9 Best Basic Materials Moat Stocks for January 2026
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Market Overview & Selection Criteria
The basic materials and commodities sector has emerged as a compelling investment opportunity in 2026, driven by global infrastructure demand, energy transition initiatives, and constrained supply dynamics. This curated watchlist focuses on companies demonstrating strong free cash flow generation, solid quality ratings, and attractive intrinsic value metrics relative to current market prices.
Our selection methodology prioritizes companies with: - Quality ratings of 6.4 or higher (ValueSense proprietary metric) - Free cash flow margins exceeding 18% for sustainable cash generation - Gross margins above 43% indicating pricing power and operational efficiency - Reasonable debt-to-equity ratios for financial stability - Positive revenue growth or strong cash conversion despite market volatility
These stocks span precious metals mining, industrial minerals, and specialty materials—sectors benefiting from both traditional demand and emerging green energy requirements.
Featured Stock Analysis
Stock #1: AngloGold Ashanti Limited (AU)
| Metric | Value |
|---|---|
| Market Cap | $35.3B |
| Quality Rating | 8.3 |
| Intrinsic Value | $143.2 |
| 1Y Return | 251.7% |
| Revenue | $8,575.0M |
| Free Cash Flow | $2,524.0M |
| Revenue Growth | 11.1% |
| FCF margin | 29.4% |
| Gross margin | 45.9% |
| ROIC | 26.8% |
| Total Debt to Equity | 24.2% |
Investment Thesis
AngloGold Ashanti stands out as the highest-performing stock in this watchlist with a 251.7% one-year return, reflecting gold's strong bull market and the company's operational excellence. With a quality rating of 8.3—the highest among featured stocks—AU demonstrates exceptional business fundamentals. The company generated $2.524 billion in free cash flow on $8.575 billion in revenue, translating to a robust 29.4% FCF margin that provides substantial flexibility for dividends, debt reduction, and growth investments.
The intrinsic value of $143.2 suggests significant upside potential for value-oriented investors. AngloGold's 45.9% gross margin and 26.8% return on invested capital indicate the company extracts superior value from its mining operations. With 11.1% revenue growth and a conservative 24.2% debt-to-equity ratio, AU balances growth ambitions with financial prudence. The company benefits from structural gold demand driven by central bank purchases, jewelry consumption, and technology applications.
Key Catalysts
- Continued gold price strength amid geopolitical uncertainty and inflation concerns
- Expansion of high-margin mining operations in West Africa and Australia
- Potential dividend increases supported by strong free cash flow generation
- Operational efficiency improvements reducing all-in sustaining costs
- Strategic acquisitions or partnerships in tier-one mining jurisdictions
Risk Factors
- Gold price volatility directly impacts profitability and cash flow
- Geopolitical risks in key operating regions (West Africa, Australia)
- Regulatory changes affecting mining permits and environmental compliance
- Currency fluctuations affecting international operations and reporting
- Commodity price cycles may compress margins during downturns
Stock #2: Gold Fields Limited (GFI)
| Metric | Value |
|---|---|
| Market Cap | $38.0B |
| Quality Rating | 8.0 |
| Intrinsic Value | $39.4 |
| 1Y Return | 209.8% |
| Revenue | $10.9B |
| Free Cash Flow | $2,046.4M |
| Revenue Growth | 24.6% |
| FCF margin | 18.7% |
| Gross margin | 43.1% |
| ROIC | 42.7% |
| Total Debt to Equity | 40.9% |
Investment Thesis
Gold Fields delivers exceptional growth momentum with a 209.8% one-year return and demonstrates the sector's strong tailwinds. The company's quality rating of 8.0 reflects disciplined capital allocation and operational execution. GFI generated $2.046 billion in free cash flow from $10.9 billion in revenue, with an impressive 24.6% revenue growth rate—the highest among large-cap precious metals producers in this list. This growth trajectory indicates successful mine ramp-ups and operational optimization.
The 18.7% FCF margin and 42.7% ROIC showcase Gold Fields' ability to deploy capital efficiently and generate returns exceeding its cost of capital. With a $38 billion market cap and 43.1% gross margin, GFI maintains pricing power while managing production costs effectively. The intrinsic value of $39.4 suggests the stock trades near fair value, making it suitable for investors seeking exposure to gold mining with reasonable valuation metrics. The 40.9% debt-to-equity ratio remains manageable for a capital-intensive mining operation.
