Aquila Resources Announces Fourth Quarter and Year End 2019 Financial Results

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TORONTO, Feb. 28, 2020 - Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) ("Aquila" or the "Company") announced the filing of its financial results for the fourth quarter and year ended December 31, 2019. All amounts, unless indicated, are reported in US dollars.

"2019 was a year of considerable progress and achievement for Aquila as we continued to advance the Back Forty Project towards construction," said Barry Hildred, President and Chief Executive Officer of Aquila. "Key permitting milestones achieved during the year included the Back Forty Mining Permit being upheld both in court and subsequently by an environmental review panel and, in Q4 2019, Aquila was issued amended Mining and Air permits. In 2020, our focus is to clear remaining legal hurdles and to get Back Forty shovel-ready. In order to fund these activities, we continue to evaluate interim and long-term funding options, including certain strategic opportunities with a variety of partners."

ANNUAL HIGHLIGHTS

• In the second quarter, the Michigan Office of Administrative Hearings and Rules issued a Final Decision and Order upholding the Mining Permit for Aquila's Back Forty Project. Following 30 days of cumulative testimony, the administrative law judge issued a final decision finding "that the proposed mining operation will not pollute, impair, or destroy the air, water and other natural resources, or the public trust in those resources," in compliance with Michigan's Nonferrous Metallic Mining Statute.
• The Company progressed certain Back Forty pre-construction activities including environmental fieldwork and site data collection. The Company also completed a geotechnical site investigation program including 1,200 meters of geotechnical drilling and hydrogeological testing in preparation for advanced engineering activities.
• The Company continued with its evaluation of underground mining following an open pit operation at Back Forty as outlined in the August 2018 Feasibility Study. The Company is also assessing various alternatives for downsizing the processing plant that better aligns open pit plant and potential future underground throughputs.

FOURTH QUARTER HIGHLIGHTS

• On November 27, 2019, the Company announced that the Michigan Department of Environment, Great Lakes, and Energy ("EGLE") environmental review panel ("Panel") unanimously upheld the Final Decision and Order previously made by the Judge in support of the Mining Permit. The Panel's decision marked the final step in the contested case challenge to the Mining Permit that began in April 2018 and represents EGLE's final decision.
• On December 12, 2019, the Company announced that EGLE approved amendments to its Mining Permit and its Michigan Air Use Permit to Install for its Back Forty Project. The amendments update the permits to align with the project design outlined in the August 2018 open pit Feasibility Study as well as in its Wetlands Permit that was issued June 4, 2018.
• The Company advanced the legal process related to the contested case challenge to its Wetlands Permit. Rebuttal testimony was completed on October 25, 2019 and closing briefs were submitted at the end of January 2020. The Company expects a final decision to follow mid-2020.
• As at December 31, 2019, Aquila had cash of $4.0 million and working capital of $1.6 million. This compared to cash of $14.4 million and working capital of $12.1 million at December 31, 2018. The decrease in working capital is primarily due to the funding of the Company's pre-construction activities.

POST QUARTER HIGHLIGHTS

• On January 27, 2020, in a unanimous decision, the United States Court of Appeals for the Seventh Circuit upheld the dismissal of a lawsuit brought by the Menominee Indian Tribe of Wisconsin in the State of Wisconsin.
• In February 2020, Mr. Dave Anderson, the Company's Director of Environment and Regulatory Affairs, was appointed General Manager. Mr. Anderson will head up responsibility for permitting, social engagement, and local operations.

OUTLOOK

• The Company is in active discussions with existing partners, advisors and outside investors to secure interim financing to complete pre-construction activities. As part of these discussions, Aquila has been negotiating with Osisko Gold Royalties to amend certain terms of the Back Forty gold and silver streams. The negotiations are focused on revising certain stream default dates, covenants, and economic terms including the timing of remaining deposits. There can be no assurance that the Company will be able to secure an agreement with Osisko Gold Royalties nor to execute and close on any funding solution.
• The Company will continue to progress certain Back Forty pre-construction activities including environmental fieldwork and site data collection. Aquila is continuing with its evaluation of underground mining following an open pit operation at Back Forty as outlined in the August 2018 Feasibility Study. The Company also plans to update the Feasibility Study and continue to seek to optimize the Project while working to achieve shovel-ready status for Back Forty.
• The Company has received the four key permits required to commence construction and operations at Back Forty. The Company will work to secure additional permits prior to construction, including a Dam Safety Permit, in 2020.
• Operational readiness activities including advancing plans with respect to roads, power, and concentrate logistics are underway.
• The Company is also evaluating its strategy and funding alternatives with respect to its exploration projects in Wisconsin, including its high-grade Reef gold property and its Bend copper-gold property, in light of the recent repeal of the decades-old moratorium on non-ferrous mining in the state.

SELECTED FINANCIAL INFORMATION

The following table provides selected financial information that should be read in conjunction with the financial statements of the Company for the year ended December 31, 2019:

ABOUT AQUILA RESOURCES
Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development?stage company with strategic assets in the Great Lakes Region. The Company's experienced management team is focused on advancing pre-construction activities for its 100%?owned zinc? and gold?rich Back Forty Project in Michigan.

Aquila's flagship Back Forty Project is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral?rich Penokean Volcanic Belt in Michigan's Upper Peninsula. The Project contains approximately 1.1B pounds of zinc and 1M ounces of gold in the Measured & Indicated Mineral Resource categories, with additional upside potential.

The Company has two other exploration projects: Reef Gold Project located in Marathon County, Wisconsin and the Bend Project located in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence containing copper and gold.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release may contain certain forward?looking statements within the meaning of applicable Canadian securities legislation. In certain cases, forward?looking statements can be identified by the use of words such as "plans", "expects" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" and similar expressions suggesting future outcomes or statements regarding an outlook.

These and other forward?looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Aquila to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein. These risks include those described under the heading "Risk Factors" in Aquila's most recent annual information form and its other public filings, copies of which can be under Aquila's profile at www.sedar.com. Aquila expressly disclaims any obligation to update forward?looking information except as required by applicable law. Such forward?looking information represents Aquila's best judgment based on information currently available. No forward?looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward?looking statements or information. Furthermore, Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

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SOURCE Aquila Resources Inc.