PR Newswire
London, June 14
| BLACKROCK WORLD MINING TRUST plc | ||||||||||||||
| All information is at 31 May 2016 and unaudited. | ||||||||||||||
| Performance at month end with net income reinvested | ||||||||||||||
| One | Three | One | Three | Five | ||||||||||
| Month | Months | Year | Years | Years | ||||||||||
| Net asset value | -10.4% | 11.1% | -20.2% | -44.2% | -64.9% | |||||||||
| Share price | -10.0% | 19.4% | -20.3% | -44.1% | -62.7% | |||||||||
| Euromoney Global Mining Index | -12.6% | 13.1% | -18.0% | -34.4% | -57.8% | |||||||||
| (Total return) | ||||||||||||||
| Sources: BlackRock, Euromoney Global Mining Index, Datastream | ||||||||||||||
| At month end | ||||||||||||||
| Net asset value including income*: | 251.70p | |||||||||||||
| Net asset value capital only: | 256.94p | |||||||||||||
| *Includes net revenue of 5.24p | ||||||||||||||
| Share price: | 225.50p | |||||||||||||
| Discount to NAV**: | 12.2% | |||||||||||||
| Total assets: | £524.1m | |||||||||||||
| Net yield***: | 9.3% | |||||||||||||
| Net gearing: | 14.8% | |||||||||||||
| Ordinary shares in issue: | 176,455,242 | |||||||||||||
| Ordinary shares held in treasury: | 16,556,600 | |||||||||||||
| Ongoing charges****: | 1.2% | |||||||||||||
| ** Discount to NAV including income. *** Based on an interim dividend of 7.00p per share and a final dividend of 14.00p per share 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. | ||||||||||||||
| Sector | % Total | Country Analysis | % Total | |||||||||||
| Assets | Assets | |||||||||||||
| Diversified | 33.6 | Global | 49.6 | |||||||||||
| Gold | 22.9 | Latin America | 15.6 | |||||||||||
| Copper | 19.4 | Australasia | 9.1 | |||||||||||
| Silver & Diamonds | 15.2 | Canada | 8.7 | |||||||||||
| Nickel | 3.9 | Other Africa | 8.4 | |||||||||||
| Industrial Minerals | 3.5 | Emerging Europe | 4.6 | |||||||||||
| Iron Ore | 0.1 | South Africa | 2.9 | |||||||||||
| Other | 0.7 | Indonesia | 0.4 | |||||||||||
| Net current assets | 0.7 | Net current assets | 0.7 | |||||||||||
| ----- | ----- | |||||||||||||
| 100.0 | 100.0 | |||||||||||||
| ===== | ===== | |||||||||||||
| Ten Largest Investments | ||||||||||||||
Company | % Total Assets | |||||||||||||
| BHP Billiton | 9.4 | |||||||||||||
| Rio Tinto | 7.8 | |||||||||||||
| First Quantum Minerals | 7.3 | |||||||||||||
| Lundin Mining | 5.1 | |||||||||||||
| Fresnillo | 4.0 | |||||||||||||
| Glencore | 4.0 | |||||||||||||
| Norilsk Nickel | 3.9 | |||||||||||||
| Sociedad Minera Cerro Verde | 3.7 | |||||||||||||
| Newcrest Mining | 3.2 | |||||||||||||
| Nevsun Resources | 2.4 | |||||||||||||
| Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted: |
| Performance |
| After strong performance year-to-date, the mining sector came under pressure in May, primarily driven by a strengthening dollar and weak economic data from China; this included disappointing trade data, a declining property price run rate and comments in a Communist party newspaper which implied a greater focus on debt sustainability and reform. The base metals sold off with nickel, aluminium and copper declining -10.9%, -7.6% and -7.3% respectively, whilst iron ore plummeted by -23.9%. We continue to favour base metals over bulks in the portfolio given the more encouraging supply/demand outlook for these commodities. |
| In the precious metals space, gold started the month on the front foot and very briefly broke through the $1,300/oz level before swiftly retreating as the dollar showed some modest strength, driven primarily by better than expected non-manufacturing ISM data in the US. This dollar strength continued into the month after the Federal Bank of New York President William Dudley said in an interview that it remained a "reasonable expectation" the central bank would raise rates twice in 2016. Gold ultimately finished the month -6.0% weaker at $1,214/oz. |
| In sector news, Freeport McMoRan announced that it had struck a deal to sell its stake in Tenke, a copper mine in the Democratic Republic of Congo (DRC) to China Molybdenum (CMOC) for $2.65bn in cash as it stepped up efforts to reduce its debt burden. The company also said it was in talks to sell its interests in Freeport Cobalt, its Finnish cobalt refinery, and the Kisanfu exploration project in the DRC to CMOC for $100m and $50m respectively. |
| In the portfolio, we rotated our gold exposure, increasing the beta of our positioning in the process. We also took part in a placement for a developing lithium producer, funded by taking profits in an existing lithium position. |
| Among the Company's unquoted holdings, Avanco provided an update on commissioning activities at the Antas Copper Mines, where progress towards steady-state production and sales is very encouraging. Copper and gold production has exceeded expectations for the April to May period, with ten shipments of copper concentrate already delivered to customers. The balance sheet remains strong with a net cash position of US$21m and the operation on target to achieve commercial production in July. |
| Strategy and Outlook |
| Price moves in the mining sector year-to-date, albeit off an unsustainably low base, have been reminiscent of the times of strong global demand growth and raw material constraints, neither of which have been a feature of present market conditions. Weaker growth in the developed economies, poor figures from some emerging markets and continuing oversupply in the mined commodities appeared to catch up with this recent rally, ultimately leading to a pull-back. |
| However, the miners have continued to make progress and whilst supply can be sticky for a number of reasons a cash negative operation cannot persist indefinitely. We have seen the first of the long-awaited supply cuts announced but mined commodity prices will need to remain at current levels or move lower before we see real momentum in cuts. In light of this, we expect to see companies further reduce capital spending and operating costs in the second half in order to bolster their balance sheets. |
| All data points are in US dollar terms unless stated otherwise. |
| 15 June 2016 |
| ENDS |
| 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. |
