BlackRock World Mining Trust Plc - Portfolio Update
15 November 2017 - 12:52AM
PR Newswire (US)
BLACKROCK WORLD
MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155) |
|
All information is at
31 October 2017 and unaudited. |
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|
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Performance at month
end with net income reinvested |
|
|
|
|
One |
Three |
One |
Three |
Five |
|
|
Month |
Months |
Year |
Years |
Years |
|
Net asset value |
3.4% |
3.4% |
16.3% |
31.4% |
-19.7% |
|
Share price |
5.4% |
4.7% |
21.7% |
33.2% |
-13.4% |
|
Euromoney Global Mining
Index |
2.1% |
2.3% |
11.3% |
29.3% |
-8.6% |
|
(Total return) |
|
|
|
|
|
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Sources: BlackRock,
Euromoney Global Mining Index, Datastream |
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|
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At month end |
|
|
|
|
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Net asset value
including income1: |
422.63p |
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Net asset value capital
only: |
414.79p |
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1 Includes
net revenue of 7.84p |
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|
|
|
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Share price: |
382.50p |
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Discount to
NAV2: |
9.5% |
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Total assets: |
£836.1m |
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Net
yield3: |
3.9% |
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Net gearing: |
12.8% |
|
|
|
|
Ordinary shares in
issue: |
176,455,242 |
|
Ordinary shares held in
treasury: |
16,556,600 |
|
Ongoing
charges4: |
1.10% |
|
|
|
|
2 Discount to NAV including income.
3 Based on quarterly interim dividends of 3.00p per
share declared on 4 May 2017 and 10 August 2017 in
respect of the year ending 31 December 2017 and a final
dividend of 9.00p per share in respect of the year ended
31 December 2016.
4 Calculated as a percentage of average net assets and
using expenses, excluding finance costs, for the year ended 31
December 2016. |
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|
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Sector |
%
Total
Assets |
|
Country
Analysis |
%
Total
Assets |
|
|
|
|
|
Diversified |
46.8 |
|
Global |
63.5 |
Copper |
21.5 |
|
Latin America |
11.9 |
Gold |
16.7 |
|
Australasia |
11.3 |
Industrial Minerals |
7.0 |
|
Other Africa |
6.8 |
Silver & Diamonds |
6.7 |
|
Canada |
4.2 |
Zinc |
1.4 |
|
USA |
0.9 |
Aluminium |
0.2 |
|
South Africa |
0.7 |
Iron Ore |
0.1 |
|
Russia |
0.5 |
Net current liabilities |
(0.4) |
|
Kazakhstan |
0.4 |
|
----- |
|
India |
0.2 |
|
100.0 |
|
Net current
liabilities |
(0.4) |
|
===== |
|
|
----- |
|
|
|
|
100.0 |
|
|
|
|
===== |
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Ten Largest Investments |
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|
|
|
Company |
%
Total
Assets |
|
BHP |
9.8 |
|
Rio Tinto |
9.5 |
|
Glencore |
8.8 |
|
First Quantum
Minerals |
8.3 |
|
Vale |
6.5 |
|
Sociedad Minera Cerro
Verde |
3.9 |
|
Lundin Mining |
3.4 |
|
Newmont Mining |
3.1 |
|
South32 |
3.0 |
|
Teck Resources |
2.6 |
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Commenting on the markets, Evy
Hambro and Olivia Markham, representing the Investment Manager
noted: |
|
Performance |
|
The Company’s NAV increased by 3.4%
in October, whilst its benchmark, the Euromoney Global Mining
Index, returned +2.8% (performance in GBP terms). |
|
For the mining sector, mined
commodity performance was generally positive. Base metals performed
strongly during the month, with nickel, zinc, copper and aluminium
increasing by 17.7%, 3.6%, 6.0% and 3.0% respectively. On the
other hand, bulk commodities came under moderate pressure with the
price of iron ore falling modestly by 1.1%. |
|
The 19th National Congress of the
Communist Party of China took place during the month. Key takeaways
for us included the fact that the outlook for China’s economy
remains robust and the Leadership have a clear plan; tackling
pollution remains a key priority and supply side reforms are likely
to continue. |
|
Elsewhere in the mining space, LME
week, the largest annual meeting of mined commodity producers and
consumers, also took place at the end of the month. Electric
vehicles and battery materials emerged as the key theme, with
lithium, cobalt and nickel being the main metals of focus.
This positive sentiment saw a rally in the volume of nickel traded
in both London and Shanghai, with the price of nickel gaining 17.7%
over the month. |
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Strategy and Outlook |
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Over the past 18 months we have seen
a remarkable turnaround in the financial health of the mining
sector. For some time we have been confident that January 2016
marked the bottom of the mining cycle as, back then, the market was
concerned about a ‘hard-landing’ in China, as well as mining
companies’ stretched balance sheets. Today, balance sheets are in
much better shape and, given current commodity prices, we are
optimistic about a continued recovery in share prices. The mining
sector has among the highest free cash flow yield out of any global
sector and, given the improvement in balance sheets, we expect
lower earnings volatility relative to the previous three years to
help drive a re-rating. |
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Whilst the mining sector has
performed strongly, we are only back at 2014 levels and still a
very long way below the peak in 2011. Mined commodity prices still
look elevated in some cases but, importantly, mining shares are
still pricing in commodity prices well below current spot
prices. |
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We recognize that China remains the
key risk for investors in the mining sector but believe that the
Chinese administration has shown itself willing and able to step in
with support to avoid a ‘hard-landing’ type event. Reform measures
put in place by the government across a range of industries,
including steel, coal and aluminium, to tackle pollution and excess
capacity, have been more effective than many expected and have
improved the profitability across a number of sectors, which we see
as a key benefit in the longer-term. China should also benefit from
a spill-over effect from the wider improvements we have seen in
global economic growth in recent months. Concerns mounted in Q2
2017 of this year that tighter credit conditions in the country
could lead to a slowdown. However, economic data has continued to
defy the sceptics and exceed expectations. |
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Meanwhile, commodity prices should
also be supported by constraints on the supply side resulting from
the underinvestment we have seen in the mining sector in recent
years, with global mining sector capex down 66% since the peak in
2012. The key question for investors today is whether the mining
companies can maintain the same level of capital discipline or will
they slip back into bad habits? For now, we feel the pain of the
recent down-cycle is still too fresh and rhetoric from management
teams gives us optimism that the sector’s focus remains on
shareholder returns. |
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All data points are in US dollar
terms unless stated otherwise. |
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14 November 2017 |
|
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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