BlackRock World Mining Trust plc - LNFFPBEUZJBOSR6PW155

Annual Results Announcement (Article 4 Transparency Directive, DTR 4.1)
for the year ended 31 December 2016

Financial Highlights

Attributable to ordinary shareholders	31 December  2016	31 December  2015	Change  %
Assets
Net assets (£’000)	677,546	377,313	+79.6
Net asset value per ordinary share	383.98p	212.83p	+80.4
– with income reinvested			+92.9
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Ordinary share price (mid-market)	336.50p	181.00p	+85.9
– with income reinvested			+100.6
	--------	--------	--------
Euromoney Global Mining Index	496.61	255.94	+94.0
Discount to net asset value	12.4%	15.0%
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	For the year ended  31 December  2016	For the year ended  31 December  2015	Change  %
Revenue
Net revenue return after taxation (£’000)	23,303	32,744	-28.8
Revenue return per ordinary share	13.19p	18.47p	-28.6
Dividend per ordinary share
– Interim	4.00p	7.00p	-42.9
– Final	9.00p	14.00p	-35.7
	--------	--------	--------
Total dividends paid and payable	13.00p	21.00p	-38.1
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Chairman’s statement

OVERVIEW

In 2016 we witnessed a dramatic turnaround in the mining sector. After five challenging years, a result of slowing growth in China and falling prices, the cycle began to turn. This was driven by two key factors. The first was that bearishness on China troughed in early 2016 and the Chinese government’s stimulus package in spring of that year led to improved economic data points and increased property prices. Second, mining companies are delivering strong financial discipline by focusing on cost reduction, reducing debt and increasing productivity. Share prices of mining companies, whose revenues are derived in US dollars, have also benefited from the weakness in sterling following the UK’s referendum vote on 23 June 2016.

PERFORMANCE

Over the twelve months to 31 December 2016, the Company’s net asset value (NAV) per share has risen by 92.9% and the share price by 100.6%. The Company’s benchmark, the Euromoney Global Mining Index, rose by 94.0% over the same period (all percentages calculated in sterling terms with income reinvested).

Notwithstanding the huge positive return, the NAV of the portfolio slightly lagged the rally in the equity only benchmark whilst the share price outpaced it. The lost relative return was mainly due to avoiding poor quality, distressed gold mining equities in the portfolio in the first two months of the year. These rallied in response to increased investor demand for 'safe-haven' assets at a time of heightened concerns over global economic growth. Further information on commodity markets and key contributors and detractors to portfolio performance are set out in the Investment Manager’s Report.

Since the year end and up until the close of business on 22 February 2017, the Company’s NAV has increased by 15.4% compared with a rise of 14.5% in the benchmark index.

REVENUE RETURN AND DIVIDENDS

The Company’s revenue return per share for the year to 31 December 2016 amounted to 13.19p compared with 18.47p for the previous year. As reported at the interim stage, falling commodity prices forced a number of the underlying portfolio companies to cut or cancel dividends, leading to a decline in the Company’s investment income.

The Directors are recommending the payment of a final dividend of 9.00p per share for the year ended 31 December 2016 (2015: 14.00p). This, together with the interim dividend of 4.00p per share (2015: 7.00p), makes a total of 13.00p per share (2015: 21.00p). The final payment will be made on 12 May 2017 to shareholders on the Company’s register on 17 March 2017, the ex-dividend date being 16 March 2017.

We mentioned in the half yearly financial report that the Board would be increasing the frequency of dividend payments from twice to four times a year. It is intended that dividends will be announced in February, May, August and November and are expected to be paid no later than May, June, September and December in each relevant year. The Company will declare its first interim dividend in May 2017 to be paid no later than June 2017.

It remains the Board’s intention to seek to distribute substantially all of the income available. Income from ordinary dividends is expected to grow in 2017 as mining companies increase or reinstate dividend payments on the back of improved profitability and reduced balance sheet concerns. The Board’s current target is to declare three dividends of at least 3.00p per share in the year to 31 December 2017 and to recommend a final dividend for approval by shareholders at the Annual General Meeting in 2018. The ability to match or exceed this target will depend on portfolio dividend distributions, currency movements, royalty payments and income from option writing and should not be interpreted as a profit forecast.

