Dear VMS followers,

This morning I’m sending along a very brief video of HudBay Minerals CEO, David Garofalo speaking on world copper demand and three mines coming into production for HudBay, including our Reed deposit. Bloomberg describes it as:

David Garofalo, chief executive officer of HudBay Minerals Inc., talks about the company's mining operations in Canada and Peru, and the outlook for copper demand. He spoke with Bloomberg's Liezel Hill in Toronto on Jan. 26. (Source: Bloomberg)

It is about three minutes long and half way through he speaks twice on Reed. I think you will be pleased with the fast tracked pace of production he describes. To view the video, please visit http://www.bloomberg.com/video/85184174/.

Several shareholders asked what the Reed project economics look like with higher copper prices than the $3.50 projections we shared recently. The table below tells the story of NPV and cash flow for Reed at $3.75 and $4.00 copper. Copper is holding well and production plans are ahead of schedule.

Best regards,

Rick Mark
CEO
VMS Ventures Inc.

VMS owns ~45% of North American Nickel

Price and Exchange Averages
PEA
Base Case (1)
3 Year Historical
Average Price Case (2)
VMS Ventures Inc.
Cu = $3.50/lb USD (3)
VMS Ventures Inc.
Cu = $3.75/lb USD
VMS Ventures Inc.
Cu = $4.00/lb USD
Pre-tax

Copper (USS/lb)	$2.78	$3.20	$3.50	$3.75	$4.00
Gold (US$/oz)	$1,059.00	$1,235.00	$1,235.00	$1,235.00	$1,235.00
Silver (US$/oz)	$21.14	$22.85	$22.85	$22.85	$22.85
US$/CDN$	0.92	0.94	0.92	0.92	0.92
Cash Flow	$112,283,000	$182,975,000	$257,028,000	$300,964,000	$349,421,000
NPV	$64,917,000	$109,904,000	$174,365,000	$191,361,000	$225,036,000
IRR	36.70%	46.60%	61.40%	68.40%	76.90%

(1) PEA Base Case metal prices projections compiled by HudBay based on 11 well-known financial institutions.
(2) Bloomberg three year historical average (December 1, 2008 to December 1, 2011)
(3) VMS copper price