Mr. Barry Hildred reports

AQUILA RESOURCES FILES Q1 2016 RESULTS AND PROVIDES CORPORATE UPDATE

Aquila Resources Inc. has filed its financial results for its first quarter ended March 31, 2015. (All amounts, unless indicated, are reported in U.S. dollars.)

First quarter highlights:

• Received notification from the Michigan Department of Environmental Quality (MDEQ) that three of the company's four mine permit applications were deemed administratively complete. Aquila has since provided additional clarification and information relating to its wetlands permit application to the MDEQ.
• Commenced a feasibility study on Back Forty, which is expected to be completed before the end of 2016. Aquila awarded the feasibility study's development to Lycopodium Minerals Canada, which will be supported by a group of globally recognized experts and specialist engineering companies.
• Announced drill results from an exploration drilling program completed at Back Forty late in 2015. The drill program included four holes, two of which tested a separate geophysical anomaly and two that tested an extension of the deposit, which returned 2.8 metres of 38.5 grams per tonne of gold and 231.8 g/t of silver overlying zinc and copper-rich massive sulphides.
• Appointed Cliff Nelson, a mining industry executive with 35 years of operational, metallurgical and mine management experience, as vice-president of U.S. operations. Mr. Nelson is responsible for Aquila's day-to-day activities in Michigan's Upper Peninsula and is based in Stephenson, in close proximity to the company's flagship Back Forty project.
• Supported its permitting activities through local stakeholder engagement and outreach activities, including public hearing and town hall meetings.
• As at March 31, 2016, Aquila had cash of $1.6-million and working capital of $400,000. These compare with cash of $3.3-million and a working capital of $1.5-million at Dec. 31, 2015. The working capital decline is due to financing for the company's feasibility study and increased overhead costs primarily relating to permitting activities. Aquila expects to receive $4.9-million in 2016 as part of a financing arrangement signed with Orion Mine Finance in March, 2015.

Highlights subsequent to quarter-end:

• Completed comprehensive and integrated metallurgical testwork that indicated 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.
• As expected, the company received responses and questions related to its Back Forty mine permit application from the MDEQ. The company is currently working with its permitting consultant Foth Infrastructure and Environment to address all 197 responses received to date and will respond to the MDEQ in due course.

Outlook

"Building on the significant momentum we generated in 2015, we made considerable progress in Q1 advancing our flagship Back Forty project," said Barry Hildred, president and chief executive officer of Aquila Resources. "Of note, we started work on our feasibility study, which we expect to complete before end of year, improved the recoveries of gold and zinc, which strengthened Back Forty's economics, and expanded our management team with the appointment of Cliff Nelson as vice-president of U.S. operations. More importantly, we made headway with our permitting activities through ongoing interactions with various levels of government, assorted regulatory agencies and various community stakeholders.

"Based on preliminary indications, we anticipate that the MDEQ will render its decision on our mine permit application in Q3 of 2016. We believe this decision, coupled with the completion of our feasibility study, will have a material impact to the company's shareholder value and strategic direction in the coming months."

Aquila's management's discussion and analysis and financial statements for the first quarter 2016 are available on the company's website and through the company's SEDAR profile.

Qualified person

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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