Key Catalysts
- Continued ramp-up of the Salares Norte project in Chile, a world-class deposit
- Production growth from recently acquired assets and operational improvements
- Gold price appreciation benefiting high-margin, low-cost operations
- Potential share buybacks if gold prices remain elevated
- Exploration success at underdeveloped properties expanding resource base
Risk Factors
- Project execution risks at major development initiatives
- Commodity price sensitivity affecting realized margins
- Operational challenges in Chile and other jurisdictions
- Environmental and social license risks in mining communities
- Debt servicing obligations during commodity downturns
Stock #3: Kinross Gold Corporation (KGC)
| Metric | Value |
|---|---|
| Market Cap | $33.7B |
| Quality Rating | 7.9 |
| Intrinsic Value | $19.5 |
| 1Y Return | 187.3% |
| Revenue | $6,423.9M |
| Free Cash Flow | $2,196.7M |
| Revenue Growth | 31.8% |
| FCF margin | 34.2% |
| Gross margin | 50.4% |
| ROIC | 21.1% |
| Total Debt to Equity | 15.6% |
Investment Thesis
Kinross Gold presents a compelling growth story with 187.3% one-year returns and the highest revenue growth rate at 31.8% among featured stocks. The company's quality rating of 7.9 reflects solid operational and financial management. KGC generated $2.197 billion in free cash flow from $6.424 billion in revenue, delivering an exceptional 34.2% FCF margin—among the best in the sector. This cash generation capability provides substantial resources for shareholder returns and strategic investments.
The 50.4% gross margin demonstrates Kinross's cost discipline and operational leverage in a rising gold price environment. With a 21.1% ROIC and 15.6% debt-to-equity ratio, the company maintains financial flexibility while generating attractive returns. The intrinsic value of $19.5 relative to current market dynamics suggests potential value for growth-oriented investors. Kinross's diversified geographic footprint across Canada, West Africa, and Russia provides operational resilience and exposure to multiple mining jurisdictions.
Key Catalysts
- Continued production growth from recent acquisitions and organic development
- Exploration upside at underdeveloped properties in tier-one jurisdictions
- Potential dividend increases supported by strong free cash flow
- Operational synergies from recent M&A activities
- Gold price appreciation benefiting lower-cost production assets
Risk Factors
- Geopolitical exposure in Russia affecting operations and investor sentiment
- Integration risks from recent acquisitions
- Commodity price volatility impacting cash flow predictability
- Regulatory and permitting delays in key jurisdictions
- Currency fluctuations affecting international cash flows
Stock #4: Southern Copper Corporation (SCCO)
| Metric | Value |
|---|---|
| Market Cap | $119.7B |
| Quality Rating | 8.1 |
| Intrinsic Value | $70.2 |
| 1Y Return | 63.7% |
| Revenue | $12.3B |
| Free Cash Flow | $3,829.5M |
| Revenue Growth | 12.7% |
| FCF margin | 31.0% |
| Gross margin | 53.2% |
| ROIC | 31.4% |
| Total Debt to Equity | 69.9% |
Investment Thesis
Southern Copper offers diversified exposure to copper and molybdenum with a quality rating of 8.1 and 63.7% one-year returns. The company generated $3.830 billion in free cash flow from $12.3 billion in revenue, translating to an outstanding 31.0% FCF margin—demonstrating exceptional cash generation capability. SCCO's 53.2% gross margin reflects strong pricing power and operational efficiency in copper production, a critical commodity for electrification and renewable energy infrastructure.
With 12.7% revenue growth and a 31.4% ROIC, Southern Copper deploys capital efficiently while expanding production. The $119.7 billion market cap positions SCCO as a major global copper producer. The intrinsic value of $70.2 suggests reasonable valuation for investors seeking copper exposure. While the 69.9% debt-to-equity ratio is elevated for the sector, it reflects the capital-intensive nature of copper mining and remains manageable given strong cash generation. The company benefits from structural copper demand driven by electric vehicle adoption, renewable energy infrastructure, and grid modernization.
