ASX RELEASE        1 September 2008

EAGLE DOWNS COAL PROJECT PRE-FEASIBILITY STUDY CONFIRMS POTENTIAL FOR COKING

 C Highlights:          

?          Pre-Feasibility Study demonstrates technical and financial potential of both single and multi longwall mining options

?          Initial capital expenditure for the project estimated to be A$892M to produce 4Mtpa of hard coking coal

?          FOB operating costs  of approximately A$72 per tonne sold

?          Project has secured 4Mtpa port allocation through Abbott Point Coal Terminal expansion sufficient for a single longwall operation

?          At 4Mtpa production and at current coal prices, the Eagle Downs Coal Project generates EBITDA of approximately A$900M per year from a single longwall operation

?          Mine life in excess of 37 years at production rate of 7Mtpa

?          Further potential to implement a second longwall development increasing production to 7Mtpa

?          First sales to commence in 2012 subject to satisfactory completion of further Feasibility Studies and receipt of regulatory approvals

OA

Eagle Downs Coal Project - Proximity to BMA?s Peak Downs Mine

Aquila Resources Limited (ASX:AQA ?Aquila? or ?the Company?) is pleased to announce the positive results of the Pre-Feasibility Study for the Eagle Downs Coal Project in which the Company has a 50% interest with Vale Australia Pty Ltd, a wholly-owned subsidiary of Vale (?Vale?).

The Eagle Downs Coal Project is located approximately 25km south-east of the township of Moranbah within the northern part of the Bowen Basin. The project area is immediately down dip of BMA?s Peak Downs Mine as shown in the figure above and is 7km south of the Isaac Plains Coal Mine and Integrated Isaac Plains South Project, which are also jointly held by the Company and Vale.

The Pre-Feasibility Study has built on the outcomes of the 2007 Conceptual Mining Study conducted by IMC Mining Solutions and also the ongoing exploration and evaluation programmes which have targeted extraction of multiple coal seams within the Moranbah Coal Measures.

The principal seams identified are the Q, Harrow Creek Upper (?HCU?), Harrow Creek Lower (?HCL?) and Dysart (?DY?), with the preferred mining plan initially targeting the upper seams (Q, HCU) followed by the mining of the lower seams (HCL and DY) when the Q and HCU seams are depleted.

Typical LTCC Face Support with Articulated Rear Canopy

At full production it is envisaged that the Eagle Downs Coal Project will produce approximately 7Mtpa of coking coal from two longwall units, accessed by a shaft and drift entry. Four mining scenarios were assessed as part of the Pre-Feasibility Study, based on the assumption of either a single longwall unit or two longwall units operating simultaneously in the same coal seam or within different seams. In addition, the potential to utilise longwall top coal caving (?LTCC?) is also being evaluated for the thicker HCL and DY coal seams.

The four mining configurations evaluated by the Pre-Feasibility Study are summarised as follows:

Capital and operating costs are estimated for each case as follows:

Longwall panel layouts were modified from those developed during the previous Conceptual Mining Study in 2007 in relation to the mining of the Q seam. After further evaluation of the large inter-burden distance between the Q and the HCU coal seams, the Q seam longwall panels were offset, with the lower HCU, HCL and DY seams stacked as shown below.

Proposed Eagle Downs Coal Project Underground Mine Layout

Set-out below is the underground shaft and drift configuration for the initial development to the Q and HCU coal seams, followed by access to the underlying HCL and DY seams.

Eagle Downs Coal Project Underground Access Configuration

The single longwall option shown in Case 2 above represents an attractive first stage of development, enabling the earlier delivery of Eagle Downs Coal Project hard coking coal into the export market and providing significant cashflow to fund the installation of a second longwall in order to increase production to 7Mtpa when additional port capacity becomes available.

Subject to the completion of the northern missing link and all requisite approvals, Eagle Downs has secured 4Mtpa of capacity through the proposed expansion of the Abbott Point Coal Terminal.  This capacity is expected to provide sufficient capacity to develop the project and establish production with a single longwall unit commencing in the financial year ending 30 June 2012.

Although the separate longwall mining of the Q seam is shown to be marginally less attractive in comparison to starting production directly from the HCU seam, the potential quality of the Q seam coal will necessitate further study work aimed at achieving incremental or supplementary production volumes with which to further enhance the overall project economics.

Indicative Eagle Downs Coal Project product specifications by seam are presented below:

L MI

N The HCU, HCL and DY seams are all expected to produce a single hard coking coal product, whilst the Q seam could potentially produce a primary hard coking coal with a higher ash secondary product. The Q and DY coal seams have the potential to provide premium hard coking coal products.

Following these encouraging results, the Stage 4 exploration programme has been commenced with the objective of increasing the measured and indicated resource status of the project, closing the drill spacing within the first 10 years of operation to approximately 500m, completing 3-D seismic assessment and progressing the continuing technical evaluation and mine design studies.

The Eagle Downs Coal Project is expected to provide Aquila with a further opportunity to significantly expand its activities in the production and development of quality metallurgical coal projects within the Bowen Basin region of Queensland. As a result, the Company is in the process of finalising approval for Feasibility Studies on the Eagle Downs Coal Project, including the Stage 4 exploration programme, which in total amount to approximately A$55 million over the next two years.

Tony Poli

Executive Chairman

For further information regarding this announcement, please contact Tony Poli.

Telephone:           (08) 9423 0111   

Facsimile:             (08) 9423 0133   

Email address:     mail@aquilaresources..com.au

Visit us at:              www.aquilaresources.com.au

Warrick Hazeldine

Purple Communications

Tel: +61 8 9485 1254

Mob: +61 417 944 616

whazeldine@purplecom.com.au

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