aquila resources inc. investor packet
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TRANSCRIPT
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Investor Packet
June 2013
Image: Financial analysts tour of the Back Forty project- October 2011
TSX: AQA / FKT: JM4A
LETTER FROM THE PRESIDENT
Dear Shareholders:
As you are aware our joint venture partner HudBay Minerals Inc. has
suspended development activities at the Back Forty project and
terminated the exploration alliance. While we are disappointed with
their decision to do so, the situation produces new opportunities for
Aquila as a result.
Aquila currently retains a 49% interest in the Back Forty project and
has certain rights to acquire HudBay's interest in the Project should
that be deemed in the interest of shareholders. Being that the Back
Forty has a completed Preliminary Economic Assessment (PEA) with
positive economic projections, exploration upside and growing
precious metals content, our 49% stake could become increasingly
valuable.
In spite of suspending other activities at Back Forty, the joint venture
released an updated NI 43-101 resource estimate in February that
incorporated the results of an additional 78 drill holes, many of which
encountered significant mineralization. The result was improved grades that can be used in the evaluation
of future economic studies.
HudBay was clear that work was suspended at Back Forty due to capital requirements at other projects
and current economic conditions. Accordingly, the high quality asset that the Back Forty has become over
the last few years remains as robust and economic today as it was yesterday. While the process of
strategically reviewing alternative options for development of Back Forty is just beginning, both sides
have agreed to work diligently to pursue what is best for our shareholders and many stakeholders.
As a result of the termination of the exploration alliance, Aquila now maintains a 100% interest in all three
former alliance projects. This further strengthens Aquila's position as an exploration leader in the Great
Lakes region of North America. High quality projects such as the Bend copper-gold deposit and Five Mile
Lake Zinc project are now 100% controlled, in conjunction with Aquila’s Reef gold project, to form a well-
rounded and highly prospective portfolio of assets.
Aquila still believes the unexplored and undeveloped nature of the Great Lakes area creates one of the
best areas in North America for new discoveries. Thanks to the dedication of our hard working team and
shareholders like you, Aquila plans to continue to advance these projects and build additional shareholder
value through exploration and discovery.
Sincerely,
Thomas O. Quigley
President and Chief Executive Officer
TSX: AQA / FKT: JM4A
CORPORATE PROFILE
Aquila Resources Inc. (TSX: AQA) (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.
Aquila has established a leadership presence in
the Great Lakes region, a politically stable and
increasingly attractive investment opportunity,
through the acquisition and development of
multiple base and precious metal projects. This
includes a 49% interest in the gold and zinc Back
Forty Project as well as a growing portfolio of
100% controlled base and precious metal
projects. Leading the way is an experienced
management team that has identified significant
ore deposits over the last 30 years.
INVESTMENT HIGHLIGHTS
Exploring in highly prospective Great Lakes region of North America with world-class potential for
base and precious metal districts
Assembled strong portfolio of base and precious metal projects ranging from grass roots to advanced
stage
49% interest in the Back Forty project which contains NI 43-101 compliant resource estimate of
907,000 ounces gold, 11.31 million ounces silver, 963 million pounds zinc and 75.8 million pounds
copper; PEA completed in 2012
Exposing shareholders to high level of exploration upside through continued acquisition and
exploration of base and precious metal projects
Highly experienced management team with regional proprietary database and history of identifying
ore deposits
Operating in politically stable jurisdiction creating potential for long-term stability, growth and
shareholder value
2011 ACCOMPLISHMENTS
Acquisition of Bend copper-gold deposit and Reef gold project within potentially world-class
Penokean Volcanic belt
Over $16 million in exploration and project development expenditures at Back Forty project
Successful drill campaigns at Reef gold project and Peninsula gold project with multiple high grade
gold intercepts
Completion of US$2.2 million corporate financing
TSX: AQA / FKT: JM4A
GREAT LAKES REGION: WORLD-CLASS POTENTIAL
Aquila has established a leadership presence within the Great Lakes region of North America. The
company has assembled a strong portfolio of projects that are currently being explored and developed
within the region while aggressive acquisition continues.
