Mr. Barry Hildred reports

AQUILA RESOURCES FILES FIRST QUARTER 2017 RESULTS

Aquila Resources Inc. has filed its financial results for the first quarter ended March 31, 2017. All amounts, unless indicated, are reported in U.S. dollars.

First quarter highlights:

• Closed a non-brokered private placement that resulted in gross proceeds of $7.9-million (Canadian). The offering was oversubscribed with 36,017,725 units issued, with each unit priced at 22 Canadian cents and consisting of one share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one Aquila common share for 30 Canadian cents for a period of 36 months.
• Aquila's permit to mine has been challenged in an administrative contested case proceeding to be conducted by the Michigan Office of Administrative Hearings. A contested case is a continuation of the permit review process where aggrieved parties can seek a formal evidentiary hearing on issues raised in their petition for a contested case. The process culminates in a proposal for decision to the MDEQ director, who issues a final decision on the case and the permit. Aquila does not anticipate the MDEQ director will come to a different conclusion on issuing the permit from MDEQ staff, and looks forward to participating in the contested case process.
• The company announced the start of a 4,600-metre drill program designed to expand known resources at Back Forty and convert current inferred resources into measured and indicated categories.
• Advanced with development of the feasibility study for the Back Forty project. Key progress included the enterprise configuration of the mine production plan.
• The company continued with efforts to refine capital and operating costs associated with the Back Forty project, including early contractor involvement to optimize execution approach and schedule.
• Named Ian Pritchard, a mining executive with more than 30 years of experience, to the company's board as an independent director. Mr. Pritchard was also named as chair of the company's technical, environmental, health and safety committee.
• Appointed Bill Matheson, a mining executive with more than 30 years of operations and project management experience, as director, construction. The appointment strengthens the company's management team.
• As at March 31, 2017, Aquila had cash of $5.1-million and working capital of $4.32-million. This compared with cash of $1.4-million and working capital of $600,000 at Dec. 31, 2016. The working capital increase was due to the private placement in February, 2017, offset by the financing of the company's permitting activities and development of the feasibility study.

Postquarter highlight:

• Received the final national pollutant discharge elimination systems permit (NPDES) from the Michigan Department of Environmental Quality (MDEQ). The NPDES permit marks the third of four permits that Aquila has received from the MDEQ following the completion of the public hearing process.

"With the third of four permits now in hand, our near-term focus will centre on completing the wetlands protection permit application process and completing assay results from our 4,600-metre winter drill program, with initial results expected in May," said Barry Hildred, chief executive officer of Aquila Resources. "In the second half of 2017, we expect to complete our feasibility study, strengthen our senior leadership team in preparation of the project execution phase, and advance discussions and examine all options to secure project financing necessary to build Back Forty."

About Aquila Resources Inc.

Aquila Resources is a development-stage company with strategic assets in the Great Lakes region. The company's experienced management team is currently focused on advancing permitting activities for its 100-per-cent-owned gold- and zinc-rich Back Forty project in Michigan.

Aquila's flagship Back Forty project is a volcanogenic massive sulphide (VMS) deposit located along the mineral-rich Penokean volcanic belt in Michigan's Upper Peninsula. In its updated preliminary economic assessment, filed in September, 2014, Back Forty demonstrated strong economics with a pretax net present value of $282-million ($210.8-million after tax) and a pretax internal rate of return of 38.8 per cent (32 per cent after tax) based on mining 16.1 million tonnes of measured, indicated and inferred resources over the 16-year life of mine, of which 12.5 million tonnes will be open pit and 3.6 million tonnes will be underground.

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