VMS VentureS

thehelmetmag

VMS VentureS

VMS VentureS

www.vmsventures.com


2 Canada VMS Ventures

VM 0


MaRCH 2013 The International Resource Journal

3

Canada

S VentureS

2

Sweet deal


VMS Ventures’ copper mine in Snow Lake

will be 100% funded, constructed and

operated by Canadian mining veterans

HudBay Minerals, leaving the junior explorer

free to seek out more opportunities

a CoMbination of technical savvy and luck

led geologist John Roozendaal to discover the

2.55Mt 4.52% copper deposit in Reed Lake, 50km

from the mining town of Snow Lake in Manitoba,

Canada. although located in one of the world’s

richest multi-metal mining locales, the deposit had

been in hiding, waiting for the right time and the

right people with the proper skills to come along.

Roozendaal, who founded the company in 2000,

and the team at VMS Ventures (TSX-V:VMS) got it

right in their first drill program.

“We assembled a good team of people with

geological knowledge of Manitoba, and identified

the area around Flin Flon and Snow Lake as one

of the world’s richest belts of VMS [Volcanogenic

Massive Sulphide ore] base and precious metal

deposits. The problem was that about half of the

belt was covered by a thin layer of younger rock,

meaning traditional prospecting over the last

century had limited success,” he says.


6 Canada VMS Ventures

“That is a remarkable opportunity for VMS, because, in other

words, we’re putting no money out at all while HudBay builds

the mine, leaving our treasury to be used for new acquisitions

and exploring for mines on our 100% owned properties”

“It’s only in recent years we’ve had access to a

tool that allows us to look beneath this ‘cover’ rock

for ore deposits not visible at surface. We applied

today’s latest technology – using a helicopter

system to look for metallic ore bodies – and

identified one particular target that was only

100m off a main highway. I happened to be

the geologist fortunate enough to be guiding

the drill program when we intersected the high-

grade copper deposit at Reed Lake”.

“It was a combination of great logistics, great

timing in using new technology and, frankly, good

instincts in following up on our hunches that

allowed us to make this discovery in our first

drill program. So a little bit of good luck goes a

long way towards success.”

Strong start

VMS Ventures was able to raise a lot of money

once studies indicated the deposit has fantastic

grades. The stock traded two billion shares over

two years, at a peak of Ca$1.70 per share from a

low of $0.12 per share just before the discovery

of Reed Lake. The company raised $20 million

from Toronto-based Griffiths McBurney and Part-

ners (GMP), which strengthened its treasury and

provided the company with credibility as a “mine-

finder” in the industry.

The exercise of raising capital was largely

driven by VMS Ventures chief executive Rick Mark,

who joined the company in June 2002 to manage

its public presence. Before Mark became a director

in a number of public companies, he worked as a

teacher and principal in the public school system

and he credits this experience with preparing him

to run a public company.

– Rick Mark, chief executive

“Some people find it odd but… running a

school, to me, is not all that different to running

a public company,” he remarks. “They’re complex

organisations that need leadership from within


Manitoba’s next

copper mine

Reed Copper PROJECT in

production 2013

Invest Today:

VMS.TSX.V

MaRCH 2013 The International Resource Journal

VMS Ventures Inc.

301-260 West Esplanade, North Vancouver, BC, Canada V7M 3G7

www.vmsventures.com, 1-866-816-0118, info@vmsventures.com

@VMSVenturesInc

7


8 Canada VMS Ventures

CuTTInG The rIBBon on The reed Lake ProJeCT, LefT To rIGhT: davId GarofaLo, hudBay PreSIdenT and Ceo; rICk Mark,

vMS Ceo and ChaIrMan; WeSLey voorheIS, ChaIrMan of hudBay’S Board; STeve PoLeGaTo, hudBay’S ManaGer of

SMaLL MIneS; hon dave ChoMIak, MInISTer of InnovaTIon enerGy and MIneS; Brad LanTz, vP of ManIToBa BuSIneSS unIT;

don LaST, reed Lake ProJeCT MIne foreMan

and you’ve got to find people who can work in-

dependently. They need to be committed to the

task at hand and also have a dream about what

they want to accomplish, and I think that’s largely

what we are.”

Mark joined VMS Ventures at a time when

resource stocks were floundering, but was

nevertheless confident he was making the right

decisions in a tough market. “I’d had enough

public company experience to understand how

they work… and it was absolutely essential to

have faith in the people in charge of the busi-

ness,” he says. “I was confident that John and

the guys he introduced me to were capable

explorers and had a real understanding of what

they were doing, so I jumped in as a partner.”


MaRCH 2013 The International Resource Journal

“What’s amazing about the mine is that we’ll leave almost no

footprint when we’re done. It covers only a 7-hectare area and

when the mining is completed, all the rock taken out of the

ground will be either at Flin Flon or buried deep in the ground”

Sharing the load

VMS Ventures now comprises a public company

team of four people, based in north Vancouver, and

four full-time geologists, including chief operating

officer neil richardson who spent 13 years work-

ing on the same mineral belt for local mining giant

hudBay Minerals; chief geologist John Pattison a

long –time Falconbridge geologist and vice presi-

dent of exploration Mark Fedikow. VMS Ventures

has smaller operations in Snow Lake and Sud-

bury. The company is one member of the north

Shore Mining Group, which includes Harvest Gold

Corporation, Pancontinental uranium Corporation

and north american nickel.

