The Discovery Zone VMS deposit at Reed Lake, Manitoba was discovered in volcanic rocks under approximately 20 meters of flat-lying dolomite and sandstone using the new VTEM helicopter-borne EM system. The deposit occurs within a sequence of altered felsic and mafic volcanic rocks intruded by a quartz-feldspar porphyry dyke. The high grade near solid to solid sulphide copper mineralization occurs at or near the contact between massive aphyric to porphyritic and fragmental basalt and an altered felsic volcaniclastic unit. The basalt is crosscut by an anastomozing system of chlorite-silica-chalcopyrite veins and pervasive fronts of silicification interpreted to represent a classic footwall alteration plumbing system.
On March 4, 2010 VMS Ventures entered into a non-binding Letter of Intent with a subsidiary of HudBay Minerals respecting VMS' Reed Lake Discovery Zone, the copper-rich Reed Lake property claims optioned from HudBay, the two southern claims adjoining the Reed Lake property and certain exploration properties adjacent to the Reed Lake property, that are 100% held by VMS. The Letter of Intent contemplates that the parties will enter into a definitive Joint Venture Agreement respecting the two Reed Lake property claims and the two claims immediately south of the Reed Lake property. HudBay will have a 70% interest in the Joint Venture and VMS will have a 30% interest. Upon execution of the definitive Joint Venture Agreement, HudBay will make certain cash payments to VMS in satisfaction of its obligation to earn back in to the property and as consideration for VMS transferring the southern claims to the Joint Venture. Under the Joint Venture, HudBay will act as operator with primary authority and discretion as to the exploration and potential development of the Reed Lake property and will have exclusive rights to purchase and market the ore produced from the new Joint Venture. HudBay will provide full financing for VMS's proportionate share of the costs to develop the property, which will be repayable solely from VMS' share of cash flow generated by the project.
The Letter of Intent also provides that, concurrently with the entering into of the Joint Venture Agreement, VMS and HudBay will enter into an Option Agreement that grants HudBay the option to earn a 70% interest in four adjacent properties held by VMS, including the Tower Zone and Super Zone properties. Upon making certain cash payments and meeting work commitments over two to three years with respect to each property, HudBay will earn a 70% interest in the applicable property resulting in a new Joint Venture between VMS and HudBay on substantially the same terms as the Reed Lake Joint Venture. Any failure to make the required cash payments and work commitments with respect to a particular property will result in such property reverting to 100% ownership by VMS, but will not affect HudBay's option over the other properties.
JOINT VENTURE/OPTIONS WITH HUDBAY MINERALS OF THE REED LAKE PROPERTIES
On July 6, 2010 the Company announced the signing of a Joint Venture Agreement with a subsidiary of HudBay Minerals Inc. (TSX: HBM) respecting its copper-rich Reed Lake Discovery Zone and adjacent mineral properties held by VMS Ventures in Manitoba’s Flin Flon Greenstone Belt. The joint venture includes 4 mineral claims (CB5503, P5030E, MB8413 and MB8412) and covers an area of 917 ha.
Pursuant to the Joint Venture Agreement, HudBay has a 70% interest and VMS has a 30% interest respecting the Reed Lake property and the two claims immediately to the south. The JV area includes the Reed Lake Discovery Zone mineral deposit. HudBay will act as operator of the joint venture with authority and discretion as to the exploration and potential development of the property and will have exclusive rights to purchase and market the ore produced from the property.
HudBay will also provide full financing for VMS' proportionate share of the costs to develop the property, which will be repayable solely from VMS' share of cash flow generated by the project. Upon VMS making certain filings to confirm the previously-disputed boundaries of the joint venture claims, HudBay made a cash payment to VMS of $2.6 million, as consideration for VMS transferring the southern claims to the joint venture and in lieu of HudBay's obligation to earn back into the property under the initial option agreement between the parties.
Option Agreements
Option agreements with HudBay were also signed on the surrounding properties of the joint venture and include the Northwest Zone Option (5 mineral claims – 899 ha.); Super Zone Option (6 mineral claims- 756 ha.); Northeast Zone Option (8 mineral claims – 1,595 ha.) and the Tower Zone Option (mineral claim MB5188 – 111 ha.).
VMS Ventures retains the Mineral Exploration Lease (MEL 268A) which lies south of the joint venture/option properties and covers 6773 ha.
Current Activities on the Joint Venture Property
The Company is no longer operator of the properties so future exploration and development activities will be determined through a management committee comprised of representatives from HudBay Minerals and VMS Ventures Inc., and undertaken by HudBay Minerals though its subsidiary.
