Reed Lake Project


Location and Property Description
The Reed Project is situated approximately 50 km west of the Town of Snow Lake where active mining and milling of base and precious metals has been ongoing for decades. The Reed Project consists of one Mineral Exploration License (MEL268A) which lies south and adjacent to the VMS Ventures and HudBay Joint Venture at the Reed Lake Deposit. The total area of the MEL is 8434 hectares. The Cowan River project is part of the Reed project. The property will be converted to claims in 2012.

History of Exploration
A significant amount of historic and new exploration has been conducted on the Reed Project and on the surrounding area that is now controlled by VMS Ventures Inc. Airborne and ground magnetic and electromagnetic surveys have been undertaken in the general area of the Project by Noranda Mining and Exploration Inc., Hudson Bay Exploration and Development, Homestake Mineral Development Company and Freeport Canadian Exploration Company since 1955 and exploration continues to the present day. These surveys were necessary owing to the extensive cover of dolomite that blankets the prospective Flin Flon-Snow Lake greenstone belt in this area. In 1972 Freeport flew Questor electromagnetic on their Reed Lake property and subsequent drill testing of anomalies resulted in the discovery of the Spruce Point and Reed Lake volcanogenic massive sulphide-type deposits as well as several other mineralized and altered zones. The Spruce Point base metal massive sulphide type deposit occurs approximately 15 km west of the Company’s Reed Lake (“Discovery Zone”) deposit. Homestake and Hudson Bay Mining and Exploration Development flew airborne geophysical surveys (EM, VLF-EM and magnetic) north of the Project area and defined numerous conductive and magnetic targets. Later, in 1995 Noranda optioned ground in these survey areas, undertook line cutting and ground geophysical surveys followed by diamond drill testing. The result was the intersection of minor base metal massive sulphide mineralization and related zones.

A geological review of assessment and historic exploration results, geophysics and geochemical surveys and diamond drill testing of targets generated by these approaches indicates Hudson Bay Exploration and Development (“HBED”) flew airborne EM and radiometric surveys in 1955 including the area of the HudBay Option Project. Freeport Canadian Exploration Company identified numerous conductors as result of an airborne Turam EM and magnetometer survey between 1973 and 1974. In 1975, diamond drill testing of these anomalies by Freeport resulted in the discovery of VMS-type alteration and mineralization hosted in mafic and felsic metavolcanic rocks. In 1980 HBED drilled five holes to test geophysical anomalies and intersected pyrite-pyrrhotite-graphite with no significant assay values. A sixth hole was drilled that same year and intersected variably altered rhyolite with pyrite and pyrrhotite and very minor amounts of chalcopyrite and sphalerite. In 1981 HBED undertook line cutting and ground EM surveys to follow-up on previous airborne geophysical surveys and in 1982 drilled three holes to test the conductive anomalies. These holes intersected altered metavolcanic and metasedimentary rocks with graphite-pyrite and pyrite-pyrrhotite-chalcopyrite mineralization. “Sub-economic” assay results were obtained from these zones. HBED drilled two holes in 1984 and intersected disseminated and stringer pyrite and pyrrhotite with minor chalcopyrite and sphalerite hosted in dacite tuff, cherty quartz porphyry and andesite. HBED undertook ground geophysical surveys consisting of pulse EM (Deep EM) and defined one anomalous trend but failed to locate any deep conductive zones. Homestake Mineral Development Company undertook airborne geophysical surveys in 1988 and followed this with a program of line cutting magnetometer and EM surveys in an area just north of the HudBay Option. These surveys were followed by geological mapping and rock geochemical programs in the same area. Results included the discovery of gold (11.5 grams per tonne over 2 m) in a pyritic quartz-carbonate shear zone. In 1991 HBED drilled one hole to test a previously defined geophysical anomaly and intersected disseminated pyrite and pyrrhotite with trace chalcopyrite and sphalerite in an extensively altered felsic metavolcanic rock. No economic assay values were obtained from the zone. Noranda Mining and Exploration Inc. undertook a drill program in an area also north of the immediate HudBay Option Project and intersected felsic volcanic breccias with VMS-type alteration with minor chalcopyrite and sphalerite. More work was recommended on this target. In 1996 HBED undertook a program of line cutting horizontal loop EM and magnetometer surveys and defined multiple conductive and magnetic targets. These were tested with a large drill program of 18 holes in 1997. Results indicated graphitic argillite, disseminated pyrite and pyrrhotite and occasional near solid sulphide layers of pyrite and pyrrhotite over narrow widths. Also in 1997, Noranda undertook a program of geological mapping, geophysical surveys and diamond drilling intersecting altered felsic metavolcanic rocks, synvolcanic intrusions and low-level base metal enrichment.

