A Change in Plans – VMS Ventures moves from exploration to production

May 14, 2013

14 - Mark Fedikow and Alan Bailes in front of core shack

VMS Ventures (VMS:TSX.V) is transitioning from a pure exploration company to becoming a developer and producer in the coming year.  Over the last 12-months several milestones were reached by the company in its corporate development.

Reed Copper Project
In December 2011, the company announced that a decision to construct the Reed Copper Project Mine had been given by the project operator and majority stake holder Hudbay Minerals, along with approval for $71 million in capital investment for the project.

The Reed Copper Mine Project is a joint venture between VMS Ventures Inc., and Hudbay Minerals who is the project operator and is financing VMS Ventures share of the costs of building the mine, through to production. Hudbay Minerals holds a 70 per cent interest in the project, VMS owns 30 per cent.

The decision to go progress with the mine construction was based on the positive economics outlined in the 43-101 compliant Preliminary Economic Assessment (“PEA”) authored by Hudbay Minerals for the Reed project. Highlights from the PEA report include daily production of ore of 1,300 tonnes by late 2013 at an average expected grade of 3.78 per cent copper, 0.45 g/t gold and 5.77 g/t silver.

14 - Well DrillersIn early 2012, government approval for Reed Copper Advanced Exploration Permit closure plan had been granted along with issue of a lease for the operation of mine development activities on the property. With this permit approved, the extraction of a 10,000 tonne bulk sample is allowed to further test ore metallurgy and confirm the mineralization widths, metal grades, and ground conditions of the rock hosting the mine.

In April 2012, a more comprehensive Pre-Feasibility study was completed by Hudbay and Stantec Consulting Ltd., which outlined positive economics for the Reed Copper Project. Using the stricter parameters of a mineral reserves study the deposit was calculated to contain 2,157,000 tonnes in the Probable category grading 3.83 per cent copper, 0.48 g/t gold and 6.02 g/t silver. Additional drilling at the mine will be required to bring the inferred mineralization left out of the Pre-Feasibility study reserve calculation into the Mineral Reserves estimate for the mine.

Other highlights of the Pre-Feasibility Study include an estimate of initial production at Reed Copper Mine in the third quarter of 2013 and that metal recoveries of 94 per cent copper, 58 per cent gold, and 62 per cent silver are assumed for the ore processed at the Flin Flon Concentrator.

Run of mine ore will be transported by truck to Flin Flon facility for processing. The proposed construction schedule in the Pre-Feasibility shows January 2014, as the proposed completion date of construction.

Under the mine development plan, the next year’s milestones will include completion of the first phase of underground development down to the 260 metre level of the mine, and extraction of a 10,000 tonne bulk sample of material from each of the three zones of mineralization.  Production at the Reed Copper Copper Mine is scheduled to begin at the 260 metre level to access Zones 10 and 20 and at the 30 metre level access the 30 Zone. Zone 10 host high grade copper and so will be mined early in the life of mine for a faster payback of capital expenditures.

Snow Lake and Sudbury
14 - Grout DrillingExploration for new deposits in the Flin Flon – Snow Lake Greenstone Belt continued in 2012 and drilling of new targets on the company’s large land package in Manitoba will begin again in early 2013.

Highlights from 2012 include high-grade gold sampled from prospecting trenches at the company’s Sails Lake property east of Snow Lake, and a 1.2 metre intersection grading 12.63 per cent zinc, 0.76 per cent copper, 1.44 g/t gold, and 5.45 g/t silver at the Reed North prospect being jointly explored with Hudbay Minerals who have optioned the property from VMS.

North American Nickel
Another area with significant growth potential for the company is its 26 million share investment in North American Nickel (NAN:TSX.V). Thissummer the Company’s Greenland based Maniitsoq project received worldwide attention in the media.

In late June 2012, a group of European geoscientists published the findings of a three year research project focusing on the Maniitsoq region of Greenland and its geology. Their research showed the area is host to the oldest meteor impact ever discovered on Earth, dated at one billion years earlier that the previously oldest recognized impact site. Further, the impact was extensive, estimated to have created an original crater of up to 200 kilometres in diameter which may have important implications for an exploration company looking for the worlds next nickel mining camp.

North American Nickel is focused on belt of nickel bearing intrusions which have been mapped over an area 75 kilometres by 15 kilometres. These intrusive bodies host numerous nickel-copper showings distributed throughout the belt. The area has undergone very limited exploration with last drilling taking place over 40-years ago.

14 - Portal TrenchIn 2011, North American Nickel flew a test survey over eight per cent of the property. The goal was to determine if a modern helicopter-borne geophysical system survey would be able to identify previously undetected magnetic and conductive bedrock anomalies. The survey was a success and so this summer a follow up survey consisting of over 3,500 line kilometres of flight lines were undertaken over a larger area of the property, with a follow-up drill program testing the best of the conductors planned for early fall of 2012.

Previous drilling on the property conducted between 1965 and 1972 were successful in intersecting significant nickel-copper mineralization though the drilling was very shallow and used small diameter back pack drills. Historical drilling highlights include intercepts of 2.67 per cent nickel over 9.85 metres, and 2.24 per cent nickel over 12.89 metres.

The next year bodes to be one of transition and offer the potential for tremendous growth for the company.

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