In the Interim Report we highlighted our belief that the sector had bottomed and it was therefore timely to increase exposure to longer term and hopefully higher growth opportunities. During the year a number of such investments were made and I am pleased to report that they are already delivering positive returns for shareholders. In the short term, the emphasis from these investments will be for capital rather than income growth.

DISCOUNT

The discount of the Company’s share price to the underlying NAV finished the year under review at 12.4% on a cum income basis having stood at 15.0% at the start of the year. The shares were trading at a discount of 11.3% as at the close of business on 22 February 2017.

The Directors recognise the importance to shareholders that the market price of the Company’s shares in the stock market should not trade at a significant discount to the underlying NAV. The decision as to whether to purchase the Company’s shares is addressed regularly in Board discussions and, during the year under review, the Company repurchased 832,000 ordinary shares at an average price of 226.99p and at an average discount to NAV of 14.5% at a cost of £1,882,000 including expenses. These shares have been placed in treasury. The Board will continue to consider whether share purchases should be made and is proposing that the Company’s existing authority to buy back up to 14.99% of the Company’s issued share capital, excluding treasury shares, be renewed at the forthcoming Annual General Meeting.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 4 May 2017 at 11.30 a.m. Details of the business of the meeting are set out in the Notice of Meeting on pages 85 to 88 of the Annual Report and Financial Statements. The meeting will include a presentation by the Portfolio Managers on the Company’s performance and the outlook for the year ahead.

This year, for the first time, shareholders who are unable to attend in person will be able to watch the meeting via a live stream. Further details of how to register for this are given on page 79 of the Annual Report and Financial Statements.

OUTLOOK

The outlook for the mining sector improved significantly over the year under review and remains largely positive for the longer term. Industry-wide trends toward increased free cash flow, upward earnings momentum and the potential to return excess capital to shareholders will aid mining stocks, although it is unlikely that we will see the same percentage increase in underlying share prices this year given that prices started 2017 significantly higher than they did in 2016.

There are some risks hanging over the market, including US dollar strength, the threat of new supply, rising oil prices adding to costs, and a depreciation in China’s currency. However, global growth expectations appear to be picking up after an extended slide, encouraged by China’s stabilising growth and President Trump’s pledge to revise taxes and increase infrastructure spending in the US, which should support commodity demand. Overall, companies in the mining sector have stronger fundamentals than a year ago and the outlook appears promising.

Ian Cockerill
Chairman
23 February 2017

Strategic report

The Directors present the Strategic Report of the Company for the year ended 31 December 2016.

PRINCIPAL ACTIVITY

The Company carries on business as an investment trust. Its principal activity is portfolio investment and that of its subsidiary, BlackRock World Mining Investment Company Limited (together the Group), is investment dealing.

OBJECTIVE

The Company’s objective is to maximise total returns to shareholders through a worldwide portfolio of mining and metal securities. The Board recognises the importance of dividends to shareholders in achieving that objective, in addition to capital returns.

STRATEGY, BUSINESS MODEL AND INVESTMENT POLICY

Strategy

The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager. Matters for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance and appointing and monitoring of the performance of service providers, including the Manager.

Business model

The Company’s business model follows that of an externally managed investment trust. Therefore the Company does not have any employees and outsources its activities to third party service providers including the Manager who is the principal service provider. In accordance with the Alternative Investment Fund Managers' Directive (AIFMD) the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited (the Manager) is the Company’s Alternative Investment Fund Manager.

The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited (the Investment Manager or BIM (UK)). The Manager, operating under an investment management agreement, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

Other service providers include the Depositary, BNY Mellon Trust & Depositary (UK) Limited. The Manager also delegates fund accounting services to BIM (UK), which in turn sub-delegates these services to Bank of New York Mellon (International) Limited and also sub-delegates registration services to the Registrar, Computershare Investor Services PLC.

