Back Forty shows strength for Aquila, HudBay (June 28, 2010)

VANCOUVER — The Back Forty deposit in Michigan is flexing its volcanogenic massive sulphide (VMS) muscles for joint-venture partners Aquila Resources (AQA-T) and HudBay Resources (HBM-T), returning lengthy intercepts of gold and zinc mineralization from an infill and expansion drill program.

Aquila has identified some eight mineralized zones at Back Forty to date. Some of the zones comprise true massive sulphide mineralization, others are stringer zones better endowed in zinc than in copper, gold, or silver, and a few only host gold mineralization. Together, the zones already host a significant amount of metal, and new drill results indicate those amounts could increase in an updated resource estimate due out before the year end.

The latest results come primarily from the eastern half of the project, which covers the East, Hinge, PM and 90 Gold zones.

Hole 424 hit mineralization outside of the resource model at the East zone, cutting 5.5 metres of 10.2 grams gold per tonne, 79.1 grams silver per tonne and 8.6% zinc. Hole 429 also hit outside of the defined East zone resource, returning 19.8 metres of 1.2 grams gold, 12.4 grams silver and 9.6% zinc.

Hole 430 tested between the East and Hinge zones and returned 122.4 metres of massive sulphide and stringer mineralization grading 2 grams gold, 9.1 grams silver and 5.5% zinc, including 13.5 metres of 6.5 grams gold and 10.6% zinc. Fifty metres to the north, hole 434 cut 22.1 metres of 1.1 grams gold, 9.9 grams silver and 11.1% zinc, followed by 6.1 metres of 3.3 grams gold, 9.4 grams silver and 4% zinc. And 100 metres to the west, hole 438 hit 5.8 metres of 1.7 grams gold, 17.2 grams silver and 8.6% zinc from above the modeled Hinge zone, followed by 8.4 metres at 1.1 grams gold, 23.2 grams silver and 14.6% zinc from east of the defined resource.

To the southeast, hole 433 extended the shallow 90 Gold zone almost 100 metres to the east with a 43.7-metre intercept grading 1.1 grams gold and 4.5 grams silver from 17 metres depth. Almost 100 metres later, the hole encountered the depth extension of the PM zone, returning 13.3 metres of 3.4 grams gold and 38.4 grams silver.

And over on the western side of the project, several holes tested for expansions to the Pinwheel and NS zones. Hole 436 returned 20.5 metres of Pinwheel gossan and massive sulphide grading 2.8 grams gold, 263.5 grams silver and 2.2% copper from outside of the resource model. And hole 438, an infill hole within the NS zone, cut 14.7 metres at 3.3 grams gold and 48.1 grams silver from 38 metres downhole, followed 15 metres later by 6 metres of 34 grams gold and 487.7 grams silver.

In at least two zones — Pinwheel and East — drilling since the resource calculation has found precious metal grades higher than previously estimated. Earlier this year in the East zone, Aquila hit 3.9 metres at 117.8 grams gold. The next hole returned 11 metres at 6.37 grams gold and 7.19% zinc. The Pinwheel zone is also showing its copper grade strength, with intercepts such as 8.8 metres of 10.67% copper. And the NS zone is a new discovery since the last resource estimate.

Aquila and HudBay are working through a US$18.5-million program at Back Forty this year, targeting completion of a feasibility study and submission of a permit application by early 2011. Aside from drilling and resource modeling, the program includes environmental and engineering studies, geotechnical studies, land acquisition and continuing economic studies.

HudBay would earn a 51% stake in the project once it has spent US$10 million. If the major funds the proposed work program to completion, it would increase its interest to 65%. Aquila is currently the project operator.

The last estimate, completed in early 2009, pegged measured and indicated resources at 8.5 million tonnes grading 2.13 grams gold, 30.6 grams silver, 5.61% zinc, 0.51% copper and 0.28% lead. Inferred resources add 1.2 million tonnes averaging 2.9 grams gold, 41.7 grams silver, 4.42% zinc, 0.21% copper and 0.55% lead.

Roughly two-thirds of those resources sit within an open-pit shell. The other third would be extracted using underground mining.

On the latest drill results from Back Forty, Aquila gained a penny to close at 27¢. The company has a 52-week trading range of 14¢- 45¢ and 82 million shares outstanding.