Back Forty Project

Overview

The Back Forty Project is an advanced stage exploration project delineating a zinc and gold-rich volcanogenic massive sulfide deposit under a joint venture agreement between Aquila and HudBay Minerals Inc. (NYSE: HBM, TSX: HBM).

Aquila owns a 49% interest in the project and HudBay owns a 51% interest, which HudBay can increase to 65% by funding and completing a feasibility study and permitting applications. HudBay is the operator of the Back Forty Joint Venture and Aquila continues to provide technical support.

• Located in Menominee County Michigan, USA 12 miles west of the town of Stephenson
• Gold and zinc-rich VMS deposit with over 90,000 meters of drilling to date
• Preliminary Economic Assessment (PEA) in progress and mine permit application submission anticipated for mid-2012
• Two-year environmental baseline studies completed
• Excellent infrastructure in place, including access to roads, rail and water
• Mine life expectation of 8 to 10 years through open-pit operations

History

Early in 2002 massive sphalerite mineralization was intersected in a water well. Follow up drill testing of a geophysical anomaly resulted in the discovery of the massive sulfide deposit.

Geology

The Back Forty deposit is comprised of massive sulfide, stringer, gossan, and gold-only mineralization, each with high-grade components. Massive sulfide has been traced along strike for nearly 1 kilometer and to a vertical depth of 700 meters. The limit of strong hydrothermal alteration associated with the Back Forty massive sulfide has not been identified and is indicative of a very large system.

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.

Resource Estimate

The November 2010 NI 43-101 (see press release dated October 15, 2010) resource estimate includes 17.94 million tonnes of measured plus indicated (M+I) and 3.37 million tonnes inferred. The M+I resources contain 907,000 ounces of gold, 11.31 million ounces of silver, 963 million pounds of zinc and 75.8 million pounds of copper. An additional 140,000 ounces of gold, 2.64 million ounces of silver 145.6 million pounds of zinc and 33.2 million pounds of copper are included in inferred resources.

The Back Forty deposit Mineral Resource incorporated data analysis, 3-dimensional solids modeling, and a block model utilizing Datamine Studio. It consists of mineralized zones constructed by Golder Associates Ltd, based on drill hole geology and metal grade data. 

* The mineral resources are reported at two cut-off grades (NSR) to reflect the “reasonable prospects” for economic extraction.  Golder carried out a Whittle pit optimization exercise using a NSR cutoff of $20.  The NSR ($/tonne) was assigned to each block by combining the contribution by each element.  For each element, the metal recovery was assigned to the blocks, recovered metal content per tonne calculated, and metal pricing applied.  Metal price assumptions are as follows: 900.00 (US$/oz.) Au; 15.00 (US$/oz.) Ag; 2.50 (US$/lb.) Cu; 0.70 (US$/lb.) Pb; and 0.95 (US$/lb.) Zn.

* Mineral resources are not mineral reserves and do not necessarily demonstrate economic viability.  There is no certainty that all or any part of this mineral resource will be converted into mineral reserve.  The resource estimate was completed by Greg Greenough, P.Geo (APGO #0825) an independent qualified person as this term is defined in National Instrument 43- 101 and reviewed by K. Palmer, P.Geo., of Golder Associates Ltd., Mississauga, Ontario.  The effective date of this resource estimate is November 29, 2010.