VMS Ventures Inc.

VMS Ventures Inc.

March 04, 2010 06:30 ET

VMS Ventures Enters Into Letter of Intent With Hudbay Minerals to Develop Its Reed Lake Discovery and Reed Lake Properties

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 4, 2010) - VMS Ventures Inc. (TSX VENTURE:VMS) (the "Company") is pleased to announce that it has entered into a non-binding Letter of Intent with a subsidiary of HudBay Minerals Inc. (TSX: HBM) ("HudBay") respecting VMS' Reed Lake Discovery Zone, the copper-rich Reed Lake property claims optioned from HudBay, the two southern claims adjoining the Reed Lake property and certain exploration properties adjacent to the Reed Lake property, that are 100% held by VMS. These Reed Lake properties are all located in Manitoba's Snow Lake - Flin Flon Greenstone belt.

The Letter of Intent contemplates that the parties will enter into a definitive Joint Venture Agreement respecting the two Reed Lake property claims and the two claims immediately south of the Reed Lake property. HudBay will have a 70% interest in the Joint Venture and VMS will have a 30% interest. Upon execution of the definitive Joint Venture Agreement, HudBay will make certain cash payments to VMS in satisfaction of its obligation to earn back in to the property and as consideration for VMS transferring the southern claims to the Joint Venture. In turn, VMS agrees to abandon all disputes respecting the location of the boundary between the Reed Lake property and the southern claims.

Under the Joint Venture, HudBay will act as operator with primary authority and discretion as to the exploration and potential development of the Reed Lake property and will have exclusive rights to purchase and market the ore produced from the new Joint Venture. HudBay will provide full financing for VMS's proportionate share of the costs to develop the property, which will be repayable solely from VMS' share of cash flow generated by the project.

The Letter of Intent also provides that, concurrently with the entering into of the Joint Venture Agreement, VMS and HudBay will enter into an Option Agreement that grants HudBay the option to earn a 70% interest in four adjacent properties held by VMS, including the Tower Zone and Super Zone properties. Upon making certain cash payments and meeting work commitments over two to three years with respect to each property, HudBay will earn a 70% interest in the applicable property resulting in a new Joint Venture between VMS and HudBay on substantially the same terms as the Reed Lake Joint Venture. Any failure to make the required cash payments and work commitments with respect to a particular property will result in such property reverting to 100% ownership by VMS, but will not affect HudBay's option over the other properties.

Rick Mark, CEO and Chair of VMS Ventures states: "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."

The establishment of the joint venture and option arrangements is contingent on the parties reaching mutually satisfactory definitive agreements and on receiving all necessary corporate and third party approvals. HudBay and VMS anticipate that definitive agreements will be completed by May 31, 2010.

About VMS Ventures Inc.

VMS Ventures Inc. is focused primarily on acquiring, exploring and developing copper-zinc properties in the Flin Flon-Snow Lake VMS Belt. The Company also holds the largest land package considered prospective for nickel-copper mineralization at Lynn Lake, which is to date Canada's third largest nickel producing camp. The Company's project portfolio consists of the Snow Lake VMS project, the Nickel Belt project and the South Bay nickel-copper-cobalt PGE property.

About HudBay Minerals Inc.

HudBay Minerals Inc. (TSX: HBM) is a Canadian integrated mining company with assets in North and Central America principally focused on the discovery, production and marketing of base metals. The company's objective is to maximize shareholder value through efficient operations, organic growth and accretive acquisitions, while maintaining its financial strength. A member of the S&P/TSX Composite Index and the S&P/TSX Global Mining Index, HudBay is committed to high standards of corporate governance and sustainability.

All VMS Ventures Inc. properties are located in the mining friendly province of Manitoba, Canada.

VMS Ventures Inc. currently has a profile on Corebox.net which is updated as soon as assay results are released. The link to visit our Corebox profile is: http://www.corebox.net/properties/reed_lake/.

Investors are invited to visit the VMS Ventures IR Hub at http://www.agoracom.com/IR/VMSVentures where they can post questions and receive answers or review questions and answers already posted by other investors. Alternatively, investors are able to e-mail all questions and correspondence to VMS@agoracom.com where they can also request to be added to the investor e-mail list to receive all future press releases and updates in real time.

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, terms of joint venture and option arrangements and the ability to complete and execute definitive agreements. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Many of these assumptions are based on factors and events that are not within the control of VMS and there is no assurance they will prove to be correct. Investors are cautioned against attributing undue certainty to forward looking statements.


John Roozendaal B.Sc.
President & Director

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

Contact Information

  • VMS Ventures Inc.
    Keith Patey
    Director of Communications
    (604) 986-2020 or Toll Free: 1-866-816-0118
    Coal Harbor Communications
    Dale Paruk
    (604) 662-4505 or Toll Free: 1-877-345-3399