BLACKROCK WORLD MINING TRUST PLC - Portfolio Update
19 October 2016 - 2:33AM
PR Newswire (US)
BLACKROCK WORLD
MINING TRUST plc |
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All information is at
30 September 2016 and unaudited. |
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Performance at month
end with net income reinvested |
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One |
Three |
One |
Three |
Five |
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|
Month |
Months |
Year |
Years |
Years |
|
Net asset value |
9.1% |
13.0% |
69.4% |
-18.4% |
-35.2% |
|
Share price |
7.6% |
13.4% |
58.5% |
-23.9% |
-34.4% |
|
Euromoney Global Mining
Index |
8.9% |
13.0% |
69.7% |
-2.7% |
-24.6% |
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(Total return) |
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Sources: BlackRock,
Euromoney Global Mining Index, Datastream |
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At month end |
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Net asset value
including income*: |
352.86p |
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Net asset value capital
only: |
346.65p |
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*Includes net revenue of
6.21p |
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Share price: |
302.25p |
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Discount to NAV**: |
14.3% |
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Total assets: |
£703.5m |
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Net yield***: |
6.0% |
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Net gearing: |
12.8% |
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Ordinary shares in
issue: |
176,455,242 |
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Ordinary shares held in
treasury: |
16,556,600 |
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Ongoing
charges****: |
1.2% |
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**
Discount to NAV including income.
*** Based on an interim dividend of 4.00p in respect of the year
ending 31 December 2016 and a final dividend of 14.00p in
respect of the year ended 31 December 2015.
**** Calculated as a percentage of average net assets and using
expenses, excluding finance costs for the year ended 31 December
2015. |
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Sector |
%
Total |
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Country
Analysis |
%
Total |
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Assets |
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Assets |
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Diversified |
37.2 |
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Global |
54.8 |
Gold |
22.2 |
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Latin America |
14.0 |
Copper |
18.5 |
|
Australasia |
9.3 |
Silver & Diamonds |
14.3 |
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Other Africa |
8.0 |
Industrial Minerals |
3.9 |
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Canada |
7.8 |
Nickel |
3.2 |
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Emerging Europe |
3.4 |
Zinc |
0.4 |
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South Africa |
1.9 |
Iron ore |
0.1 |
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Indonesia |
0.3 |
Other |
0.0 |
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Tanzania |
0.3 |
Net current assets |
0.2 |
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Net current assets |
0.2 |
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----- |
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----- |
|
100.0 |
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|
100.0 |
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===== |
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===== |
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Ten Largest Investments |
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Company |
%
Total
Assets |
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Rio Tinto |
8.6 |
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BHP Billiton |
8.3 |
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First Quantum
Minerals |
8.0 |
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Glencore |
5.6 |
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Lundin Mining |
4.3 |
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Fresnillo |
4.1 |
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Teck Resources |
3.4 |
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Newmont Mining |
3.3 |
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Norilsk Nickel |
3.3 |
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Sociedad Minera Cerro
Verde |
3.3 |
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Commenting on the markets, Evy
Hambro and Hannah Gray, representing the Investment Manager
noted:
|
Performance |
After a difficult August, the mining
sector returned to trending upwards buoyed by rising commodity
prices on the back of better-than-expected Chinese economic data
and US dollar weakness after the US Fed confirmed there would be no
interest rate rise. Whilst the market had been widely expecting no
US rate hike, confirmation of this was nonetheless moderately
supportive for commodity prices. Positive data points from China
included new bank loans rising to Rmb949bn, up 17.1% year-on-year,
and the country’s steel production remaining robust at 68.6 million
tonnes, reflecting a 2.5% increase. |
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Most mined commodities were up over
the month with gold, copper and nickel prices gaining 1.0%, 5.3%
and 8.5% respectively. The nickel price was supported by news that
the Philippine government had suspended half of the country’s
mining operations for failing to meet social and environmental
standards. For reference, last year the country produced
approximately 465,000 tonnes of nickel, representing over 20% of
the world’s mined output. However, it was coking coal which was the
star performer, rising an extraordinary 54.4% over the month as
China’s coal industry reform programme, which has constrained
domestic output to the equivalent of 276 days of production, forced
Chinese steel producers to turn to the import market. |
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Good stock selection in the gold
sector helped the Company outperform this month, with quality names
such as Fresnillo and Avanco Resources showing good performance.
The Company continues to have a quality bias in gold through
exposure to companies with tier 1 assets, as well as management
teams with strong track records. |
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During the month, the Company
increased its exposure to iron ore producer Vale on the back of
strengthening iron ore prices and the potential for further asset
sales to be announced. The Company also topped up its coal producer
exposure on the back of an increasing coal price and a more
supportive longer term outlook which should lead to earnings
upgrades. The Company reduced its debt holdings after strong
performance in these bonds year-to-date on the back of company
action and rising commodity prices strengthening balance
sheets. |
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Amongst the Company’s unquoted
investments the Company received its first royalty payment from
Avanco Resources on 2 September. This payment was equivalent to 25%
of the gold revenue and 2% of the copper revenue in the quarter
ended 30 June 2016. |
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Strategy and Outlook |
After an extended down-cycle,
January 2016 appears to have marked the bottom for the mining
sector. The sector has performed very strongly this year driven by
commodity prices bouncing off the multi-year lows we saw at the end
of 2015. Nonetheless, positioning surveys suggest investors remain
cautious of the sector, given several years of severe
underperformance, and the sector continues to be under-owned
relative to history. Sentiment towards China has improved since the
lows of Q3 2015 following stimulus at the beginning of 2016,
lending support to commodities as fears over a ‘hard landing’ in
the country have eased. The Chinese government’s stimulus package
early this year has fed through into improved economic data points
such as PMI figures above 50 and increases in property prices. At
the same time, we have seen mining companies focus on cutting
costs, reducing debt and improving balance sheets. |
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Looking ahead, we expect the mining
sector’s performance to remain somewhat volatile in the near-term
but we see the medium to long-term outlook as positive. The
situation in China has improved but overall global economic growth
is likely to remain low for some time. The impact of the mining
sector slashing capital expenditure and underinvesting over the
past few years is beginning to be felt by global production.
Finally, whilst the sector has performed well this year, it has
only returned to July 2015 levels and, with many of the miners
trading at attractive free cash flow yields, valuations still at
relative lows and commodity prices surprising to the upside, the
risk of being underweight the sector remains significant. |
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All data points are in US dollar
terms unless stated otherwise |
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18 October 2016 |
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ENDS |
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Latest information is available by
typing www.brwmplc.co.uk on the internet, "BLRKINDEX" on Reuters,
"BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).
Neither the contents of the Manager’s website nor the contents of
any website accessible from hyperlinks on the Manager’s website (or
any other website) is incorporated into, or forms part of, this
announcement. |
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