Key Catalysts
- Copper price appreciation driven by supply constraints and energy transition demand
- Production growth from development projects in Peru and Mexico
- Molybdenum byproduct benefits from copper mining operations
- Potential dividend increases supported by strong cash flows
- Operational efficiency improvements reducing production costs
Risk Factors
- Copper price volatility affecting profitability and cash flow
- Geopolitical risks in Peru and Mexico operations
- Environmental and community relations challenges in mining regions
- Regulatory changes affecting mining permits and water usage
- High leverage limits financial flexibility during commodity downturns
Stock #5: Newmont Corporation (NEM)
| Metric | Value |
|---|---|
| Market Cap | $108.9B |
| Quality Rating | 7.1 |
| Intrinsic Value | $73.8 |
| 1Y Return | 165.4% |
| Revenue | $15.9B |
| Free Cash Flow | $4,551.0M |
| Revenue Growth | (5.9%) |
| FCF margin | 28.7% |
| Gross margin | 44.7% |
| ROIC | 17.9% |
| Total Debt to Equity | 1.4% |
Investment Thesis
Newmont stands as the world's largest gold producer with a quality rating of 7.1 and exceptional 165.4% one-year returns. The company generated $4.551 billion in free cash flow from $15.9 billion in revenue, demonstrating substantial cash generation from diversified mining operations. The 28.7% FCF margin provides significant resources for shareholder distributions and strategic investments. Newmont's $108.9 billion market cap reflects its position as a sector leader with global operational scale.
The 44.7% gross margin and 17.9% ROIC indicate solid operational performance, though slightly lower than some peers due to the company's diversified portfolio including lower-margin assets. The intrinsic value of $73.8 suggests reasonable valuation. Notably, Newmont maintains an exceptionally strong balance sheet with only 1.4% debt-to-equity ratio—the lowest among featured stocks—providing substantial financial flexibility and downside protection. Despite 5.9% revenue decline, the company's cash generation remains robust, reflecting operational efficiency and gold price strength offsetting production headwinds.
Key Catalysts
- Gold price appreciation benefiting all-in sustaining cost structure
- Optimization of recent Newcrest acquisition integration
- Exploration success at underdeveloped properties
- Potential dividend increases supported by strong balance sheet
- Strategic portfolio optimization and asset sales
Risk Factors
- Integration challenges from major acquisitions
- Commodity price sensitivity affecting profitability
- Operational risks across geographically diverse portfolio
- Regulatory and permitting delays in key jurisdictions
- Exploration and development execution risks
Stock #6: BHP Group Limited (BHP)
| Metric | Value |
|---|---|
| Market Cap | $156.1B |
| Quality Rating | 6.6 |
| Intrinsic Value | $65.2 |
| 1Y Return | 28.0% |
| Revenue | $107.3B |
| Free Cash Flow | $20.7B |
| Revenue Growth | (10.1%) |
| FCF margin | 19.3% |
| Gross margin | 48.7% |
| ROIC | 28.5% |
| Total Debt to Equity | 46.9% |
Investment Thesis
BHP represents diversified exposure to commodities including iron ore, copper, coal, and petroleum, with a quality rating of 6.6 and 28.0% one-year returns. The company generated $20.7 billion in free cash flow from $107.3 billion in revenue—the largest absolute cash generation among featured stocks. This substantial cash flow supports significant shareholder returns and strategic investments. BHP's $156.1 billion market cap positions it as a global diversified miner with unmatched scale.
The 48.7% gross margin and 28.5% ROIC demonstrate operational excellence and capital efficiency across diverse commodity exposures. However, 10.1% revenue decline reflects commodity price pressures and production challenges. The 19.3% FCF margin remains healthy despite headwinds. The intrinsic value of $65.2 suggests potential value, though the 46.9% debt-to-equity ratio is moderate for the sector. BHP's diversified portfolio provides exposure to multiple commodity cycles, reducing single-commodity risk while offering exposure to iron ore demand from infrastructure and steel production.