VMS Ventures drilled 71 drill holes in 2007/2008 on the property. HudBay drilled 39 drill holes, 2 wedges and deepened one hole in 2010 and 2011. In total 110 drill holes for a length of 40087 metres were drilled on the property. On April 1st, 2011, VMS Ventures announced a NI 43-101 mineral resource for the Reed Lake Deposit at 2.55 million tonnes @ 4.52% copper in the indicated category. The NI 43-101 technical report is now filed on SEDAR as of May 13, 2011. The new resource (see table below) provided the basis to conduct a prefeasibility study (released December 19th, 2011 and available on Sedar). The Joint Venture project, in which VMS has a carried interest and operator HudBay Minerals has a 70% interest, represents a high grade, near surface copper deposit that can be accessed via a ramp and in which ore can be trucked to the Flin Flon concentrator.
|
Mineral Resource
|
Contained Metal
|
|
Category
|
Tonnes
|
Au (g/t)
|
Ag (g/t)
|
Cu (%)
|
Zn (%)
|
Au (oz)
|
Ag (oz)
|
Cu (lbs)
|
Zn (lbs)
|
|
Indicated
|
2,550,000
|
0.64
|
7.86
|
4.52
|
0.91
|
52469
|
644382
|
253572000
|
51051000
|
|
Inferred
|
170,000
|
0.38
|
4.55
|
4.26
|
0.52
|
2077
|
24868
|
15932400
|
1944800
|
A 43-101 compliant Preliminary Economic Assessment (PEA) authored by HudBay was released on December 19th, 2011. HudBay has decided to approve a $71 million capital investment and proceed with construction of the Reed Copper project based on the positive economics outlined in the PEA. A summary of the project’s economics follows (100% basis):
· Approximate daily ore production of 1,300 tonnes at Reed is expected by late 2013, subject to receipt of required permits.
· Average expected production grades of 3.78% copper, 0.45 g/t gold and 5.77 g/t silver.
· Assumed metal recoveries in HudBay’s Flin Flon Concentrator of 94% copper, 58% gold and 62% silver.
· Average production in concentrate of approximately 17,000 tonnes per year of copper metal.
· Total operating costs estimated to average approximately $91 per tonne milled ($67 per tonne mining, $16 per tonne milling and $8 per tonne administration) over a five year mine life.
· Sustaining capital expenditures are expected to total approximately $55 million over the five year mine life.
· PEA base-case pre-tax NPV (net present value) (8%) of 64.9% million assuming average weighted metal prices of US$2.78 lb Cu, US$1,059 oz Au, US$24.14 oz Ag and USD/CDN$ exchange rate of $0.92 over the five year ,mine life. All dollar values are Canadian (CDN$) unless specified.
The Company is no longer operator of the properties so future exploration and development activities will be determined through a management committee comprised of representatives from HudBay Minerals and VMS Ventures Inc., and undertaken by HudBay Minerals though its subsidiary.
The Company is no longer operator of the properties so future exploration and development activities will be determined through a management committee comprised of representatives from HudBay Minerals and VMS Ventures Inc., and undertaken by HudBay Minerals though its subsidiary.
An aggressive drill program of 30 drill holes and approximately 7,000 m in length has commenced in preparation for a resource estimate (filed on Sedar as of May 13, 2011). Drilling commenced in August 2010 and is planned to continue into 2011 and is the first phase of work on the property. Drilling will test the extent of the mineralization at depth and along strike. It will also follow-up on off-hole anomalies detected through bore hole surveys. Drilling in 2011 will also test priority targets elsewhere on the property which are not accessible during the summer months due to wet ground conditions.
On April 1st, 2011, VMS Ventures announced a NI 43-101 mineral resource for the Reed Lake Deposit at 2.55 million tonnes @ 4.52% copper in the indicated category. The NI 43-101 technical report is now filed on SEDAR as of May 13, 2011. The new resource (see table below) provides the basis to conduct a prefeasibility study. The Joint Venture project, in which VMS has a carried interest and operator HudBay Minerals has a 70% interest, represents a high grade, near surface copper deposit that can be accessed via a ramp and in which ore can be trucked to the Flin Flon concentrator. Permitting and pre-feasibility efforts will be conducted by HudBay throughout 2011 with the expectation of a construction decision by year end.
