the completion of the 2018 open pit feasibility study. Given the enhancements to the Project and the ability to demonstrate substantially reduced environmental impact by incorporating the underground mine plan, Aquila believes the most efficient path to shovel-ready status is to focus efforts on successfully permitting the optimized Feasibility Study design.

As such, the Company has determined not to proceed with its appeal of the January 2021 decision by an Administrative Law Judge to deny the prior issuance of the Wetlands Permit. The Feasibility Study team is focused on a design seeking to avoid direct impacts to wetlands.  Even if a Wetlands Permit is required, Aquila expects that it will be able to secure a re-issued permit from EGLE based on the fieldwork already completed under the existing Wetlands Permit and progress on the groundwater modeling that would be used to support any estimates of indirect wetland impacts.

The Company has also determined not to proceed with the contested case of the amended Mining Permit. As the amended Mining Permit only contemplates the open pit portion of the Project, there is no benefit to continuing to dedicate resources to a permit under which the Company does not plan to proceed. Following the completion of the Feasibility Study, the Company will submit an application for a Mining Permit that reflects the optimized design, including the underground mine plan. Should a Wetlands Permit and Dam Safety Permit be required, the Company will submit applications for these permits concurrent with the Mining Permit application. A key benefit of this approach is that it should facilitate a consolidated review process and, compared to a sequential process, compress the timeline to permit issuances.

The Company is maintaining its Air Permit and National Pollutant Discharge Elimination System (NPDES) Permit in good standing and will proceed with timely renewals of these permits, as required.

ABOUT AQUILA

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development‐stage company focused on high grade polymetallic projects in the Upper Midwest, USA. Aquila’s experienced management team is currently advancing pre-construction activities for its flagship 100%‐owned gold and zinc‐rich Back Forty Project in Michigan.

The Back Forty Project is a volcanogenic massive sulfide deposit with open pit and underground potential located along the mineral‐rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional exploration upside. An optimized Feasibility Study for the Project is underway.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

For further information, please contact:

Guy Le Bel, President & CEO
Tel: 450.582.6789
glebel@aquilaresources.com

Barry Hildred, Executive Chair
Tel: 647.943.5672
bhildred@aquilaresources.com

David Carew, VP Investor Relations
Tel: 647.943.5677
dcarew@aquilaresources.com

Source: Aquila Resources Inc.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.


MICHIGAN STATE SENATE ADOPTS SR 16 - SUPPORT FOR MINING

Highlights

  • Through bipartisan support and an unanimous vote, SR 16 was adopted by the Michigan Senate on April 28, 2021. The resolution to expresses support for mining and the mining industry and encourages the Governor, state agencies, local governments, members of the public, and labor organizations to support mining by taking certain actions.

 


AQUILA RESOURCES PROVIDES CORPORATE UPDATE

Highlights

  • Appealed the Judge’s Wetlands Permit decision to the EGLE permit review panel
  • Received an outpouring of local support from senior leadership in Michigan
  • Will continue to work with EGLE to finalize the Back Forty groundwater model in support of a revised application seeking a reissuance of the Wetlands Permit
  • Will undertake optimization studies to assess Project opportunities
  • Evaluating financing alternatives with support from key stakeholders

TORONTO–(BUSINESS WIRE)–

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to provide an update on its strategy to advance its Back Forty Project in Michigan’s Upper Peninsula following the January 4, 2021 decision by an Administrative Law Judge (“Judge”) denying the prior issuance of a wetland/stream/floodplain permit (“Wetlands Permit”). The Michigan Department of Environment, Great Lakes, and Energy (“EGLE”) issued the Wetlands Permit to the Company in June 2018 following years of environmental baseline work and a thorough review process including comment periods and public hearings and review by the U.S. Environmental Protection Agency. Aquila believes that the Judge’s decision was based largely on a strict interpretation of the administrative completeness of the permit application rather than a specific view on the Project itself. As Aquila has been proactive in addressing the initial permit conditions since the issuance of the Wetlands Permit, the Company believes the Judge’s decision only represents a temporary setback for the Project.

Barry Hildred, President & CEO of Aquila, commented, “While we were disappointed by the Judge’s decision, we have a high level of confidence that there is a clear path to successfully permitting the Back Forty Project, regardless of the outcome of our appeal. Our relationship with EGLE is strong and we have made good progress addressing the conditions in the original Wetlands Permit. Given the current uncertain economic climate, we believe that projects like Back Forty are even more critical to providing the jobs and community support that Michigan needs, while at the same time protecting the environment.”

Appeal to EGLE Environmental Review Panel

Aquila has appealed the Judge’s decision to the EGLE environmental review panel (“Panel”). EGLE will convene a three-person panel of experts with relevant experience within 45 days. The Panel will then hear arguments and is expected to render a decision later in 2021. The Panel has the authority to adopt, remand, modify, or reverse, in whole or in part, the Judge’s decision. The decision of the Panel will become the final decision of EGLE.

Through its appeal, at a minimum, Aquila is seeking to clarify certain aspects of the decision to facilitate further permitting efforts for the Back Forty Project. The Judge found Aquila’s Wetlands Permit application to be administratively incomplete due to alleged lack of an agreed upon groundwater model and lack of reliable identification of potential indirect wetland impacts related to groundwater drawdown caused by pit dewatering. The Judge’s determination that the Project is not in the public interest and that Aquila’s alternatives analysis was inadequate was largely based on the same alleged lack of information about indirect wetland impacts. As such, even though Aquila has been working with EGLE to satisfy permit conditions requiring further data collection and groundwater modeling to validate previous conclusions regarding indirect impacts, the Judge found that the statute required Aquila to provide all of the information before a permit could be issued.

Notably, the Company believes that there is nothing in the decision that would prevent Aquila from obtaining a Wetlands Permit for the same or a similar mine plan.

While the appeal is in process, the Company requested, and has been granted, a stay of proceedings of the contested case related to the amended Mining Permit.

