Aquila Resources Limited refers to its previous announcements in which it advised that the Company and its JV in the West Pilbara Iron Ore Project, AMCI Pty Ltd, have not reached agreement on a proposed budget for the 2012-13 financial year.

As a result, the dispute was referred to arbitration in September 2012, in accordance with the dispute resolution procedures of the JV Agreement.

At a directions hearing today, the arbitrator made orders for the arbitration to commence in late February 2013. Aquila is hopeful that the arbitration award will be handed down during the March
2013 Quarter.

As previously advised, a determination by the arbitrator is non binding, except for the identification of a Vendor Participant whose Venture Interest may be acquired by the other Participant at fair market value.

The Project has moved to minimum expenditure whilst the dispute is being resolved and this has resulted in a number of work program being wound down or suspended for the time being.