Vancouver, B.C., January 9, 2013. VMS Ventures Inc. (TSX-V:VMS) (“VMS Ventures” or the “Company”) is pleased to report on developments at the Reed copper project near Snow Lake, Manitoba. Reed is a high grade copper deposit scheduled to begin production in the fourth quarter of 2013. VMS Ventures owns 30% and is carried to production. HudBay Minerals (TSX: HBM, NYSE: HBM) (“Hudbay”) owns 70% and is the Operator.
VMS Ventures COO Neil Richardson, states: “Important progress was made over the last quarter of 2012 with the completion of necessary infrastructure for underground development. We are particularly pleased that the Reed project has completed much of the difficult near surface phase of underground work, including the completion of approximately 72 metres of lateral development in 2012.”
The Reed project is within the planned budget and schedule towards production in the fourth quarter of 2013. As of the end of 2012, the team worked 294 days without a lost time accident, including the critical activity on the project to ensure the decline is well supported near its entrance by installing bolts, screen, arches, spilings and shotcrete.
Hudbay and VMS Ventures have invested $19.7 million on the project to November 30, 2012 and have entered into an additional $17.8 million in commitments for the project. Capital expenditures at Reed are expected to total approximately $44 million in 2013.
The Environmental Act license application for Reed has been submitted to the provincial government. Mining at the Reed Copper Project is expected to begin by the fourth quarter of 2013, and is anticipated to ramp up to full production of approximately 1,300 tonnes per day by the first quarter of 2014.
2012 Q4 Project Highlights:
The ramp had advanced 72 metres and the shop and warehouse was 75% complete with the steel siding in progress. The mine rescue trailer was set-up and training is continuing. The winterization is on-going and site preparation is now complete for the development of the escape and ventilation raises. The ramp is expected to progress at a rate of 4 metres of advance per day for the remainder of the project.
We invite you to view the latest pictures of the development at the Reed Copper Deposit on our website at: http://vmsventures.com/Projects/Manitoba-Properties/VMSHudBayJointVentures/VMS-Ventures—HudBay-Joint-Venture-Project/default.aspx.
Summary of the Reed Mine’s Economic Assessment
- Initial production at Reed is expected by Q 4 – 2013 and will ramp up to full production of approximately 1,300 tonnes per day by Q1 – 2014.
- Average expected reserve ore grades of 3.83% copper, 0.48 g/t gold and 6.02 g/t silver, slightly better than PEA due to the exclusion of the inferred resources in the pre-feasibility study.
- Assumed metal recoveries in HudBay’s Flin Flon Concentrator of 94% copper, 58% gold and 62% silver.
- Average production in concentrate of approximately 17,000 tonnes per year of copper metal.
- Total operating costs estimated to average approximately $90 per tonne milled ($67 per tonne mining, $16 per tonne milling and $7 per tonne administration) over a five year mine life.
- Sustaining capital expenditures are expected to total approximately $52 million over the five year mine life.
- Pre-Feasibility pre-tax NPV (8%) of $57.4 million using weighted average metal prices of US$2.95/lb. for copper, US$1,269.09/oz. for gold and US$24.78/oz. for silver.
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