Canada’s Next Copper Mine

Richard (Rick) Mills
Ahead of the Herd

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As a general rule, the most successful man in life is the man who has the best information

VMS Ventures (VMS), a resource development company, is the discoverer of Reed Copper deposit, which is likely to be the next copper mine to enter production in Canada. I caught up with the team at VMS Ventures to learn more about how this discovery came to be.

The Company

VMS Ventures is focused on the acquisition, discovery and development of base metal deposits, primarily in Manitoba.

The company’s head office is in North Vancouver. VMS Ventures shares costs with North American Nickel, including costs for its four full time geologists, Neil Richardson, John Pattison, John Roozendaal and Mark Fedikow, who work from home offices in Manitoba and Ontario.

Business Plan

VMS’ strategic approach is to acquire projects within mineral endowed areas with the right geological formations, and potential for expansion of known resources. The group has a strong team of experienced mineral deposit and exploration geologists, combined with experience using the latest technology available to assist in locating untapped mineral potential.

For example, its work in Manitoba has centred on the Flin Flon-Snow Lake Greenstone belt located approximately 650 km north of Winnipeg. The belt is one of the richest per acre Volcanogenic Massive Sulphide deposits in the world.

The historical grade of all the deposits discovered there average approximately 2.5 per cent copper and 4.5 per cent zinc per tonne and typically with significant gold and silver credits. That’s one of the key reasons VMS was attracted to the Flin Flon region, and that’s where the Reed Copper discovery took place. 

The Discovery

The Reed Copper deposit was discovered by VMS Ventures in 2007. In October of that year the company announced an intercept of 43 meters assaying 4.38 per cent copper (@ $3.19 lb Cu that’s $308.03 rock just in the Cu) and within it a higher grade section of 10.50 meters in length assaying 11.19 per cent copper per tonne – $786.96 per tonne.

This news attracted worldwide attention because of its impressive copper grade (more than twice the average for even this rich belt), resulting in VMS’s share price increasing by over 1000 per cent. Over two years, VMS Ventures traded two billion shares and reached a peak of $1.70 per share. VMS Ventures also raised $20 million, led by Toronto-based Griffiths McBurney and Partners, which helped finance the drilling of the deposit and has resulted in VMS only conducting two financings since 2007. Having a financing lead by GMP and making a discovery in such as historic belt certainly enhanced VMS Ventures’ reputation as an explorer and as a venture investment.

Many of the world’s exposed or shallow mineral deposits have already been discovered, but new technologies are allowing geologists to see deeper and evaluate large areas faster. With this in mind, VMS Ventures used a new helicopter-borne geophysical technology, called VTEM, to discover the high-grade copper deposit at Reed Copper, a mature mining camp, in record time.

In the past, electro-magnetic anomalies detected from the air needed to be precisely located on the ground before being drilled, which required expensive and time-consuming surface geophysical surveys. However, using the VTEM helicopter mounted geophysical system VMS could ‘see’ below the cover rocks, lakes, swamps and soil which overlie the prospective volcanic rocks and detect otherwise ‘blind’ mineral deposits in the Flin Flon belt.

VMS Ventures was one of the early companies in the Flin Flon belt to drill directly from airborne data and this meant the team could fly, drill and discover all in the same year. This is important as there are numerous areas with prospective targets that are situated under swamps or lakes and they can only be accessed during the frozen winter months, greatly narrowing the exploration window. Speeding up the process of identifying a target, evaluating it and drill testing priority anomalies all within the same season is a tremendous advantage that earlier explorers were without.

The discovery was made when a strongly magnetic anomaly with a coincident strong conductive airborne geophysical anomaly was drill tested in an area the company’s technical team had been exploring and had earlier in the year flown with the new VTEM airborne geophysical system. The challenge was that the host rocks to these deposits were covered in this area by a 20m thick layer of younger rocks and so remained hidden from previous explorers in the area.

The Partnership

In 2010 the VMS Ventures team signed a Joint Venture Agreement with Hudbay Minerals Inc. for the Reed Copper project. As the discovery was made on ground that had been optioned by VMS from Hudbay, the JV agreement established that Hudbay would hold a 70 per cent and VMS a 30 per cent interest in the property and act as the operator.

Another feature of the agreement was that VMS Ventures’ portion of the mine construction costs would be financed by Hudbay to production and that its 30 per cent share of the capital expenditures be paid back out of the proceeds of production. This eliminated the risk posed by poor capital markets during the time of construction as well as freeing up the company’s treasury which sits at just over $6 million dollars, for future acquisitions to continue growing the company even while the mine is in development and production.