Aquila Resources Announces Third Quarter 2021 Financial Results
12 November 2021 - 12:59PM
Business Wire
Aquila Resources Inc. (TSX: AQA,
OTCQB: AQARF) (“Aquila” or the “Company”) announces
the filing of its financial results for the third quarter ended
September 30, 2021. All amounts, unless indicated, are reported in
US dollars.
Guy Le Bel, President & CEO of Aquila, commented, “This past
quarter has been transformational for Aquila. Since announcing the
proposed acquisition of the Company by Gold Resource Corporation in
September, our team has been working closely with our counterparts
to ensure a smooth closing of the Transaction following the
upcoming Aquila Shareholder Meeting. We are excited to start a new
chapter as part of a multi-jurisdictional, diversified precious and
base metal producer with an attractive growth profile underpinned
by the Back Forty Project. We thank our shareholders for their
strong support of Company over the years. During the quarter,
Aquila also continued to progress the optimized Feasibility Study
for the Project, which remains on track for completion in the
coming months.”
THIRD QUARTER HIGHLIGHTS
- On September 7, 2021, Aquila announced the entering into of a
binding letter agreement (the “Letter Agreement”) with Gold
Resource Corporation (“GORO”) (NYSE American: GORO) setting
out certain key terms of a proposed acquisition by GORO of all the
issued and outstanding common shares of Aquila by way of a plan of
arrangement under the Business Corporations Act (Ontario) (the
“Transaction”). Pursuant to the Transaction, GORO will
acquire all the issued and outstanding Aquila shares for 0.0399 of
a GORO share per Aquila share (the “Exchange Ratio”). Based
upon the 20-day volume-weighted average price (“VWAP”) of
GORO’s shares on the NYSE American stock exchange on September 3,
2021, being the last trading day prior to the date of the Letter
Agreement, the Exchange Ratio represents a 29% premium to the
20-day VWAP of Aquila’s shares on the Toronto Stock Exchange as of
such date. The Exchange Ratio represents consideration of C$0.09
per Aquila share (the “Per Share Price”), reflecting a
premium of 12.5%, based upon the closing prices of the Aquila
shares and the GORO shares on September 3, 2021.
- On August 16, 2021, Aquila announced that a subsidiary of
Osisko Gold Royalties Ltd (“OGR”) agreed to immediately
release $2.4 million (the “Fourth Deposit”) to the Company
under the Amended and Restated Gold Purchase Agreement dated as of
March 10, 2021. The Fourth Deposit will be used for the continued
advancement of the Back Forty Project Optimized Feasibility Study
and demonstrates OGR’s strong support for the Back Forty
Project.
- On August 16, 2021, Aquila also announced that Guy Le Bel,
President and CEO of the Company, was appointed to the Board of
Directors.
- As at September 30, 2021, Aquila had cash of $2.3 million and
negative working capital of $0.6 million. This compared to cash of
$1.8 million and negative working capital of $0.8 million at
December 31, 2020. The decrease in working capital is primarily due
to permitting and legal activities at its Back Forty Project. The
Company is actively evaluating financing and strategic alternatives
and continues to take measures to preserve liquidity including
cutting discretionary spending, and working with service providers
to manage and defer spend wherever possible.
POST QUARTER HIGHLIGHTS
- On October 6, 2021, Aquila announced that it entered into a
definitive arrangement agreement (the “Arrangement
Agreement”) with GORO in connection with the Transaction. The
Aquila management team and Board of Directors believe strongly that
the Transaction outlined in the Arrangement Agreement provides
significant benefits to Aquila shareholders. GORO has a strong
balance sheet, it owns a consistently profitable mine in the
Americas, and it has a highly accomplished technical and operating
team. As such, this Transaction materially de-risks the financing
and development of the Back Forty Project for the benefit of the
Company’s stakeholders. The Transaction requires the approval of
(i) 66⅔ percent of the votes cast by Aquila shareholders and (ii) a
simple majority of the votes cast by the minority shareholders
(excluding shareholders whose votes are required to be excluded
pursuant to Multilateral Instrument 61 – 101) at a special meeting
of shareholders (the “Aquila Shareholder Meeting”). The
Aquila Shareholder Meeting is scheduled to be held on November 17,
2021. Each of Orion Mine Finance and Hudbay Minerals Inc., which
hold 28.3% and 10.4%, respectively, of the issued and outstanding
Aquila shares, has entered into a voting support agreement with
GORO pursuant to which they have agreed to vote their Aquila shares
in favour of the Transaction. In addition, all of the directors and
officers of Aquila holding approximately 1.9% of the issued and
outstanding Aquila shares in aggregate have also executed a voting
support agreement. The Aquila Board of Directors unanimously
recommends that Aquila Shareholders vote FOR the Arrangement
Resolution.
