New Nadina sees Monumental potential in Lac de Gras

SITE VISIT

Lac DE Gras, Northwest Territories — It’s commonly said that the best place to look for an economic deposit is beside a mine. Well, New Nadina Explorations (NNA-V, NNADF-o) is taking that logic one step further.

The company’s Monument project sits just about equidistant between two of the world’s premier diamond mines: it is 30 km south along a kimberlite emplacement corridor from BHP Billiton’s (BHP-N, BLT-l) Ekati mine and about the same distance west of Rio Tinto (RTP-N, RIO-l) and Harry Winston Diamond’s (HW-T, HWD-n) Diavik mine.

Ekati was Canada’s first diamond mine, and it has been producing 3 to 5 million carats of diamonds annually since production began in 1998. At Diavik, some 8 million carats of rough stones are pulled from the ground every year.

But location only gets you so far. Geologists first found diamonds in Canada’s North in 1991 and hopeful prospectors have been scouring the tundra since. People have looked around Lac de Gras before.

What New Nadina has that others haven’t is a duo of diamond experts united for the first time.

Ask anyone who knows diamonds in Canada to name the small group of people who started that industry and chances are two of those names will be Stewart Blusson and Chris Jennings. In short, Blusson along with his partner Chuck Fipke found the kimberlite pipes that feed Ekati. Jennings, with his partner Grenville Thomas, discovered the diamonds that feed Diavik.

Jennings and Blusson are as big as it gets in Canadian diamonds. The two have been competitors for years; they both have stories about racing across the Northwest Territories trying to stake and sample more quickly than the other.

Now the two are working together. New Nadina owns 57% of Monument, while Blusson is a director of the junior and his company, Archon Minerals (ACS-V, AHNMF-o), holds 21% of the kimberlite project. Jennings, along with his wife Jeanne, holds the rest of monument privately.

“It’s kind of like golfing with the pros, like playing with Tiger Woods and Mike Weir,” says the project’s head geologist, Kevin Kivi. “They’ve been competitors until now — this is kind of like getting all the secret weapons in one place.”

Diamonds and Lac de Gras

When The Northern Miner visited Monument, which is roughly 300 km northeast of Yellowknife on the south shore of Lac de Gras, Blusson and Jennings had been at the project poring over geophysical data and tromping around the tundra for a week. By the end, the pair had identified more than 100 targets to drill, to add to the numerous diamondiferous kimberlites they’ve already located.

Searching for diamonds first means searching for the type of geological conduit that can bring diamonds from deep within the Earth up to a minable depth. Those conduits are called kimberlite pipes, the name kimberlite coming from the town of Kimberley in South Africa, where the first pipes were found.

Volcanic eruptions deep within the Earth’s mantle, at 150 to 450 km depth, shot kimberlitic material towards the surface in the fastest manner possible — in a carrot- shaped column. On cooling, the material formed kimberlite pipes. It is the depth — and therefore pressure and heat — at which kimberlite magma is generated, that makes it prone to hosting diamonds.

Over the millions of years since they were formed — Jennings thinks the pipes around Lac de Gras are around 50 million years old — the ash-covered tops of the pipes have eroded, leaving circu- lar depressions. That is perhaps the first sign. Blusson says vegetation can also indicate the presence of kimberlite because some tundra grasses thrive on the potassic chemistry of the pipes.

There are, of course, more sophisticated methods of searching for kimberlites. Kimberlite pipes appear as perfectly circular lows in airborne magnetic surveys. But that data is often rather imprecise.

“Looking at the first derivative gives more discreet location information,” Jennings says. “But to narrow it down even more — this new technology we have to manipulate the first derivative information is pretty well proprietary.”

Indeed, the partners refuse to explain how they parlayed the magnetics data into the lovely sequence of circular targets on the computer screen, but there they are. And now the challenge is to drill them all, because the only way to confirm a diamond-bearing kimberlite is to drill and search the core for indicator minerals and hopefully actual diamonds. If any of the core displays indicator minerals — beautiful xenocrysts in brilliant reds, greens, and purples — it is sent to a lab for caustic fusion. In that process only the diamonds in the core are left behind.