Penokean Volcanic Belt Underexplored belt with district-scale potential that could potentially host
more than 150 million tonnes of mineralization
Midcontinent Rift System Underexplored geological rift that could potentially become a major
Copper-Nickel- PGE district
Surface Gossan At Back Forty
Drill Core From Bend Deposit
Drill Rig At Reef Gold Project
TSX: AQA / FKT: JM4A
BACK FORTY PROJECT
The Back Forty project is an advanced-staged exploration project
delineating a zinc and gold rich volcanogenic massive sulfide (VMS)
deposit located within the Penokean Volcanic Belt. Over the past 10
years, Aquila and various venture partners have spent more than $50
million exploring and advancing the Back Forty project.
As of July 3, 2012 HudBay suspended funding for the joint venture.
Both parties are now working together to assess various strategic
alternatives that will continue to advance the project and that are in
the best interests of shareholders and stakeholders. An updated
National Instrument (NI) 43-101 resource estimate that included an
additional 78 drill holes was released on February 4, 2013.
PROJECT HIGHLIGHTS
49% owned by Aquila and 51% owned by HudBay Minerals Inc.
(TSX: HBM; NYSE: HBM)
Located in Menominee County, Michigan USA 12 miles west of
the town of Stephenson
Gold and zinc-rich VMS deposit with over 120,000 meters of
drilling to date
Positive Preliminary Economic Assessment (PEA) completed in
2012 (included only 25% of ore body) and Net Present Value (8%
discount rate) calculated at $78 million
Updated resource estimate released in February 2013
Two-year environmental baseline studies completed
Excellent infrastructure in place including access to roads, rail,
water and electricity
PROJECT GEOLOGY
Mineralization at Back Forty consists of massive, semi massive, and stringer sulfide mineralization as well
as precious metal zones with sparse sulfides, developed within a highly altered sequence of rhyolite
breccias and pyroclastic rocks cut by dikes, sills and irregular intrusions of porphyritic dacite and
rhyodacite. Late mafic dikes and at least one dioritic to gabbroic intrusive intrude the felsic sequence.
Structurally, this rhyolite sequence and associated massive sulfide mineralization has been deformed into
an asymmetric, moderately southwest plunging anticlinal fold characterized by a gently dipping north limb,
and a steeply dipping and sheared south limb. Folding has produced an axial planar schistosity and
faulting has offset lithologies and created zones of weakness for younger intrusive rocks.
Altered host rocks form assemblages of quartz – sericite – pyrite throughout an extensive area
surrounding the known mineralization. The degree and extent of this alteration is evidence for a large and
long lived hydrothermal system and suggests the potential for additional mineralization in the area.
TSX: AQA / FKT: JM4A
RESOURCE ESTIMATE
The updated February 2013 National Instrument (NI) 43-101 technical report calculated 15.1 Mt of
Measured plus Indicated (M+I) and 2.3 Mt of Inferred resources. The updated M+I resource estimate
contains 987,236 ounces of gold, 11.91 million ounces of silver, 1.02 billion pounds of zinc, 74.3 million
pounds of lead and 110.4 million pounds of copper. An additional 155,885 ounces of gold, 1.99 million
ounces of silver, 113.3 million pounds of zinc, 17.2 million pounds of lead and 18.6 million pounds of
copper are included in inferred resources.
