Mr. Barry Hildred reports

AQUILA RESOURCES FILES FOURTH QUARTER AND YEAR END 2017 FINANCIAL RESULTS

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

Fourth quarter highlights

• In December, 2017, the Michigan Department of Environmental Quality (MDEQ) deemed Aquila's wetland/stream/floodplain permit application for the Back Forty project administratively complete and the regulatory technical review process can now move to the next stage. This is final required permit to operate and build the Back Forty project.
• The company closed 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 purchased 49,173,076 units of Aquila at a price of 26 cents per unit for aggregate gross proceeds of $10-million. Each unit consists of one common share and one-quarter of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the company for 34 cents until May 10, 2021. Concurrent with the strategic investment, the parties have entered into a gold purchase agreement whereby OBL will purchase 18.5 per cent of the refined gold from the project until the company has delivered 105,000 ounces of gold. Upon satisfaction of the production threshold, the threshold stream percentage will be reduced to 9.25 per cent of the refined gold. In exchange for the refined gold delivered under the stream, 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 which was received on close.
• 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 g/t silver and 12.17 per cent zinc over 7.09 metres (drilled thickness) in LK-17-537.
• The company also completed its estimates of capital costs and operating expenditures for the feasibility study for the Back Forty project. Key progress included frozen layout, optimized flow sheet and overall reduction to environmental footprint including water, wetlands and air impacts.
• In December of 2017, the State of Wisconsin passed AB 499, the Mining for America Act which, amongst other things, repealed a decades-old moratorium on non-ferrous mining in the state. Aquila is currently evaluating its strategy in Wisconsin where it has two earlier stage exploration assets.
• As at Dec. 31, 2017, Aquila had cash of $17.2-million and working capital of $15.5-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 strategic investment and the first advance under the stream in November, 2017, 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

• In February, 2018, the company announced an updated mineral resource estimate for the Back Forty project. Highlights of the 2018 mineral resource estimate include a 10-per-cent increase in tonnage in the measured and indicated mineral resource categories versus the prior 2013 mineral resource estimate, a 12-per-cent increase in contained zinc and a 4-per-cent increase in contained gold. Contained silver, copper and lead also increased versus the 2013 mineral resource estimate.
• The Menominee Indian Tribe of Wisconsin recently filed a federal lawsuit in the Eastern District of Wisconsin against the Environmental Protection Agency and the U.S. Army Corps of Engineers, claiming that the federal government should exercise jurisdiction over the wetlands permitting process currently being administered by the State of Michigan and require Aquila to obtain a federal wetlands permit. Both federal agencies rejected this argument when it was presented to them last year, and Aquila anticipates that their position that the State of Michigan is properly exercising its delegated authority to issue a wetlands permit will be vindicated by the federal court.
• The company appointed Michael Welch as chief operating officer (COO) effective March 1, 2018. As COO, Mr. Welch will assume responsibility for the company's activities at its Back Forty project in Michigan where he will lead operational readiness and help drive the seamless integration from project to operations. He will also oversee stakeholder engagement, compliance, sustainability and the company's regional strategy. Mr. Welch has more than 25 years of experience in the mining and mineral exploration industry covering grassroots exploration, mine geology/exploration, project management and executive operations management. Prior to joining Aquila, Mr. Welch was the managing director and president of the board of directors for Lundin Mining Corp.'s Somincor operations, which include the Neves-Corvo copper and zinc mine in Portugal. Prior to that, he was responsible for the construction completion and start-up of operations for Lundin's Eagle mine in northern Michigan, United States. Before joining Lundin, Mr. Welch was the vice-president of operations for Xstrata Nickel's Raglan operation in Quebec, Canada.

"Two thousand seventeen was a year of considerable progress and achievement for Aquila as we continued to advance the Back Forty project towards a construction decision," said Barry Hildred, president and chief executive officer of Aquila. "The company will continue to work with the MDEQ to address any questions concerning the wetlands permit and we anticipate a permit decision in the first half of 2018. In parallel, we are moving ahead on a number of key initiatives including finalizing the Back Forty feasibility study, developing an exploration strategy for Back Forty and our earlier stage assets in Wisconsin, continuing to enhance our leadership team, and considering the strategic and financial options available to the company."

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 and engineering activities for its 100-per-cent-owned zinc- and gold-rich 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 1.1 billion pounds of zinc and one million ounces of gold in the measured and indicated categories, with additional upside potential.

We seek Safe Harbor.