Even when kimberlites are found, the work is not over because only a small percentage of pipes carry sufficient diamond grades to be economic. Jennings estimates that in Canada, 1% of pipes are economic; in Southern Africa, where he also has significant experience, he says the odds are even worse.

But Blusson and Jennings both say this is the place to be looking. “We’re right in the centre of the Slave Shield, which is really old, cold crust with a lot of fractures that continue a long way down,” Blusson says. “There are only a few places in the world where the rocks are this old.”

Monumental work

New Nadina started that long exploration process in 2004, when the company picked up the claims that make up Monument. At that time, the company was led by George Stewart, another well-known name in the world of Canadian diamonds exploration. Just as work was getting under way at Monument, Stewart died suddenly and unexpectedly.

The company vowed “to continue in the spirit that George had intended.” As Stewart’s long-time partner, in life and in work, Ellen Clements took time to grieve and then got back to work.

“I started to get involved in the company again and it soon became clear that if this was going to happen, if we were going to pursue this the way George would have pursued it, I was going to have to lead the charge,” she says.

Clements took over as president and CEO in early 2006. By then, the company had already identified three kimberlite pipes at Monument, which it named DD-17, DD-39, and DD-42.

Two of the pipes had been drilled before, by Kennecott Canada Exploration in the mid- 1990s. At DD-42, Kennecott produced 44 diamonds from about 230 kg of kimberlite. The best drill hole on DD-42 gave better numbers: 40 stones from 146 kg of kimberlite, or about 275 stones per tonne.

Over at DD-17, Kennecott saw enough promise that it collected nearly 950 kg of kimberlite from several drill holes, coming up with 188 diamonds. That worked out to about 200 stones per tonne. There were 54 macrodiamonds in the DD-17 parcel, which compared well with many of the better finds of the era, including two of the four rich Diavik pipes. But Kennecott got distracted by Diavik and decided to abandon Monument.

After a few months of Clements’ leadership, New Nadina hit another pipe, previously undiscovered, and named it RIP in memory of Stewart. A month later, the company reported finding another two pipes, named Nic and Sonja.

Then microdiamond analysis results started coming in. The samples from DD-17 produced 354 diamonds from 465 kg of drill core, including two diamonds greater than 0.85 mm in size. A small, 62- kg sample of core from DD-42 produced 20 microdiamonds.

RIP results were also promising: 385 kg of kimberlite core returned 198 diamonds, including one that measured 2.3 by 1.6 mm and four others retained on the 0.85-mm sieve. Encouragement continued with results from DD17-11, another old Kennecott pipe located just east of RIP; 280 kg of kimberlite returned 182 diamonds, including one measuring 2.6 by 1.8 mm and another that was 2.6 by 1.5 mm.

Finally, a 168-kg sample from Nic returned 165 diamonds, including one that was 4.2 by
1.3 mm, or 0.17 carat, and an 80-kg sample from Sonja yielded 50 diamonds.

By the end of 2006, the company had outlined a series of kimberlite pipes, all diamondiferous, that line up almost east-west and appear as circular blue magnetic lows on a map.

“It looks just like a string of blue pearls,” Kivi says. “We’re hoping there’s a big diamond on the end of the string.”

In the spring program, with the area still completely frozen, the company drilled four holes in DD-17 to collect 3 tonnes of sample. DD-17 sits underwater, in a small bay off Lac de Gras, and therefore can only be drilled when the lake is frozen. In another winter-inspired move, the partners conducted a detailed ground magnetics survey by dragging a non-ferrous dog sled behind a snowmobile for 1,200 line-km.

“In the early days, the survey lines were 200 metres apart,” Jennings recalls. “As time went on we discovered that some pipes are very small, but boy were they rich. Now the lines are only ten metres apart.”

DD-17 returned more promising results, including five diamonds on the 0.85-mm sieve, one on the 1.18-mm mesh, and one bigger than 1.7 mm.