The Back Forty Project Continues to Receive Strong Support from Local Leadership

Aquila is pleased to highlight the support that the Back Forty Project has received locally.

A delegation of Upper Peninsula lawmakers including Sens. Ed McBroom and Wayne Schmidt, and Reps. Greg Markkanen, Beau LaFave, and Sara Cambensy expressed their support for responsible mining and the Back Forty Project in a joint statement:

Mining has been a critical component of the Upper Peninsula way of life for generations. Our state has enacted some of the most stringent mining and environmental regulations in the world to ensure that Michigan mines must operate as good stewards and valued parts of our local communities.

Through a rigorous process with EGLE, this permit was rightly approved, and we remain hopeful that the department will work with Aquila to address this wrongful rejection of the permit…. We vow to work together in stressing the importance of this project and reasonable regulations overall, as one U.P., to ensure that one judge’s decision is not the policy position advanced in Michigan. Our communities want and support mining in the U.P. now as in the past generations.

In a letter to the Company dated January 20, 2021, Tony Retaskie, Executive Director of the Upper Peninsula Construction Council (“UPCC”), a group made up of over 250 quality construction contractors located across the Upper Peninsula of Michigan, stated:

On behalf of the U.P. Construction Council, I’m sorely disheartened by the rejection of your Wetlands Permit Application.

Our Labor/Management Council, made up of nearly 3,500 members, fully supports responsible mining such as what Aquila Resources proposes with the Back Forty Project. We realize the positive economic spiral this project would create for the Upper Peninsula. With an initial capital investment of $250 million and a life of mine payroll estimated to exceed $280 million, the Back Forty Mine would directly and indirectly create hundreds of jobs, including construction hires, paying solid, family sustaining wages. The Project will also contribute greatly to Michigan and local budgets as a major tax and royalty payer.

Mined products, as you know, are everywhere in our daily lives, from beauty products, to transportation and cell phones. The UPCC would prefer these products be mined here, where we have some of the strongest mine regulations there are.

Although we are disappointed with the judge’s decision, we urge you to continue your efforts to advance the Project to the operations phase and we pledge our support for the Back Forty Project.

The Company will Continue to Work with EGLE to Secure a Reissued Permit

It has always been the Company’s intention to satisfy the original Wetlands Permit conditions and Aquila has made significant progress over the last two years in this respect. In particular, data collection and interpretation related to the groundwater model is substantially complete. In parallel with its appeal, Aquila will continue to work closely with EGLE to reach consensus on the groundwater model. Once EGLE has accepted the Company’s model, EGLE will be in a position to evaluate a revised permit application and reissue the Wetlands Permit.

Project Optimization Studies

As the Company works through the appeal and continues its collaboration with EGLE in support of a revised Wetlands Permit application, the Company will conduct optimization studies that will seek to evaluate areas of opportunity identified in the Company’s 2020 Preliminary Economic Assessment. These include opportunities to increase gold recoveries in light of improved metal prices and optimizing the mine plan to enhance economics and reduce the open pit strip ratio. Fortunately, once EGLE has accepted the foundational groundwater model, the model can be applied in the context of any potential improvements to the Project.

Financing Update

Over the past several weeks, Aquila management has had numerous discussions with its key stakeholders including Osisko Gold Royalties Ltd. The stakeholders have reaffirmed their support for the Project and they share Aquila’s view that while the Judge’s decision represents a temporary setback, the Back Forty Project will be successfully permitted and built.

Aquila is working with its key stakeholders and its financial advisor to secure capital that will enable the Company to advance the above initiatives as well as to fund exploration activities at its Reef and Bend projects in Wisconsin.

About Aquila

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development-stage company focused on high grade and gold-rich projects in the Upper Midwest, USA. Aquila’s experienced management team is focused on advancing pre-construction activities for its 100%-owned gold and zinc-rich Back Forty Project in Michigan.

Aquila’s flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

Barry Hildred
Aquila Resources Inc.
Tel: 647.943.5672
Email: bhildred@aquilaresources.com

Guy Le Bel
Aquila Resources Inc.
Tel: 450.582.6789
Email: glebel@aquilaresources.com

David Carew
Aquila Resources Inc.
Tel: 647.943.5677
Email: dcarew@aquilaresources.com

Source: Aquila Resources Inc.


AQUILA RESOURCES ANNOUNCES ORGANIZATIONAL CHANGES

– Aquila Resources Announces Organizational Changes –

TORONTO–(BUSINESS WIRE)–

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to announce the appointment of Guy Le Bel as President & CEO of Aquila, effective February 1, 2021. Barry Hildred will transition to the role of Executive Chair of the Board of Directors. The Board has appointed Ted Munden, outgoing Chair of the Board of Directors, to the position of Lead Director.

“My focus as Executive Chair will be supporting Guy as he drives the Back Forty Project and our exploration projects in Wisconsin through their next phase of development,” said Barry Hildred. “I look forward to working closely with Guy on strategic initiatives, capital raising, and stakeholder relations.”

Guy Le Bel brings more than 35 years of experience in business and project development, strategic and financial planning, and permitting in the Americas to Aquila. Most recently, he was CEO and CFO of Golden Queen Mining Ltd. until its acquisition in 2020 by Falco Resources Ltd. Mr. Le Bel was previously Vice President, Evaluations for Capstone Mining Corp. and Vice President, Business Development for Quadra/FNX Mining Ltd. Mr. Le Bel also held business advisory, strategy and planning, business valuation, and financial planning management roles at BHP Billiton Base Metals, Rio Algom Ltd, and Cambior Inc., together with independent consultation mandates across the industry. He provides extensive experience across base and precious metals industries in the Americas. Mr. Le Bel has held board positions in numerous junior exploration and mining companies since 2007 and currently serves on the Board of Pembridge Resources plc. and Kintavar Exploration Inc. Mr. Le Bel holds an MBA Finance from Ecole des Hautes Études Commerciales (Montreal), a Master Applied Sciences, Mining Engineering from the University of British Columbia and a B.Sc. Mining Engineering from Université Laval. He is a Professional Engineer (O.I.Q.).

