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Volcanogenic massive sulphide (VMS) deposits typically occur as lenses of polymetallic massive sulphide and are major sources of zinc (Zn), copper (Cu), lead (Pb), silver (Ag) and gold (Au).
There are almost 350 known VMS deposits in Canada and over 800 known worldwide. Historically they account for 27% of Canada’s Cu production, 49% of its Zn, 20% of its Pb, 40% of its Ag, and 3% of its Au. VMS deposits are estimated to have supplied over 5 billion tonnes of sulphide ore. This includes at least 22% of the world’s Zn production, 6% of the world’s Cu, 9.7% of the world’s Pb, 8.7% of its Ag, and 2.2% of its Au.
VMS deposits consist of a massive to semimassive stratabound sulphide lens. Most are underlain by a sulphide-silicate stockwork vein system. Individual massive sulphide lenses can be over 100 meters thick, tens of meters wide, and hundreds of meters in strike length. VMS deposits range in size from 200,000 tonnes to more than 150 million tonnes and most often occur in clusters.
VMS deposits have long been recognized, by both major’s and junior’s, as potential elephant country – and because of their polymetallic content these types of deposits continue to be one of the most desirable because of the security offered against fluctuating prices of different metals.
One junior mining company involved in the search for and development of this type of deposit is VMS Ventures Inc. TSX.V – VMS. The major focus of VMS, for two and a half years, was on acquiring copper, nickel and zinc properties in the Flin Flon – Snow Lake VMS Belt.
Projects
In October, 2007 VMS announced its Reed Lake Discovery Hole intercept of volcanogenic massive sulphide mineralization (located 52 km southwest of Snow Lake, 15 km west of the former Spruce Point Mine and 1.2 km south of HudBay Minerals’ Highway Zone). The Discovery Hole assayed an incredible 43.05 meters of 4.38% copper, 1.56% zinc, 0.85 grams per tonne gold and 13.09 grams per tonne silver, including 10 meters of 11.19% copper.
Seventy three holes were drilled up to September, 2008. Hole #RD-08-41 included 33.46 meters of 10.36% Copper, which included 18.08 meters of 13.80% copper.
VMS now holds 12 distinct land packages in the belt and each of the 12 land packages it obtained were selected on the basis of VMS style mineralization in drill core or at surface.
The world class Flin Flon mining camp is close meaning there is a readily available experienced workforce to draw from, and all the necessary infrastructure needed to advance the Reed Lake deposit.
On July 6, 2010, VMS announced a joint venture agreement with Hudbay Minerals (TSX: HBM) to develop the Reed Lake property and adjacent claims. VMS has a 30% carried interest (funded through to production with payback from their share of production) and HudBay has a 70% interest and will act as the operator of the joint venture.
“We are very pleased to enter into this Letter of Intent with HudBay Minerals. We believe HudBay is our best partner to develop the Reed Lake deposit quickly and profitably. We look forward to assisting HudBay in resuming drilling at the Reed Lake deposit and aggressively exploring and developing the Joint Venture claims. We welcome their commitment to explore for more deposits in the Super Zone and the other properties surrounding the Reed Lake Joint Venture claims.” Rick Mark, CEO and Chairman, VMS Ventures
In August of 2010 VMS Ventures announced that it had received from HudBay the payment required under the Reed Lake joint venture (JV) agreement and the initial payments under the four property option agreements that were announced July 6, 2010. The payments received by VMS total $2.85 million. HudBay almost immediately began drilling at Reed Lake in late August, 2010 and plans a 43-101 resource estimate before the end of Q1 2011.
$3 Million Exploration Program Approved
A $3 million budget for work on the property for the remainder of 2010 was approved at a joint management committee meeting September 9, 2010. Over the coming months a total of at least 20 holes are expected to be drilled into the deposit on six sections spaced roughly 40 – 50 meters apart which are intended to enable the National Instrument 43-101 mineral resource estimate.
