JOHANNESBURG (miningweekly.com) - Base-metals-miner HudBay Minerals and junior miner VMS Ventures have entered into a joint-venture (JV) agreement to develop the Reed Lake property and two adjacent claims in Manitoba's Flin Flon greenstone belt.

Previously, HudBay owned the Reed Lake claim under option to VMS, and VMS had now added two of its properties to the agreement.

HudBay now had a 70% interest in the Reed Lake property and two other claims south to the property, while VMS had a 30% interest in the claims.

HudBay would provide full financing for VMS' proportionate share of the costs to develop the Reed Lake property, which would be repayable solely from VMS' share of cash flow generated by the project, while also making a cash payment of $2,6-million to VMS for transferring the two southern claims to the JV agreement.

Under an initial option agreement, HudBay was obliged to earn back into the VMS properties. The option agreements granted HudBay the right to earn a 70% interest in four adjacent claim parcels held by VMS, including the Tower Zone and Super Zone properties.

VMS Ventures CEO Rick Mark said that the agreement allowed the company's most important asset, the Reed Lake discovery zone to be developed. "The agreement with HudBay removes any impediment to financing the project and provides the technical expertise and infrastructure necessary to help realise its full potential."

HudBay would act as operator of the JV and would decide on the development of the property. The company also had exclusive rights to purchase and market the ore produced from the property.

HudBay executive vice-chairperson Warren Holmes said that the company was optimistic that the Reed Lake property could be developed into a source of copper feed for its Flin Flon concentrator.

"We intend to start drilling on the Reed Lake property as soon as possible and we are also looking forward to conducting exploration on a number of promising targets on the option properties."

Mark said that VMS would work "aggressively" with the HudBay team to explore the Reed Lake property and to ultimately determine the size of the deposit and to advance it towards development.

"We are also pleased that exploration can again start on the surrounding claims so that any other deposits on the properties can be identified," he concluded.

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