AQUILA RESOURCES INC. (TSX:AQA)(FRANKFURT:JM4A) today announced that it has acquired under option a package of gold properties located in the Marquette Greenstone Belt in the Upper Peninsula of Michigan.
Drilling of approximately six to eight holes has commenced on one of several exploration targets expected to be drilled in 2010 and 2011. Acquisition of the gold properties are part of a corporate diversification strategy by Aquila to expand its portfolio of assets outside its current 49% interest in the Back Forty Joint Venture with HudBay Minerals Inc. (TSX:HBM)(NYSE:HBM) ("HudBay").
"Our exploration focus going forward will be to acquire, explore and develop gold properties for Aquila in concert with exploration and development of additional base metal properties with joint venture partner HudBay under our recently signed Exploration Alliance Agreement," stated Tom Quigley, President and CEO of Aquila. "This acquisition of high potential exploration stage gold projects takes advantage of our exploration expertise in the State of Michigan and diversifies Aquila's mineral property interests."
With the acquisition of the Michigan gold properties, Aquila has three key assets in its portfolio:
These mineral interests are located in the Upper Peninsula of Michigan, and the company views the region as having excellent mineral potential as evidenced by recent discoveries, including the Eagle Nickel Copper Deposit by Kennecott, as well as the Back Forty Zinc Gold VMS Deposit. Historically, the Upper Peninsula has produced significant amounts of copper and iron ore, and lesser amounts of gold and silver.
MICHIGAN GOLD PROPERTIES
Drilling has commenced on the Peninsula Property located in the Archean-aged Marquette Greenstone Belt and is part of a package of mineral interests acquired by Aquila in this area. The Peninsula Property contains a number of targets within a 300 acre area that has seen small scale mining and prospecting activity in the early 1900's, and limited exploration during the 1980's and 1990's. The Peninsula target is a broad zone of shearing and quartz carbonate alteration partially tested by Callahan Mining Corporation, the operators of the Ropes Gold Mine during the 1980's located two miles to the northeast of the Peninsula Property. Historical drilling by Callahan reported values up to 11.3 g/t gold over 5.5 meters at the Peninsula Property.
Under the terms of the Option Agreement, Aquila can earn an interest in 332 acres of surface and mineral land and 1,799 acres of mineral rights owned by the vendor in the Marquette Greenstone Belt. To earn a 100% interest in the properties, the Company must make cash payments totaling $100,000 over four years, issue 400,000 shares (100,000 upon signing) over four years, and complete a total of $950,000 of work expenditures over four years. In order to complete a 100% acquisition of the properties, Aquila must purchase the mineral and surface rights owned by the vendor for $1300 per acre. A net smelter return royalty ranging from 1% to 4% is payable in the event of mineral production from the properties.
The properties under Option are owned by Minerals Processing Corporation - a related party to Aquila with common directors and officers. The Option and transaction were approved by the non-related party directors of Aquila.
BACK FORTY JOINT VENTURE
On October 15, 2010, Aquila and HudBay announced a new mineral resource estimate at the Back Forty Joint Venture project (see Aquila press release dated October 15, 2010). The new resource contains 18.1 million tonnes in the measured and indicated category with nearly one million ounces of contained gold and over one billion pounds of zinc. The potential open pit contains approximately 16.4 million measured and indicated tonnes.
The first drill hole in an exploration program targeting mineralization below the resource pit shell intercepted two zones of massive sulfide and gold mineralization including an upper zone of 6.02 meters of 8.14 g/t gold, 312.2 g/t silver and 7.99% zinc, as well as a lower zone of 69.67 meters of 1.11 g/t gold, 27.0 g/t silver and 1.30% zinc, including 6.23 meters of 6.39 g/t gold and 94.27 g/t silver. Two drills are active at the project with plans to add a third drill in the near future.
Aquila also announced in the October 15, 2010 press release, the signing of an Exploration Alliance Agreement with HudBay to explore for base metal deposits in the Upper Peninsula. Under the terms of the agreement HudBay has made a $250,000 payment to Aquila and will subsequently make a US$2 million equity investment into the Company. Under the terms of the agreement, HudBay may fund up to $2 million in exploration expenditures on specific properties at which time a 50/50 joint venture would be established. HudBay can then elect to increase its interest to 65% by completing a feasibility study and submitting required mine permit applications under a structure similar to the current joint venture agreement at the Back Forty Project.
The Exploration Alliance will potentially benefit Aquila shareholders by enabling the Company to acquire and explore new properties on a non-dilutive basis, particularly during the early phase of exploration when the risk is very high.
Thomas O. Quigley is the Qualified Person for Aquila as described in National Instrument 43-101, and is responsible for the contents of this release.
Source: AQUILA RESOURCES INC.