Aquila Resources : PDF Copy of August 1, 2018 Release

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AQUILA RESOURCES ANNOUNCES POSITIVE

FEASIBILITY STUDY RESULTS FOR ITS BACK FORTY PROJECT

- After-tax NPV at a 6% discount rate of US$208M, IRR of 28.2% and Capex of US$294M -

TORONTO, ON-AUGUST 1, 2018-Aquila Resources Inc. (TSX: AQA) ("Aquila"or the"Company") announced today the results of an independent open pit only Feasibility Study ("Feasibility Study")completed on its 100% owned zinc- and gold-rich Back Forty Project in Michigan. The Feasibility Study was compiled by Lycopodium Minerals Canada Ltd("Lycopodium")with support from globally recognized experts and specialist consulting engineering companies in environmentally critical areas such as waste water treatment, tailings and waste rock management and mine design. All economic values within this news release are in USdollars unless indicated otherwise.

"The completion of the Back Forty Project Feasibility Study is a significantmilestone for Aquila and sets thestage for the next steps to develop this deposit," said Barry Hildred, President and Chief Executive Officer ofAquila."Back Forty is well-positioned as a permitted project in a favourable mining jurisdiction that is closeto existing infrastructure. We can now focus the Company's resources on the pre-construction phase at BackForty while considering funding alternatives to complete the development of the Project."

Highlights

• •Pre-tax NPV at a 6% discount rate of $259M and IRR of 32.0% at base case metal prices of $1,300/oz gold, $1.20/lb zinc, $20/oz silver, $3.00/lb copper and $1.00/lb lead.

• •After-tax NPV at a 6% discount rate of $208M and IRR of 28.2% with a 2.2 year payback.

• •Open pit Proven and Probable Mineral Reserves of 11.65M tonnes.

• •A project life of seven years with total payable gold production of 468,000 oz (or an average of 67,000 oz per year) and 135,000 oz in Year 1. Total payable gold equivalent production of 1.1 million oz.

• •Total payable zinc production of 512M lbs (or an average of 73M lbs per year). Total payable zinc equivalent production of 1.2B lbs.

• •Initial project capital costs estimated at $294M with a 24-month construction period.

• •Sustaining capital costs of $110.6M.

• •Gross C1 cash costs1of $499/oz gold equivalent or $0.46/lb zinc equivalent and net C1 cash costs of -$590/oz gold or -$1.73/lb zinc.

• •Gross AISC2of $677/oz gold equivalent or $0.62/lb zinc equivalent and net AISC of -$171/oz gold or -$1.34/lb zinc.

• •The Company has also identified a number of opportunities to further enhance the overall economics of the Project including the future addition of an underground expansion.

Andrew Boushy, P.Eng., Senior Vice President, Projects commented, "I want tothank our entire expanded team of specialists and consultants for all of their efforts in helping us complete the Feasibility Study. The robust results of the study clearly demonstrate that Back Forty is a compelling project based only on an open pit operation and we see several opportunities to further enhance value that will be advanced during the detailed engineering phase. We have set the bar high for environmental protection and plan to engage localcontractors who live in the community in which we will operate."

1C1 cash costs, which are intended to measure direct cash costs of producing paid metal, does not have a standardized meaning under IFRS. See"Non-IFRS Measures".

2All-in sustaining costs ("AISC") does not have a standardized meaning under IFRS. See "Non-IFRS Measures".

E807 Gerue Street, Stephenson, MI USA 49887

141 Adelaide St. West, Suite 520, Toronto, ON, M5H 3L5

T: 906.753.9602

T: 647.943.5672

www.aquilaresources.com

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Back Forty Project Background

The Back Forty Project (the"Project") is a polymetallic (zinc, gold, copper, silver, lead) 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.

Mineralization at the Back Forty deposit consists of discrete zones of: 1) zinc or copper-rich massive sulphide (±lead), which may contain significant amounts of gold and silver, 2) stockwork stringer and peripheral sulphide, which can be gold, zinc, and copper-bearing (±lead/silver), 3) precious metal-only, low-sulphidemineralization, and 4) oxide-rich, precious metal-bearing gossan.

