BlackRock World Mining Trust Plc - Portfolio Update

PR Newswire
London, January 11

BLACKROCK WORLD MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155)
All information is at 31 December 2017 and unaudited.
Performance at month end with net income reinvested
		One			Three				One	Three		Five
		Month			Months				Year	Years		Years
Net asset value		11.2%			12.2%				23.8%	54.0%		-14.4%
Share price		7.0%			10.4%				24.2%	57.0%		-9.8%
Euromoney Global Mining Index		10.8%			10.2%				20.8%	48.0%		-2.2%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income1:								455.30p
Net asset value capital only:								448.72p
1 Includes net revenue of 6.58p
Share price:								397.75p
Discount to NAV2:								12.6%
Total assets:								£904.2m
Net yield3:								4.5%
Net gearing:								12.7%
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 4May2017, 10 August 2017 and 10 November 2017 in respect of the year ended 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.
Sector	% Total					Country Analysis					% Total
	Assets										Assets
Diversified	47.7					Global					61.7
Copper	20.3					Latin America					11.6
Gold	15.4					Australasia					10.7
Silver & Diamonds	7.9					Other Africa					7.0
Industrial Minerals	7.0					Canada					6.0
Zinc	1.4					USA					0.9
Aluminium	0.3					South Africa					0.7
Iron Ore	0.1					India					0.7
Net current liabilities	(0.1)					Russia					0.4
	-----					Kazakhstan					0.4
	100.0					Net current liabilities					(0.1)
	=====										-----
											100.0
											=====
Ten Largest Investments
Company				% Total Assets
Rio Tinto				8.8
Glencore				8.7
BHP				8.4
Vale				7.3
First Quantum Minerals				7.3
Teck Resources				5.7
Sociedad Minera Cerro Verde				3.8
Newmont Mining				2.9
Lundin Mining				2.9
South32				2.8

Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:

Performance

The Company's NAV increased by 11.2% in December, outperforming its benchmark, the Euromoney Global Mining Index, which rose by 10.8%. For the full year, the Company's NAV increased by 23.8%, outperforming its benchmark, which rose by 20.8% (performance in GBP terms).

December was a particularly strong month for mining, with the Euromoney Global Mining Constrained Weights Index posting its largest increase since July 2017. Data emerged pointing towards a healthy economic and credit environment in China, which improved sentiment and provided a tailwind for the mining sector. The Caixin Manufacturing PMI reading for December was 51.5, which compares to 50.8 in November. Mined commodity prices rose strongly across the board, rebounding after a weak November. Base metals performed well, with nickel, zinc and copper increasing by 15.0%, 5.0% and 7.0%, respectively. Copper reached its highest price since February 2014, boosted by a tighter market outlook as a result of China curbing copper scrap imports. In addition, the market is now looking ahead to wage negotiations in Chile where contracts expire with 32 unions in 2018, which may lead to supply disruptions. Bulk metal prices also increased, with iron ore rising by 8.0%. The iron ore price was pushed higher by winter production cuts in China and the current low level of steel inventories, which is expected to lead to significant restocking in early 2018.

Elsewhere, a number of mining companies held their capital markets days during the month. These reinforced the themes we have seen during the year around capital discipline and returning cash to shareholders either in the form of cash dividends or share buybacks. Mining companies have, however, started to see the early signs of cost inflation, mainly driven by the increase in the price of oil, and companies modestly increasing sustaining capital expenditure.

Strategy and Outlook

After two strong years, investors that have not been exposed to mining may now be questioning if they have missed the opportunity. We are, however, still a long way below the peak in 2011 and the sector continues to trade at a valuation discount to broader equity markets. Meanwhile, the miners are trading on very attractive cash flow multiples with Glencore, BHP and Rio Tinto all currently trading at forward free cash flow yields of around 10%, for example. For the mined commodities, in most cases, we believe they look reasonably fairly priced and so our base case is that they remain relatively range-bound at current levels which sees healthy profitability for the sector. Crucially, however, mining equities are still pricing in commodity prices well below current spot prices and, as such, we are constructive on the shares but neutral the commodities themselves. Many still distrust the miners, expecting them to make the same mistakes of the past in terms of poor capital discipline. Our view though is that the pain of the recent down-cycle is still too fresh in the minds of management teams for this to become a widespread issue in the near-term. We have begun to see moderate increases in sustaining capex announced but we believe for the most part these have been necessary increases rather than indicative of a widespread return to poor capital discipline.

All data points are in US dollar terms unless stated otherwise.

11 January 2018

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.