|
Mineral Resource
|
Contained Metal
|
|
Category
|
Tonnes
|
Au (g/t)
|
Ag (g/t)
|
Cu (%)
|
Zn (%)
|
Au (oz)
|
Ag (oz)
|
Cu (lbs)
|
Zn (lbs)
|
|
Indicated
|
2,550,000
|
0.64
|
7.86
|
4.52
|
0.91
|
52469
|
644382
|
253572000
|
51051000
|
|
Inferred
|
170,000
|
0.38
|
4.55
|
4.26
|
0.52
|
2077
|
24868
|
15932400
|
1944800
|
To date, 30 drill holes have been drilled. HudBay drilling is now underway testing for additional lenses of sulphide mineralization in and around the Reed Lake Deposit targeting anomalies identified in bore hole, TDEM surface and VTEM airborne geophysical surveys that have been conducted on the JV property. Exploration throughout the property package, outside the immediate area of the deposit, is also underway with up to15 drill holes planned to be completed before the end of June. This program will test priority targets identified on the four optioned claim packages surrounding the Reed Lake JV property.
The following tables outline assay results and plan map data:
|
Hole Number
|
From (m)
|
To (m)
|
Length (m)
|
Au (g/t)
|
Ag (g/t)
|
Cu (%)
|
Zn (%)
|
Zone
|
|
RLD001
|
129.00
|
138.90
|
9.90
|
0.77
|
8.21
|
5.56
|
0.67
|
20
|
|
RLD002
|
99.30
|
113.28
|
13.98
|
0.46
|
5.19
|
0.94
|
3.74
|
30
|
|
140.05
|
178.60
|
38.55
|
0.38
|
4.10
|
3.81
|
0.08
|
20
|
|
RLD003
|
111.20
|
140.00
|
28.80
|
0.88
|
7.18
|
1.58
|
3.07
|
30
|
|
149.55
|
221.51
|
71.69
|
0.64
|
7.94
|
6.69
|
0.14
|
20
|
|
RLD004
|
164.77
|
171.20
|
6.43
|
0.54
|
4.89
|
0.80
|
4.46
|
30
|
|
235.77
|
257.54
|
21.77
|
0.27
|
4.15
|
3.74
|
0.95
|
20
|
|
RLD005
|
288.70
|
289.00
|
0.30
|
0.00
|
0.69
|
0.32
|
0.04
|
120
|
|
RLD006
|
197.62
|
197.85
|
0.23
|
0.00
|
2.06
|
1.65
|
0.45
|
130
|
|
213.10
|
234.78
|
21.68
|
0.27
|
4.14
|
3.17
|
1.03
|
20
|
|
234.78
|
276.80
|
42.02
|
0.14
|
3.23
|
2.80
|
0.14
|
10
|
|
213.10
|
276.80
|
62.70
|
0.18
|
3.54
|
2.93
|
0.44
|
10-20 Combined
|
|
RLD007
|
171.11
|
178.63
|
7.52
|
0.52
|
5.55
|
2.62
|
1.23
|
20
|
|
RLD008
|
148.00
|
151.86
|
3.86
|
0.43
|
6.36
|
4.32
|
1.17
|
20
|
|
RLD009
|
129.26
|
139.04
|
9.78
|
1.79
|
24.55
|
1.13
|
4.60
|
30
|
|
RLD010
|
75.74
|
91.90
|
16.16
|
1.59
|
15.86
|
1.27
|
3.21
|
30
|
|
119.47
|
122.00
|
2.53
|
0.03
|
1.04
|
0.38
|
3.48
|
120
|
|
RLD011
|
48.75
|
67.14
|
18.39
|
1.42
|
19.07
|
2.23
|
3.27
|
30
|
|
RLD012
|
35.84
|
51.60
|
15.76
|
1.30
|
13.55
|
1.53
|
6.57
|
30
|
|
RLD013
|
No Significant Mineralization
|
|
RLD014
|
No Significant Mineralization
|
|
RLD015
|
527.00
|
537.09
|
10.09
|
0.67
|
5.20
|
2.39
|
0.23
|
10
|
|
RLD016
|
218.73
|
221.00
|
2.17
|
0.11
|
2.93
|
1.13
|
0.25
|
120
|
|
RLD017
|
No Significant Mineralization
|
|
RLD018
|
244.14
|
244.44
|
0.30
|
0.93
|
20.23
|
4.20
|
1.79
|
120
|
|
371.00
|
371.50
|
0.50
|
0.07
|
3.77
|
1.14
|
0.02
|
99
|
|
407.88
|
410.73
|
2.85
|
1.39
|
11.89
|
7.05
|
4.44
|
10
|
|
435.00
|
440.00
|
5.00
|
0.00
|
0.48
|
0.10
|
1.01
|
110
|
|
RLD019
|
162.00
|
167.00
|
5.00
|
0.28
|
3.67
|
0.64
|
5.60
|
30
|
|
262.80
|
263.84
|
1.04
|
0.04
|
1.03
|
0.76
|
1.99
|
120
|