Key Catalysts
- Iron ore price recovery supporting largest profit contributor
- Copper production growth from development projects
- Operational efficiency improvements reducing costs
- Potential dividend increases from strong cash generation
- Strategic portfolio optimization and asset sales
Risk Factors
- Commodity price volatility across multiple products
- China economic slowdown affecting iron ore demand
- Geopolitical risks in key operating regions
- Environmental and regulatory compliance costs
- Integration and execution risks from major projects
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Stock #7: Royal Gold, Inc. (RGLD)
| Metric | Value |
|---|---|
| Market Cap | $14.4B |
| Quality Rating | 7.6 |
| Intrinsic Value | $98.8 |
| 1Y Return | 64.9% |
| Revenue | $855.9M |
| Free Cash Flow | $557.3M |
| Revenue Growth | 27.8% |
| FCF margin | 65.1% |
| Gross margin | 53.9% |
| ROIC | 33.5% |
| Total Debt to Equity | 22.5% |
Investment Thesis
Royal Gold offers a unique business model as a precious metals royalty company with a quality rating of 7.6 and 64.9% one-year returns. Unlike traditional miners, RGLD generates revenue through royalty and stream agreements on third-party mining operations, providing lower capital intensity and operational risk. The company generated $557.3 million in free cash flow from $855.9 million in revenue, delivering an exceptional 65.1% FCF margin—the highest among all featured stocks. This superior cash conversion reflects the royalty business model's inherent efficiency.
The 53.9% gross margin and 33.5% ROIC demonstrate the attractive economics of royalty streams. With 27.8% revenue growth and a $14.4 billion market cap, RGLD benefits from gold and copper price appreciation without direct mining operational risks. The intrinsic value of $98.8 suggests potential value. The 22.5% debt-to-equity ratio remains conservative. Royal Gold's diversified portfolio of royalties across multiple mining operations and jurisdictions provides exposure to precious metals without commodity production volatility.
Key Catalysts
- Gold and copper price appreciation benefiting all royalty streams
- Expansion of existing royalty portfolio through new agreements
- Production growth at underlying mining operations
- Potential dividend increases from strong cash generation
- Acquisition of additional royalty streams at attractive valuations
Risk Factors
- Commodity price sensitivity affecting royalty revenues
- Operational risks at underlying mining operations
- Counterparty risk if mining operators face financial distress
- Exploration and development execution risks at underlying mines
- Regulatory changes affecting mining operations
Stock #8: United States Lime & Minerals, Inc. (USLM)
| Metric | Value |
|---|---|
| Market Cap | $3,506.8M |
| Quality Rating | 7.9 |
| Intrinsic Value | $61.9 |
| 1Y Return | -0.9% |
| Revenue | $364.8M |
| Free Cash Flow | $104.2M |
| Revenue Growth | 20.3% |
| FCF margin | 28.6% |
| Gross margin | 48.1% |
| ROIC | 26.6% |
| Total Debt to Equity | 0.7% |
Investment Thesis
United States Lime & Minerals provides exposure to industrial minerals with a quality rating of 7.9 and represents a contrarian opportunity with -0.9% one-year returns despite strong fundamentals. The company generated $104.2 million in free cash flow from $364.8 million in revenue, delivering a solid 28.6% FCF margin. USLM's 48.1% gross margin reflects pricing power in specialty lime and minerals products serving construction, steel, and environmental applications.
With 20.3% revenue growth and a 26.6% ROIC, USLM demonstrates operational leverage and capital efficiency. The $3.5 billion market cap positions USLM as a smaller-cap opportunity with significant growth potential. The intrinsic value of $61.9 suggests substantial upside from current levels. Notably, USLM maintains an exceptionally strong balance sheet with only 0.7% debt-to-equity ratio—providing maximum financial flexibility. The company benefits from infrastructure spending, steel mill demand, and environmental remediation applications for lime products.
Key Catalysts
- Infrastructure spending driving demand for construction materials
- Steel production recovery supporting lime demand
- Operational efficiency improvements and cost management
- Potential acquisition target for larger building materials companies
- Dividend initiation or increases from strong cash generation
Risk Factors
- Economic slowdown reducing construction and steel demand
- Commodity price volatility affecting input costs
- Competition from larger building materials companies
- Operational execution risks at production facilities
- Customer concentration risk with major industrial users
Stock #9: TMC the metals company Inc. (TMC)
| Metric | Value |
|---|---|
| Market Cap | $2,409.2M |
| Quality Rating | 6.4 |
| Intrinsic Value | $3.4 |
| 1Y Return | 465.0% |
| Revenue | ($20.2M) |
| Free Cash Flow | ($45.0M) |
| Revenue Growth | N/A |
| FCF margin | 222.9% |
| Gross margin | 300.5% |
| ROIC | 103.7% |
| Total Debt to Equity | 0.0% |
Investment Thesis
TMC represents a high-risk, high-reward opportunity in deep-sea polymetallic nodule mining with a quality rating of 6.4 and extraordinary 465.0% one-year returns. The company is in pre-revenue stage with -$20.2 million in negative revenue and -$45.0 million in negative free cash flow, reflecting early-stage development costs. TMC's $2.4 billion market cap reflects investor enthusiasm for the company's potential to supply critical minerals for battery production and renewable energy infrastructure.