- On November 8, 2021, Aquila announced that leading independent
international corporate governance analysis and proxy advisory firm
Institutional Shareholder Services recommended that Aquila
shareholders vote FOR the Arrangement Resolution in advance of the
Aquila Shareholder Meeting.
- On October 5, 2021 Aquila announced that it has closed the
previously announced transaction (the “GL Transaction”) to
sell its Bend and Reef properties in Wisconsin to Green Light
Metals Inc. (“GL”). Total consideration of C$7,000,000
payable to Aquila consists of: (i) upfront cash consideration of
C$2.1 million, of which C$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 C$1.1 million was paid
at closing and (ii) a non-interest bearing promissory note of GL in
the principal amount of C$4.9 million.
OUTLOOK
- In connection with the GORO Transaction, the Aquila Shareholder
Meeting is scheduled to be held on November 17, 2021. The
Transaction is also subject to approval by the Ontario Superior
Court of Justice (Commercial List) and applicable stock exchange
approvals. The Transaction does not require the approval of GORO’s
shareholders. In addition to shareholder, court and regulatory
approvals, the Transaction is also subject to the satisfaction of
certain other closing conditions that are customary for a
transaction of this nature, and each of GORO and Aquila has
provided appropriate interim period covenants regarding the
operation of its business in the ordinary course. Subject to all
conditions precedent to completion of the Transaction being met,
the Transaction is expected to close in late November 2021. In
connection with the closing of the Transaction, Aquila will apply
to have its shares delisted from the Toronto Stock Exchange.
- The Company is continuing to advance its Back Forty Project in
Michigan, where the main objectives are completing an optimized
Feasibility Study (the “Feasibility Study”) and securing the
remaining permits required for construction and operations. The
Feasibility Study will incorporate both the open pit and
underground mine plans and will reflect Aquila’s commitment to
sustainability and responsible mining employing industry best
practices.
- A key objective of the Feasibility Study is to incorporate
feedback from the Michigan Department of Environment, Great Lakes
& Energy (“EGLE”) and the local community since the
original permits were issued. By incorporating the underground mine
plan and modifying the Project footprint, the Company expects to
demonstrate substantially reduced surface impact, including wetland
impacts, and a longer mine life for the benefit of all
stakeholders.
- The Company will continue to work with EGLE to finalize the
Back Forty groundwater model. Aquila is pleased with the
significant progress made in this regard and continues to collect
the required site-specific data.
- Following the completion of the Feasibility Study, Aquila will
seek to permit the optimized Project design.
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
quarter ended September 30, 2021:
Three months ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Mineral property exploration
expenses
$593,946
$537,696
1,631,276
$1,059,202
Administrative expenses
641,512
742,633
1,886,813
2,393,686
Net finance charges
427,070
405,214
1,284,443
3,137,227
Loss from operations
$1,662,528
$1,685,543
$4,802,532
$6,590,115
(Gain) loss on foreign
exchange
(150,352)
51,227
(8,234)
(141,780)
Loss (gain) on change in value of
contingent consideration
(9,468)
6,580
(53,519)
243,185
Gain on change in fair value of
warrant liability
-
(88,000)
(5,430)
(133,064)
Net and comprehensive loss for
the period
$1,502,708
$1,655,350
$4,735,349
$6,558,456
Net loss per share - basic and
diluted
0.00
0.00
0.01
0.02
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 currently 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.
Aquila has two other exploration projects: Reef Gold Project
located in Marathon County, Wisconsin and the Bend Project located
in Taylor County, Wisconsin. Reef is a gold-copper property and
Bend is a volcanogenic massive sulfide occurrence containing copper
and gold.
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”. In particular, this news
release contains forward-looking information pertaining to the
following: the ability of the Company to close the Transaction on
the terms outlined in the LOI or at all, the ability of Newco to
list on the TSX-V, plans related to the Back Forty Project
optimized feasibility study and permitting, the ability of the
Company to complete a financing or strategic transaction, the
ability of the Company to satisfy subsequent drawdown conditions
under the Gold Stream, and other development plans and objectives.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20211112005321/en/
Guy Le Bel, President & CEO, Director Tel: 450.582.6789
glebel@aquilaresources.com
David Carew, VP Corporate Development & IR Tel: 647.943.5677
dcarew@aquilaresources.com