The infill drill program has, so far, been considered a success with the following holes reported:
“We are excited to see the grades and thickness of the mineralization from this in-fill drilling program at Reed Lake. The stacked lenses indicated by this early drilling emphasize the potential for this deposit. We look forward to HudBay continuing their definition of the deposit in preparation for a National Instrument 43-101 mineral resource estimate, which HudBay has stated is targeted for early 2011.” Neil Richardson, VMS Chief Operating Officer
Sails Lake Option
While the company’s key asset is their 30% carried ownership in the Reed Lake Project VMS’s Geological team is searching for new discoveries on its 100% owned property portfolio in the Flin Flon – Snow Lake greenstone belt.
In the Sails Lake area alteration typical of base metal massive sulphide-type deposits and exhalites was identified during a gold exploration program in 1996. This discovery of chemical sediments commonly associated with VMS type mineralization, and the presence of historic airborne geophysical anomalies, prompted VMS to option the Sails Lake Property and stake adjoining claims to cover the favorable stratigraphy.
A reconnaissance survey in 2006 established that the geological setting is similar to that found in the Snow Lake area.
VMS conducted an airborne geophysical survey over the property in early 2007 using GEOTECH’s VTEM system. A number of well-defined conductors were identified. These anomalous responses indicate the presence of bedrock hosted conductive minerals – copper and zinc bearing sulphide with associated gold and silver as well as the iron sulphide minerals pyrite and pyrrhotite.
Geochemical surveys conducted in 2008 and 2009 identified coincident multi-element base and precious metal anomalies coincident with VTEM geophysical responses. Analytical results from soil samples collected during the 2008 field season have identified new anomalies that are coincident with VTEM anomalies.
Mobile Metal Ions (MMI) soil geochemical surveys were continued in 2010 with a detailed sampling grid established over anomalous responses documented by the 2008 surveys. These data confirm the presence of significant base and precious metal anomalies in the area. The MMI data was integrated with geological and geophysical datasets to produce drill targets.
VMS is currently drilling the Sails Lake Option, results are expected early in the new year.
Management
VMS Ventures is led by an experienced and knowledgeable management team:
Share Structure
Shares Issued:114,717,955
No Warrants
Options:11,138,800
Fully Diluted:125,856,755
Insider Share Ownership: 7%
Working Capital: $12,600,000.00
Debt: Nil
Conclusion
Are there one or more compelling reasons to invest in well managed, metals focused, resource extraction juniors?
During the economic downturn miners saved their cash and paid off debt. Capital Expenditures were virtually non-existent and many projects were delayed or cancelled outright.
Copper
Operational constraints and cutbacks initiated in 2009 are projected to constrain mine production to 16.2 million tonnes in 2010, the International Copper Study Group (ICSG) said. Looking to 2011, increased economic activity is expected to boost end-user demand for the metal much faster than production, pushing the global market deeper into deficit of
about 400,000 tonnes.
Zinc/Lead
“Short of silver mines with strong zinc/lead by-product credits there is nothing between here and the horizon in terms of new production. This then implies that a shortage bubble is coming along and prices will spike again as they did in 2006/2007. Primary base metal sources of Zn/Pb will be heading down as mines expire and no new production appears. This is where the real crisis is brewing.” Christopher Ecclestone, Hallgarten & Company
Global commodity demand is obviously a combination of factors:
A lack of spending on exploration and development by mining companies, combined with already low inventories of many metals, will likely ensure supply will not be equal to demand for a considerable time yet to come.
This author believes that there is exceptional, and as of yet, undiscovered value in base metal junior companies with quality assets. When you find one that has a coveted, potentially future cash flowing asset such as Reed Lake, the bluesky of a Sails Lake Option and over $12mm in the bank with no debt then that company should be on every investors radar screen. Is VMS Ventures on your radar screen?
If not, maybe it should be.
Richard (Rick) Mills
[email protected]
www.aheadoftheherd.com
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Richard is host of www.aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 200 websites, including: Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell.com, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor and Financial Sense.
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Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.
Richard Mills does not own shares of VMS Ventures Inc. TSX.V – VMS
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