“The Board thanks Barry for his leadership and ongoing commitment to Aquila,” said Lead Director Ted Munden. “Since joining the Company as President & CEO in 2013, Barry has been instrumental in recapitalizing the Company, completing the repurchase of the Back Forty Project from Hudbay Minerals, successfully closing two streaming deals, and advancing the Back Forty Project through the permitting and study phase. We welcome Guy as President & CEO and look forward to benefitting from his significant technical and financial experience.”

“I am excited to join the Aquila team,” said Guy Le Bel. “l see tremendous potential in Aquila’s portfolio of high grade, polymetallic assets and look forward to unlocking their value for the benefit of all stakeholders.”

About Aquila

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development-stage company focused on high grade and gold-rich projects in the Upper Midwest, USA. Aquila’s experienced management team is focused on advancing pre-construction activities for its 100%-owned gold and zinc-rich Back Forty Project in Michigan.

Aquila’s flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210126006026/en/

Barry Hildred
Aquila Resources Inc.
Tel: 647.943.5672
Email: bhildred@aquilaresources.com

Guy Le Bel
Aquila Resources Inc.
Tel: 450.582.6789
Email: glebel@aquilaresources.com

David Carew
Aquila Resources Inc.
Tel: 647.943.5677
Email: dcarew@aquilaresources.com

Source: Aquila Resources Inc.


AQUILA RESOURCES PROVIDES PERMITTING UPDATE

– Judge overturns Back Forty Wetlands Permit –

TORONTO–(BUSINESS WIRE)– Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) announces that on January 4, 2021, an Administrative Law Judge (“Judge”) for the Michigan Office of Administrative Hearings and Rules issued a decision denying the prior issuance of a wetland/stream/floodplain permit (“Wetlands Permit”) for its Back Forty Project in Michigan.

By way of background, petitioners earlier filed an administrative contested case challenge to the issuance of the Wetlands Permit by the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”). The Wetlands Permit was issued by EGLE on June 4, 2018 following years of environmental baseline work and a thorough review process including comment periods and public hearings. The Judge convened an evidentiary hearing in June 2019, which ended in January 2020. In his January 4, 2021 decision, the Judge determined that Aquila’s groundwater model does not provide a reliable identification of wetland impacts and therefore found the permit application to be administratively incomplete. The Judge also determined that Aquila did not provide a complete assessment of potential alternatives to its proposed plan.

The Company strongly disagrees with the Judge’s decision, which is based in significant part on what the Company believes is a misunderstanding of the information concerning the potential for indirect wetlands impacts associated with the Back Forty Project. The decision establishes a permitting approach that markedly departs from wetland permits issued for other mining projects in the Great Lakes region. Aquila worked for several years with EGLE staff during the permitting process to address the complex technical issues associated with estimating potential indirect wetland impacts, landing on an approach that complied with federal U.S. Army Corps guidelines for estimating and permitting such impacts for mining projects.

The Wetlands Permit was issued with specific conditions that must be satisfied prior to the commencement of construction and operations, including a condition that required EGLE to accept an updated groundwater model. During the 31 months since the Wetlands Permit was issued, Aquila has been working constructively with EGLE to satisfy the conditions, and the Company planned to complete the updated groundwater model in 2021. The Company will continue to work with EGLE and believes it will successfully resolve the issues cited in the Judge’s decision.

Barry Hildred, President & CEO of Aquila, commented, “Obviously, we are disappointed by the Judge’s decision. The Company is evaluating its alternatives, which include the submission of an updated permit application or appealing the decision to the EGLE environmental review panel. Aquila has worked diligently to limit impacts to surrounding wetlands and is only directly impacting 11.2 acres of regulated wetlands. Having reviewed the decision, we believe that Aquila will be able to resolve the cited issues and remain confident that Back Forty will be a safe, disciplined operation that promotes and supports local community socio-economic development and is protective of the environment.”

Michigan State Circuit Court Dismisses Challenge to Back Forty Mining Permit

Aquila is pleased to announce that on December 22, 2020, the Ingham County Circuit Court in the State of Michigan upheld the final decision of EGLE to issue the Back Forty Mining Permit after a lengthy contested case hearing initiated by two petitioners. Subsequent to its issuance by EGLE, the Mining Permit was upheld by the Judge and an environmental review panel made up of technical experts from various fields.

The Mining Permit is one of four foundational State permits required for the commencement of construction and operations at Back Forty. In addition to the Mining Permit, regulators in Michigan have previously granted an Air Permit, Wetlands Permit, and a Water Discharge Permit for the Back Forty Project.

About Aquila

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development-stage company focused on high grade and gold-rich projects in the Upper Midwest, USA. Aquila’s experienced management team is focused on advancing pre-construction activities for its 100%-owned gold and zinc-rich Back Forty Project in Michigan.

Aquila’s flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20210105005530/en/
Barry Hildred, CEO
Aquila Resources Inc.
647.943.5672
bhildred@aquilaresources.com

David Carew, Director of Corporate Development & Investor Relations
Aquila Resources Inc.
647.943.5677
dcarew@aquilaresources.com

Source: Aquila Resources Inc.


AQUILA RESOURCES SUBMITS DAM SAFETY PERMIT APPLICATION FOR ITS BACK FORTY PROJECT

– Dam Safety Permit application submitted to EGLE –

TORONTO–(BUSINESS WIRE)–November 17, 2020

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to announce that it has applied to the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”) for a Dam Safety Permit for its Back Forty Project. The Company has already been issued the four foundational State permits required for the commencement of construction and operations at Back Forty, being the Mining Permit, Air Permit, Water Discharge (NPDES) Permit, and Wetlands Permit. The Dam Safety Permit, which is required to build the proposed Tailings Management Facility (“TMF”) and Contact Water Basin, is the final State permit required to commence construction and operations.

