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Tower Zone Option

Location of the Tower Zone Option Location and Description
The Tower Zone Option property (mineral claim MB5188) comprises a mineral claim covering 111 hectares (274 acres) located immediately east of the VMS Ventures and HudBay Joint Venture Property and Reed Lake Deposit. The property is bounded on its North 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). 

History of Exploration
Exploration at the Tower Zone Option effectively began with VMS Ventures though earlier airborne geophysical and some ground geophysical surveying which was undertaken before VMS's exploration of the area. In early 2007 a VTEM airborne geophysical survey was flown over the Reed Lake Property including the Tower Zone. The Company's  first attempt drilling on the property, which tested VTEM conductors and magnetic anomalies, commenced in 2007 which the Reed Lake Deposit was discovered 1 km to the west of the Tower Zone.

Ten holes have been completed on the Tower Zone. No previous drilling was conducted on the property prior to the Company commencing work on the property.  Trace amounts of mineralization and various rock types associated with copper-zinc massive sulphide deposits of the belt have been identified in drill core, no concentrations of economic minerals were intersected. Further drilling and surveying is required to complete the exploration of this property. Though the geology of the area is complicated, the number of anomalies and their apparent strength makes this a priority target area. The targets are located along the eastern strike direction of the Discovery Zone and lithogeochemical sampling of drill core has shown that the felsic volcanic rock unit directly overlying the Reed Deposit is also present at the Tower Zone property. Exploration efforts will in part focus on locating the base of this unit where similar rocks host mineralization 1 km to the west of the Reed Deposit. These types of deposits tend to occur in clusters, with multiple lenses of mineralization generally formed within one prominent rock unit and therefore identification of this unit is a priority for exploration geologists working on the property.

Philosophy of VMS Ventures Exploration
The area of Reed Lake Joint Venture and Tower Option was initially acquired because of its characteristic VMS-type mineralization and alteration accompanied by abundant significant ground and airborne geophysical responses and historical 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 geology of the Tower Zone Option property consists of felsic and mafic volcanic rocks characteristic of the mine hosting areas in the Flin Flon – Snow Lake Greenstone Belt. In 2010, Dr Alan Bailes, undertook a study of the geology of the Discovery Zone and Tower Zone entitled “Geological Setting of the Reed Lake VMS Deposit and the relationship to the Tower Zone”. Following logging of key holes and high precision trace element geochemical sampling of drill core, a link was established between the Discovery Zone approximately 1 km to the west and the Tower Zone geology. Rhyolite (felsic volcanic) rocks at the Discovery Zone are geochemically identical to the rhyolites intersected at the Tower Zone. With this correlation the Tower Zone is considered very prospective for hosting mineralization like that at the Reed Lake deposit and so further work is recommended with a focus on the mafic rocks in the area as these rocks host the deposit mineralization.

Drilling on the property has intersected minor amounts of mineralization and hydrothermal alteration minerals which are evidence of volcanogenic massive sulphide (VMS) deposit formation. Whether a VMS deposit was formed and if so whether it is economic in size and grade is yet to be determined. Armed with the knowledge gained from Dr. Bailes study and in cooperation with our Option partner, this project will see renewed exploration in the coming years.

Geophysics
VTEM airborne geophysical surveys were flown over the property. In 2007 a survey flown in roughly west to northwest direction was undertaken. Several of the anomalies were drill tested resulting in the Discovery as well as prospective geology on the Tower Zone. Drilling of the Discovery Zone and re-interpretation of the underlying geology lead to a second survey being flown in a more north-south direction to allow for better coupling of the conductive anomalies being evaluated for future drilling.

Ground deep-EM geophysical surveys were undertaken in 2008 to look for conductive anomalies beneath the 200 - 300 metre 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.

Current Activities on the Property

Ten holes have been completed on the Tower Claim. No previous drilling was conducted on the property prior to the Company commencing work on the property. Though trace amounts of mineralization and various rock types associated with copper-zinc massive sulphide deposits of the belt were identified in drill core, no concentrations of economic minerals were intersected. Further drilling and surveying is required to complete the exploration of this property. 

The geology of the area is complicated, the number of anomalies and their apparent strength makes this a priority target area. The targets are located along the eastern strike direction of the Discovery Zone and lithogeochemical sampling of drill core has shown that the felsic volcanic rock unit directly overlying the Reed Deposit is also present at the Tower Claim property. Exploration efforts will in part focus on locating the base of this unit where similar rocks host mineralization 1 km to the west at the Reed Deposit. These types of the deposits tend to occur in clusters, with multiple lenses of mineralization generally formed within one prominent rock unit and therefore identification of this is a priority for exploration geologists working on the property.

Optionor HudBay Minerals Inc. initiated their exploration of the property with a variety of activities including data compilation and analysis, geophysical surveying and diamond drilling, On July 7, 2011 the Company announced that HudBay completed exploration expenditures of $300,000 on the option property. This work included diamond drilling in two holes for a total of 2401 m and completing of borehole pulse electromagnetic surveys. A further $400,000 must be spent in exploration activity before the anniversary date of June 5, 2012. This would make the total expenditures of $700,000 to complete their earn-in on this project. A TDEM survey will be completed between the Reed Copper deposit and Reed North discovery, and will incorporate the magnetic anomalies on the Tower Zone.

Assay results were announced on September 29th, 2011, with two mineralized zones intersected in RLE014:

Hole Number

From (m)

To (m)

Length (m)

Cu %

Zn %

Au (g/t)

Ag (g/t)

RLE014

751.06

753.85

2.79

0.03

2.58

0.05

1.44

757.92

761.38

3.46

0.38

1.20

0.21

4.26

*True widths unknown*

Hole Number

UTM East1

UTM North1

UTM Elevation1

Azimuth2

Dip

Length (m)

RLE014

395075

6048460

295

180

-60

1082.00

1Universal Transverse Mercator/North American Datum 1983/Zone 14

2”Azimuth” is degrees from True North

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 and will 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.      

Under the terms of the Option agreement with HudBay Minerals Inc., for the Tower Property, a further $400,000 must be spent in exploration activity before the anniversary date o July 5th, 2012. This would make the total expenditures of $700,000, to complete their earn-in on this project.

    

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