|
RLD020
|
75.02
|
107.30
|
32.28
|
2.10
|
22.03
|
3.41
|
1.33
|
30
|
|
185.40
|
191.92
|
6.52
|
0.39
|
7.52
|
5.45
|
1.24
|
20
|
|
RLD021
|
55.95
|
84.00
|
28.05
|
2.35
|
25.69
|
4.85
|
1.75
|
30
|
|
124.66
|
125.58
|
0.092
|
0.61
|
3.43
|
2.96
|
0.07
|
20
|
|
RLD022
|
45.90
|
54.80
|
8.90
|
1.92
|
25.78
|
3.95
|
4.14
|
30
|
|
RLD023
|
290.90
|
293.78
|
2.88
|
0.43
|
7.63
|
5.00
|
0.31
|
20
|
|
RLD024
|
189.60
|
226.70
|
37.10
|
0.46
|
6.62
|
5.60
|
0.72
|
20
|
|
RLD025
|
156.75
|
184.12
|
27.37
|
0.25
|
4.75
|
4.66
|
0.61
|
20
|
|
240.62
|
244.20
|
3.58
|
0.01
|
2.64
|
4.76
|
0.11
|
10
|
|
RLD026
|
141.14
|
149.49
|
8.35
|
0.36
|
7.90
|
4.93
|
0.86
|
20
|
|
RLD027
|
540.40
|
548.47
|
8.07
|
1.01
|
8.02
|
4.04
|
0.74
|
10
|
|
RLD028
|
539.77
|
550.00
|
10.23
|
0.82
|
5.05
|
2.18
|
0.15
|
10
|
|
RLD029
|
405.06
|
443.51
|
38.45
|
0.14
|
2.92
|
4.35
|
0.07
|
10
|
|
RLD030
|
471.70
|
521.78
|
50.08
|
0.80
|
9.08
|
6.85
|
0.20
|
10
|
|
RLD031, RLD31W1
|
No Significant Mineralization
|
|
RLD032
|
260.53
|
274.91
|
14.38
|
0.61
|
8.69
|
1.57
|
1.83
|
120
|
|
476.96
|
478.79
|
1.83
|
1.39
|
6.99
|
4.01
|
1.15
|
10
|
|
RLD033
|
567.04
|
613.73
|
46.69
|
0.54
|
4.18
|
2.48
|
0.14
|
10
|
|
RLD034 to RLD039
|
No Significant Mineralization
|
| |
|
|
|
|
|
|
|
|
*True widths unknown
|
Hole Number
|
UTM North (1)
|
UTM East (1)
|
UTM Elevation (1)
|
Azimuth (2)
|
Dip
|
Length (m)
|
|
RLD001
|
6048903
|
393961.5
|
296
|
220
|
-45
|
209
|
|
RLD002
|
6048910
|
393968.4
|
296
|
224
|
-60
|
302
|
|
RLD003
|
6048913.7
|
393970.7
|
295.6
|
224
|
-70
|
380
|
|
RLD004
|
6048923.2
|
393972.2
|
295.5
|
225
|
-75
|
365
|
|
RLD005
|
6048954.8
|
393942.5
|
295.90
|
225
|
-76
|
551
|
|
RLD006
|
6048942.3
|
393929.5
|
295.96
|
225
|
-70
|
443
|
|
RLD007
|
6048942.3
|
393929.2
|
295.99
|
225
|
-60
|
308
|
|
RLD008
|
6048936.3
|
393923.4
|
295.89
|
225
|
-50
|
242
|
|
RLD009
|
6048881.4
|
394013.9
|
296.25
|
225
|
-70
|
302
|
|
RLD010
|
6048873.3
|
394004.9
|
296.15
|
225
|
-60
|
251
|
|
RLD011
|
6048866.5
|
393997.8
|
298.06
|
225
|
-45
|
224
|
|
RLD012
|
6048856.6
|
393986.7
|
296.12
|
225
|
-43
|
149
|
|
RLD013
|
6048832.2
|
394034.5
|
296.62
|
225
|
-43
|
230
|
|
RLD014
|
6048849.0
|
394051.8
|
295.82
|
225
|
-65
|
260
|
|
RLD015
|
6048886.7
|
393573.2
|
299.4
|
60
|
-84
|
788
|
|
RLD016
|
6048983.5
|
393890.9
|
295.3
|
225
|
-65.5
|
383
|
|
RLD017
|
6048971.5
|
393892.3
|
295.7
|
225
|
-53.7
|
221
|
|
RLD018
|
6048988.0
|
393904.0
|
295.6
|
225
|
-66.8
|
506
|
|
RLD019
|
6048911.0
|
394000.0
|
295.0
|
225
|
-73.0
|
308
|
|
RLD020
|
6048893.0
|
393991.2
|
295.9
|
225
|
-65.5
|
281
|
|
RLD021
|
6048892.5
|
393990.5
|
295.7
|
225
|
-53.9
|
250
|
|
RLD022
|
6048880.0
|
393974.0
|
296.0
|
220.0
|
-44.3
|
303
|
|
RLD023
|
6048943.3
|
393968.5
|
295.4
|
225.0
|
-74.4
|
401.0
|
|
RLD024
|
6048942.8
|
393968.2
|
295.6
|
225.0
|
-65.0
|
434.0
|
|
RLD025
|
6048928.8
|
393952.9
|
295.6
|
225.0
|
-58.0
|
302.0
|
|
RLD026
|
6048916.4
|
393938.7
|
296.4
|
225.0
|
-48.0
|
224.0
|
|
RLD027
|
6049095.4
|