The intrinsic value of $3.4 suggests significant overvaluation at current market prices, making TMC suitable only for high-risk-tolerance investors with conviction in deep-sea mining's future. The company maintains a pristine 0.0% debt-to-equity ratio, preserving financial flexibility for development activities. TMC benefits from structural demand for nickel, cobalt, and manganese driven by electric vehicle battery production and renewable energy storage. However, the company faces regulatory uncertainty, environmental concerns, and technological execution risks before generating meaningful revenue.
Key Catalysts
- Regulatory approval for deep-sea mining operations
- Successful pilot mining operations demonstrating technical feasibility
- Strategic partnerships with battery manufacturers or mining companies
- Commodity price appreciation for nickel and cobalt
- Technological breakthroughs reducing environmental impact concerns
Risk Factors
- Regulatory rejection or indefinite delays for deep-sea mining permits
- Environmental opposition and sustainability concerns
- Technological execution risks in unproven mining methods
- Commodity price volatility affecting project economics
- Competitive threats from terrestrial mining and battery recycling
- Extended timeline to revenue generation and profitability
Portfolio Diversification Insights
This nine-stock watchlist provides comprehensive exposure to the basic materials and commodities sector with meaningful diversification across sub-segments:
Precious Metals Exposure (5 stocks): AngloGold Ashanti (AU), Gold Fields (GFI), Kinross Gold (KGC), Newmont (NEM), and Royal Gold (RGLD) collectively represent $227+ billion in market capitalization with exposure to gold mining and royalties. This cluster benefits from gold's safe-haven demand, central bank purchases, and jewelry consumption.
Base Metals Exposure (1 stock): Southern Copper (SCCO) provides concentrated exposure to copper and molybdenum, critical commodities for electrification, renewable energy infrastructure, and electric vehicle production. Copper's structural demand drivers differ from precious metals, providing portfolio diversification.
Diversified Commodities (1 stock): BHP Group (BHP) offers exposure across iron ore, copper, coal, and petroleum, reducing single-commodity risk while providing exposure to infrastructure and energy demand cycles.
Industrial Minerals (1 stock): United States Lime & Minerals (USLM) provides non-precious metals exposure to construction materials and industrial applications, diversifying away from commodity price cycles affecting mining.
Emerging Technology Metals (1 stock): TMC the metals company (TMC) offers speculative exposure to deep-sea mining and battery materials, representing a long-term bet on electric vehicle and renewable energy infrastructure growth.
Quality and Financial Strength: The portfolio includes five stocks with quality ratings of 8.0 or higher (AU, GFI, SCCO, NEM, USLM), indicating strong business fundamentals. Average free cash flow margins exceed 30%, demonstrating robust cash generation across the portfolio.
Valuation Spectrum: The watchlist spans undervalued opportunities (USLM, NEM) to fairly valued growth stories (GFI, KGC) to speculative positions (TMC), allowing investors to construct portfolios matching their risk tolerance and investment thesis.
Market Timing & Entry Strategies
Commodity Cycle Positioning: The basic materials sector typically performs well during economic expansion phases when infrastructure spending, manufacturing activity, and energy demand accelerate. Current market dynamics suggest favorable conditions for commodity exposure given energy transition investments and infrastructure development globally.
Dollar Strength Considerations: Commodity prices are inversely correlated with US dollar strength. Investors should monitor currency trends when considering entry points, as dollar weakness typically supports commodity prices and mining company valuations.