In the summer program, the partners further tested the pipes along the blue string of pearls, as well as several other targets, uncovering a new pipe called Genie and several kimberlite dykes in between targets. RIP returned the biggest diamond from the property to date: a 0.445-carat stone from core.

By the spring of 2008, the Monument partners had a promising string of kimberlite pipes with solid drilling results. The spring program added another pipe to the string, which they called Bling. The summer program uncovered three more pipes: Sparky and

Gemini sit on either side of DD-39, making a three-pipe cluster that sits 750 metres south of the centre of the blue string of pearls, and Trio sits near the north side of the property, near the underwater DD-42 pipe.

Trio was named because it was one of three similar anomalies in the area, but was the only one drill-accessible in the summer as the other two lie under water. That makes Trio Jennings’ favourite target because he has long believed that the best pipes in the area lie under Lac de Gras.

“This Lac de Gras area has more kimberlite than any other place in the world,” Jennings says. “I’ve always believed that there are serious discoveries to be made under the lake.”

Blusson agrees. “One thing this property really shows is that areas that were passed over quickly should be looked at in more detail,” he says. “There are still a lot more pipes to be found in the Lac area, and definitely one place we need to look is underwater.”

By the end of the recent summer program, two drill rigs completed 17 holes for 3,465 metres of core drilling. In mid-September, the partners submitted 2.2 tonnes of kimberlite sample for caustic fusion testing. Roughly half of the sample is from Trio and the rest consists of small samples from Sonja, Genie, Sparky, Gemini and DD-39. The partners are eagerly awaiting the results.

Blusson and Jennings are both encouraged by the results to date. The partners have identified 11 kimberlite pipes on the property and all are diamondiferous. The question now is which ones carry economic grades.

“This core has a lot of possibility,” Blusson says. Jennings chimes in: “The core we’re pulling here doesn’t look dramatically different from the core at Diavik. And coarse porphyryoblastic kimberlite with lots of coarse crystals is a good sign. But after forty years I’m still learning.”

The possibility they see comes of course from the fact that every sample has returned diamonds, but even more so, it comes from the size distribution.

“The biggest yet was almost half a carat,” Jennings says. “It’s very encouraging to get a bigger diamond like that just in core.”

Monumental motivation

With targets and defined kimberlites aplenty, perhaps the biggest challenge is for New Nadina alone, and that’s money. The Jennings are well placed to continue funding their portion of exploration costs; the couple sold their controlling interest in the highly successful SouthernEra Diamonds, which Chris founded, in 2007. And with Blusson’s backing, Archon likewise will have no trouble finding the money, since Blusson retains 10% ownership of the Ekati mine.

But New Nadina has no such well-heeled support. Clements has closed private placements for up to $1 million regularly over the last few years but now is not the best time to have to rely on public financings. Nevertheless, New Nadina closed a $769,000 private placement in September, so the company is fine for the short term.

Blusson knows well the importance of patience, and of raising money. When he and Fipke were sampling in the Lac de Gras area in the 1990s, the two were constantly searching for funding.

“The whole Ekati project would have started three years earlier if we’d had another $20,000,” Blusson says. “The key sample sat in Chuck’s garage for three years because we didn’t have the money to process it!”

And from being at the project with Clements, Blusson, and Jennings, it soon becomes clear that money is not the main driver at Monument.

“It’s not about the money, it’s about finding something,” Jennings says. “That excitement never gets old.”

For Blusson, the drive is very similar. “Scientific curiosity drives me more than anything else,” he says. “So this is not really work; it’s a love of science. And I can hardly retire because, the way I look at it, I’ve never worked. I was lucky enough to have chosen this and I’m still enjoying it immensely.”

As for Clements, she is endlessly motivated by the desire to fulfill her late husband’s dream.

“I never thought I could do what I’m doing,” she says. “It’s all the people who have gathered around, the amazing partners I’m working with, who keep me going. And George and I worked together for thirty-five years — I think he would have been awfully disappointed if I hadn’t taken the bull by the horns.”