Major aspects of the Project include mine open pit, hydrological cut-off wall, oxide and sulphide processing plants, tailings management facility, waste rock storage facilities, contact and non-contact water basins, mine services, access road and a state of the art waste water treatment plant. The reclamation and closure plan includes the backfilling of the open pit with waste rock and the capping of the tailings and waste rock facility followed by a minimum of 20 years of environmental monitoring as required by Michigan law.

Access to the facility is from the west side of the Project from the existing River Road. Principal access will be via a main security gate near the process plant. Power to the site will be provided via an incoming high voltageline from the east side of the Project.

Mineral Reserve Estimate

The Proven and Probable Mineral Reserve Estimate for the Project is summarised in the table below. Approximately 70% of the Mineral Reserve Estimate is in the Proven category. Only Measured and Indicated Mineral Resources are included in the open pit Mineral Reserve Estimate. The Mineral Reserve Estimate wasprepared by P&E Mining Consultants Inc.

Back Forty Mineral Reserve Estimate as at February 6, 2018

Ore Mt	NSR $/t	Gold g/t	Silver g/t	Zinc %	Lead %	Copper%
Proven	8.12	$120	1.95	18.4	3.02	0.13	0.35
Probable	3.53	$85	1.63	29.3	1.76	0.41	0.10
Proven + Probable	11.65	$109	1.85	21.7	2.64	0.21	0.28

• 1. CIM definitions were followed for the Mineral Reserve Estimate.

• 2. The Mineral Reserve Estimate used average long term metal prices of $1,250/oz gold; $20.00/oz silver; $1.15/lb zinc; $1.00/lb lead; and $3.00/lb copper.

• 3. A Mineral Reserve is defined within a mine plan, with pit phase designs guided by Lerchs-Grossmann (LG) pit shells, after dilution and mining loss adjustments.

• 4. The Mineral Reserve Estimate is derived from Measured and Indicated Mineral Resources only.

• 5. Metallurgical recovery used was a variable function of the rock type and metal grade.

• 6. The Mineral Reserve Estimate for the Project will be comprised of eight different ore types that will be processed either though a flotation concentrator or cyanide leach plant. NSR cut-off values applied are: Ore 1 - $16.50/t, Ore 2,3,4,7,8 - $16.00/t, Ore 5 - $17.50/t, and Ore 6 -

  $28.50/t.

• 7. The life-of-mine strip ratio is 4.3:1 including the pre-construction period.

E807 Gerue Street, Stephenson, MI USA 49887

141 Adelaide St. West, Suite 520, Toronto, ON, M5H 3L5

T: 906.753.9602

T: 647.943.5672

www.aquilaresources.com

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Mineral Resource Estimate

The Mineral Resource Estimate from which the Mineral Reserve is derived from is set out below and wasprepared by P&E Mining Consultants Inc.

