Super Zone Option

Super Zone Option Location and Description
The Super Zone Option property comprises a group of 5 mineral claims covering 756 hectares (1867 acres) located immediately east and north east of the JV Property and Reed Lake Deposit. The property is bounded on its south by a paved Provincial highway giving all season road access to exploration crews. The highway connects the property with the mining communities of Snow Lake (82 km to the east) and Flin Flon (100 km to the west). The Super Zone is now referred to as "Reed North".

HudBay has now drilled nine (9) holes, for a total of 2,482 m, on this discovery. Two mineralized horizons have been recognized and a possible third, a deeper target, has been identified by deep penetrating geophysical surveys over the area. Drill results have been positive and follow-up borehole pulse electromagnetic surveys on the discovery support the interpretation that this is a highly prospective area. The mineralization is at, and around, bimodal volcanism. This is especially encouraging as it is the setting in which the larger deposits tend to be located, in VMS camps around the world. The bimodal volcanism and the strong alteration over a large area suggest a large hydrothermal mineralizing system.

Drilling will continue to focus on this area where the geophysical anomaly associated with the mineralization has been traced for more than 1 km. The mineralization seen to date is semi-massive to stringer (remobilized) type sulphides. Variable amounts of pyrrhotite and chalcopyrite occur, with lesser amounts of sphalerite and magnetite.

History of Exploration
Like the other properties in the area that comprise the Reed Lake JV-Option agreement the Super Zone is situated near the northern boundary of the flat-lying Paleozoic cover rocks. Underneath these Paleozoic-aged cover rocks are much older Proterozoic-aged volcanic rocks which are the host to the valuable mineral deposits being explored for by the Company. As such, the deposits are not exposed at surface and a great deal more geological detective work is required to locate them.

The property has undergone several phases of exploration including older and modern airborne and ground geophysical surveying, soil geochemical sampling and some prior drilling which intersected intervals of minor base and pathfinder minerals and hydrothermally altered volcanic rocks.

These provide evidence of a favourable geological environment for the formation of a volcanogenic massive sulphide (VMS) deposit such as that discovered 2 km to the west at the Discovery Zone. Airborne and deep ground penetrating geophysical surveys provide geologists the ability to essential see through the 20 m thick layer of younger rocks which overlie the much older volcanic rocks that underlie the property. The geophysical surveys have also detected a number of highly conductive and magnetic anomalies which are the signature of base metal deposits in the area. These anomalies remain undrilled and will comprise priority targets in the upcoming exploration activities.

Geology
The property is located near at the northern limits of the Western Canada Sedimentary Basin, which are younger sedimentary rocks that overlie the older and prospective volcanic rocks being explored for copper-zinc-gold-silver poly-metallic deposits in the area. Most of the property is covered by this flat lying layer approximately 20 m thick and or glacial till all of which prevent geologists from directly seeing the rocks underneath. From drill core and correlation of known rock units to geophysical survey maps it is known that the same prospective rock package hosting the Reed deposit is present beneath these claims.

The geology of the Super Zone Option property consists of felsic and mafic volcanic rocks characteristic of the mine hosting areas in the Flin Flon – Snow Lake Greenstone Belt. The geology of the area is a continuation of the Four Mile Island Assemblage of rocks which host 2 past copper-zinc producers (Dickstone and Spruce Point Mines) and several deposits including the one discovered by the Company in 2007. The assemblage consists of mafic and felsic volcanic and intrusive rocks which are of the same age as those hosting the bulk of the VMS deposits in the Flin Flon domain.

Geophysics
VTEM airborne geophysical surveys were flown over the property. In 2007 a survey flown in approximately a west to northwest direction and a second survey flown in a north south direction, was flown to better couple with the trend direction of the prospective target rocks was completed in 2008. In addition, deep penetrating Electro-magnetic surveying was completed in 2008 and 2009 over parts of the property and some historical and modern bore hole surveying was also completed which showed untested off hole anomalies to be followed up in future drill programs.

The geophysical surveys completed to date have provided both targets for drilling as well as a better understanding of the underlying geology and the direction that favourable host rocks are trending.

Ground Deep-EM geophysical surveys were undertaken in 2008 to look for conductive anomalies beneath the 200 - 300 meter depth penetration of the VTEM survey. A series of conductive anomalies forming a chain leading from near the Highway zone of copper-zinc mineralization to the NW was detected and lead onto the Tower claims. Drilling of VTEM anomalies on the property were followed by borehole geophysical surveying to look for off-hole anomalies or explain conductors in holes not intersecting conductive rock intervals such as massive sulphide or graphite rich rock units.

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.

Option Agreement with HudBay Minerals Inc.
On June 6, 2010 the Company announced the signing of a Joint Venture Agreement with a subsidiary of HudBay Minerals Inc. Pursuant to the Joint Venture Agreement, HudBay has a 70% interest and VMS has a 30% interest in a joint venture 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 will make 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.

An aggressive drill program, in preparation for a resource estimate, has commenced, to be followed by additional drilling to bring the resource into a reserve category and exploration drilling to expand the known resource and identify new deposits on the property.

Current Activities on the Property
The Company is no longer operator of the properties so future exploration and development activities will be undertaken by HudBay Minerals through its subsidiary and overseen by a joint management committee of representatives of the two companies. A total of 9 drill holes have been drilled on this property.

On May 11^th, 2011, the Company announced the discovery of a new high grade copper zone grading 7.44% copper over 7.18 m core length in hole RLE006, approximately 1.8 km northeast of the Reed Lake Copper deposit on the Super Zone Claims option property. Hole RLE004 was the original discovery that intersected two small horizons that was followed-up with borehole pulse electromagnetic survey that generated two strong “CAT A” targets that were intersected in hole RLE006.

On August 9^th, 2011, the Company announced follow-up results on a new high grade copper zone grading 5.95% copper over 2.23 m core length in hole RLE007. The new zone is now known as the Reed North discovery located 1.8 km northeast of the Reed Lake Copper deposit. Four holes were completed. Two holes, RLE007 and RLE009, are on the Super Zone and two other holes, RLE008 and RLE010, are on the Northwest Zone property.

Location of the Super Zone Discovery:

Hole RLE006 intersected two zones of mineralization within a bimodal (rhyolite/basalt) volcanic sequence.

The first zone intersected 7.18 m of 7.44% copper (from 133.89 to 141.07 m) and a second zone intersected 44.49 m of 0.79% copper and 0.39% zinc (from 214.00 to 258.49 m). The initial hole in this zone was RLE004 targeting a 1 km long VTEM airborne anomaly with coincident magnetics. This hole intersected 0.34 m grading 5.41% Cu. The follow-up borehole pulse electromagnetic survey indicated two conducive targets and was followed up with the discovery hole RLE006.

The largest copper deposits in the Flin Flin-Snow Lake belt are associated with bimodal volcanism and this has all the earmarks of such a discovery. HudBay is continuing exploration with two diamond drills testing geophysical and geological targets on the option properties.

Additional work will continue on this new zone and additional VTEM targets in the region. A large time-domain electromagnetic survey is scheduled over favourable magnetic trends.

HudBay have spent $300.000 on the property and another $300,000 need to be spent on exploration activity before the anniversary date of July 5^th, 2012.

Option Properties Assay Data:

² “Azimuth” is degrees from True North

A plan map of the mineralized intercepts projected to surface on the total magnetic field map is presented below: