Aquila Resources Announces Results from New Preliminary Economic Assessment for Back Forty Project

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TORONTO , July 23, 2014 /CNW/ - Aquila Resources Inc. (TSX: AQA) (FKT: JM4A) ("Aquila"), a development-stage company with assets in the Great Lakes Region including its 100%-owned gold- and zinc-rich Back Forty Project in Michigan's Upper Peninsula ("Back Forty"), today announced positive results from its new preliminary economic assessment ("PEA") on Back Forty. The PEA, which incorporates a revised mine plan based on results from Aquila's 2013 resource update, was completed by Tetra Tech Inc. after considering various trade-off studies which looked at different mine configurations to determine the optimal scenario for the project. The PEA will be filed on SEDAR (www.SEDAR.com) within 45 days and will also be available on Aquila's website. All figures quoted are in USD unless otherwise specified.

PEA Highlights

The PEA contemplates mining 16.1Mt of mineralized material over the 16-year life of mine ("LOM"), of which 12.5Mt is open-pit and 3.6Mt is underground. The PEA demonstrates the potential for a diverse earnings stream with a payable metal value mix of 41.2% gold, 40.5% zinc, 12.0% copper, 5.7% silver, and 0.6% lead.

Table 1. Key Economic Highlights

	Pre-Tax	After-Tax
NPV @ 6%	$247.2M	$184.7M
IRR	34.9%	28.9%
Payback Period	1.6 years	2.1 years

The PEA includes inferred resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA results will be realized.

Highlights from the PEA include:

• Operating at an initial throughput rate of 5,350 tpd, the total payable production of the mine is expected to be 532 thousand ounces of gold, 704 million pounds of zinc, 63 million pounds of copper, 4,645 thousand ounces of silver, and 11 million pounds of lead;
• A total estimated initial capital cost of $261 million comprised of $177 million of direct pre-production capital expenditure ("CAPEX"), a $44 million contingency, and $40 million of indirect and owner's costs;
• The average on-site operating costs are $29.25 per tonne processed for open-pit mining and $66.20 per tonne processed for the underground mine; and,
• The near-surface characteristics of the ore body provide the opportunity to develop a low-CAPEX, high-grade initial phase operation. The economics of this are still being evaluated as part of the PEA and will be reported when complete.

"The results from our PEA validate our decision to acquire 100% of Back Forty and focus on strategic assets in this promising region," stated Barry Hildred , Chief Executive Officer of Aquila. "The PEA and new mine plan show marked improvements across key metrics. Ultimately, we believe this PEA demonstrates the potential of Back Forty while carefully considering the interests of all our key stakeholders."

Mark Burridge , Chairman of Aquila stated: "Our focus is now on recommencing project development at Back Forty. The PEA provides a path forward for the next set of project milestones, including the ramp-up of permitting activities and the commencement of a feasibility study and an exploration program initially focused on near-mine satellite targets."

Sensitivity Analysis

A sensitivity analysis was performed to test the economic viability of Back Forty against possible fluctuations in commodity prices. A table illustrating project sensitivity is presented below:

Table 2. Sensitivity Analysis

	Base Case -15%	Base Case	Base Case + 15%
Gold	$1,099/oz	$1,293/oz	$1,487/oz
Silver	$17.39/oz	$20.46/oz	$23.53/oz
Zinc	$0.82/lb	$0.96/lb	$1.10/lb
Copper	$2.70/lb	$3.18/lb	$3.66/lb
Lead	$0.82/lb	$0.96/lb	$1.10/lb
Pre-Tax
NPV @ 6%	$94.2M	$247.2M	$399.2M
IRR	20.2%	34.9%	47.7%
Payback Period	3.3 years	1.6 years	1.0 year
After-Tax
NPV @6%	$74.6M	$184.7M	$294.5M
IRR	17.5%	28.9%	38.7%
Payback Period	3.5 years	2.1 years	1.4 years

Mineral Resources

In February 2013 , Aquila updated its mineral resource estimate. The 2014 PEA incorporates the results from this updated resource, of which 90% was classified as Measured and Indicated and only 10% Inferred. Please refer to Aquila's annual information form dated March 31, 2014 for further information regarding the updated mineral resource estimate.