Category Tonnes Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%)
Open Pit *
Measured 4,720,716 2.24 26.77 0.55 0.13 3.49
Indicated 4,926,783 1.90 18.30 0.14 0.21 1.49
Measured and Indicated 9,647,498 2.07 22.45 0.34 0.17 2.47
Inferred 152,488 2.76 34.56 0.19 0.39 2.86
Underground **
Measured 1,982,087 1.97 25.56 0.29 0.31 5.04
Indicated 3,504,462 1.96 27.78 0.33 0.32 3.57
Measured and Indicated 5,486,549 1.97 28.06 0.32 0.32 4.10
Inferred 2,184,246 2.03 25.96 0.37 0.33 2.15
Open Pit and Underground
Measured and Indicated 15,134,047 2.03 24.48 0.33 0.22 3.06
Inferred 2,336,734 2.07 26.53 0.36 0.33 2.20
EXPLORATION POTENTIAL
The limit of strong quartz-sericite-pyrite alteration in rhyolites has not been identified in either drilling or
surface exploration at Back Forty. Outcrops over half a kilometer to the southwest are altered and
mineralized.
Step out drill holes have shown that strongly altered host-rocks with anomalous zinc and gold
mineralization continue for at least 500 meters east of the known massive sulfide. Drilling in late 2010
intersected deep, high grade gold and zinc mineralization between 100 and 300 meters west-southwest
of previously modeled mineralization, indicating that mineralization continues at depth. Strong gravity
trends that coincide with the strike of massive sulfide remain to be tested. More than 10 geophysical
targets remain to be tested.
* Cut off values were determined for each of the metallurgical domains contained in the optimized open pit were based on NSR
values. Average cut-off value for the open pit resource contained within an optimized pit shell was US$27.75. See “Mineral
Resource Estimate Disclosure.”
** Cut off values were determined for each of the metallurgical domains based on NSR values. Average cut-off value for the
underground resources outside of the optimized pit shell was US$66.45. See “Mineral Resource Estimate Disclosure.”
TSX: AQA / FKT: JM4A
PRELIMINARY ECONOMIC ASSESSMENT
The April 2012 National Instrument (NI) 43-101 Preliminary Economic Assessment (PEA) outlines the
construction and operation of an estimated seven year open pit mining operation of approximately one
million tonnes per year.
The high grade open pit deposit provides substantial leverage to gold and zinc prices. Revenue by metal
is 48% gold and 26% zinc, 18% copper and 8% silver. Using the base case metal price assumptions
below, the project achieves payback of capital occurs in the third year of full production.
3-Year Historical Price Base Case
Gold US$ (oz) 1,332
Silver US$ (oz) 25.05
Copper US$ (oz) 3.44
Zinc US$ (oz) 0.94
Pre-tax Cashflow 211,794,000
NPV 8% 73,574,000
IRR 18.2%
The potential economic viability of the Back Forty deposit was evaluated using measured, indicated and
inferred mineral resources and a discounted pre-tax cash flow analysis. The mine plan evaluated in the
PEA assessed the mining of only the near surface portion of the resource by open pit methods.
Potential underground mining of deeper resources was not addressed in the PEA.
The PEA outlined the scope for the project and a summary of the key operating and cost parameters of
the project are as follows:
Proposed life of mine is approximately 7 years at a full production rate of 3,000 tonnes per day
Net payable gross revenue of $786.8 million is from copper and zinc concentrates and gold-silver
alloy dore
Average unit operating costs of $36.79 per tonne mined and processed over life of the project
Total life of mine capital of $272.3 million, includes $224.7 million for initial project capital required to
build the mine, site infrastructure, sulfide flotation and oxide leach plant and purchase of new mining
equipment to achieve commercial production
The project has a pre-tax cash flow of $211.8 million and a Net Present Value (8%) of $73.6 million,
18.2% Internal Rate of Return using 3 year historical metal prices
Over the Life of Mine (LOM), Back Forty is expected to produce 77,200 tonnes of copper concentrate,
323,500 tonnes of zinc concentrate and 295,300 ounces of gold and 2,561,700 ounces of silver
contained in gold-silver alloy dore product and within the copper concentrate
TSX: AQA / FKT: JM4A
REEF GOLD PROJECT
The Reef Gold project is located approximately 99 miles west of the Back Forty project. The project is
100% owned by Aquila and has the potential to host a gold deposit amenable to open pit operations.
