Aquila Resources Announces Closing of Bend and Reef Property Sale

Rhea-AI Summary

Aquila Resources Inc. has completed the sale of its Bend and Reef properties in Wisconsin to Green Light Metals Inc. for $7 million. The consideration includes $2.1 million in upfront cash and a Promissory Note of $4.9 million, payable upon a Go-Public Transaction or by the Maturity Date of December 31, 2022. The agreement also grants Aquila rights to participate in future equity financings by GL and appoint a board member. Barry Hildred, Aquila's Executive Chair, recused himself from the transaction due to his involvement with GL.

Positive

• Total consideration of $7 million strengthens Aquila's financial position.
• Upfront cash inflow of $2.1 million enhances liquidity.
• Investor rights agreement with GL potentially increases future value through participation in equity financings.

Negative

• Dependence on a Go-Public Transaction for $4.9 million may introduce uncertainty.
• The need for GL to complete an IPO before December 31, 2022 for full payment adds financial risk.

TORONTO--(BUSINESS WIRE)--

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) (“Aquila” or the “Company”) is pleased to announce that it has closed the previously announced transaction (the “Transaction”) to sell its Bend and Reef properties in Wisconsin to Green Light Metals Inc. (“GL”). All dollar amounts are reported in Canadian dollars.

Total consideration of $7,000,000 payable to Aquila consists of:

• Upfront cash consideration of $2.1 million, of which $1 million was advanced as a deposit upon the execution of the letter of intent with respect to the Transaction in June 2021 and the remaining $1.1 million was paid at closing; and
• A non-interest bearing promissory note (“Promissory Note”) of GL in the principal amount of $4.9 million. The Promissory Note shall become due and payable by GL on the earlier of: (i) December 31, 2022 (the “Maturity Date”); or (ii) immediately prior to the completion of an initial public offering or other transaction that results in the shares of GL (or of a successor entity) being listed on a stock exchange as freely tradeable securities (a “Go-Public Transaction”).

If the Promissory Note becomes due and payable on a Go-Public Transaction, then the Promissory Note shall be satisfied by way of:

• $900,000 in cash; and
• The issuance of that number of GL shares equal to $4 million divided by the price per share at which GL shares are issued in the Go-Public Transaction financing.

If GL does not complete a Go-Public Transaction prior to the Maturity Date, then the Promissory Note shall be satisfied by way of the issuance of that number of GL shares equal to $4.9 million divided by the price per share at which GL issued shares in its most recently completed financing prior to the Maturity Date.

In connection with the Transaction, GL and Aquila also entered into an investor rights agreement pursuant to which, among other things, Aquila received the right to participate in future equity financings completed by GL as well as nomination rights in respect of one member of GL’s board of directors, in each case subject to Aquila continuing to maintain a specified ongoing ownership interest in GL.

Barry Hildred, Aquila’s Executive Chair, is an investor in GL and Chair of the GL board of directors. As such, Mr. Hildred did not participate in the Transaction on behalf of Aquila and recused himself from voting on the Transaction as a member of Aquila’s board of directors.

ABOUT AQUILA

Aquila Resources Inc. (TSX: AQA, OTCQB: AQARF) is a development-stage company focused on high grade polymetallic projects in the Upper Midwest, USA. Aquila’s experienced management team is advancing pre-construction activities for its flagship 100%‐owned gold and zinc-rich Back Forty Project in Michigan.

The Back Forty Project is a volcanogenic massive sulfide deposit with open pit and underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional exploration upside. An optimized Feasibility Study for the Project is underway.

Additional disclosure of Aquila’s financial statements, technical reports, material change reports, news releases and other information can be obtained at www.aquilaresources.com or on SEDAR at www.sedar.com.

Cautionary statement regarding forward-looking information

This press release may contain certain forward-looking statements. 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”. 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, including but not limited to: risks with respect to the COVID-19 pandemic; and other related risks and uncertainties, including, but not limited to, risks and uncertainties disclosed in Aquila’s filings on its website at www.aquilaresources.com and on SEDAR at www.sedar.com. Aquila undertakes no 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211005006095/en/

Guy Le Bel, President & CEO

Tel: 450.582.6789

glebel@aquilaresources.com

David Carew, VP Corporate Development & Investor Relations

Tel: 647.943.5677

dcarew@aquilaresources.com

Source: Aquila Resources Inc.

FAQ

What is the total consideration for Aquila's sale of Wisconsin properties?

Aquila received a total of $7 million for the sale of its Bend and Reef properties.

When is the Maturity Date for the Promissory Note?

The Maturity Date for the Promissory Note is December 31, 2022.

What rights did Aquila receive in the investor rights agreement with GL?

Aquila received rights to participate in future equity financings by GL and nomination rights for a board member.

How much cash did Aquila receive upfront from the sale?

Aquila received $2.1 million in upfront cash from the sale.

What are the terms if GL completes a Go-Public Transaction?

If GL completes a Go-Public Transaction, the Promissory Note will be satisfied with $900,000 in cash and GL shares valued at $4 million.