Details of the contractual terms with other third party service providers are set out in the Directors’ Report on page 27 of the Annual Report and Financial Statements.

Investment policy

The Company’s investment policy is to provide a diversified investment in mining and metal securities worldwide. While the policy is to invest principally in quoted securities, the Company’s investment policy includes investing in royalties derived from the production of metals and minerals as well as physical metals.

In order to achieve its objective, it is intended that the Group will normally be fully invested, which means at least 90% of the gross assets of the Company and its subsidiary will be invested in stocks, shares, royalties and physical metals. However, if such investments are deemed to be overvalued, or if the Manager finds it difficult to identify attractively priced opportunities for investment, then up to 25% of the Group’s assets may be held in cash or cash equivalents. Risk is spread by investing in a number of holdings, many of which themselves are diversified businesses.

The Group may occasionally utilise derivative instruments such as options, futures and contracts for difference, if it is deemed that these will, at a particular time or for a particular period, enhance the performance of the Group in the pursuit of its objectives. The Company is also permitted to enter into stock lending arrangements.

The Group may invest in any single holding, of quoted or unquoted investments, that would represent up to 20% of gross assets at the time of acquisition. Although investments are principally in companies listed on recognised stock exchanges, the Company may invest up to 20% of the Group’s gross assets in investments other than quoted securities. Such investments include unquoted royalties, equities or bonds. In order to afford the Company the flexibility of obtaining exposure to metal and mining related royalties, it is possible that, in order to diversify risk, all or part of such exposure may be obtained directly or indirectly through a holding company, a fund or another investment or special purpose vehicle, which may be quoted or unquoted. The Board will seek the prior approval of shareholders to any unquoted investment in a single company, fund or special purpose vehicle or any single royalty which represents more than 10% of the Group’s assets at the time of acquisition.

In addition, while the Company may hold shares in other listed investment companies (including investment trusts), the Company will not invest more than 15% of the Group’s gross assets in other UK listed investment companies.

The Group’s financial statements are maintained in sterling. Although many investments are denominated and quoted in currencies other than sterling, the Board does not intend to employ a hedging strategy against fluctuations in exchange rates.

The Investment Manager believes that tactical use of gearing can add value from time to time. This gearing is typically in the form of an overdraft or short term loan facility, which can be repaid at any time or matched by cash. The level and benefit of gearing is discussed and agreed with the Board regularly. The Company may borrow up to 25% of the Group’s net assets. The maximum level of gearing used during the year was 16.0% and, at the financial reporting date, net gearing (calculated as borrowings less cash as a percentage of net assets) stood at 12.4% of shareholders’ funds (2015: 12.2%). For further details on borrowings refer to note 6.

No material change will be made to the investment policy without shareholder approval.

PORTFOLIO ANALYSIS

As at 31 December 2016, two investments were held at Directors’ valuation, including one fair valued investment in the Banro gold-linked preference share representing a total of £13,633,000 (2015: £10,572,000) and the unquoted investment in Avanco Resources representing £19,917,000 (2015: £8,142,000). Unquoted investments can prove to be more risky than listed investments.

Information regarding the Company’s investment exposures is contained within the ten largest investments, the investments listing, and portfolio analysis. Further information regarding investment risk and activity throughout the year can be found in the Investment Manager’s Report.

DIVERSIFYING SOURCES OF INCOME

2014 Revenue Breakdown

Ordinary Dividends	55.9%
Special Dividends	7.9%
Fixed Interest	16.2%
Option Premium Income	17.5%
Royalty Income	1.0%
Other	1.0%

2015 Revenue Breakdown

Ordinary Dividends	61.9%
Special Dividends	0.2%
Fixed Interest	15.8%
Option Premium Income	22.1%
Royalty Income	0.0%
Other	0.0%

2016 Revenue Breakdown

Ordinary Dividends	47.6%
Special Dividends	3.6%
Fixed Interest	20.8%
Option Premium Income	22.2%
Royalty Income	5.5%
Other	0.3%

CONTINUATION VOTE

As agreed by shareholders in 1998, an ordinary resolution for the continuation of the Company is proposed at each Annual General Meeting. Following market weakness in the mining sector in recent years, January 2016 appears to have been the low point in the cycle given the scale of upwards moves that followed. The industry has taken action to return commodities into balance and the sector has responded positively. The Directors therefore recommend that shareholders vote in support of the Company’s continuation.

