Red Hill Coal Project Initial Resource Statement 75Mt Insitu Coal

Highlights:

?         Initial Resource Statement 75 million tonnes of insitu coal

?         Metallurgical Coal potential similar to that being mined at Isaac Plains Coal Mine

?         Underground mining options and Conceptual Mining Study in progress

Aquila Resources Limited ("Aquila" or "the Company") is pleased to announce the initial Resource Statement for its wholly owned Red Hill Coal Project ("Red Hill").

The project is located towards the western side of the northern Bowen Basin situated approximately 45 km north of the township of Moranbah and between the Goonyella and Burton Coal operations as shown on Figure 1.

Figure 1 Red Hill Coal Project locality

Since September 2007, Aquila has completed a review of available open file information and a field programme including five 100mm partially cored quality holes and a total of 5,800m of drilling within the project area. The aim of this work was to establish an understanding of the stratigraphy within the project area in particular, with respect to the continuity and quality of the Rangal Coal Measures which were known to occur in the tenement.  The coal horizons intersected included the Rangal Coal Measures and the upper Fort Cooper Coal Measures. These host the Leichhardt, Vermont and Girrah seams.

Throughout most of the project area, the Leichhardt coal seam comprises two seam groups, the Leichhardt Upper and the underlying, stone-banded, Leichhardt Lower seams. Whilst future exploration programmes will continue to test the extent and quality of the Leichardt Lower seam, it was not continuously intersected during recent programmes and was not modelled as part of the resource evaluation work.

The Leichardt Upper seam plies were intersected at the western margin of the tenement at depths of
60-80m and found to thicken from an average of approximately 1.5m within the central parts of the tenement to in excess of 2.5m with depth towards the north and north eastern boundaries of the project area. The seams dip at approximately 8? to the north east. Partings within plies are variable in thickness. These partings thin substantially within the western margins of the project area which remains the most prospective for initial development of the project.

Within the Vermont seam, which lies approximately 25m beneath the Leichardt, the Upper and Middle plys remain the primary targets, appearing as relatively bright and clean coal. These plies typically carry improved coking properties from those of the Leichardt which will be investigated in detail as part of the next phase of development drilling. The Vermont seam plies are typically 2.5m thick in total increasing down dip to approximately 3m in the north and east.

Salva Resources Pty Ltd was commissioned by Aquila to independently develop a geological model to calculate an initial estimate of Coal Resources of the Red Hill Coal Project, based on data supplied by the Company. Open cut and underground Coal Resource estimates have been prepared for the Leichhardt Upper seam and the Vermont Upper and Lower seams.

The purpose of this work was to allow:

?       An assessment of the Coal Resources in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code), 2004, for public reporting; and

?       A quantification of the potential utilisation of the Coal Resources within the tenement considering all aspects affecting the recovery of the in-situ Resources. The benchmark for this estimation is the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves, 2003.

The estimated Coal Resources, within the Red Hill Coal Project area total 75.0Mt (which includes the Leichhardt and underlying Vermont seams). The Resources fall within the Inferred confidence category as summarised in Table 1 and Table 2 shows the distribution of Coal Resources with depth.

Table 1 Total Insitu Coal Resource at the Red Hill Coal Project

Table 2 Insitu Coal Resource by seam and depth interval

Average raw coal qualities by seams area summarised in Table 3.

Table 3 Raw Coal Quality

*Note: not reported at this stage

The results from the exploration and quality assessment programmes completed by the Company to date for the Red Hill Coal Project have focussed on the Leichhardt seam qualities. This work indicates that the Leichhardt seam is generally a medium volatile coal, with the potential to produce a primary product of low to moderate ash (9.0-11.0%) with low sulphur (less than 0.3%) content.  Average CSN values from the test work were 4.3, indicating the metallurgical coal potential from this seam. Whilst the average raw phosphorous values have been reported in excess of 0.1%, a range of 0.031 to 0.380% has been identified.

Based on this work, the evaluation of potential underground mining options is continuing and a Conceptual Mining Study is in progress. This work is considering a number of development configurations including bord and pillar and short longwall options. The third stage of exploration will focus on further definition of the resource in the north and east of the project area where the Leichhardt seam thickens, the assessment of quality of both the Leichhardt and Vermont seam groups (including the distribution of phosphorous across the resource) and the proposed box cut and initial underground development of areas along the north western boundary of the Red Hill tenement.

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

The estimates of Coal Resources for the Red Hill Underground Project  presented in this announcement have been carried out in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code), 2004, prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy (AusIMM) and The Australasian Institute of Geoscientists and Minerals Council of Australia, December 2004. The information in this announcement that relates to Red Hill Coal Resources, is compiled by Mr Blair Richardson and modelled and reviewed by Mr Lyon Barrett. Mr Richardson is a full time employee of Aquila Resources Ltd, with 25 years experience in geology and over 15 years experience in resource evaluation. Mr Richardson is a member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the JORC Code. Mr Richardson holds shares in Aquila Resources Ltd. Mr Barratt is a full time employee of Salva Resources and has over 15 years experience in geology and over 10 years experience in resource evaluation. Mr Barrett is a member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the JORC Code. Mr Richardson and Mr Barrett consent to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.

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