Synthesis of all historic exploration coupled with geochemical surveys and VTEM airborne electromagnetic and magnetic surveys undertaken by VMS Ventures in 2007 resulted in the definition of anomalous geophysical responses in the area of the HudBay Option and Mineral Exploration License 268A. In 2007 the Company drilled hole RD-07-02 to 270 m to test an 800 m long southwest-trending VTEM anomaly one of these conductive and magnetic zones. On October 4, 2007 the Company announced a “discovery” drill hole (RD-07-02)that intercepted 43.05 meters of mineralization grading 4.38% copper, 1.56% zinc, 0.85 g/t gold and 13.09 g/t silver. The mineralization was intercepted in the area of the property boundary between the HudBay Option and a Mineral Exploration License held by VMS Ventures. The extent to which the mineralization is located on the HudBay property is yet to be determined as the property line separating the claims is uncertain and a review of the precise location of the claim line is currently in process.

This intersection is hosted by weakly altered felsic volcanic rocks and is overlain by distinctive magnetite and chert layers. Exploration on the property is proceeding with additional geophysical and geochemical surveys and diamond drilling. The Discovery Zone at Reed Lake is interpreted to represent a “typical” Flin Flon – Snow Lake greenstone belt volcanogenic massive sulphide-type deposit.

Philosophy of VMS Ventures Exploration
The Reed Project was acquired because the area is characterized by VMS-type mineralization and alteration accompanied by abundant significant ground and airborne geophysical responses and historic diamond drill results. Base metal VMS-type mineralization had been intersected in previous exploration programs. Systematic review of assessment work and drill core from this property has been key in “seeing through” the abundant graphite-pyrite zones that were the focus of historic drill testing of geophysical responses. The recognition of chemical sedimentary rocks or “exhalites” deposited at a stratigraphic interval corresponding with a break in volcanism represents an important time-stratigraphic feature. It is at this location that base metal massive sulphide deposits are formed and this is the interpretation that guided the acquisition of the property.

This geological scenario is applicable to other deposits in the Flin Flon-Snow Lake greenstone belt and in greenstone belts worldwide. The Reed Project being explored by the Company is sub-Paleozoic meaning that the rocks that will host copper, zinc, nickel and platinum group metals are not exposed at surface which has frustrated traditional methods of exploration. For this reason deep-looking soil geochemical surveys have been applied to the property to assist with prioritizing drill targets. VMS Ventures has undertaken an integrated geological-geophysical-geochemical exploration program to assess the Project area for base metal and associated precious metal mineralization.

The property is characterized by a veneer of dolomite that overlies the highly prospective Flin Flon-Snow Lake greenstone belt and its contained base metal massive sulphide type mineralization and related alteration. Geologic interpretation based on airborne magnetic surveys and historic diamond drill results indicates the underlying greenstone belt comprises juvenile volcanic rocks intruded by tonalite, granodiorite and granite. Information gleaned from exploration diamond drill hole logs indicate the presence of variably altered mafic and felsic volcanic flows, pyroclastic and volcaniclastic rocks and related intrusions. Interbeds of greywacke, siltstone, sandstone and chemical sedimentary rocks such as graphite-pyrite and chert-magnetite are also present. Volcanogenic base metal copper-zinc massive sulphide type mineralization was discovered by the Company on the Reed Project and the HudBay Option and adjacent claims in association with these rock types.

