It is easy to forget that back in August last year, things were pretty glum in the resources space.

So much so Garimpeiro decided to devise a strategy that was bound to deliver rewards once the sector turned for the better, as it has.

The strategy involved taking advantage of the “grand sale’’ at the time in companies that had made Tier 1-type discoveries but weren’t being treated like they had.

The notion was that Tier 1 discoveries always shine through in the long-run, leaving the rest of the pack behind by a substantial margin.

Garimpeiro nominated three stocks at the time: De Grey (ASX:DEG) with its Hemi gold discovery in the Pilbara, Chalice (ASX:CHN) and its Julimar nickel-copper-PGE discovery on Perth’s doorstep, and Rumble (ASX:RTR) with its Earaheedy zinc-lead-silver discovery north of Wiluna.

All three are quality discoveries with world-class credentials, with De Grey and Chalice already there. Rumble is just about there, with a maiden resource estimate not far off now which will make the market sit up and take notice.

That the strategy paid off comes through in the share price gains for De Grey and Chalice since last August, with Rumble bringing up the rear.

De Grey has gone $1 last August to $1.37 this week. Chalice has moved up from $4.85 to $6.15. Rumble in the meantime has fallen from 27c to 21c. Two out of three ain’t bad, with Rumble poised for a catch-up on the release of its maiden resource estimate.

Apart from all three building their resource positions, their Tier 1 status (to be confirmed by Rumble) means that corporate activity involving all of them is a given.

That has been noticeable in Chalice where Gina Rinehart is believed to be sitting on a stake of just under the disclosure threshold of 5%. Andrew “Twiggy’’ Forrest has also been mentioned in dispatches as bidding Chalice founder and 9% shareholder Tim Goyder for his stake.

De Grey is also assumed to be on the radar of the gold majors because if Newmont’s $24 billion bid for our own Newcrest tells us anything, it is that replacing reserves is an almighty challenge. De Grey’s location in WA is also something special in an industry being pushed around in Africa and Latin America.

Rumble has to be on watchlist of the big zinc producers given its scale and low-cost potential, with global demand for the galvanising and battery material headed for an acute shortage in coming years.


A very unpatriotic sell-off

Given all that, Garimpeiro reckons the run up in the share price in the companies with Tier 1 discoveries under their belt is not over yet. And this week he adds another one, Patriot Battery Metals (ASX:PMT).

There was a dumb sell-off in the stock during the week because latest drilling results from a newly discovered lithium pegmatite at its Corvette project in Canada were not as spectacular as earlier results from its CV5 pegmatite.

The results from the new pegmatite (CV13) would have dream time stuff for any other lithium explorer. It’s just that Patriot has set the bar so high at CV5. Former Pilbara Minerals (ASX:PLS) boss Ken Brinsden reckons Corvette is the biggest thing since sliced bread, and he would know.

Watch out for more grade hits from the emerging super-grade zone at CV5 in coming days, and more exploration results from CV13 and Corvette’s other pegmatite swarms, all of which may well coalesce at depth in to something that could make all other known sources of hard-rock lithium look on the small side of things.

Industry players are watching, that’s for sure. Mineral Resources (ASX:MIN) and Pilbara are both rumoured to have been nibbling their way on to the share register. That’s because Tier 1 finds of any description don’t come along all that often.

Rio Tinto, which is full of lithium ambition, knows that more than most.

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