Aquila has completed over 4,500 meters of core drilling since acquiring the project and is working towards
a NI 43-101 resource estimate.
Located in Marathon County Wisconsin, USA in the Penokean VMS Belt
Project was focus of exploration by Noranda Exploration in 1970’s
4,500 meters of core drilling completed by Aquila to date; Phase III drill program planned
Noranda calculated historic resource estimate (non 43-101 compliant) of 119,000 contained gold
ounces (454,600 tonnes @ 10.6 g/t)
Resource extends from surface to depth of 450 feet and is open in all directions
Project is potentially amendable to low cost, open pit mining
2011 Drilling Program At Reef
TSX: AQA / FKT: JM4A
BEND COPPER-GOLD DEPOSIT
The Bend copper-gold deposit is 100% controlled by Aquila Resources. Exploration in the 1990's
delineated a non 43-101 compliant resource estimate of greater than three million tonnes of copper, gold
and silver mineralization. Since acquiring the project in 2011, almost 6,000 meters of core drilling have
been completed and development of a 43-101 compliant mineral resource continues. Mineralization
remains open in all directions. Located in northern Taylor County Wisconsin, USA in the Penokean
Volcanic belt
Approximately 35 miles southeast from former producing Flambeau mine
Contiguous land block covering 5,560 acres within the Chequamegon National Forest on both private
and federal lands
Copper and gold-rich volcanogenic massive sulfide (VMS) deposit with over 14,000 meters of
historical drilling
Historical resource estimates include (non 43-101 compliant):
3 million tonnes grading 2.4% copper, 1.4 g/t gold and 13.7 g/t silver in copper zone
1.23 million tonnes grading 4.7 g/t gold and .31% copper in gold zone
Historic drill core verified for geological characteristics and mineralized content
5,800 meter drill program completed in winter 2011; additional program scheduled for 2012
DRILL INTERCEPT HIGHLIGHTS
2.66 meters of 2.85% copper in B12-01
29.30 meters of 1.05 g/t gold in B12-02
Including 3.24 meters of 3.15 g/t gold
6.29 meters of 4.26 g/t gold in B12-03
Including 6.29 meters of 4.26 g/t gold
74.5 meters of 1.04 g/t gold in B12-04
Including 9 meters of 2.27 g/t gold
71.68 meters of 1.68 g/t gold in B12-06
Including 26.55 meters of 0.54% copper in B12-06
And 18.4 meters of 5.25 g/t gold
Including 2.9 meters of 27.06 g/t gold
18.4 meters of 5.25 g/t gold in B12-06
3.53 meters of 3.56 g/t gold in B12-07A
63.06 meters of 1.32 g/t gold in B12-08
Including 5.41 meters of 6.34 g/t gold
77.36 meters of 0.67 g/t gold in B12-09
Including 6.44 meters of 0.54% copper
And 4.17 meters of 2.06 g/t gold
34 meters of 1.02 g/t gold in B12-10
Including 5.5 meters of 2.43 g/t gold
37.01 meters of 1.06 g/t gold in B12-11
Including 7.55 meters of 2.05 g/t gold
TSX: AQA / FKT: JM4A
OTHER PROJECTS
FIVE MILE LAKE ZINC PROJECT
The Five Mile Lake project is located in St. Louis County, Minnesota approximately 10 kilometers
southwest of Ely, Minnesota. Limited core drilling by Newmont Exploration (NYSE: NEM) and Teck
Resources Ltd. (NYSE: TCK) have produced encouraging results from large geochemical anomalies.
