Aquila Enters Into Operating Agreement with Hudbay Minerals for Back Forty Project

TORONTO, ONTARIO -- (Marketwire) -- 03/21/12 -- Aquila Resources Inc. (TSX: AQA) (OTCQX: AQARF) (FRANKFURT: JM4A) ("Aquila" or the "Company") is pleased to announce the Company has entered into an Operating Agreement with HudBay Minerals Inc. (TSX: HBM) (NYSE: HBM) ("Hudbay") to advance work at the Back Forty project ("Back Forty" or the "Project"). The Company also announced that, together with Hudbay, it expects to release a National Instrument (NI) 43-101 Preliminary Economic Assessment (PEA) for the Project within the next 60 days.

The Back Forty project currently contains an NI 43-101 compliant Measured plus Indicated resource estimate of 17.89 million tonnes grading 1.57 g/t gold, 19.60 g/t silver, 0.19% copper and 2.44% zinc. Total contained metals include 907,000 ounces of gold, 11.31 million ounces of silver, 963 million pounds zinc, and 75.8 million pounds of copper (see press release dated October 15, 2010).


Operating Agreement

The Operating Agreement was contemplated previously in the Subscription Option and Joint Venture Agreement originally entered into on August 6, 2009 (see press release dated August 6, 2009). The Operating Agreement will govern exploration, development and operations at Back Forty.

Under the terms of the Operating Agreement, Back Forty assets will be transferred into a Michigan Limited Liability Company. Initial ownership interests are 49 percent for Aquila and 51 percent for Hudbay, who will also remain the Project operator.

Hudbay can increase its ownership to 65 percent (or an incremental 14 percent) following completion of the feasibility study, submission of all mine permit applications and by making payments on outstanding land option agreements. Additionally, Hudbay will have the ability to increase its stake by another 10 percent should Aquila elect not to fund its portion of capital expenditures for development within 90 days of receipt of mining permits.

Hudbay will continue to be responsible for funding substantially all expenditures at Back Forty until it has completed the feasibility study and submitted necessary mine permit applications. Other terms covered in the Operating Agreement include dilution of the respective partners, procedures for sale of either parties interest with right of first refusal and marketing rights to products produced from the project.


Update on Preliminary Economic Assessment

The Company expects to author a National Instrument (NI) 43-101 Preliminary Economic Assessment for the Back Forty project, utilizing data provided by Hudbay, within the next 60 days. The initial Project scope will be an open pit design that includes back filling of the pit once mining has completed. Additional drilling focused on further delineation of in-pit resources has occurred since the last resource estimate was published. The potential impact on the Project from this delineation will be reviewed in conjunction with preparation of a Pre-Feasibility Study.

"The execution of the Operating Agreement, and completion of the Preliminary Economic Assessment, are the next steps in the progression of the Back Forty project towards making a construction decision," said President and CEO Thomas Quigley. "The PEA will provide an initial, order of magnitude financial appraisal of an open pit mine plan exploiting only a portion of the identified resource at Back Forty, and will also provide parameters and guidance for the upcoming Pre-Feasibility study."


About Back Forty Project

The Back Forty Project, located in Menominee County in the Upper Peninsula of Michigan, is an advanced stage exploration project delineating a zinc and gold-rich volcanogenic massive sulfide deposit under an Operating Agreement between Aquila and HudBay Minerals Inc. (NYSE: HBM) (TSX: HBM). The Back Forty deposit is comprised of massive sulfide, stringer, gossan, and gold-only mineralization, each with high-grade components. Massive sulfide has been traced along strike for nearly 1 kilometer and to a vertical depth of 700 meters. The limit of strong hydrothermal alteration associated with the Back Forty massive sulfide has not been identified and is indicative of a very large mineralized system. For more information on the Back Forty Project, please refer to the Back Forty Project section on our website www.aquilaresources.com.


About Aquila Resources Inc.

Aquila Resources Inc. (TSX: AQA)(OTCQX: AQARF)(FRANKFURT: JM4A) is a mineral exploration Company focused on the discovery and development of high-grade base and precious metal projects in highly prospective regions of North America. The Company is moving towards an interest in production on its flagship Back Forty Project through an Operating Agreement with Hudbay Minerals Inc. (TSX: HBM)(NYSE: HBM). The Company has also positioned itself for future growth by acquiring new base metal deposits under an Exploration Alliance with Hudbay as well as through the acquisition of 100% owned precious metal exploration properties. Leading the way is an experienced management and technical team that have identified significant high-grade base and precious metal properties. For more information, please visit www.aquilaresources.com.


Thomas O. Quigley is the Qualified Person for Aquila Resources as described in National Instrument 43-101 and is responsible for the contents of this release.

This press release contains certain forward-looking statements. 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". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; changes in project parameters as plans continue to be refined, future prices of resources; possible variations in reserves, grade or recovery rates, accidents, labor disputes and other risks of the mining industry; and delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Shares Outstanding: 90,739,168

The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release.



Contacts:

Aquila Resources Inc. (Toronto)
Robin Dunbar
CFO
416-203-1404
rdunbar@aquilaresources.com

Aquila Resources Inc. (U.S.)
Thomas O. Quigley
President
906-352-4024
tquigley@aquilaresources.com
www.aquilaresources.com