VMS Ventures Inc. conducted an airborne geophysical survey over the property in early 2007 using GEOTECH’s VTEM system. A number of well-defined conductors with associated magnetic anomalies were identified. Diamond drill testing of one of these EM/magnetic anomalies led to the discovery of the Reed Lake volcanogenic copper-zinc massive sulphide type deposit at Reed Lake (“Discovery Zone”). In February 2008, a 1,250 line kilometre VTEM geophysical survey was flown over the Reed Lake property. This survey was flown in a north-south direction and designed to fly across target geologic features oriented in an east-west direction. The 2007 airborne survey over part of Reed Lake property, along with the enhanced understanding of the geology of the deposit, indicated an east-west trend to the host rocks and this survey helped to map this trend. Targets previously identified in the original survey were further defined and many new anomalies detected.

Subsequent to the discovery of the copper-rich mineralization at Reed Lake VMS Ventures undertook a variety of ground geophysical surveys including deep-looking electromagnetic, induced polarization and gravity to assess the applicability to the project area. A deep penetrating geophysical survey known as DeepEM covered the Discovery Zone and along strike to the east and west of the known mineralization. The survey was used to look for geophysical evidence of mineralization at depths of approximately 400m below surface. A strong response was interpreted below the mineralization drilled thus far and continuing to the west. Thus far, drilling has intersected mineralization to the 400m level. The survey also tested the horizontal strike length and direction of the mineralized body which indicated an east-west trend to mineralization which has also been interpreted from examination of drill core collected in the program.

A walking magnetic survey covered the discovery area, and produced a higher resolution map of the magnetic properties of the underlying geology. The mineralization contains abundant magnetic minerals which makes this method very useful in tracking the direction of mineralization and, potentially, in identifying related deposits along strike of the Discovery Zone mineralization. The Discovery Zone near surface was well defined in the survey and the magnetic anomaly associated with the mineralization extends over 500m to the west of the Discovery Zone to the extent of the survey grid area. A detailed gravity survey was undertaken to cover the immediate area of the Discovery Zone.

Borehole surveys were completed on a number of holes at the Discovery Zone to test for off-hole anomalies in holes that did not intersect mineralization. These surveys identify anomalies beneath the deepest holes and the data is being closely examined to determine the presence of additional mineralized lenses. These results have been processed, interpreted and anomalies identified.

A wide range of geochemical surveys have been initiated on the properties since 2006. These include partial and selective extraction soil geochemical surveys, snow geochemistry and soil gas hydrocarbons. Follow-up partial extraction soil geochemical surveys are currently being implemented. The detection of multi-element base and precious metal anomalies coincident with VTEM geophysical responses will be the focus of planned diamond drilling on the property.

Deposit Types
Base metal massive sulphide mineralization hosted within a sequence of volcanic rocks and exhalite are strongly indicative of volcanogenic massive sulphide type base metal mineralization (“VMS”). This deposit type is representative of Flin Flon belt VMS deposits including the Discovery Zone at Reed Lake. This deposit type remains the priority target for the Company.

Future Activities on the Property 

The Cowan River project is located 45 km southwest of the Town of Snow Lake and 8 km east of the Reed Copper deposit, Geophysical anomalies identified from airborne survey data collected by the Company collected through contractors were prioritized and three anomalies selected as drill targets for the first drill program undertaken by the Company on the property.

VMS Ventures announced a high-grade copper discovery on April 13, 2011 in hole RLE-11-001, grading 9.81% copper over 1.37 metres. The target was a coincident EM conductor and magnetic anomaly.  The drill hole intersected 6.59 m grading 2.25% copper and included a 1.37 m interval grading 9.81% copper, 1.46% zinc, 1,.05 g/t gold and 19.48 g/t silver. Four additional drill holes were drilled on targets identified in a follow-up ground geophysical survey with highly anomalous copper values. Borehole pulse electromagnetic surveys have been completed and interpretation indicates a category “A” off-hole anomaly located down-dip. These surveys have been incorporated into the 3D geological model.

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