Barry Hildred, President & CEO of Aquila, commented, “With input from globally recognized engineering firms including Golder Associates Inc., Aquila is designing an operation that will protect the environment while providing a significant economic opportunity for the counties surrounding the Back Forty Project. We look forward to supporting EGLE with their review of our application and expect the Dam Safety Permit to be issued in 2021. The design of the Back Forty TMF reflects best-in-class safety standards to manage precipitation at the mine site during operations and does not involve impounding or interfering with any water bodies.”

In order to refine elements of the Back Forty Project design, including to reduce wetland impact, improve dust management, increase stormwater storage capacity, and reduce the footprint of tailings facilities post-closure, the Company revised its application for the Wetlands Permit and submitted updated applications for an amended Mining Permit and Air Permit to EGLE, both of which were approved in December 2019. The amended Mining Permit and the Wetlands Permit are subject to ongoing administrative contested case challenges that the Company expects to resolve successfully in due course.

About Aquila

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development-stage company focused on high grade and gold-rich projects in the Upper Midwest, USA. Aquila’s experienced management team is focused on advancing pre-construction activities for its 100%-owned gold and zinc-rich Back Forty Project in Michigan.

Aquila’s flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20201117005506/en/
Barry Hildred, CEO
Aquila Resources Inc.
647.943.5672
bhildred@aquilaresources.com

David Carew, Director of Corporate Development & Investor Relations
Aquila Resources Inc.
647.943.5677
dcarew@aquilaresources.com

Source: Aquila Resources Inc.


Communications Tower-Lake Township

Good Afternoon,

We hope you and your family are well. In an effort to improve communications, internet availability and access to educational opportunities, Aquila Resources began the process of researching entities who could assist us in constructing a communications tower in Lake Township. It was in June of 2019, when we first contacted representatives from Northern Michigan University LTE and their Educational Access Network.

One of our goals in developing the Back Forty Mine is to have a positive impact on our community. The NMU representatives exhibited one way to work towards our goal would be to improve the communications capability in Lake and Holmes Townships, along with helping out our near neighbors in Wisconsin too.

For years, Menominee County has been looking for ways to improve their emergency management system and 911 network. Due to county budgetary constraints, the improvement project was pushed back year after year until adequate financing became available.

Earlier this year, Menominee County hired Gunnerson Consulting to analyze the emergency management system. It was recommended, and agreed upon by the commissioners, to move the 911 Communications Network to a VHF simulcast system. However, there was still a lack of coverage available in Lake and Holmes Townships. Several options were presented to the Menominee County Board of Commissioners, but at a substantial cost, and with less coverage, than if the county elected to house their equipment on our proposed tower.

In an effort to assist the county now, we agreed to build the tower earlier than originally planned with no cost to the county. We were planning to construct the tower for operational communications on the mine site once construction began. Many will ask, what is in it for Aquila Resources? Well, we strive for Zero Harm when it comes to the safety of our employees, contractors and visitors. We do have employees who work and live in the project area. We want everyone, including our neighbors, to stay safe and be able to go home at the end of each day.

You may have heard of the “Golden Hour.” It is the period of time following a traumatic injury during which there is the highest likelihood that prompt medical and surgical treatment will prevent death. The remoteness of the area, and the current lack of communications coverage, impact the first hour response time. We hope our efforts will assist first responders, who tirelessly volunteer their time helping others, for many years to come.

We are willing to work with the county administrator, the commissioners, and Gunnerson Consulting to address any concerns regarding the tower. Be assured the issues will be resolved and adopted into the lease agreement, which will guarantee the best possible coverage for our friends and neighbors in Lake and Holmes Townships.


AQUILA RESOURCES ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR ITS BACK FORTY PROJECT

– PEA includes the known underground Mineral Resources –

BACK FORTY PROJECT PEA HIGHLIGHTS:
(All figures in this news release are expressed in US dollars unless indicated otherwise)

  • Robust economics: After-tax NPV at a 6% discount rate of $176.3 million (approximately CA$235 million) with 26.1% IRR at long term consensus metal prices including $1,485 per ounce gold
  • Significant leverage to gold: After-tax NPV of $316.3 million at a 6% discount rate (approximately CA$422 million) with 37.8% IRR at recent spot prices including $1,998 per ounce gold with gold generating 52% of revenue
  • Includes the known underground Mineral Resources at Back Forty, increasing the life of mine to 12 full years
  • Life of mine production of over 1.5 million gold equivalent1 ounces with production in Year 1 of 206,000 gold equivalent ounces
  • The PEA mine plan consists of open pit mining from Year 1 to Year 5. Underground development will be initiated in Year 5 and underground mining will continue to Year 11. Remaining stockpiles will be processed in Year 12 and a partial Year 13
  • Pre-production capital costs of $250.4 million benefitting from significant nearby infrastructure
  • Potential value enhancement through additional exploration as the deposit remains open at depth
    ___________________________________

1 Refer to Note 4 of Table 1 for an overview of the gold equivalent calculation methodology.

TORONTO–(BUSINESS WIRE)–

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to announce results of a positive Preliminary Economic Assessment (“PEA”) for its wholly-owned Back Forty Project (“Back Forty” or the “Project”), located in the Upper Peninsula of Michigan, USA. The PEA demonstrates Back Forty’s value as a high grade, gold-rich project with compelling economics in a Tier 1 jurisdiction. The PEA builds on the Company’s 2018 open pit Feasibility Study and includes the currently known underground Mineral Resources.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200805005353/en/

Figure 1: Production Profile - The production profile at Base Case metal prices is shown in Figure 1. (Graphic: Business Wire)Figure 1: Production Profile – The production profile at Base Case metal prices is shown in Figure 1. (Graphic: Business Wire)

Barry Hildred, President & CEO of Aquila, commented, “The completion of the PEA is a significant milestone for Aquila that showcases Back Forty’s potential as a near-term producer in the United States at a time when advanced and substantially de-risked projects are scarce. Back Forty is a well-defined project that also holds tremendous exploration potential. We are excited to commence work on an updated Feasibility Study that we anticipate will be completed next year as we advance the Project through the final stages of pre-construction activities. While doing so, we plan on conducting a drill program at Back Forty to continue to expand the Mineral Resource at-depth where the deposit remains open with numerous targets.”

