Mr. Barry Hildred reports

AQUILA RESOURCES ANNOUNCES US$10 MILLION EQUITY FINANCING AND US$55 MILLION GOLD STREAM TRANSACTION WITH OSISKO CANADA

Aquila Resources Inc. has entered into a financing transaction with Osisko Bermuda Ltd. (OBL), a wholly owned subsidiary of Osisko Gold Royalties Ltd., pursuant to which OBL has agreed to commit approximately $65-million (U.S.) to Aquila through a $10-million (U.S.) private placement and $55-million (U.S.) gold stream purchase agreement.

"We are very pleased to be able to conclude this transaction with Osisko as we feel they are the right partner to assist us in advancing Back Forty to commercial production," stated Barry Hildred, Aquila's chief executive officer. "Proceeds from these transactions will allow us to complete all preconstruction activities at Back Forty and will provide a significant portion of the upfront capital required to build the project. With Osisko as our strategic partner, we are well positioned to advance the project efficiently and realize material value for our shareholders."

Private placement

OBL has agreed to purchase 49,173,076 units of Aquila at a price of 26 Canadian cents per unit for aggregate gross proceeds of $10-million (U.S.) (the strategic investment). Each unit shall consist of one common share and one-quarter of one common share purchase warrant. Each whole warrant shall entitle the holder to purchase one common share of the company for 34 Canadian cents for a period of 42 months from the closing date. The shares will be issued by way of a private placement and therefore will be subject to a customary four-month hold period from the date of closing.

Proceeds from the financing will be used to complete the feasibility study for the Back Forty project, advance the project to full permits for construction, complete exploration programs and for general corporate purposes.

On closing of the strategic investment, OBL will own approximately 14.9 per cent of Aquila's issued and outstanding common shares. For such time as OBL and its affiliates own at least 10 per cent of the issued and outstanding common shares of Aquila, it will have the right to participate in future equity or equity-linked placements to maintain its interest in Aquila and have the right to nominate one individual for election or appointment to the board of directors of the company.

Gold stream

Concurrent with the strategic investment, the parties have also entered into a gold purchase agreement, whereby OBL will provide the company with staged payments totalling $55-million (U.S.), payable as follows:

• $7.5-million (U.S.) on closing of the gold stream transaction;
• $7.5-million (U.S.) upon receipt by Aquila of all material permits required for the development and operation of the project, and receipt of a positive feasibility study;
• $10-million (U.S.) following a positive construction decision for the project;
• $30-million (U.S.) upon the first drawdown of an appropriate project debt finance facility, subject to the COC (change of control) provision (as defined herein).

Under the terms of the stream agreement, OBL will purchase 18.5 per cent of the refined gold from the project (the threshold stream percentage) until the company has delivered 105,000 ounces of gold (the production threshold). Upon satisfaction of the production threshold, the threshold stream percentage will be reduced to 9.25 per cent of the refined gold (the tail stream). In exchange for the refined gold delivered under the stream agreement, OBL will pay the company continuing payments equal to 30 per cent of the spot price of gold on the day of delivery, subject to a maximum payment of $600 (U.S.) per ounce.

In the event of a change of control of the company prior to the advancement of the final $30-million (U.S.) under the stream agreement, the person or entity acquiring control over the project may elect to forgo the final payment, in which case the threshold stream percentage and tail stream will be reduced to 9.5 per cent and 4.75 per cent, respectively. All other terms and conditions of the stream agreement will remain unchanged.

Pursuant to the stream agreement, the company has agreed to pay a $200,000 (U.S.) capital commitment fee. The fee is payable as to 50 per cent upon closing of the stream transaction and 50 per cent upon Osisko financing the second deposit under the stream agreement. Aquila will satisfy the fee by way of the issuance of common shares of the company based upon the five-day volume weighted average price of the common shares prior to the applicable deposit financing date.

Closing of the gold stream transaction is anticipated to occur on or about Nov. 10, 2017, and is subject to satisfaction of customary conditions.

Board appointment

Effective immediately and pursuant to the strategic investment, Joseph de la Plante, vice-president of corporate development for Osisko Gold Royalties, has been appointed to Aquila's board of directors. Mr. de la Plante has been vice-president, corporate development, of Osisko Gold Royalties since June, 2014. Prior to this, Mr. de la Plante held the position of senior adviser, investment and corporate development, of Osisko Mining Corp. since November, 2010, where he played a key role in the company's investor relations and corporate development efforts prior to the sale of the company.

Advisers

GMP Securities LP and Medalist Capital Ltd. acted as financial advisers to the company and McCarthy Tetrault LLP acted as legal counsel.

About Aquila Resources Inc.

Aquila Resources is a development-stage company with strategic assets in the Great Lakes region. The company is currently focused on advancing permitting activities for its 100-per-cent-owned high-grade polymetallic Back Forty project in Michigan.

Aquila's flagship Back Forty project is an open-pit volcanogenic massive sulphide deposit with underground potential located along the mineral-rich Penokean volcanic belt in Michigan's Upper Peninsula. The project contains approximately one billion pounds of zinc and one million ounces of gold in the measured and indicated categories, with additional upside potential.

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