Table 3. Global Resource at Back Forty

Category	Tonnes	Au (g/t)	Ag (g/t)	Cu (%)	Pb (%)	Zn (%)	Au (oz) Content	Zn (lbs) Content
Measured	6,700,000	2.16	27.30	0.47	0.18	3.95	465,000	583,000,000
Indicated	8,430,000	1.92	22.24	0.22	0.26	2.36	520,000	439,000,000
M&I	15,130,000	2.03	24.48	0.33	0.22	3.06	985,000	1,022,000,000
Inferred	2,340,000	2.07	26.53	0.36	0.33	2.20	156,000	113,000,000

Notes:

(1)	Mineral resources are not mineral reserves and do not have demonstrated economic viability.
(2)	NSR cut-off values for the 2013 resource estimate were based on metal price assumptions of US$0.96 per pound zinc, US$3.65 per pound copper, US$1.01 per pound lead, US$1456.36 per troy ounce gold and US$27.78 per troy ounce silver. Metallurgical recoveries were determined and applied for each of the metallurgical domains determined for the deposit. Average cut-off value for the open-pit resource contained within an optimized pit shell was US$27.75. Average cut-off value for the underground resources outside of the optimized pit shell was US$66.45.

Project Potential

The optimized mine plan provides some flexibility in the development of the project including a low-CAPEX, high-grade initial phase operation. This option would focus on mining near-surface, high-grade zones by way of three small open pits in order to maximize capital return in the early years of production. This approach has the potential to provide attractive economic returns, mitigate certain start-up risks, and allow for significant optionality in the long-term development of the project. This opportunity would be fully evaluated during the feasibility stage of project development and could be pursued depending on future macro-economic conditions.

Other opportunities for consideration include optimization of the underground mining approach, which was not completed as part of the PEA, improving processing performance, and defining the upside potential, including further exploration and expansion of the underground resource, in-pit targets, and near-mine drill targets, which have the potential to extend mine life and improve project economics.

Qualified Persons

The PEA was prepared under the supervision of Tetra Tech Inc., specifically Rex Bryan , SME; Wenchang Ni , P.Eng.; Daniel Sweeney , P.Eng.; Arun Vathavooran, Ph.D., C.Eng., MIMMM, SME; Dharshan Kesavanathan , P.Eng.; Mike McLaughlin , P.Eng.; Sabry Abdel Hafez , P.Eng.; and, Andrew Carter , Eur. Ing., C.Eng., MIMMM, MSAIMM, SME. All of the aforementioned individuals are qualified persons as defined in National Instrument 43-101.

The scientific and technical information in this news release was reviewed and approved by Thomas O. Quigley , Vice President of Exploration and Senior Technical Advisor for the Back Forty Project. By virtue of his education, experience, and professional association, Mr. Quigley is considered a Qualified Person as defined under National Instrument 43-101. Information regarding data verification is provided in Aquila's annual information form dated March 31, 2014 .

About Aquila Resources

Aquila Resources Inc. (AQA.TO) (JM4A.F) is a development-stage company with assets in the Great Lakes Region including its 100%-owned gold- and zinc-rich Back Forty Project in Michigan's Upper Peninsula. The Company is led by an experienced management team that has identified significant ore deposits over the last 30 years.

The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release. Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release contains certain forward-looking statements within the meaning of applicable Canadian securities legislation. 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" and similar expressions suggesting future outcomes or statements regarding an outlook.

Forward-looking statements relate to any matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, without limitation, statement with respect to: (i) the economic analysis contained in the PEA; (ii) the development plan of the PEA and results thereof; (iii) capital expenditure programs; (iv) the quality or quantity of the mineral resources subject to estimates by Aquila; and, (v) work plans to be conducted by Aquila.

These and other 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. Aquila expressly disclaims any 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.

SOURCE Aquila Resources Inc.

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