Aquila will host a webcast to provide a corporate update and review the results of the PEA on Tuesday August 11, 2020 at 12 PM ET / 9 AM PT. See details below.

PEA SUMMARY

The PEA was prepared in accordance with National Instrument 43-101 (“NI 43-101”) by P&E Mining Consultants Inc. in collaboration with Golder Associates Ltd. and Lycopodium Minerals Canada Ltd. The team was led by Andrew Boushy, P.Eng. SVP Capital Projects of Aquila with support from Neil Lincoln, P.Eng. of Lincoln Metallurgical Inc. The Company plans to file the PEA Technical Report (“Technical Report”) on SEDAR at www.sedar.com within 45 days of the date of this news release. The PEA is preliminary in nature, includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be classified as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

TABLE 1
PEA SUMMARY METRICS

Area

Item

Units

Base Case
Price Deck1

Spot
Price Deck2

Process Production

Total Process Feed

Million tonnes

15.9

Grade

g/t gold equivalent (AuEq)4

4.2 g/t

3.7 g/t

Total Recovery and Payability

% of contained AuEq

74.3%

73.4%

Payable Gold

koz gold

692

Payable Gold Equivalent

koz gold equivalent

1,543

1,323

Annual Gold Equivalent

koz gold equivalent

128

110

Life of Mine

Years

12 years

Throughput

Tonnes per day (t/d)

Nominal 2,800 t/d sulphides + 350 t/d oxides

Metal Price Deck

Gold

$/oz

$1,485

$1,998

Zinc

$/lb

$1.08

$1.04

Copper

$/lb

$3.05

$2.92

Silver

$/oz

$18.20

$25.00

Lead

$/lb

$0.91

$0.83

Revenue and OPEX

Gross Revenue

$/t process feed

$132

$149

NSR

$/t process feed

$113

$130

Total Site Opex

$/t process feed

$52

Royalties

% of NSR

2.0%

2.1%

EBITDA3

$/t process feed

$59

$75

EBITDA margin

% of EBITDA / NSR

52%

58%

C1 Cash Costs (co-product)3

$/oz gold equivalent

$733

$854

C1 Cash Costs (by-product)3

$/oz gold

$(1,392)

$(1,791)

CAPEX

Initial Capital

$ M

$250.4

Sustaining Capital

$ M

$214.1

AISC (co-product)3

$/oz gold equivalent

$926

$1,078

AISC (by-product)3

$/oz gold

$(963)

$(1,362)

Unlevered Returns

Pre-Tax NPV 6% discount rate

$ M

$248.3

$430.3

Pre-Tax IRR

%

31.6%

45.4%

Post-Tax NPV 6% discount rate

$ M

$176.3

$316.3

Post-Tax IRR

%

26.1%

37.8%

After-tax Payback

years

2.4

1.6

1.

THE BASE CASE MACRO-ECONOMIC FORECAST ASSUMES FLAT PRICING THAT HAS BEEN DRAWN FROM THE CONSENSUS LONG TERM ESTIMATES OF SELECT BANKS AS OF JULY 2020.

2.

As at August 4, 2020.

3.

None of EBITDA, C1 cash costs or all-in sustaining costs (“AISC”) have a standardized meaning under IFRS. See “Non-IFRS Measures”.

4.

Gold equivalent ounces were determined by calculating the total value of metals contained or produced and dividing that number by the gold price ($1,485/oz gold Base Case or $1,998/oz gold Spot Case). As the denominator is higher in the Spot Case, the gold equivalent is lower than at Base Case prices. Gold equivalent grade is calculated by dividing the number of gold equivalent ounces by the Mineral Resource size (tonnes).

5.

Project economics reflect the Company’s gold and silver streaming agreements with Osisko Gold Royalties (see Aquila press release dated June 18, 2020). The PEA financial model includes $30 million of initial payments under the gold stream to be received during the design and construction period. The 2018 Feasibility Study did not include the impact of the gold streaming agreement.

TABLE 2

SENSITIVITY TO GOLD PRICE1

Gold Price

($/oz)

After-tax NPV6%
($M)

After-tax IRR

Gold % of Gross Revenue

$1,200

$83

16.9%

40%

$1,400

$149

23.6%

43%

$1,600

$213

29.3%

47%

$1,800

$277

34.6%

50%

$2,000

$341

39.6%

52%

$2,200

$401

44.1%

55%

$2,400

$460

48.5%

57%

1.

ALL OTHER METALS AS BASE CASE METAL PRICES.

OPPORTUNITIES

The PEA outlined a number of initiatives that may enhance the Project including:

  • Increased gold recovery: There is value in further investigating leaching sulphide flotation tailings to economically recover additional gold. Previous scoping metallurgical test work and cost analysis investigated various options, at a high level, to extract gold from flotation tailings and was favourable at gold prices above $1,600/oz.
  • Contract mining: The current mine operations plan is based on an owner-operated mine fleet. Contract mining may be an option to offset initial mine capital costs and mitigate any risks associated with training, operational readiness and the availability of experienced mine personnel.
  • Contract process plant operations and maintenance: The current process plant operations plan is based on owner operating and maintaining the process plant. An operations and maintenance contract may be an option to mitigate any risks associated with training, operational readiness and the availability of experienced process plant operators and maintenance personnel.
  • Resource confirmation and expansion: Complete additional infill drilling with the objective of step-out drilling to potentially expand Mineral Resources.

WEBCAST DETAILS

Management will host a webcast on Tuesday August 11, 2020 at 12 PM ET / 9 AM PT to provide a corporate update and discuss the PEA. Register for the webcast here. Please send your questions to management at dcarew@aquilaresources.com. A replay of the webcast will be available on the Company’s website at www.aquilaresources.com.