Located 10 kilometers southwest of Ely, Minnesota in the Vermillion District
Contiguous land block covering 4,267 acres
445-line kilometer VTEM survey completed in 2011 revealed number of EM anomalies
Widespread alteration, typical of that associated with base metal deposits in the Noranda and Snow
Lake camps, is associated with mineralization at Five mile
Four diamond holes drilled in 1994 by Teck Resources Ltd. (NYSE: TCK)
STURGEON FALLS SILL PROJECT
Located in northern Menominee County Michigan, USA
Approximately 19 miles north of Back Forty project
Host ultramafic rock with favorable chemistry to host nickel/copper sulfides
Recently completed 1,470-line kilometer VTEM survey that identified multiple drill targets
ROYAL VINDICATOR PROJECT
Located in Haralson County Georgia, USA in the Carolina Slate belt and 100% owned
Land package covers 600 contiguous acres with single private surface and mineral owner
Consistent gold values across horizon suggest potential for multiple high-grade ore shoots
Preliminary geologic mapping and geochemical sampling completed in 2010
MOOSE PASTURE PROSPECT
Located in Anson County North Carolina, USA in the Carolina Slate belt and 100% owned
Land package covers 917 acres and 5 private landowners
Historic gold-in-soil anomaly that disappears beneath the Cretaceous coastal plain
Preliminary geological mapping, geochemical sampling and stream sampling program completed in
2012
TSX: AQA / FKT: JM4A
LEADERSHIP TEAM
PETER M.D. BRADSHAW, CHAIRMAN
Dr. Bradshaw, P. Eng., is President, CEO and Director of First Point Minerals Corp. and has 40 years of
international exploration experience in over 30 countries with Barringer Research, Placer Dome and
Orvana Minerals. Dr. Bradshaw has been directly involved with the discovery, evaluation and
advancement of a number of properties. He is also the co-founder and Chairman of the Mineral Deposit
Research Unit, University of British Columbia.
THOMAS O. QUIGLEY, PRESIDENT, DIRECTOR
Mr. Quigley, a Professional Geologist, obtained a Master’s of Science degree in Geology from Queen’s
University in 1990 from the Mineral Exploration Program (QMinEx). He also attended the University of
Minnesota, obtaining a Master’s of Science degree in Biology in 1978. Mr. Quigley has extensive
exploration experience as an industry and consulting geologist throughout North America. He has been
President of Minerals Processing Corporation since its inception in 1995, and President of Aquila
Resources Inc. since 2004.
BARRY HILDRED, CEO
Mr. Hildred is a seasoned executive and successful entrepreneur with varied business leadership
experience. Previously, Mr. Hildred was founder of The Equicom Group, a company specializing in
strategic financial and investor relations services for Canadian public companies. In 2007, The Equicom
Group was acquired by the TMX Group where. Mr. Hildred is currently Chairman of Aldridge Minerals
Inc., a development stage mining company focused on advancing its Yenipazar gold and polymetallic
VMS deposit in Turkey. He is also the Treasurer and a Director of The Children’s Aid Foundation.
ROBIN DUNBAR, CFO, DIRECTOR
Mr. Dunbar is responsible for corporate development and finance. He obtained a Masters of Business
Administration from Dalhousie University. Mr. Dunbar is based in the Toronto office and is also the
President of Mustang Minerals Corp. and has been a Director since its inception in 1996. Prior to that, Mr.
Dunbar was Vice-President, Corporate Banking of Dai-Ichi Kangyo Bank (Canada).
EDWARD MUNDEN, DIRECTOR
Mr. Munden is a Director of Capital House Corporation, a private investment company that provides
and/or arranges funding and managerial assistance to a portfolio of technology software, energy and
mining companies. Mr. Munden is a professional engineer and holds a Bachelor of Science degree in
geological engineering and a Masters of Business Administration from Queen's University.
WILLIAM J. WEST, DIRECTOR
Mr. West has been the President of West Minerals Inc. of Warren, OH, since 1995. Prior to that, he was
Vice President of Oglebay Norton. Mr. West received his BA in Geology from the University of Miami and
his Masters of Business Administration from Case Western Reserve University, Cleveland, Ohio.