ESCANABA — The company behind a planned gold mining project in Menominee County has entered into an agreement to be acquired by Colorado-based gold and silver producer Gold Resource Corporation.

Aquilla Resources, based in Ontario, Canada, had been working towards the establishment of a mine capable of producing an estimated 692 thousand ounces of gold, 801 million pounds of zinc, 86 million pounds of copper, 6.26 million ounces of silver, and 26 million pounds of lead over its lifespan, according to the company’s estimates. However, the project had been fraught with controversy, largely from environmental groups and local residents, who raised concerned about the possibility of contamination in the neighboring Menominee River.

In addition, the project, commonly known as the “Back Forty Mine,” has been repeatedly delayed by the permitting processes. Earlier this year, State Senator Ed McBroom (R-Vulcan) put forward a resolution in support of mining and the mining industry, which was passed by the senate with bipartisan support and forwarded to the governor’s office, the Michigan Association of Counties, the Michigan Township Association and the Michigan Municipal League. However, no legislative changes were made that would alter the permitting process.

The permitting limbo caused a hit to Aquila’s bottomline, with the company reporting $0.9 million in available cash and a negative working capital of $2.1 million in June of this year, according to the company’s second quarter financial results. The decrease in working capital was “primarily due to permitting and legal activities at its Back Forty Project.” Additional funds not included in the calculations were made available to the company through an amendment to a gold purchase agreement and the sale of two other potential mining sites in Wisconsin.

Gold Resources, on the other hand, owns three producing mines in the state of Oaxaca, Mexico, as well as a mill used for processing ore. According to the company’s website, it is focused on “unlocking the value of the mine, existing infrastructure, and large property position.”

Gold Resource Corporation’s balance sheet is also a far cry from Aquilla’s. According to the company’s quarterly report submitted to the United States Securities and Exchanges Commission for Q2, Gold Resources had $30.5 million in cash as of June 30, an increase of $5.1 million since Dec. 31, 2020. The company’s net income was $1.3 million, or 2 cents per share for the quarter.

Aquila Resources announced the sale after the close of stock market trading Tuesday. Aquila — which has traded on the Toronto Stock Exchange (TSX) under the ticker AQA and in the United States through the OTCQB Venture Market as AQARF — has maintained “penny stock” status for a number of years, with a current 52-week high of only 13 cents per share. On the low end, the stock has traded for as little as 4.23 cents a share in the same period.

Under the terms of the sale, all existing Aquila shareholders will receive 3.99% of a Gold Resource share (NYSE: GORO) for each share held. The deal represents a 29% premium to the 20-day volume-weighted moving average price of Aquila on the TSX based on a 20-volume-weighted average price of Gold Resource shares on the NYSE, as of Sept. 3.

At the close of the deal, Aquila shareholders will own about 14.9% of Gold Resources, which has traded between $1.57 and $4.06 over the last 52 weeks and offers a 2.34% dividend yield annually (roughly 4 cents per share). Aquila has not historically issued a dividend.

The price of both companies spiked Wednesday, with Aquila shares rising by as much as 10% shortly after market open before settling to 6.5 cents per share, a roughly 4.84% day gain, by noon. Gold Resource Corporation rose to $1.80 per share by noon, a day gain of roughly 5.26%.