HudBay and VMS find high grade copper in Manitoba

HudBay Minerals (HBM-T, HBM-N) and VMS Ventures (VMS-V) have a high grade copper project on their hands right in the safe confines of Manitoba.

The companies released a resource estimate at the Reed Lake polymetallic deposit near Snow Lake that showed indicated resources of 2.55 million tonnes grading 0.64 grams gold, 7.86 grams silver 4.52% copper and 0.91% zinc. That works out to 52,469 oz. of gold, 644,382 oz. of silver, 253.6 million lbs of copper and 51 million lbs of zinc.

A copper equivalent cut-off grade of 1.5% was used in generating the resource. Metal prices of US$900 per oz gold, US$15.00 per oz silver, $2.50 per lb copper and $1.00 per lb zinc were used for the estimation of copper equivalents.

VMS says the estimate provides the basis for a prefeasibility study that will likely take up the bulk of the year with a construction decision coming by year end.

HudBay is the operator of Reed Lake and has a 70% interest while VMS has a 30% carried interest.

Neil Richardson, VMS’s chief operating officer, says the economics of the project will likely benefit not only from high grades but also due to the high grade being near surface and near vertically structures.

Richardson also said there is a “likelihood” that the deposit will be in production next year.

Drilling is currently testing for additional lenses of sulphide mineralization in and around the deposit.

Exploration outside of the immediate area of the deposit is being done via 15 drill holes with drilling expected to be wrapped up by the end of June.

VMS also has the Cowan River project, which is 10-km to the east of its Reed Lake, where it is drill testing three anomalies. It says that results should be out in two weeks.

On HudBay’s side the news from Reed Lake ties in nicely with an announcement from the company on March 29 which said its copper-equivalent reserves have nearly quadrupled in one year to 39.2 lbs per common share from 11.3 lbs. last year.

It credits the bulk of the increase to its recent $520 million acquisition of the Constancia project from Norsemont Mining in Peru.

In Toronto on April 1, HudBay shares were up 2% or 35¢ to $16.14 on 1.1 million shares traded while VMS shares were off 2¢ to 69¢ on 590,000 shares traded.