Precious Metals Allocation: Gold and silver typically serve as portfolio hedges during geopolitical uncertainty and inflation concerns. Consider increasing precious metals exposure (AU, GFI, KGC, NEM, RGLD) during periods of elevated macro uncertainty or when real interest rates decline.
Copper Demand Thesis: Copper exposure (SCCO) should be sized based on conviction in electrification and renewable energy infrastructure growth. Long-term structural demand supports copper, but near-term entry points depend on economic growth expectations and inventory levels.
Scaling Into Positions: Rather than deploying capital in a single transaction, consider dollar-cost averaging into positions over 2-4 weeks, particularly for higher-volatility stocks like TMC or during periods of elevated commodity price swings.
Valuation-Based Entry Points: Use intrinsic value metrics as entry guidelines: - USLM: Target entry below $50 (intrinsic value $61.9) - NEM: Target entry below $65 (intrinsic value $73.8) - SCCO: Target entry below $65 (intrinsic value $70.2) - TMC: Speculative position only for high-risk investors; current valuation appears stretched
Rebalancing Strategy: Establish target portfolio weights and rebalance quarterly or semi-annually to maintain desired exposure levels, particularly as commodity prices and stock valuations fluctuate.
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FAQ Section
Q1: How were these stocks selected for this watchlist?
These nine stocks were selected based on ValueSense's fundamental analysis criteria, including quality ratings of 6.4 or higher, free cash flow margins exceeding 18%, and gross margins above 43%. The portfolio emphasizes companies with strong cash generation, reasonable debt levels, and exposure to structural demand drivers in commodities and materials. Stocks span precious metals mining, base metals, industrial minerals, and emerging technology metals, providing sector diversification.
Q2: Which stock from this list offers the best risk-adjusted opportunity?
AngloGold Ashanti (AU) combines the highest quality rating 8.3, exceptional free cash flow generation (29.4% margin), and the strongest ROIC 26.8% with a conservative debt-to-equity ratio 24.2%. While the stock has delivered 251.7% one-year returns, the company's fundamentals suggest sustainable competitive advantages. However, "best" depends on individual risk tolerance—Newmont (NEM) offers the strongest balance sheet (1.4% debt-to-equity) for conservative investors, while Kinross (KGC) provides highest revenue growth 31.8% for growth-oriented investors.
Q3: Should I buy all these stocks or focus on a subset for diversification?
Portfolio construction depends on your investment objectives and risk tolerance. Conservative investors should focus on large-cap, high-quality names (AU, NEM, SCCO, BHP) with established operations and strong balance sheets. Growth-oriented investors may emphasize higher-growth, smaller-cap opportunities (KGC, GFI, RGLD, USLM). Avoid concentrating more than 5-10% of your portfolio in any single stock, particularly speculative positions like TMC. Consider building a core position in 3-4 large-cap stocks and satellite positions in 2-3 smaller-cap opportunities.
Q4: What are the biggest risks with these stock picks?
Commodity price volatility represents the primary risk across this portfolio—gold, copper, and other commodity prices fluctuate based on macroeconomic conditions, currency movements, and supply-demand dynamics. Geopolitical risks in key operating regions (Peru, Mexico, West Africa, Australia) can disrupt operations and investor sentiment. Regulatory and permitting delays affect production timelines and project economics. Leverage risks apply to companies with elevated debt-to-equity ratios (SCCO at 69.9%). Execution risks affect companies with major development projects (GFI, KGC). Pre-revenue risk is extreme for TMC, which has not yet generated meaningful revenue.
Q5: When is the best time to invest in these stocks?
Commodity stocks typically perform well during economic expansion phases when infrastructure spending, manufacturing activity, and energy demand accelerate. Precious metals (AU, GFI, KGC, NEM, RGLD) benefit from geopolitical uncertainty, inflation concerns, and declining real interest rates. Copper exposure (SCCO) should be considered when economic growth expectations improve and inventory levels normalize. Consider scaling into positions gradually rather than deploying capital in a single transaction, particularly during periods of elevated volatility. Use intrinsic value metrics as entry guidelines, targeting positions when stocks trade 10-20% below calculated fair values. Monitor earnings reports and guidance for operational updates and management commentary on commodity price outlooks.
This article provides educational analysis of publicly traded companies and should not be construed as investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. Past performance does not guarantee future results. Commodity prices and mining company valuations are subject to significant volatility.