NEWS RELEASE Shares Outstanding: 220,827,374
AQUILA RESOURCES CLOSES PREVIOUSLY ANNOUNCED FINANCING TRANSACTION WITH ORION MINE FINANCE FOR US$20.75 MILLION
- Includes US$17.25 million silver purchase agreement and US$3.5 million private placement -
- Company appoints new Vice President of Project Development -
TORONTO, ON - April 1, 2015 - Aquila Resources Inc. (TSX: AQA) (FKT: JM4A) (the "Company", "Aquila"), a development-stage company with assets in the Great Lakes Region including its 100%-owned gold- and zinc-rich Back Forty Project in Michigan's Upper Peninsula ("Back Forty"), announced today that it has closed a previously announced financing transaction with Orion Mine Finance ("Orion") including a private placement and a silver purchase agreement for total funding of US$20.75 million (collectively, the "Transaction"). 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 additional exploration. Concurrent with the Transaction, the Company has also completed the re-purchase of two existing royalties on Back Forty.
Private Placement
Aquila has issued 26,923,077 units ("Units") to Orion at a price of US$0.13 per unit for gross proceeds of US$3.5 million. Each Unit is comprised of one common share and one-half of a warrant ("Warrant"). Each full Warrant entitles Orion to purchase one common share for a price of US$0.19 for a period of 36 months. Orion now holds approximately 12.2% of the outstanding common shares in Aquila on a basic shares outstanding basis and 17.2% on a partially diluted basis. Orion also has the right to participate in any future equity or equity-linked financings to maintain its ownership level in Aquila.
In connection with the private placement, Orion received the right to nominate one individual for election to the Board of Directors of Aquila for 24 months and thereafter for such time as Orion owns at least 10% of the outstanding common shares. Orion has not yet exercised its nomination right but has indicated that it intends to do so.
Silver Purchase Agreement
Under the terms of the silver purchase agreement, Orion, or designated affiliate of Orion, has agreed to purchase up to 75% of the total payable silver ounces produced from the Back Forty Project. In exchange for the right to purchase silver, Orion will pay Aquila US$17.25 million (the "Deposit") payable in five installments. Orion has advanced US$6.5 million of the Deposit, representing the first installment. The remaining US$10.75 million is payable in four installments over the next 18 months and is subject to the completion of certain milestones and the satisfaction of certain other conditions.
Once the Back Forty project is in production, Orion will pay an ongoing price of US$4.00 per each ounce of silver delivered under the agreement. A copy of the Silver Purchase Agreement will be filed under Aquila's profile on SEDAR (www.sedar.com)
414 10th Avenue, Suite 1, Menominee, MI USA 49858 10 King St. E., Suite 300 Toronto, ON M5C 1C3
906.352.4024 F: 906.352.4027 T: 416.477.6985
www.aquilaresources.com
Royalty Terminations
Concurrent with the closing of the Transaction, Aquila completed the previously announced termination
of royalty interests held by HudBay Minerals Inc. ("HudBay") and Vale Exploration USA, Inc. ("VE USA"). Aquila paid US$4million cash to VE USA and US$1million in cash plus 1,730,769 Units to HudBay iin exchange for the termination of their royalty interests. The cash portion of these payments was funded out of the proceeds of the Transaction that Aquila received at closing.
Appointment of Vice President Project Development
Aquila Resources is also pleased to announce the appointment of Andrew Boushy as Vice President, Project Development who will oversee the development of the Back Forty Project. Andrew brings over
25 years of hands-on experience in the global mining and minerals industry with a focus on capital project
management and operational improvement including asset and organizational optimization. He has worked in a project manager capacity for such firms as Kinross Gold and Xstrata Nickel, and was most recently the Vice President & General Manager at a global Engineering and Project Management firm based in Toronto. Andrew is a Professional Engineer holding a Bachelor of Applied Science, Mechanical Engineering from Queen's University.
Coen Louwarts has stepped down from his role as Vice President Corporate Development but will remain as a consultant to Aquila during a transitional period.
"Aquila's management and board of directors wish to thank Coen for his contributions to the Company and wish him the very best," stated Barry Hildred, Aquila's President and CEO. "I am also pleased to welcome Andrew in his new role. With the backing of our new financial partner, we will look to expand our team to better position the Company as we move forward through our next phase of development."
About Aquila Resources
Aquila Resources Inc. (TSX: AQA) (Frankfurt: JM4A) is a development-stage company with assets in the Great Lakes Region including its 100%-owned gold- and zinc-rich Back Forty Project in Michigan's Upper Peninsula.
Barry Hildred, CEO Aquila Resources Inc. Tel: 416 477 6985
Email: [email protected]
Joe Racanelli
TMX Equicom
Tel: 416 815 0700 ext. 243
Email: [email protected]
414 10th Avenue, Suite 1, Menominee, MI USA 49858 10 King St. E., Suite 300 Toronto, ON M5C 1C3
906.352.4024 F: 906.352.4027 T: 416.477.6985
www.aquilaresources.com
This press release contains 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.
Forward-looking statements relate to any matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, without limitation, statements with respect to the Proposed Transaction, including the anticipated terms and use of proceeds thereof the anticipated closing date.
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. 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.
414 10th Avenue, Suite 1, Menominee, MI USA 49858 10 King St. E., Suite 300 Toronto, ON M5C 1C3
906.352.4024 F: 906.352.4027 T: 416.477.6985
www.aquilaresources.com