TSX-V: VMS $ 0.09 -0.01 -10% Volume: 1,734,300 15-20 min delay April 5, 2016

VMS Ventures Provides Update on Reed Mine

Feb 25, 2016

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 25, 2016) - VMS Ventures Inc. (TSX VENTURE:VMS) ("VMS Ventures" or the "Company") is pleased to update shareholders on the performance of the Reed mine operations ("Reed") up to the end of December 2015 and provide a summary of the financial results received from our joint venture partner Hudbay. VMS Ventures owns 30% of Reed and Hudbay Minerals Inc. (TSX:HBM)(NYSE:HBM) ("Hudbay"), the operator, owns 70%.

Reed Mine Development Update

During the six months of July to December 2015 the Reed mine produced 232,226 tonnes from zones 10 and 20. The decline is currently below the 310 metre level and ore development continues on the 265 metre level. The 285 metre level escape raise is complete and generator #3 is installed and commissioned. The table below shows production results from July to December 2015 as well as total for the year.

Oct - Dec
2015 YTD
Tonnes Hoisted 113,043 119,183 463,375
Au g/t 0.50 0.49 0.55
Ag g/t 6.55 7.56 6.76
Cu % 3.18 3.51 3.16
Zn % 1.48 0.88 0.99


  • For the three months ended September 30, 2015 operations included a ventilation raise between the 260 to 160 metre levels and 606 metres of development.
  • For the three months ended December 31, 2015 the operations included the 285 metre level escape raise, the installation and commissioning of generator #3 and 625 metres of development.

Financial Information

The following financial information for the Reed mine was provided to the Company by Hudbay as part of its joint venture reporting obligations. A detailed summary can be found in the Company's Management Discussion and Analysis for the quarters ended August 31, 2015 and November 30, 2015.

Under the terms of the Joint Venture Agreement with Hudbay, the Company's 30% share of the ore concentrate sales, less production costs and accrued interest on the bridge loan, are applied to the outstanding balance of the contribution loan from Hudbay. This payment incorporates the delay of approximately 100 days before the ore concentrate sales are finalized while all production costs and accrued interest are up to the date of the payment. The contribution loan is interest free. In December 2015, the quarter continued to be profitable due to higher copper concentrates and grades as well as the lower Canadian currency; however the ore concentrate sales were negatively impacted by lower metal prices.

VMS Contribution Loan Continuity Schedule

Sept 30, 2014 Dec 31, 2014 Mar 31, 2015 Jun 30, 2015 Sept 30, 2015 Dec 31, 2015
Opening Balance 23,741,563 22,436,990 21,841,423 20,295,110 18,870,567 18,118,863
Payment from Ore Sales Less Mine Costs





Recovered Exploration Costs - - - - - (594,977)
End Balance of Contribution Loan 22,436,990 21,841,423 20,295,110 18,870,567 18,118,863 17,041,340

Shaun Heinrichs, CFO, states "The continuity schedule above indicates the current quarterly drawdowns since the start of production at the Reed mine. Despite the lower metal prices and one time larger capital outlays the operations continue to make significant headway in reducing this obligation as a result of their continued focus on cost management and mine optimization."

The bridge loan which funded production costs generated from April 2014 to June 2014 has an ongoing balance of $3,348,130 which will be repaid from the gross profit of the mine once the balance of the contribution loan has been repaid in full. Interest is charged on the bridge loan at a rate of 8% per annum and is paid each quarter from the profits of the mine.

The on-going production costs, related administrative and operator costs are due from VMS and Hudbay based on their relative interest percentage. Hudbay issues quarterly reports to the Company summarizing the financial results of the operations and to provide the allocation of the realized proceeds from ore sales (based on a 100 day lag), net of production costs, to the contribution loan principal and bridge loan interest. During the six months ended December 31, 2015 the Company realized $8,506,352 of ore sales arising from the ore processed from April through September, 2015 and incurred $7,137,136 of production costs for the six months from July through December 2015. The Company paid $135,026 of interest on the bridge loan and recovered $60 of overpayment relating to the second quarter cash call notice.

During the six months ended December 31, 2015 the Company also incurred approximately $1,164,339 of exploration costs related to the Reed mine. Hudbay contributed $594,977 towards this program by offsetting the contribution loan in lieu of cash payment, further reducing the liability outstanding from the Company.

Qualified Person

All technical information in this release has been reviewed by Neil W. Richardson, P. Geo, who is the Chief Operating Officer for the Company and Qualified Person.

About VMS Ventures Inc.

VMS Ventures is a mining and mineral exploration company currently in a joint venture with Hudbay on the producing Reed mine near Flin Flon Manitoba. VMS Ventures holds a 30% interest in the Reed mine which is operated by Hudbay. The Reed mine achieved full production during Q2 of 2014. In addition, VMS Ventures is exploring a large prospective property package in Manitoba. The Company also holds approximately 14.5% of the shares of North American Nickel (TSX VENTURE:NAN) which is exploring a new district scale nickel-copper-cobalt PGE deposit belt in S.W. Greenland.

As of January 30, 2016, VMS Ventures Inc. has entered into a Plan of Arrangement with Royal Nickel Corp. Please see News release VMS VENTURES announces Plan of Arrangement with Royal Nickel Corp. on our website for more information.


John Roozendaal, B.Sc., Interim CEO and President

VMS Ventures Inc.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of accuracy of this news release.

Contact Information:
VMS Ventures Inc.
Shaun Heinrichs
(604) 986-2020 or Toll Free: 1-866-816-0118
VMS Ventures 
500 - 200 W. Esplanade
North Vancouver, BC V7M 1A4
Tel: 604-986-2020
Fax: 604-986-2021
Toll Free: 1-866-816-0118
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