Mr. Barry Hildred reports

AQUILA RESOURCES FILES Q2 2016 RESULTS

Aquila Resources Inc. has provided an update on its recent developments, including the status of permitting activities, the launch of a new exploration program and progress on its feasibility study. It has also filed its financial results for its second quarter ended June 30, 2016. All amounts, unless indicated, are reported in U.S. dollars.

Back Forty permit update:

During the quarter, the company responded to the Michigan Department of Environmental Quality's (DEQ) request for additional information relating to its previously filed mine permit application (MPA) for its Back Forty project in the Upper Peninsula. Subsequent to quarter-end, the company granted the DEQ an extension to Aug. 25 to render a draft decision on the MPA. Recently, Aquila also received notification that the DEQ publicly noticed a draft of the national pollutant discharge elimination systems (NPDES) permit, one of the four required permits at Back Forty.

Back Forty exploration and new project opportunity:

The company also announces that it has commenced an exploration program that includes 10 drill holes testing step-out and satellite targets near the known Back Forty deposit. Initial results from this program are expected before the end of the company's third quarter.

In addition, the company initiated exploration activities, including geophysics, mapping and land acquisition, in several project areas north of the company's Back Forty project. The project areas have been deemed to be prospective and similar in style to the nickel, copper and platinum group mineralization found at the Eagle mine, which is located in nearby Marquette county of Michigan's Upper Peninsula. These newly identified properties are expected to be vended into a wholly owned subsidiary named Aquila Nickel Inc.

Management commentary:

"Our second quarter was among our most active yet and was marked by considerable progress," said Barry Hildred, president and chief executive officer of Aquila. "Most notably, we advanced our permitting activities as well as feasibility study for Back Forty, setting the stage for what we believe will be a very active second half of the year for Aquila."

Mr. Hildred added: "In addition to our first priority of obtaining permit approvals for Back Forty, we will continue to focus on new near-mine exploration targets that will showcase what we believe is meaningful resource upside and future underground potential. In addition, we will allocate select resources to the pursuit of new regional asset opportunities in the Upper Peninsula that we expect will result in Aquila holding a larger portfolio of projects in a very favourable mining jurisdiction."

Other second quarter 2016 highlights:

• Received gross proceeds of $2,557,692 following Orion Mine Finance's exercise of 13,461,539 warrants at a strike price of 19 cents. As a result of the transaction, Orion owns 44,412,616 or 18.9 per cent of Aquila's outstanding float;
• Advanced work on the feasibility study for Back Forty. Progress included the completion of process design and procurement packages for all major equipment, the commencement of the resource model update and mine design/optimization, and the completion of a geotechnical and site investigation program including 11 boreholes and 10 test pits. The feasibility study is still expected to be completed before the end of 2016;
• 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 of September, 2014;
• As at June 30, 2016, Aquila had cash of $1.6-million and working capital of $100,000. This compares with cash of $3.3-million and 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 $4,275,000 in 2016 as part of a financing arrangement signed with Orion Mine Finance in March, 2015, and amended in June, 2016.

Aquila's MD&A (management's discussion and analysis) and financial statements for the second quarter ended June 30, 2016, are available on the company's website and via 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.

We seek Safe Harbor.