Back Forty Mineral Resource Estimate as at February 6, 2018

Area	Metallurgy Type	Class	NSRCut-off	Tonnes	Gold	Gold	Silver	Silver	Zinc	Zinc	Copper	Copper	Lead	Lead
			$/tonne	(1,000)	g/t	K oz	g/t	K oz	%	M lb	%	M lb	%	M lb
Pit Constr-ained	Floatable	Meas	21	6,797	1.75	381	18.4	4,027	3.45	516.5	0.38	56.4	0.16	23.4
		Ind	21	3,768	1.58	191	25.2	3,056	3.15	261.7	0.24	19.9	0.39	32.8
		M & I	21	10,565	1.68	572	20.9	7,083	3.34	778.2	0.33	76.3	0.24	56.2
		Inf	21	71	1.01	2	30.7	70	2.98	4.7	0.14	0.2	0.37	0.6
	Leachable	Meas	22	553	5.61	100	34.8	618	0.19	2.4	0.05	0.6	0.13	1.5
		Ind	22	1,777	2.15	123	39.6	2,263	0.41	16.1	0.03	1.3	0.29	11.5
		M & I	22	2,330	2.97	223	38.5	2,881	0.36	18.5	0.04	1.9	0.25	13.0
		Inf	22	378	3.62	44	40.1	487	0.38	3.2	0.06	0.5	0.52	4.3
	Total	Meas	21+22	7,350	2.04	481	19.7	4,645	3.20	518.8	0.35	57.0	0.15	24.9
		Ind	21+22	5,545	1.76	314	29.8	5,319	2.27	277.8	0.17	21.2	0.36	44.3
		M & I	21+22	12,895	1.92	795	24.0	9,964	2.80	796.6	0.28	78.2	0.24	69.2
		Inf	21+22	448	3.21	46	38.6	557	0.79	7.9	0.07	0.7	0.49	4.9
Out of Pit	Floatable	Meas	70	556	1.79	32	26.8	480	5.32	65.2	0.33	4.0	0.41	5.0
		Ind	70	3,059	1.84	180	26.2	2,577	4.23	285.4	0.51	34.3	0.30	20.3
		M &I	70	3,615	1.83	213	26.3	3,057	4.40	350.7	0.48	38.4	0.32	25.3
		Inf	70	544	2.96	52	37.5	656	1.38	16.6	0.62	7.5	0.39	4.6
	Leachable	Meas	70	37	7.38	9	74.3	89	0.31	0.3	0.12	0.1	0.11	0.1
		Ind	70	77	3.85	9	47.3	117	0.32	0.5	0.15	0.2	0.13	0.2
		M & I	70	114	5.01	18	56.1	206	0.32	0.8	0.14	0.3	0.13	0.3
		Inf	70	137	5.93	26	81.0	356	0.42	1.3	0.16	0.5	0.49	1.5
	Total	Meas	70	593	2.14	41	29.8	569	5.01	65.5	0.32	4.1	0.39	5.1
		Ind	70	3,135	1.88	190	26.7	2,694	4.14	286.0	0.50	34.6	0.30	20.5
		M &I	70	3,729	1.93	231	27.2	3,262	4.28	351.5	0.47	38.7	0.31	25.7
		Inf	70	680	3.56	78	46.2	1,011	1.19	17.8	0.53	8.0	0.41	6.1
Total	Floatable	Meas	21+70	7,353	1.75	414	19.1	4,507	3.59	581.7	0.37	60.5	0.18	28.4
		Ind	21+70	6,827	1.69	371	25.7	5,633	3.64	547.1	0.36	54.2	0.35	53.1
		M &I	21+70	14,180	1.72	785	22.2	10,140	3.61	1,128.8	0.37	114.7	0.26	81.5
		Inf	21+70	615	2.74	54	36.7	726	1.57	21.2	0.57	7.7	0.38	5.2
	Leachable	Meas	22+70	590	5.72	109	37.3	707	0.20	2.6	0.05	0.7	0.12	1.6
		Ind	22+70	1,854	2.22	132	39.9	2,380	0.41	16.7	0.04	1.6	0.29	11.7
		M & I	22+70	2,444	3.07	241	39.3	3,087	0.36	19.3	0.04	2.2	0.25	13.4
		Inf	22+70	514	4.24	70	51.0	842	0.39	4.5	0.09	1.0	0.51	5.8
	Total	Meas	21+22+ 70	7,943	2.04	522	20.4	5,214	3.34	584.3	0.35	61.2	0.17	30.0
		Ind	21+22+ 70	8,680	1.80	504	28.7	8,013	2.95	563.8	0.29	55.8	0.34	64.9
		M &I	21+22+ 70	16,623	1.92	1,026	24.7	13,227	3.13	1,148.1	0.32	116.9	0.26	94.9
		Inf	21+22+ 70	1,129	3.42	124	43.2	1,568	1.03	25.7	0.35	8.7	0.44	11.0

141 Adelaide St. West, Suite 520, Toronto, ON, M5H 3L5

E807 Gerue Street, Stephenson, MI USA 49887

T: 906.753.9602

T: 647.943.5672

www.aquilaresources.com

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1.

Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

• 2. The Inferred Mineral Resource in this estimate has a lower level of confidence that 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.

• 3. The Mineral Resource was estimated using CIM guidelines and include the Mineral Reserve.

• 4. Metallurgical type Oxide (all gold domains and leachable Gossans) is leachable, while all other metallurgical types are flotable.

• 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.

Mining

The Project area consists of subdued terrain and topography. The area, topography and climate are amenable to the conventional open pit mining operations proposed for the Project. No underground mining is planned at this stage although the potential for underground mining will be evaluated in the near future.

The mining operations will encompass a single large open pit that will be mined with conventional mining equipment in three pushback phases. The mining fleet will consist of major equipment used directly in the rock-moving operation including blast hole drills, hydraulic excavators, and 91 t haul trucks. Various support equipment will be required, such as dozers, graders, water trucks, and light vehicles for maintenance, personnel transport and mine supervision.