BACK FORTY PROJECT BACKGROUND

The Back Forty Project is a polymetallic Volcanogenic Massive Sulphide (“VMS”) deposit located in Menominee County, Michigan, USA. The Back Forty Deposit was originally discovered in 2002 and is currently wholly owned by Aquila. The Project is located approximately 55 km south-southeast from Iron Mountain, and approximately 19 km west of Stephenson, Michigan.

A Feasibility Study on the Project was completed in August 2018 that studied open pit mining and on-site processing plants for treating oxide material to produce gold doré and sulphide material to produce zinc, copper, and lead concentrates. The subject of the PEA relates to an expansion of the open pit mining case (Phase 1) by proposing the development of an underground mine (Phase 2) associated with the Project after the open pit phase is complete. It should be noted that the Company has not yet commenced the permitting process for a potential underground expansion.

While the value proposition and operating context for the PEA are similar to the 2018 Feasibility Study, the PEA reflects certain enhancements including:

  • As a result of the addition of an underground mine expansion, the oxide and sulphide processing plants were resized to a lower nominal throughput to align them with expected underground mine throughput and to optimize the Project’s economics. The oxide process plant throughput has been reduced from 800 t/d to 350 t/d and the sulphide process plant throughput has been reduced from a nominal 4,000 t/d to 2,800 t/d. The reduction in process plant throughput contributed to a $54 million decrease in initial capital expenditures versus the 2018 Feasibility Study.
  • The oxide processing flowsheet was updated to include a SART (sulfidization, acidification, recycling and thickening) plant for optimal doré quality, silver recovery, mercury management, and cyanide management.
  • Process plant feed, stockpile management and sulphide process plant change-overs have been optimized to improve operability.
  • Additional metallurgical test work has been incorporated to assess blending options and recovery performance and penalties.
  • Updated permit conditions have been incorporated, including a double liner leak detection system under all waste rock storage areas and additional contact water storage volume.

MINERAL RESOURCE ESTIMATE

The Mineral Resource Estimate is set out in Table 3 and was prepared by P&E Mining Consultants Inc. The Deposit is well-defined with 94% of the Mineral Resource contained in the Measured and Indicated (“M&I”) classifications. On a gold equivalent basis, the Deposit contains 2.5 million gold equivalent ounces in the M&I classifications at a grade of 4.3 g/t gold equivalent.

TABLE 3
MINERAL RESOURCE ESTIMATE AS AT OCTOBER 14, 2019

Classification

Tonnes
(1,000)

Gold
(g/t)

Gold
(koz)

Silver
(g/t)

Silver
(koz)

Copper
(%)

Copper
(mlb)

Lead
(%)

Lead
(Mlb)

Zinc
(%)

Zinc
(Mlb)

Open Pit

Measured

7,062

1.94

440.1

18.95

4,302.0

0.34

53.51

0.14

22.1

3.02

470.1

Indicated

4,341

1.75

244.7

29.67

4,140.1

0.14

13.55

0.35

33.8

1.97

188.1

M&I

11,403

1.87

684.8

23.03

8,442.0

0.27

67.05

0.22

55.9

2.62

658.2

Inferred

264

3.13

26.6

42.32

359.4

0.06

0.35

0.56

3.3

0.62

3.6

Underground

Measured

1,382

2.21

98.0

25.37

1,127.7

0.30

9.1

0.32

9.7

4.43

134.9

Indicated

5,486

1.86

327.7

25.98

4,582.8

0.42

51.2

0.32

38.2

3.53

427.3

M&I

6,868

1.93

425.7

25.86

5,710.6

0.40

60.3

0.32

47.9

3.71

562.2

Inferred

930

3.88

116.0

51.21

1,531.8

0.47

9.7

0.45

9.2

1.40

28.7

Total

Measured

8,444

1.98

538.1

20.00

5,429.7

0.34

62.6

0.17

31.8

3.25

605.0

Indicated

9,827

1.81

572.4

27.61

8,722.9

0.30

64.7

0.33

72.0

2.84

615.4

M&I

18,271

1.89

1,110.4

24.09

14,152.6

0.32

127.3

0.26

103.8

3.03

1,220.5

Inferred

1,194

3.71

142.5

49.24

1,891.2

0.38

10.1

0.47

12.5

1.23

32.3

1.

MINERAL RESOURCES WHICH ARE NOT MINERAL RESERVES DO NOT HAVE DEMONSTRATED ECONOMIC VIABILITY.

2.

The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

3.

The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.

4.

The Mineral Resources in this Technical Report were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.

5.

The Mineral Resource Estimate was based on metal prices of $1,375/oz gold, $22.27/oz silver, $1.10/lb zinc, $3.19/lb copper and $1.15/lb lead.

6.

Open pit Mineral Resources were defined within the constraining pit design as per the 2018 Feasibility Study.

7.

NSR cut-off values were established for each metallurgical type. Refer to the Technical Report for full details.

MINING

The Back Forty mine plan presented in the PEA is based on mining the highest value material as soon as possible and treating this material through the process plants to maximize cash flow. This strategy is achieved by mining the mineralized material and either feeding the material directly to the process plant or stockpiling the material on-site for processing later per a feed schedule based on optimal economics for the operation. This plan consists of a combined open pit and underground mining operation. Open pit mining will take place from Year 1 to Year 5. Underground development will be initiated in Year 5 and underground production mining will continue to Year 11.

A series of grade blending stockpiles, by material type, will serve to prioritize the processing of higher-grade material and also manage fluctuations in process plant feed delivery from the two mining operations.

The Back Forty Project area consists of very subdued terrain and topography. The area, topography and climate are amenable to the conventional open pit mining operations proposed for the Project. The open pit mining operation will encompass a single open pit that will be mined with conventional mining equipment in three pushback phases. The underground mine will be developed beneath the open pit with a single decline access point located partway down the open pit main access ramp.