393736.5
|
296.0
|
205.0
|
-68.0
|
692.0
|
|
RLD028
|
6049095.6
|
393736.8
|
296.3
|
195.0
|
-70.0
|
677.0
|
|
RLD029
|
6048721.1
|
393858.5
|
295.0
|
350.0
|
-65.0
|
500.0
|
|
RLD030
|
6049038.6
|
393852.4
|
295.2
|
219.0
|
-70.0
|
605.0
|
|
RLD031
|
6049095.0
|
393735.0
|
296.0
|
215.0
|
-72.0
|
854.0
|
|
RLD031W01
|
6049095.0
|
393735.0
|
296.0
|
215.0
|
-72.0
|
710.0
|
|
RLD032
|
6049040.0
|
393850.0
|
296.0
|
220.0
|
-64.0
|
548.0
|
|
RLD033
|
6049040.0
|
393850.0
|
296.0
|
230.0
|
-68.0
|
700.0
|
|
RLD034
|
6049038.0
|
393851.95
|
295.65
|
230.0
|
-64.0
|
605.0
|
|
RLD035
|
6049037.11
|
393850.84
|
295.54
|
225.0
|
-50.0
|
350.0
|
| |
|
|
|
|
|
|
|
RLD036
|
6049037.29
|
393851.0
|
295.64
|
225.0
|
-57.0
|
425.0
|
|
RLD037
|
6048554.0
|
394000.0
|
296.0
|
45.0
|
-78.0
|
1319.0
|
|
RLD038
|
6049040.0
|
393853.0
|
296.0
|
205.0
|
-65.0
|
416.0
|
|
RLD039
|
6049037.0
|
393852.0
|
296.0
|
205.0
|
-60.0
|
308.0
|
(1) Universal Transverse Mercator/North American Datum 1983/Zone 14
(2) “Azimuth” is degrees from True North
Location of the Reed Lake Projects and Description
The Reed Lake Project area is situated approximately 45 km west-southwest of the Town of Snow Lake where active mining and milling of base and precious metals has been ongoing for decades. The Project consists of the Reed Lake Joint Venture with HudBay and 4 optioned properties with HudBay surrounding the joint venture. MEL (268A) lies immediately south of the HudBay joint venture/option area and is retained by VMS Ventures.
History of Exploration
A significant amount of historic and new exploration has been conducted on the Reed Lake Joint Venture/Option 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 continuing up 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. 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 base metal massive sulphide mineralization and related zones.
Surveys conducted on the immediate Project area comprise geological review of assessment and historic exploration results, geophysics and geochemical surveys and diamond drill testing of targets generated by these approaches. Hudson Bay Exploration and Development (“HBED”) flew airborne EM and radiometric surveys in 1955 including the area of the Reed Lake Joint Venture/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 Reed Lake Joint Venture. 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 Reed Lake Joint Venture 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 on the Reed Lake Joint Venture/Option Project and adjacent 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. The hole intersected 2.5 m of 15.30% copper within 10.5 m of 11.19% copper within 22.25 m of 7.75% copper within 43.05 m of 4.38% copper. This intersection is hosted by moderately- to strongly 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 area of this ‘discovery’ was termed the ‘The Discovery Zone’ and is interpreted to represent a “typical” Flin Flon – Snow Lake greenstone belt volcanogenic massive sulphide type deposit.
