Name and Location
Back Forty gold/zinc project, Michigan, US.

Client
Aquila Resources.

Project Description
The new preliminary economic assessment (PEA) completed on the Back Forty project, in Michigan’s upper peninsula, incorporates a revised mine plan based on results from Aquila’s 2013 resource update. The project contains measured and indicated resources of 15.13-million tonnes grading 2.03 g/t gold, 24.48 g/t silver, 0.33% copper, 0.22% lead and 3.06% zinc. Inferred resources total 2.34-million tonnes grading 2.07 g/t silver, 26.53 g/t silver, 0.36% copper, 0.33% lead and 2.2% zinc.

The PEA contemplates mining 16.1-million tonnes of mineralised material over the 16-year life-of-mine, of which 12.5-million tonnes is openpit and 3.6-million tonnes is underground. The PEA demonstrates the potential for a diverse earning stream, with a payable metal value mix of 41.2% gold, 40.5% zinc, 12% copper, 5.7% silver and 0.6% lead. Operating at an initial throughput rate of 5 350 t/d, the total payable production of the mine is expected to be about 532 000 oz of gold, 704-million pounds of zinc, 63-million pounds of copper, 4.66-million ounces of silver and 11-million pounds of lead.

Net Present Value/Internal Rate of Return
The project has a pretax net present value at 6% of $247.2-million and an internal rate of return of 34.9%, with a payback period of 1.6 years.

Value
$261-million.

Duration
Not stated.

Latest Developments
Aquila has closed a private placement and a silver purchase agreement for total funding of $20.75-million with Orion Mine Finance.

The proceeds from the transaction will be used to fund the next stage of development at Back Forty, including the completion of permitting activities, a feasibility study and further exploration.

Under the terms of the transaction, Aquila issued 26.92-million units to Orion, with each unit consisting of one common share and one-half of a three-year warrant to buy one common share at a strike price of $0.19 a share, at a price of $0.13 apiece for gross proceeds of $3.5-million.

Orion has also bought 75% of Aquila's life-of-mine silver output from Back Forty for gross proceeds of $17.25-million, subject to a draw-down schedule. Orion will also pay an ongoing price of $4/oz of silver delivered under the streaming agreement.

Aquila will repurchase the existing royalties of Back Forty from Vale Exploration USA and HudBay Minerals for $4-million in cash and $1-million in cash respectivelyand $225 000 in units, priced at $0.13 a unit.

Orion now holds about 12.2% of the outstanding common shares in Aquila on a basic shares outstanding basis and 18.3% on a partially diluted basis. Orion has also acquired the right to participate in any future equity or equity-linked placements to maintain its interest level in Aquila.

Further, Orion has gained the right to nominate one individual for election to the board for 24 months and, thereafter, as long as Orion owns at least 10% of the outstanding common shares.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Aquila Resources, tel +1 906 352 4024, fax +1 906 352 4027 or email info@aquilaresources.com.