FSM vs. RIO: Which Basic Materials Stock Is a Better Buy Currently?

Fortuna Mining FSM and Rio Tinto Group RIO are two well-known players in the Zacks Basic Materials industry. Rio Tinto is benefiting from rising copper production, driven by strong operational performance across its assets. The company operates in more than 30 countries worldwide. Its core products are iron ore, copper, aluminium and lithium.

Fortuna Mining, formerly Fortuna Silver Mines, engages in precious and base metal mining, primarily in Argentina, Burkina Faso, Mexico, Peru and Cote d'Ivoire. FSM is based in Canada and has mines in Latin America and West Africa. The company produces gold and silver while creating long-term shared value through efficient production, environmental stewardship and social responsibility.

Given this backdrop, let’s take a closer look at which basic materials company currently holds the edge, and more importantly, which might be the smarter investment now.

The Case for RIO

Rio Tinto, which operates in the mineral exploration and mining markets, holds one of the world’s largest lithium portfolios and a robust pipeline of development projects, positioning it well to benefit from the growing demand for lithium. RIO produces lithium using several established methods. The company also manufactures a broad suite of lithium products, including lithium chloride, lithium carbonate, lithium hydroxide and spodumene concentrate.

RIO is also expanding its lithium extraction capabilities through a new partnership with ILiAD Technologies, a leader in direct lithium extraction or DLE technology. The collaboration supports the company’s efforts to enhance operational efficiency while improving sustainability and cost effectiveness.

RIO continues to advance its project pipeline. In December 2025, the company achieved the first copper production at the Johnson Camp mine in Arizona using its proprietary Nuton technology. This marks a significant milestone, as Nuton enables cleaner, faster and more efficient copper recovery at an industrial scale.

The Pilbara facility remains the backbone of Rio Tinto’s iron ore business. In the fourth quarter of 2025, RIO’s iron ore operations in the Pilbara facility improved, with shipments rising 7% year over year. The aluminum production also delivered encouraging results. RIO’s aluminum output rose 2% in the quarter, on a year-over-year basis, as refinery and smelter operations improved. In March 2026, Rio Tinto announced its plans to extract gallium from the alumina refining process in Quebec.

The Case for FSM

As a predominantly gold-focused producer, FSM is benefiting significantly from the strong upward momentum in gold prices (despite the recent drop) and sustained demand. Gold prices are currently in excess of $4,000 per ounce, despite the recent drop, amid ongoing geopolitical uncertainties. In addition, structural supply limitations — including declining production from aging mines and a lack of major new discoveries — are expected to provide continued support for gold prices.

The record-setting performance of gold in 2025 bodes well for FSM. Rising geopolitical tensions in the Middle East and potential U.S. trade tariff threats have reinforced gold’s status as a safe-haven asset, further driving demand. Fortuna Mining, which divested the San Jose and Yaramoko assets in 2025, produced 65,130 gold equivalent ounces (“GEO”) from continuing operations in the fourth quarter of 2025.

For the full year, the company generated 317,001 GEOs, successfully meeting its annual production guidance. During the fourth quarter of 2025, the Séguéla mine processed 410,014 tons of ore and produced 36,942 ounces of gold at an average head grade of 3.16 g/t Au. Compared with the year-ago quarter, ore processed declined 5%, while the average head grade improved 7%. Total gold production from Séguéla reached 152,426 ounces in 2025, surpassing the company’s annual guidance. Strong Performance at the Séguéla Mine bodes well for FSM’s growth prospects.

Last month, the company released an updated Mineral Resource estimate for the Diamba Sud Gold Project in Senegal, effective Jan. 16, 2026. Indicated Mineral Resources now total 1.25 million ounces of gold, representing an increase of 530,000 ounces from the previous estimate and highlighting the project’s continued resource expansion potential. The 73% increase in indicated gold ounces, with 94% of the total resource now classified as indicated, marks a significant milestone for the Diamba Sud project.

Moreover, the company has a robust balance sheet. FSM ended 2025 with a solid liquidity position exceeding $700 million. This strong financial position places the company in a favorable position to fund future projects and navigate potential market volatility. In 2025, FSM’s free cash flow more than doubled year over year to $330 million, driven by a significant increase in realized gold prices to $4,166 per ounce.

Valuation Picture

Valuation-wise, FSM looks slightly more attractive than RIO based on the price-to-sales ratio.

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How Do Zacks Estimates Compare for FSM & RIO?

Despite the current uncertainty, the Zacks Consensus Estimate for FSM’s 2026 EPS implies a year-over-year increase of a massive 180%. The EPS estimates for the full-year 2026 and 2027 have remained stable over the past seven days.

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The Zacks Consensus Estimate for RIO’s 2026 sales and EPS implies a year-over-year increase of 11.3% and 25.9%, respectively. The EPS estimates for the full-year 2026 and 2027 are stable in RIO’s case as well.

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FSM or RIO: Which Stock Is a Better Pick?

With the still high gold prices, Fortuna Mining is positioned for continued production growth, particularly with the anticipated development of the Diamba Sud project in the current year. Despite the promise, RIO’s Pilbara facility’s performance continues to be subject to weather-related risks, approval timelines for mining areas and cost pressures. Iron ore price volatility could impact earnings as well, despite stable volumes. Moreover, FSM appears to have an edge over RIO due to its more attractive valuation.

Driven by the positives, Fortuna Mining emerges as the winner in this face-off in the basic materials space and the stock appears to be a better pick than RIO now. FSM currently sports a Zacks Rank #1 (Strong Buy), whereas RIO has a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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