On October 4, 2007 the Company announced a "discovery" drill hole which 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 Claims and a Mineral Exploration License held by VMS Ventures and within the area of influence of claims optioned from W. Bruce Dunlop. Today this discovery is part of the Reed Lake Joint Venture.
Philosophy of VMS Ventures Exploration
The area of Reed Lake Joint Venture and Options was initially acquired because of its characteristic 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 joint venture agreement with HudBay Minerals Inc. This geological scenario is applicable to other deposits in the Flin Flon-Snow Lake greenstone belt and in greenstone belts worldwide.
Geology
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 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 Lake Joint Venture and Options in association with these rock types.
Reed Lake Discovery Zone Geology
The Reed Lake volcanogenic base metal massive sulphide (VMS) mineralized zone is overlain by distinctive layers of magnetite and chert. The rocks that underlie and contain the sulphide deposit are weakly altered felsic volcanic rocks and metasedimentary rocks derived largely from a felsic source that have been intruded by a fine-grained diabase. The felsic rocks consist of both aphyric- and quartz-phyric tuff and fragmental rocks. The diabase partially envelops and cuts across the massive sulphide deposit. The margin of the diabase is aphanitic to fine-grained and amygdaloidal for 10 to 100 cm into the body and encloses abundant angular, sub-angular blocks and amorphous domains of silica. The diabase is zoned and contains rare phenocrysts of feldspar in its outer zones, but a central core that is characterized by pyroxene (augite) phenocrysts. The southern margin of the intrusion has not been drilled to date.
Diamond drilling at the Discovery Zone has resulted in the interpretation that the deposit consists of two separate lenses, the first referred to as the “A” Zone, and a second called the “B” Zone.
As interpreted from visual examination of drill core and from sample geochemistry, the two zones are distinct in their chemistry and origin. Zone “A” is considerably richer in zinc than Zone “B” and appears to be part of a debris flow or sulphide material which originally broke off of another, possibly larger, sulphide body and was transported down a slope at the time the deposit was originally formed. This mineralization is stratigraphically-controlled, meaning it seems to be confined within the same rock layers that the original deposit was emplaced. The central mass of the mineralizing system, where Zone “A” originated, is therefore located elsewhere.
Zone “B” is much richer in copper and appears to be structurally controlled rather than stratigraphically controlled like Zone “A”. This mineralization is interpreted to be re-mobilized from another yet to be identified sulphide body. The exploration of this mineralization which extends to a depth of at least 400 m as drilled so far will be by additional drilling and borehole geophysical surveys, which can pulse the area around the borehole from 50m to 100m from the borehole looking for adjacent mineralization not intersected in the drill hole.
Geophysics
VMS Ventures Inc. conducted an airborne geophysical survey over the properties in early 2007 using GEOTECH’s VTEM system. In 2008, a second VTEM airborne 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 2008 survey results were merged with the 2007 airborne survey which covered a smaller portion of the property. A number of well-defined conductors with associated magnetic anomalies were identified. Diamond drill testing of one of these EM/magnetic anomalies in 2007 led to the discovery of the Reed Lake volcanogenic copper-zinc massive sulphide type deposit at Reed Lake (“Discovery Zone”). 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. The initial airborne anomalous VTEM responses indicate the presence of additional bedrock-hosted conductive zones of mineralization such as copper- and zinc-bearing sulphide with associated gold and silver and the iron sulphide minerals pyrite and pyrrhotite. Together these minerals provide targets for exploration. In 2009 a ZTEM airborne survey was flown over parts of the Reed Lake Joint Venture property by Geotech to compare this latest airborne system to the VTEM system previously flown. In April, 2010, an airborne gravity survey was flown by Fugro Airborne Surveys over the property comprising 290 line km of flying.
Geochemistry
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.
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 a priority target for the Company in its surrounding properties.
In 2012, HudBay plans to complete 4000 m of drilling and BHPEM surveys and testing a TDEM anomaly between the Reed Copper deposit and the Highway Zone to the northeast.
REED LAKE VTEM MAP:
REED LAKE PLAN MAP:
