Speed has been the name of the game for Nemaska Exploration (NMX-V), and now the company is waiting for the market to catch up.
The Quebec City-based company only acquired what is likely to become its flagship property in September of last year.
This lithium project, known as Whabouchi, had one encouraging historic hole drilled on it, and Nemaska’s president and chief executive Guy Bourassa knew he needed a fresh and inspiring hole if he was to get Nemaska a fair valuation when it went into its initial public offering.
And he didn’t have much time to do it.
Owing to a prior deal with Golden Goose Resourses (GGR-V), Nemaska needed to go public by the end of 2009 to maintain its hold on its Lac Levac property and its promising nickel, copper and PGE deposit known as Nisk-1.
Remarkably, by the end of October — just four weeks after securing the lithium prospect — Nemaska had 900 metres of diamond drilling done and 16 trenches dug at Whabouchi — which encountered 296 metres of mineralization.
But it was the drill program that delivered the goods.
Nemaska was set on proving that a hole drilled by a subsidiary of Inco some 10 years earlier was no fluke. That hole encountered 83 metres grading 1.44% lithium oxide (Li2O) and when Nemaska reported its own intercept of 101 metres grading 1.64% Li2O it had done just that.
The Nemaska hole was drilled just 30 metres northwest of the historic hole and it was followed by two holes 100 metres to the west and two holes 150 metres to the east. All four of those holes returned mineralization, with highlight intercepts of 65.7 metres grading 1.92% Li2O and 20.8 metres grading 1.74% Li2O.
The results helped Nemaska raise $5.2 million in its IPO and has left it with $3.4 million for its exploration budget.
In typical fashion the company wasted little time in putting that money to work.
It immediately launched an 8,000-metre diamond drill program at Whabouchi and has had two rigs turning at the site with the aim of proving up a measured and indicated resource by mid-May.
Provided those drills confirm Bourassa’s belief that the company is sitting on top of a large spodumene pegmatite lithium deposit, the company may start to receive the kind of attention that its peer Lithium One (LI-V) has received.
Lithium One is proving up its Cyr deposit, which sits 100 km northwest of Nemaska. The company currently has a market cap of roughly $47 million compared to Nemaska’s $22 million.
That is a significant gap considering that Lithium One is also in the early stages of exploration. Like Nemaska, Lithium One does not yet have a NI 43-101 compliant resource for Cyr.
Also its best intersections have been similar to Namaska’s with Lithium One’s best hole returning 64 metres grading 1.65% Li2O.
While Bourassa would be pleased to see the market value Whabouchi in the same way that it has Cyr, he reckons that Nemaska has more value locked up in the rocks of central Quebec.
Indeed, Whabouchi is just one of four designated areas along the 70-km polymetallic belt that Nemaska solely controls.
The company originally came to the belt for its nickel, copper and PGE potential. After Golden Goose Resources made the Nisk-1 discovery, Nemaska, then a private company, secured the ground around Nisk-1 with the hope that it, too, would make a discovery.
But when the nickel price crashed in 2008, Golden Goose decided to focus on its gold project outside of Wawa, Ont., leaving Nisk-1 available.
Nemaska jumped at the opportunity and locked up the zone and other ground along the belt.
Golden Goose left behind a NI 43- 101 compliant resource of 2.03 million tonnes grading 1.06% nickel for 47 million lbs. of nickel; 0.55% copper for 24 million lbs. of copper; and 0.07% cobalt, 1.03 grams palladium per tonne and 0.23 gram platinum per tonne.
Bourassa says one drill rig will make the 20-km trip northeast from Whabouchi to Nisk-1 in mid- March.
That drill will have a slightly different purpose than the one used by the former operator. Since Golden Goose wanted to get a mine into production quickly, it focused on tighter drilling, leaving much tonnage off the table.
Nemaska will now start poking around a deposit that remains open at depth and in all directions.
Further optimism for Bourassa comes from a recent geophysical survey, which registered 10 signals that could turn out to be lenses like the one found at Nisk-1.
“If even one or two of those targets turn out to be lenses, then we have a mining camp,” he says.
But for now the Nemaska story is tied to lithium.
Bourassa says he has high hopes for the commodity in North America, given U.S. President Barack Obama’s recent comment that the U.S. doesn’t want to replace its reliance on the Gulf States with a reliance on other developing nations as it transitions from gasoline to electric cars.
The comment can be read as a shot at Chile and Argentina, which currently produce roughly 85% of the global lithium supply.
While mines there still have more lithium production capacity, Bourassa believes that the push to get lithium from North American sources will be strong in the coming years, and he plans to have Nemaska well-positioned to take advantage.
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