Nemaska looks to earn Street cred

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.

The property, 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.

Due to a prior deal with Golden Goose Resources (GGR-V) Nemaska needed to go public by the end of 2009 to maintain its hold on its Lac Levac property and the promising nickel, copper and PGE deposit known as Nisk-1.

Remarkably by the end of October – just four weeks after securing the lithium prospective land — Nemaska had 900 metres of diamond drilling done and 16 trenches dug — which encountered 296 metres of mineralization.

But it was the drill program that truly 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 100.9 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 65.74 metres grading 1.92% Li2O and 20.76 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 metres diamond drill program at Whabouchi and has had two rigs turning at the site with the aim of proving up a measure and indicated resource by mid-May.

Provided those drills confirm Bourassa’s belief that the company is sitting on top of a large spodumene pegmatitie 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 roughly 100 km northwest of Nemaska. The company currently has a market cap of roughly $47 million compared with 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 compliant resource for Cyr.

Also its best intersections have been similar to Nemaska’s with Lithium One’s best hole returning 64 metres grading 1.65% Li2O.

And while Bourassa would be pleased to see the market value Whabouchi in the same way that it has Cyr, he also knows that Nemaska has plenty 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 has sole control of.

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 Nick-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, leaving Nisk-1 available.

Nemaska jumped at the opportunity and locked up the zone and as much of the other ground along the belt as well.

Golden Goose left behind a compliant resource estimate 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 per tonne palladium and 0.23 grams per tonne platinum.

Bourassa says one drill rig will make the 20 km trip northeast from Whabouchi to Nisk-1 in a month’s time.

That drill will have a slightly different purpose than the one’s used by the former operator. Since Golden Goose was focused on getting 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 ten 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 given U.S. president Barrack Obama’s recent comments that the U.S. doesn’t want to replace its reliance on the Gulf States to the reliance on other developing nations as it transitions from oil to electric cars.

The comments 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 source lithium from North American sources will be strong in the coming years, and he plans to have Nemaska well positioned to take advantage.