Mr. Barry Hildred reports

AQUILA RESOURCES FILES THIRD QUARTER 2017 FINANCIAL RESULTS

Aquila Resources Inc. has filed its financial results for the three-month and nine-month periods ended Sept. 30, 2017. All amounts, unless indicated, are reported in U.S. dollars.

Third quarter highlights:

• The company released the second round of results from the company's 2017 drill program at the Back Forty project. The five holes were a combination of infill, stepout and geotechnical drilling. The results included 1.23 grams per tonne gold, 112.96 grams per tonne silver, 1.12 per cent lead and 13.61 per cent zinc over 2.39 metres*; 0.82 gram per tonne gold, 75.37 grams per tonne silver, 0.1 per cent copper, 2.69 per cent lead and 9.6 per cent zinc over 5.9 metres*; and 0.98 gram per tonne gold, 65.75 grams per tonne silver, 2.53 per cent lead and 8.95 per cent zinc over 6.00 metres* in hole LK-17-528 (*drilled thickness; true thickness is 85 per cent of drilled thickness).
• The company finalized optimization of the feasibility study for the Back Forty project. Key progress included freezing layout, plant resizing and improved metallurgical recovery test work.
• The company commenced a resource update to be included in the feasibility study.
• As at Sept. 30, 2017, Aquila had cash of $3.1-million and working capital of $2.2-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, and warrant exercises during Q3 2017, offset by the financing of the company's permitting activities and development of the feasibility study.

Postquarter highlights:

• The company announced 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 $65-million to Aquila through a $10-million private placement and $55-million gold stream purchase agreement. 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 approximately $10-million. 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 cents for a period of 42 months from the closing date. Concurrent with the equity financing, the parties have entered into a gold purchase agreement, whereby 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 per ounce. In consideration for the stream, OBL will make four upfront deposit payments to Aquila totalling $55-million, including $7.5-million on close of the equity and gold purchase agreements.
• The company appointed Joseph de la Plante, vice-president, corporate development, for Osisko Gold Royalties, to the board of directors. Mr. de la Plante, Osisko Gold Royalties' nominee pursuant to the subscription agreement, 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.
• The company released the final results from the company's 2017 exploration drill program at the Back Forty project. The drilling program was designed to test the along-strike extension of the 2016 zone massive sulphide. The results included 1.27 grams per tonne gold, 15.78 grams per tonne silver and 12.17 per cent zinc over 7.09 metres (drilled thickness) in LK-17-537.
• The final required permit to operate and build the Back Forty mine is a Wetlands Protection Act permit covered under Northern Rockies Ecosystem Protection Act (NREPA) 1994 PA 451, as amended. On Jan. 13, 2017, the company submitted its wetland protection permit application to the Michigan Department of Environmental Quality (MDEQ). The MDEQ sent a detailed correction request letter on Jan. 26, 2017, requesting additional information and clarification/corrections in the permit application. A new wetland delineation and mapping was also requested by the MDEQ and completed in June, 2017.
• On Oct. 2, 2017, the company resubmitted its wetland permit application. At the request of the MDEQ, the company temporarily withdrew the application to provide the MDEQ with additional time to review the application prior to deeming the application administratively complete. The company will resubmit the application shortly and anticipates that the application will be deemed complete and put on public notice in the near term.

"During the quarter, we made significant progress related to the advancement of the Back Forty project," said Barry Hildred, chief executive officer of Aquila Resources. "We are working closely with the MDEQ in order to expedite the completion of the fourth and final required permit. As we await this permit, we are moving ahead on a number of initiatives to ensure we are construction ready, including adding to the leadership team and exploring strategic and financing options for the project."

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.

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