MEDIA RELEASE                     6 May 2008

West Pilbara Iron Ore Project Pre-Feasibility Study

delivers positive results

Highlights:

·         PFS confirms technical and financial viability of a 25 million tonne per annum iron ore project in the West Pilbara

·         Capital expenditure is estimated at US$3.9 billion for dedicated Project facilities, including provisions for EPCM, contingency and Owners’ costs

·         Operating costs of under US$20 per tonne FOB, including royalties, at 25Mtpa

·         Sensitivity analyses indicate that the Project is capable of producing 30Mtpa in Stage 1 with a marginal increase in capital expenditure

·         Annual EBITDA of US$1.3 billion at 30Mtpa using expected 2008 iron ore prices

·         PFS recommends construction of 160km of new rail and a new deep water port facility at Cape Preston, subject to commercial agreement with other parties with interests in this port

• Subject to approvals, construction could commence Q1 2010 with first shipments in 2012

Carbon steel resources producer and developer, Aquila Resources Limited (ASX:AQA “Aquila” or “the Company”) is pleased to announce positive results from the Pre-Feasibility Study (PFS) of the first stage of the West Pilbara Iron Ore Project (”the Project”), being developed by its 50% owned Australian Premium Iron Joint Venture (“API JV”).

Mr Poli said, “Aquila began its iron ore initiative in 2004 and the completion of the PFS is a major milestone in its progression. The PFS has focused on the selection of preferred port options, development of the iron product, definition of infrastructure at proposed mine areas and development of mine-to-port transport corridors. The Company will propose that the API JV now proceed to a more definitive, bankable feasibility study.”

“The Company remains committed to developing an iron ore export business in the West Pilbara through the API JV, and the results of the PFS are another significant step toward delivering this,” he said.

The PFS has confirmed the technical and financial viability of a development based on a 25 million tonnes per annum (“Mtpa”) iron ore operation, with 160km of new railway to a new open-access, deep-water port facility at Cape Preston, subject to commercial agreement with other parties with interests in this port. Sensitivity analyses indicate that the Project is capable of producing 30Mtpa in Stage 1 with a marginal increase in capital expenditure.

Subject to approvals, construction on Stage 1 of the Project could commence in early 2010 with first shipments in 2012. The pathway toward production outlined in the PFS includes the proposed submission of an Environmental Impact Assessment by the fourth quarter of 2008, with a Definitive Feasibility Study due to be completed in the second quarter of 2009.

Capital Expenditure

Approximately US$1.7 billion of the estimated capital expenditure for the Project is incurred to install the railway, ore wharf and channel for such a facility. Significant opportunities exist to either minimise capital expenditure or maximise the utilisation of such infrastructure through joint development, third party use and increased throughput from the Project.

Mr Poli said, “The Company is highly encouraged by the recent announcement from Australasian Resources Limited (“ARL”) that Mineralogy Pty Ltd, the developer of Cape Preston port, is prepared to consider a development proposal from ARL to construct a deep water port under Mineralogy’s existing government approvals.”

Operating Costs

Operating costs for the Project are forecast to be US$19.36 per tonne FOB at 25Mtpa production, including royalties, with production due to commence in 2012, subject to approvals.

This cost structure would generate annual earnings before interest, tax, depreciation and amortisation (“EBITDA”) of approximately US$1.3 billion (at expected 2008 iron ore prices) at production levels of 30Mtpa.

Consultants and contractors, experienced with Pilbara iron ore facilities and operations, have been utilised to develop the capital and operating cost estimates. The following table lists those parties by area or discipline. Key reports were also subjected to peer reviews by independent consultants. An exchange rate of US95 cents has been used for both the capital and operating cost estimates.

Looking Ahead

The West Pilbara Iron Ore Project has a substantial presence in the West Pilbara region, with access to over 9,000km² of tenement area. It has an established Measured, Indicated and Inferred Resource of 493 million tonnes (JORC).

Summary of Channel Iron Resources

Summary of Bedded Iron Resources

Whilst initial exploration has focused on some 3,000km² of tenement area, there remains a further 6,000km² which is highly prospective for both Channel Iron and Bedded Iron deposits similar to those currently being mined by BHPB and Rio Tinto. The potential exists to discover significant additional resources to allow increased throughput on the infrastructure installed for Stage 1.

“The Project has defined an initial resource in the West Pilbara to support a 30Mpta operation, and is continuing to explore the significant potential to expand the resource base and further drive long term value for Aquila’s shareholders,” Mr Poli said.

“Through the Project, we have a considerable presence in one of the world’s premier iron ore regions, have an expanding team of iron ore specialists and remain well funded to develop these resources to capitalise on the global iron and steel demand,”.

The following photograph shows some of the prospective formations in the West Pilbara Iron Ore Project which have yet to be drilled.

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

Issued by:              Warrick Hazeldine

                    Purple Communications

                    Tel: +61 (0) 89485 1254

                    Mob: 0417 944 616

                    E: whazeldine@purplecom.com.au

Competent Person Statement

The information in this announcement that relates to Mineral Resources is based on information compiled by Mr Stuart H Tuckey, Dr Sia Khosrowshahi and Mr Jani Kalla who are members of the Australian Institute of Mining and Metallurgy. Mr Tuckey is full-time employee of the Company. Dr Khosrowshahi and Mr Kalla are employees of Golder Associates Pty Ltd. Messers Tuckey, Khosrowshahi and Kalla have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’.  Mr Tuckey. Dr Khosrowshahi and Mr Kalla consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

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