For scheduling purposes, the Back Forty open pit was subdivided into three phases. Mining commences in a small higher-grade starter pit and subsequently expands outwards by pushing back the pit walls. This enables annual waste stripping quantities to be distributed over time to avoid highly variable annual total material mined tonnages.

A summary of the phase tonnages is shown in the table below.

Pit Phase Tonnages

Phase 1	Phase 2	Phase 3	Total
Waste Stripping Over Burden WasteTotal Waste Strip ratio	Mt Mt Mt w:o	1.23 4.63	1.65 19.43	0.90 22.39	3.78 46.45
		5.86 2.6	21.08 4.1	23.29 5.4	50.23 4.3
Ore Production Flotation Ore Leach OreTotal OreAvg NSR	Mt Mt Mt $/t	1.95 0.28	4.33 0.78	3.66 0.65	9.94 1.71
		2.23 $135	5.11 $98	4.30 $109	11.65 $109

Ore may be delivered either to the primary crusher or placed into one of the nearby stockpiles. Waste is either taken to a waste storage facility or used in tailings dam construction.

E807 Gerue Street, Stephenson, MI USA 49887

141 Adelaide St. West, Suite 520, Toronto, ON, M5H 3L5

T: 906.753.9602

T: 647.943.5672

www.aquilaresources.com

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In order to improve mining selectivity and reduce ore dilution, two different bench heights will be used. The Oxide and Pinwheel Ore Zones can be narrow and closely spaced, hence they will be mined using a 2.5 m high bench height. In the Main and Tuff Ore Zones and in large waste areas away from the ore zones, bench heights of 5.0 m will be used to minimize unit mining costs. In waste areas near the ore zones, waste must be mined on the 2.5 m bench as part of the ore/waste mining separation. Approximately 10% of the waste rock tonnage will be mined on 2.5 m high benches.

Mineral Processing and Metallurgy

The process plant design for the Project is based on a flexible metallurgical flowsheet designed for treatment of a variety of different ore types. The flowsheet is based on well proven unit operations in the industry.

The key project design criteria for the process plant are:

• •Nominal throughput of 4,000 tpd sulphide ore and 800 tpd oxide ore.

• •Crushing circuit availability of 75% supported by the use of surge bins and dedicated feeders for choke feeding cone crushers for optimum crushing performance and wear minimization.

• •Oxide and sulphide process plant availability of 91.3% through the use of standby equipment in critical areas and reliable grid power supply.

• •Sufficient automated plant control to minimize the need for continuous operator interface and allow manual override and control if and when required.

Sulphide Mineral Reserve that will be processed through the flotation concentrator have been classified into five ore types from three zones:

• •Main Zone - Representing over half of sulphide mineralization, will produce separate zinc and copper concentrates, each containing payable levels of gold and silver.

• •Tuff Zone - Representing approximately one third of sulphide mineralization, will produce separate zinc and lead concentrates, each containing payable levels of gold and silver.

• •Pinwheel Zone - Represents the remaining 12% of mineralization and has been sub-classified into 3 ore types. All Pinwheel ore types will produce copper mineralization that contains payable levels of gold and silver. However, only one of the ore types (Type 8) will produce zinc concentrate and this will not contain any payable by-products.

Project value will be maximized by campaigning the different sulphide ore types through the process plant separately, with the minimum duration of any campaign approximately one month. A total of seven different ore stockpiles will be used to facilitate campaigning and also ensure that both the sulphide and oxide process plants are fed with the highest value ore available.

For the initial 18 months of operation, only Main and Pinwheel type ores will be campaigned through the process plant. After 26 months of operation, Pinwheel ore will be depleted and for the remaining life, only Main and Tuff ores will be campaigned through the process plant.

The overall sulphide process plant flowsheet includes the following steps:

• •Primary crushing.

• •Grinding and classification

• •Bulk rougher flotation.

• •Zinc rougher flotation.

• •Bulk concentrate re-grind.

E807 Gerue Street, Stephenson, MI USA 49887

141 Adelaide St. West, Suite 520, Toronto, ON, M5H 3L5

T: 906.753.9602

T: 647.943.5672

www.aquilaresources.com