TORONTO, Aug. 9, 2019 /CNW/ - Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) ("Aquila" or the "Company") announced the filing of its financial results for the second quarter ended June 30, 2019. All amounts, unless indicated, are reported in US dollars.
Barry Hildred, President & CEO of Aquila, commented "In 2019, we have continued to advance pre-construction activities in compliance with all permits as issued for Back Forty. In May, we received a favorable administrative court ruling upholding our Mine Permit and Michigan regulators issued a proposed decision in favor of our permit amendments. In parallel, we continue to evaluate a potential future underground mine at Back Forty while considering all strategic and financial options for the Company and the project. We believe that a stronger gold market and improving investor sentiment will set up a favorable backdrop for advancing Back Forty as we transition into the Project Execution phase."
SECOND QUARTER HIGHLIGHTS
The Company is progressing certain Back Forty Project pre-construction activities including environmental fieldwork and site data collection, metallurgical testwork, hydrogeological modeling, and a geotechnical drill program.
The Company is continuing with its evaluation of underground mining following an open pit operation at Back Forty as outlined in the August 2018 Feasibility Study. The Company is also assessing various alternatives for the processing plant that better aligns open pit plant and potential future underground throughputs. This analysis will form the basis of an updated Preliminary Economic Assessment, the results of which Aquila expects to announce later this year.
On May 3, 2019, the Michigan Office of Administrative Hearings and Rules issued a Final Decision and Order upholding the Michigan Nonferrous Metallic Mineral Mining Permit for its Back Forty Project in Michigan. Following 30 days of cumulative testimony, the administrative law judge issued a final decision finding "that the proposed mining operation will not pollute, impair, or destroy the air, water and other natural resources, or the public trust in those resources," in compliance with Michigan's Nonferrous Metallic Mining Statute.
On May 22, 2019, a draft permit (proposed decision) on the Back Forty Mining Permit amendment was issued. A consolidated public hearing for the Mine Permit and Air Permit amendments was held on June 25, 2019. Aquila expects the amendments to receive final approval in 2019.
On May 29, 2019, Aquila strengthened its land position at its Bend Project in Wisconsin by entering into a long-term mineral lease agreement with a party that owns the mineral rights on a portion of the deposit.
On June 3, 2019, a contested case hearing related to the Company's Wetlands Permit began.
On June 19, 2019, the Company announced the election of Pamela Saxton to its Board of Directors. Ms. Saxton is a business executive with over 35 years of experience in domestic and international public company finance roles, primarily in mining, software and oil and gas. Ms. Saxton has also joined the Company's Audit Committee.
On June 28, 2019, the Company announced that its two largest shareholders, Orion Mine Finance (and its affiliated funds) ("Orion") and Osisko Gold Royalties Ltd. ("Osisko") completed a transaction whereby Orion purchased from Osisko all 49,651,857 common shares of the Company owned by Osisko (the "Transaction"). The Transaction was a small component of the share repurchase and secondary offering transaction first announced by Osisko on June 25, 2019. Orion now owns 97,030,609 common shares of Aquila representing approximately 28.7% of the outstanding common shares. Osisko remains a significant financial partner to Aquila as the holder of gold and silver streams on the Company's Back Forty Project. Under its gold streaming agreement with the Company, Osisko remains committed to funding an additional US$40 million in staged payments to continue the development of the Back Forty Project.
As at June 30, 2019, Aquila had cash of $9.6 million and working capital of $7.0 million. This compared to cash of $14.4 million and working capital of $12.1 million at December 31, 2018. The decrease in working capital is primarily due to the funding of the Company's pre-construction activities.
OUTLOOK
Pre-construction activities including engineering and construction readiness will continue to advance at Back Forty.
Operational readiness activities including advancing plans with respect to roads, power, and concentrate logistics are underway.
In addition to recently filled positions, the Company will continue to add resources to its owners' team to prepare for the construction and operational readiness phases at Back Forty.
The Company will continue discussions with prospective financial partners to secure the required capital to construct the Back Forty Project. Aquila, with the assistance from its advisors, will consider all strategic and financial options available to the Company and the Project.
The Company is also evaluating its strategy and funding alternatives with respect to its exploration projects in Wisconsin in light of the recent repeal of the decades-old moratorium on non-ferrous mining in the state.
SELECTED FINANCIAL INFORMATION
The following table provides selected financial information that should be read in conjunction with the financial statements of the Company for the three months and six months ended June 30, 2019:
Three Months Ended
Six Months Ended
June 30
June 30
2019
2018
2019
2018
Mineral property exploration expenses
$ 2,164,885
$ 2,067,182
$ 3,208,168
$ 3,401,955
Administrative expenses
1,170,077
1,257,305
2,420,760
2,409,659
Net finance charges
608,668
643,046
1,305,334
1,035,527
Loss from operations
3,943,630
3,967,533
6,934,262
6,847,141
(Gain) loss on foreign exchange
79,162
(131,136)
(12,837)
(328,435)
Loss (gain) on change in value of contingent consideration
98,720
486,975
162,488
462,505
(Gain) loss on change in fair value of warrant liability
(302,564)
118,261
(349,622)
(107,204)
Net and comprehensive loss for the period
3,818,948
4,441,633
6,734,291
6,874,007
Net loss per share - basic and diluted
0.01
0.01
0.02
0.02
