• Deep-ocean volcanic-hydrothermal systems – then relocated into multiple discreet deposits

• Major deposit type

• Large accumulations of Cu-Zn

• Contain high values gold and silver

• Host major mining camps

VMS Ore Deposits

What are they and how are they formed?

• VMS stands for Volcanogenic-assisted Massive Sulphide ore deposits that are formed by submarine volcanic-hydrothermal processes that can occur along major geological rifts.

• Cold sea water penetrates into the volcanic pile where it is heated creating a hydrothermal convection circulation. High temperature fluids leach metals from the surrounding rocks that are then deposited on the sea floor.

• High temperature sulphurous plumes called black smokers can be seen depositing a variety of metal sulphides on the seafloor as they mix with deep ocean water.

• VMS deposits consist to a large degree of iron (pyrite) with copper (chalcopyrite), zinc (sphalerite) and lead (galena). Lesser but economically significant amounts of gold and silver, tin and bismuth are often present.

• Following deposition and accumulation in one or more horizons, VMS deposits are often mechanically rearranged through slumping and thrusting and then relocated miles from their original deposition sites.

• Deposits that may have originally formed in a single specific horizon, can be subjected to multiple folding events that result in the repetitions of the same ore zones

• VMS deposits are often bowl-shaped due to venting of the hydrothermal fluids into submarine depressions (craters) or into hydrothermal mounds formed by successive black smoker chimneys.

• Recent evidence from radiogenic isotope studies at the giant Neves Corvo deposit (300 Mt massive sulphides) in Portugal indicate that some deposits found within VMS environments may also be the result of a mixing between the “typical” volcanic-seawater derived hydrothermal components and deeper seated magmatic sources of metal.

Black smokers on the ocean floor are the source of base metals in VMS Deposits

How do we find them?

• VMS deposits have distinctive alteration haloes around them that can be “fingerprinted” and used to spot certain stratigraphic horizons during exploration

• The deposits generally have a very high electrical/magnetic conductivity which makes them amenable to discovery by traditional EM geophysical techniques

• They are also have a very high density so that large deposits can also produce a marked gravity anomaly such as in the case of the Neves-Corvo deposit in Portugal

World Significance of VMS Deposits

• VMS deposits are found around the world in countries such as Canada, Japan, Australia, Scandinavia and Spain/Portugal

• World class examples of VMS deposits include the Iberian Pyrite Belt (Spain); Bathurst, Noranda, Windy Craggy and Flin Flon (Canada); and the newly emerging Tambo Grande District (Peru). Many of these districts contain very high tonnage deposits (e.g. Tharsis, Spain – 350 Mt; Brunswick 12, Canada -134.1 Mt)

• Canada’s prominent role in the VMS area can be seen in the following chart of 45 VMS deposits from around the world

• VMS districts have given rise to the birth of many famous mining companies such as Noranda, Falconbridge, Boliden and HudBay

• Many of the large VMS areas in Canada are very well explored and the opportunity for new discoveries is therefore less. The Sherridon area, while it is a classic VMS environment, is relatively under explored.

Local Flin Flon Scene

• HudBay is Canada’s 3rd largest producer of copper and zinc from mines located within two of the three known VMS areas in the Flin Flon belt – Flin Flon and Snow Lake

• The Flin Flon district has produced 7.5 Mt of copper and zinc from 16 deposits over a period of almost 80 years while the nearby Snow Lake area has produced almost 2 Mt copper and zinc from 10 deposits. The third area, Sherridon/Meat Lake, is of a similar areal extent as Snow Lake and is now 100% controlled by Halo.

• After Noranda and Kidd Creek, the Flin Flon-Callinan-777 ore system represents one of the most significant Precambrian base metal VMS camps in the world, which is also characterized by a higher than average gold content.

Deposits mechanically relocated by collapse and thrusting

The Sherridon VMS Picture

• The VMS exploration potential at Sherridon has a very sound geological basis:

  • The key rocks are of submarine volcanic origin

  • The rocks have undergone the same high degree of alteration (as indicated by the presence of high silica rhyolites and high titanium amphibolites) as often seen in other famous VMS areas such as Snow Lake, Bathurst, etc

  • There is strong evidence that Sherridon area is faulted off the same volcanic center as Snow Lake

  • The area has already produced 250,000 t copper and zinc from two deposits and more than 350,000 t of metal has been identified in six other deposits/mineralized zones

  • The Sherridon area is considered to be under-explored

• Eminent geologists such as GSC’s Dr. D. F. Sangster have conducted world wide studies of more than 150 VMS deposits and have concluded that they can be characterized:

  • They often form in clusters of 10 or more deposits – 50% of the 150 deposits in Canada can be found in only six clusters

  • The distribution of deposit size within a cluster is NOT random and that 80% of the metal is probably contained within only two deposits and that the largest deposit will contain approximately four times the metal of the next largest

  • Total base metal content of a cluster is a good indication of “discovery efficiency”

• Characterization of VMS deposits allows a certain degree of prognostication of undiscovered deposits especially in a “new” area such as Sherridon

  • Given the predominantly submarine volcanic origin and the concentration of felsic volcanic composition of the rocks, the possibility for the discovery of a cluster of VMS deposits is good

  • A typical felsic type VMS cluster such as is anticipated at Sherridon would probably grade around 6.5% Cu + Zn, 1 g/t Au and 70 g/t silver

  • Analysis of the distribution of the Snow Lake deposits shows a low “discovery efficiency” and that the highest metal ranked deposit is yet to be discovered

  • Given the likelihood of a common volcanic origin and the relatively intense exploration effort at Snow Lake, the potential exists for a 50+ Mt deposit to be found at Sherridon

Exploration Strategies

• Halo’s large land position will greatly increase exploration efficiency and its ability to develop a complete geological picture of the entire Sherridon/Meat Lake complex

• The two-prong exploration strategy envisioned by Halo is predicated on the following:

• The strong evidence supporting a traditional volcanic-seawater derived hydrothermal model, and

• Halo will utilize its database of detailed geological and structural information develop a 3D picture of the main ore bearing stratigraphic horizons containing the traditional VMS deposits

• This model will be used in conjunction with 2006 2,700-line km helicopter Time Domain EM survey to help identify deeper extensions to existing deposits and new deposits in lesser explored areas

• Targets developed through this process will be further refined and optimized using selective ground gravity surveys

Typical VMS Characteristics (Sangster)

• Often form clusters of 10 or more

• Deposit size distribution is NOT random

• 80% of metal in top two ranked deposits

• Total metal an indication of “discovery efficiency”

Snow Lake/Sherridon District

• Has only produced 2 Mt metal

• Lalor Lake, discovered in 2007, estimated by HudBay as 20 million tonnes

• Is the 50 Mt deposit missing?

Flin Flon District

• Produced 7.5 Mt Cu and Zn

• 60% from one deposit

• Gold now contributes 15% of revenue