Open Pit Mining

The open pit design is based on the 2018 Feasibility Study design. Minor modifications were made to standardize on 5-metre-high benches with a quadruple bench configuration, resulting in a 20-metre vertical distance between catch berms.

Open pit mining operations will be carried out by Company personnel except for blasting operations. A blasting contractor will be used to supply the explosives, prepare the blasts, charge the holes, fire the blast, and inspect the area post-blast. The equipment fleet will consist of hydraulic excavators and wheel loaders, both with 8 m3 buckets, and 90 t capacity haul trucks, plus track dozers, graders, and support equipment.

A summary of the open pit mining schedule is shown in Table 4.

TABLE 4
OPEN PIT MINING SCHEDULE

Type

Units

Total

Year

Y-1

Y1

Y2

Y3

Y4

Y5

Overburden

kt

3,778

1,233

1,648

896

Waste Rock

kt

47,970

1,568

9,263

12,130

13,437

10,512

1,058

Total Waste

kt

51,747

2,801

10,911

13,027

13,437

10,512

1,058

Process Plant Feed Mining

Total Sulphide

kt

8,815

73

2,236

1,647

1,406

2,678

776

Total Oxide

kt

1,317

126

353

327

157

309

45

Total Feed

kt

10,132

199

2,589

1,974

1,563

2,987

821

Total Material

kt

61,880

3,000

13,500

15,000

15,000

13,500

1,879

Strip ratio

w:o

5.1

14.1

4.2

6.6

8.6

3.5

1.3

Feed to Stockpiles

kt

6,961

199

1,995

1,609

575

1,953

629

Underground Mining

Extraction of the underground Mineral Resource will be achieved by a combination of mechanized Cut and Fill (“CF”) or Longhole (“LH”) methods. CF mining is the dominant method, producing approximately 63% of mined tonnes, with LH producing the remaining 37% of tonnes. CF mining uses one of four stope sizes, and targets flatter-dipping material (dip less than 55°). LH mining uses one of two stope size subsets and orientations (transverse or longitudinal). The weighted average direct mining cost is $33/tonne.

The underground mine begins construction and development in Year 5 with commercial production achieved in Year 6. The production rate of the underground varies depending on development requirements, with a commercial production rate of 2,300 t/d, increasing to a maximum of 3,200 t/d in Year 7.

Table 5 shows the production tonnes from the Back Forty underground deposit by year and mining method.

TABLE 5
PRODUCTION BY MINING TYPE BY YEAR (KT)

Type

Year
5

Year
6

Year
7

Year
8

Year
9

Year
10

Year
11

Total

LH

438

968

732

2,138

CF Type 1

98

503

520

268

1,389

CF Type 2

119

551

558

536

232

1,996

CF Type 3

1

18

43

47

13

122

CF Type 4

1

16

22

24

8

72

Total

122

683

1,126

1,126

959

968

732

5,717

MINERAL PROCESSING AND METALLURGY

Oxide mineralized material and sulphide mineralized material (Main, Pinwheel and Tuff material) will be treated through separate process plants.

The oxide mineralized material will be processed via a cyanidation leach circuit to produce doré. Depending on the grades of copper, zinc and lead, the sulphide mineralized material will be processed via two stages of flotation to produce concentrates, i.e. either a copper and zinc concentrate, or a lead and zinc concentrate.

Sulphide mineralized material will be processed on a campaign basis based on the main material types that have a similar metallurgical response. As such the design of the sulphide process plant is based on a flexible metallurgical flowsheet to process the main material types.

The oxide process plant has been designed for a throughput of 350 t/d. The overall flowsheet includes the following steps:

  1. Three stage crushing using an open circuit jaw crusher, open-circuit secondary cone crusher and closed-circuit tertiary cone crusher.
  2. Grinding and classification.
  3. Pre-leach thickening.
  4. Cyanide leach.
  5. Vacuum filtration of leaching tailings.
  6. SART.
  7. Carbon-in-Column gold adsorption.
  8. Carbon acid-washing, desorption and recovery.
  9. Smelting to produce doré.
  10. Cyanide destruction of the final wash filtrate from the vacuum filtration step.
  11. Tailings repulping and disposal to the Tailings Management Facility (“TMF”).

The sulphide process plant has been designed for a nominal throughput of 2,800 t/d. The overall flowsheet includes the following steps:

  1. Primary crushing.
  2. Coarse mineralized material stockpile and reclaim.
  3. Grinding and classification.
  4. Gravity concentration.
  5. Bulk rougher flotation to produce copper concentrate or lead concentrate depending on mineralized material campaign.
  6. Zinc rougher flotation.
  7. Bulk concentrate regrind (copper or lead concentrate).
  8. Zinc concentrate regrind.
  9. Bulk cleaner flotation, using three stages of cleaning (copper or lead concentrate).
  10. Zinc cleaner flotation, using two stages of cleaning.
  11. Bulk concentrate thickening and filtration (copper or lead concentrate).
  12. Zinc concentrate thickening and filtration.
  13. Tailings thickening and disposal in the common TMF.

Metal Production

Metal production figures are summarized in Table 6.

TABLE 6
PAYABLE METAL PRODUCTION

Metal

Life of Project

Average Annual

Gold (K oz)

692

58

Zinc (M LBS)

801

67

Copper (M lbs)

86

7

Silver (K oz)

6,260

522

Lead (M lbs)

26

2

The production profile at Base Case metal prices is shown in Figure 1.

A summary of the life of project revenue by metal, revenue by product, and recovery by metal are included in Table 7 (calculated at Base Case metal prices).

