VMS Ventures Inc. (TSX.V:VMS) is a mining and mineral exploration company currently in partnership with Hudbay Minerals on the producing Reed mine near Flin Flon Manitoba. VMS holds a 30% interest in the Reed mine which is operated by Hudbay Minerals and achieved full production in 2014.



Latest News Release

VMS Ventures Provides Update on Reed Mine

VMS Ventures Inc. has updated shareholders on the performance of the Reed mine to the end of June, 2015, and provided a summary of the financial report received from joint venture partner HudBay. VMS Ventures owns 30% and Hudbay Minerals Inc. (TSX:HBM)(NYSE:HBM) ("Hudbay") owns 70% and is the Operator.

Reed Mine Development Update


During the months of April to June 2015 the Reed mine produced 112,505 tonnes, primarily from zone 20. The table below shows production from April 2015 to June 2015 and year-to-date results.


  April  May June





Tonnes Hoisted 39,236 42,494 30,775 112,505 231,150
Au 0.597 0.544 0.662 0.595 0.601
Ag 5.866 5.456 7.689 6.210 6.450
Cu 2.67 3.217 3.55 3.117 2.959
Zn 0.918 0.792 1.139 0.931 0.801


The decline is close to the 285 metre level and ore development continues on the 260 and 265 metre levels. Three slot raises have been completed for stope production and the vent raise from 235 to 160 metre level has also been completed.


Financial Information


The following financial information for the Reed mine was provided to the Company by Hudbay as part of its joint venture reporting obligations and a detailed summary can be found in the VMS Ventures Management Discussion and Analysis for the quarter ended May 31, 2015.


As of April 1, 2014, the Company started commercial production on the Reed mine. As per the Joint Venture Agreement with Hudbay, a contribution loan was established to record the Company's 30% share of the mine development costs incurred by Hudbay to the date of commercial production. The Company reports quarterly drawdowns on the loan based on gross profits before depletion from actual ore concentrate sales less production costs and accrued interest on the bridge loan. This incorporates the delay of approximately 100 days before the ore concentrate sales are finalized. The contribution loan is interest free. In December 2014, the quarter was negatively impacted by lower copper concentrate and head grades.


VMS Contribution Loan Continuity Schedule


  30 Apr 14 30 Sep 14 31 Dec 14 31 Mar 15  30 Jun 15
Opening Balance 23,741,563.30 23,741,563.30 22,436,990.93 21841423.75 20,295,110.99
Drawdown: Payment from Ore Purchase   -(1,34,572.37) (595,567.18) (1,546,312.76) (1,424,543.47)
End Balance of Contribution Loan 23,741,563.30 22,436,990.93 21,841,423.75 20,295,110.99 18,870,567.52



VMS Ventures Interim CEO and President, John Roozendaal states: "The continuity schedule above indicates the current quarterly drawdowns since the start of production at the Reed mine. For the period April 2014 to March 2015 the Company has reported $19,197,271.13 in gross profits less production costs for the period July 2014 to June 2015 $13,991,585.72, which includes $334,629.79 of accrued interest on the bridge loan for net drawdowns on the contribution loan of $4,870,995.78. At June 30, 2015 the balance of the contribution loan is $18,870,567.52."


The bridge loan which funded production costs generated from April 2014 to June 2014 has a balance of $3,348,130.73. This loan principal will not be repaid from the gross profit of the mine until the contribution loan has been repaid in full. The accrued interest calculated at 8% per annum is repaid from the gross profits of the mine.


The reporting period for VMS Ventures does not synchronize with its Reed mine partner and operator Hudbay Minerals resulting in a delay to which information can be disseminated. The Company has initiated the steps to resolve this by amending the year end to match that of Hudbay.


In addition, the on-going production costs, related administrative and operator costs are due from VMS and Hudbay based on the percentage interest. Hudbay issues quarterly cash call reports to the Company to cover the quarterly expenses. In general, the proceeds from the ore concentrate sales should be in excess of the production, administrative and operator costs and therefore the company should not need to make any cash contributions. The quarterly drawdown on the loan is generated by finalized ore sales, which take approximately 100 days to receive, less current period costs.


Qualified Person


All technical information in this release has been reviewed by Neil W. Richardson, P.Geo, who is the Chief Operating Officer for the Company and Qualified Person.


Legal Notice / Disclaimer


This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.


Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.


Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.


Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

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