When it came to building the Reed Lake

mine, VMS Ventures wanted an experienced

partner. That came with a deal between VMS and

hudBay Minerals, who has been mining in the

Snow Lake region for 80 years. “We didn’t want

to be the mine builders and operators because

the deposit at that time (despite containing 3

million tonnes of high-grade copper worth more

than a billion dollars) was too small for a junior

company to afford to set up a mining operation

around it,” Mark explains.

“So the sensible thing, right from the beginning,

was to have hudBay as the operating partner. While

they pushed and shoved on the deal for a year,

we were patient and had money in the bank; we

weren’t going to do anything foolish with this asset.

“Eventually we constructed a deal where we

own 30% of the deposit and they provide all the

financing to construct the mine,” Mark continues.

“That is a remarkable opportunity for VMS, because,

in other words, we’re putting no money out at all

while hudBay builds the mine, leaving our treasury

to be used for new acquisitions and exploring for

mines on our 100% owned properties. once in

production, the ore will be trucked to infrastructure

in Flin Flon for processing.

– John Roozendaal, president

9


10 Canada VMS Ventures

“We’ll pay back our share of the expenses to

hudBay out of our revenue, which we anticipate

will take less than a year if copper prices hold at

the current level. We anticipate cash flow starting

in 2015.”

In a good place

VMS Ventures has secured a deal that relieves

it of upfront costs but, in any case, Reed Lake is

a low-CaPeX project. as mentioned previously,

it lies just 100m from a main highway so the

transportation of ore to Flin Flon for process-

ing will be straightforward. Because the deposit

occurs just 25m below the surface, VMS will

not have to incur the cost of building a mill or a

shaft, access will be by decline and processing

will occur at hudBay’s existing facilities.

“They have a crusher, a mill and a concentra-

tor and they’ll export the metal, marketing it under

their current marketing division,” says Mark. “So

we get all that as part of the deal, as well as mine

financing and the benefit of their tremendous his-

tory and experience. having hudBay as a part-

ner was absolutely strategic to this mine being

profitable… We get the best of both worlds.”

Because the mine is expected to have a

relatively short life of six years, it will be powered

by a transportable diesel generator plant; remov-

ing the need for costly power infrastructure. Its

sustainability credentials aren’t bad either.

“What’s amazing about the mine is that we’ll

leave almost no footprint when we’re done,” says

Roozendaal. “It covers only a 7-hectare area and

when the mining is completed, all the rock taken

out of the ground will be either at Flin Flon or

buried deep in the ground. The surface area will

be restored to its original state.”

The reed Lake Project is on budget and on

schedule to start production by the end of 2013.

VMS Ventures is in a similarly good position itself.


“We’re well funded, have about $10 million in the

bank and we know cash flow is coming,” says Mark.

“I think every exploration company wants to get

where we are; but almost none of them make it.”

Freedom to explore

With arrangements in place for Reed Lake, VMS

Ventures is continuing to explore. It has 16 ad-

ditional targets to drill within its large Flin Flon/

Snow Lake land package – any one of which

could be its next mine, adds Roozendaal – and

vMS plans to draw upon its solid financial base

to acquire new mines further afield.

“Because we have cash flow in the not too

distant future, we are starting to look for what will

be our next mine through acquisition,” explains

Mark. “The mining market has become tougher on

companies, but that gives us a great opportunity

to make some good acquisitions.

“So many companies are running out of money;

so many juniors are trading below 10 cents and

have assets they can’t finance. We are currently

reviewing advanced projects, where an invest-

ment of millions in drilling and other studies could

result in a project being valued at many times

that amount – similar to Reed – and ultimately

be developed into an operating mine.”

It is not VMS Ventures’ aim to become a

standalone producer. Mark says he thinks the

MaRCH 2013 The International Resource Journal

“smartest approach” is for the company to stick

with what it does best and get the most it can

from its exploration and project evaluation and

development expertise. In the coming years, it as-

pires to make new discoveries and/or acquisitions

in safe mining jurisdictions and see them devel-

oped them into mines. Through north american

nickel, of which it owns 26%, VMS Ventures wants

to explore and advance the Maniitsoq project in

Greenland. Maniitsoq hosts a belt of prospective

nickel host rocks that Mark reckons could become

“the talk of the mining world”.

all this considered, VMS Ventures wants to

make it clear to investors that Reed Lake is now

a “mature story” with production expected by the

end of the year and feels it can achieve consid-

erable growth even in poor market conditions due

to its future cash flow.

“Mine stocks tend to move as they get closer

to production; there’s a long dead space where the

project goes from discovery, to feasibility studies, to

production,” says Mark. “Stocks generally rise as

a production decision is made and we’re hoping

that will be the case with VMS Ventures this year.”

It surely will, providing the management and

technical team conducts business as usual and

of course, receives its share of luck.

www.VMSVentureS.CoM

11


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