TABLE 7

Revenue by Metal

Revenue by Product

Total Recovery by Metal

Metal

% of Revenue

Product

% of Revenue

Metal

Recovery

Gold

45%

Zinc Concentrate

43%

Gold

74.3%

Zinc

38%

Copper Concentrate

38%

Zinc

91.9%

Copper

11%

Doré

13%

Copper

81.2%

Silver

5%

Lead Concentrate

6%

Silver

67.2%

Lead

1%

Total

100%

Lead

83.7%

Total

100%

Concentrate Marketing

In addition to a Doré, the Back Forty Project will produce zinc, copper and lead concentrates. The zinc concentrates will on average grade 53.9%, the copper concentrates will on average grade 18.5% (with high precious metals content), and the lead concentrate will on average grade 35%. Over its 12-year life, the Project will on average annually produce 66,200 tonnes of zinc concentrate, 18,600 tonnes of copper concentrate and 3,100 tonnes of lead concentrate. All concentrates are expected to be marketable. Studies are ongoing to evaluate the optimal blends, destinations and transport options for Back Forty concentrates. The Company believes that there are multiple attractive options for each of the concentrates.

CAPITAL AND OPERATING COSTS

The capital estimate is summarized in Table 8 by area and by discipline. All costs are based on Q3 2019 pricing. The estimate is deemed to have an accuracy of ±25%.

TABLE 8

CAPITAL ESTIMATE SUMMARY BY AREA

Item

Capital Costs ($M)

Construction Indirects

11.4

Oxide Process Plant

24.1

Sulphide Process Plant

57.5

TMF/Waste Rock Facility

42.6

Infrastructure

34.2

Mining

23.6

EPCM

15.7

Owner costs

11.4

Subtotal

220.6

Contingency (14%)

29.9

Total

250.4

Sustaining Capital

Capital expenditures incurred after Year -1 are considered sustaining capital. Open pit sustaining capital totals $45.9M in expenditures primarily incurred between Year 1 and Year 6. Initial capital costs for the underground mine are treated as sustaining capital costs for the Back Forty Project since open pit mining will be well underway by the time the underground mine is developed. Sustaining capital costs also include all costs associated with infrastructure, capital waste development (vertical and lateral), relevant equipment leasing costs (down payments, legal fees, origination costs and mobilization costs), and the paste backfill plant. Total underground sustaining capital costs are estimated at $98.9M primarily incurred in Year 5 and Year 6.

Other Project sustaining capital costs include subsequent TMF stage raises over the LOM and process plant annual capital expenditures. Other Project sustaining capital schedule over the life of mine is estimated at $69.3M incurred between Year 1 and Year 5.

Mine closure costs, salvage value and rehabilitation costs are estimated at $75M.

Operating Costs

A summary of the life of project operating costs is outlined in Table 9.

TABLE 9
OPERATING COSTS SUMMARY

Life of Project Cost
($M)

Unit Cost
($/t)

Gross Revenue

2,095

132

Realization Charges

310

19

NSR (Base Case)

1,785

113

Open pit mining

178

11

Underground mining

288

18

Process plant

310

20

G&A

46

3

Total Site Opex

821

52

Qualified Persons

This news release has been reviewed and approved by the Qualified Persons noted below. The Qualified Persons have reviewed or verified all information for which they are individually responsible.

TABLE 10
QUALIFIED PERSONS

Qualified Person

Employer

Professional
Designation

Neil Lincoln

Lincoln Metallurgical Inc.

P.Eng.

Andrew Bradfield

P&E Mining Consultants Inc.

P.Eng.

Yungang Wu

P&E Mining Consultants Inc.

P.Geo.

David Penswick

Gibsonian Inc

P.Eng.

About Aquila

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development‐stage company focused on high grade and gold-rich projects in the Upper Midwest, USA. Aquila’s experienced management team is focused on advancing pre-construction activities for its 100%‐owned gold and zinc‐rich Back Forty Project in Michigan.

Aquila’s flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral‐rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential.

Aquila has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold. Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

Readers are cautioned that the conclusions, projections and estimates set out in this news release are subject to important qualifications, assumptions and exclusions, all of which are detailed in the Technical Report. To fully understand the summary information set out in this news release, the Technical Report to be filed on SEDAR should be read in its entirety.

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements and information include, but are not limited to, statements with respect to future permitting and legal timelines and the advancement of the Company’s Back Forty Project, the additional upside potential of the Project, statements with respect to the expected project economics for the Project, such as estimates of life of mine, total production and average production, metal production and recoveries, C1 cash costs, AISC, capital and operating costs, pre- and post-tax IRR, pre- and post-tax NPV and cash flows, the potential conversion of Inferred Mineral Resources into Indicated Mineral Resources, and any projections outlined in the Preliminary Economic Assessment in respect of the Project. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Aquila’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.

Non-IFRS Measures

C1 cash costs, AISC, and EBITDA are non-IFRS financial measures calculated by the Company as set forth below, and may not be comparable to similar measures reported by other companies.

C1 cash costs, which are intended to measure direct cash costs of producing paid metal, include all direct costs that would generate payable recoveries of metals for sale to customers, including mining of mineralized materials and waste, leaching, processing, refining and transportation costs, on-site administrative costs and royalties, net of by-product credits. C1 cash costs do not include depreciation, depletion, amortization, exploration expenditures, reclamation and remediation costs, sustaining capital, financing costs, income taxes, or corporate general and administrative costs not directly or indirectly related to the Project. C1 cash costs are divided by the number of ounces of gold estimated to be produced for the period to arrive at cash costs per gold ounce produced.

AISC includes C1 cash costs, as defined above, plus exploration costs at the Project and sustaining capital expenditures (including additional tailings storage, permitting and customary improvements to the operations over the life of the project). AISC is divided by the number of ounces of gold estimated to be produced for the period to arrive at AISC per gold ounce produced.

EBITDA is earnings before interest, taxes, depreciation, and amortization.

Barry Hildred, CEO
Aquila Resources Inc.
Tel: 647.943.5672
Email: bhildred@aquilaresources.com

David Carew, Director of Corporate Development & Investor Relations
Aquila Resources Inc.
Tel: 647.943.5677
Email: dcarew@aquilaresources.com

Source: Aquila Resources Inc.


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