Mr. Barry Hildred reports

AQUILA IMPROVES GOLD AND ZINC METAL RECOVERIES AT ITS BACK FORTY PROJECT

Aquila Resources Inc. has completed comprehensive and integrated metallurgical test work that indicates improved recoveries and the potential for increased production of Back Forty's two primary metals, gold and zinc. Gold recoveries improved to 63 per cent, up from 61 per cent, and zinc recoveries improved to 93 per cent, up from 91 per cent, when benchmarked against the company's preliminary economic assessment study of June, 2014.

"We are very encouraged by the positive results of our metallurgical test program," said Andrew Boushy, vice-president of project development. "Improved recoveries for gold and zinc clearly suggest the potential for improved metal production and ultimately improved economics at Back Forty. We will be further quantifying and evaluating the impact of these results on Back Forty's project economics during the course of our work on the feasibility study, which is being developed in parallel with our permitting activities, both of which are expected to be completed before the end of 2016."

The metallurgical test work, which was conducted by SGS Canada Inc. in Lakefield, analyzed new representative samples that indicated that the mineral resource is an aggregate of four metallurgical zones, namely three sulphide zones (Main, Pinwheel and Tuff) and one oxide zone. Further test work performed on composite samples for each of these ore types revealed a gradient, with higher-grade samples generally exhibiting improved recovery compared with lower-grade samples. When new recovery equations were applied to the PEA mine plan, the impact in recovery ranged from 2-per-cent improvement for zinc to a 15-per-cent improvement for silver. The full impact of the metallurgical test work against each of Back Forty's contained metals is illustrated in the attached table.

                                  REVISED RECOVERY SUMMARY 
  
                                PEA                   Revised recovery                 Var (1)    
              Contained   Recovered   Per cent   Contained   Recovered   Per cent   Recovered

Au (000 oz)         891         546      61.3%         891         564      63.3%        3.3%     
Zn (000 lb)     939,200     855,623      91.1%     939,200     873,170      93.0%        2.1%     
Ag (000 oz)      10,624       5,108      48.1%      10,624       5,892      55.5%       15.4%    
Pb (000 lb)      60,060      22,416      37.3%      60,060      24,685      41.1%       10.1%    
Cu (000 lb)      92,978      74,715      80.4%      92,978      74,254      79.9%       (0.6%)   

(1) All estimates and calculations have been rounded for presentation purposes.  

Test work also demonstrates that additional gold and silver are recovered in zinc concentrate. Further work will be performed to determine whether the concentration of precious metals in zinc concentrate will meet the required payable threshold.

The positive results of the metallurgical test program provide the company with the basis to finalize its process design, a key step in the development of the Back Forty feasibility study. Aquila expects to complete the feasibility study, including an updated resource and mine plan, by December, 2016.

Aquila selected nearly 70 samples representing the variability of the four zones of the Back Forty deposit and submitted them to SGS for test work to both confirm previous results and provide continuing support for the feasibility study. The samples were subjected to a variety of industry-standard comminution tests (CWi, SMC, Bond ball mill, Ai), and these results will enable the selection, design and optimization of the crushing and grinding circuits during the current feasibility study. Lycopodium Minerals Canada Ltd. is currently designing the processing plant and provided input for the comminution test work.

Qualified person

David Penswick, PEng, an independent mining consultant, who is a qualified person as defined under National Instrument 43-101, prepared and is responsible for the technical information as disclosed in this news release.

This news release was reviewed and approved by Thomas O. Quigley, vice-president of exploration and senior technical adviser 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 30, 2016.

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