PERFORMANCE

In the year to 31 December 2016, the Company’s NAV has risen by 92.9% compared with an increase in the Euromoney Global Mining Index of 94.0%. The Company’s share price rose by 100.6% over the same period (all figures calculated in sterling terms with income reinvested).

RESULTS AND DIVIDENDS

The results for the Company are set out in the Consolidated Statement of Comprehensive Income. The total profit for the year, after taxation, was £333,912,000 (2015: loss of £210,131,000) of which £23,303,000 (2015: £32,744,000) is revenue profit.

It is the Board’s intention to distribute substantially all of the available income. The Directors recommend the payment of a final dividend as set out in the Chairman’s Statement. Dividend payments for the year ended 31 December 2016 (including the interim dividend) amount to £22,939,000 (2015: £37,230,000).

KEY PERFORMANCE INDICATORS

The Board measures the development and success of the Company’s business through achievement of the Company’s investment objective, to maximise total returns through the cycle, which is considered to be the most significant key performance indicator for the Company.

Performance measured against various indices

The Board reviews and compares, at each meeting, the performance of the portfolio as well as the net asset value and share price for the Company and various indices. Information on the Company’s performance is given in the Chairman’s Statement and the Investment Manager’s Report. The Company slightly underperformed its benchmark index in the year ended 31 December 2016 but the Board is encouraged by the Company’s performance in recent months. 

Share price discount to net asset value (NAV) per share

The Company publishes a NAV per share figure on a daily basis through the official newswire of the London Stock Exchange. This figure is calculated in accordance with the Association of Investment Companies (AIC) formula. At each Board meeting, the Board monitors the level of the Company’s discount to NAV and reviews the average discount/premium for the Company’s relevant sector. In the year to 31 December 2016, the discount narrowed from 15.0% on a cum income basis to 12.4%.

The Board considers the use of share buybacks to enhance shareholder value. At its regular meetings, it also undertakes reviews of marketing/investor relations and sales reports from the Manager and considers their effectiveness, as well as measures of investor sentiment.

Ongoing charges

The Board continues to review the Company’s ongoing charges to ensure that the total costs incurred by shareholders in the running of the Company remain competitive when measured against peer group funds. An analysis of the Company’s costs, including the management fee, Directors’ fees and general expenses, is submitted to each Board meeting. The management fee is reviewed at least annually.

The key performance indicators (KPIs) used to measure the progress and performance of the Company over time and which are comparable to those reported by other investment trusts are set out below:

	Year ended  31 December  2016	Year ended  31 December  2015
Net asset value total return	+92.9%	-35.3%
Share price total return	+100.6%	-37.0%
Benchmark total return	+94.0%	-36.9%
Discount to net asset value	12.4%	15.0%
Revenue earnings per share	13.19p	18.47p
Total dividends per share	13.00p	21.00p
Ongoing charges1	1.10%	1.21%
Ongoing charges on gross assets2	0.96%	1.08%

^1. Ongoing charges represent the management fee and all other operating expenses, excluding finance costs, transaction costs and taxation, as a % of average shareholders’ funds.

^2. Ongoing charges based on gross assets represent the management fee and all other operating expenses, excluding finance costs, transaction costs and taxation, as a % of average gross assets. Gross assets are calculated based on net assets during the year before the deduction of the bank overdraft and loans. Ongoing charges based on gross assets are considered to be an appropriate performance measure as management fees are payable on gross assets only in the event of an increase in NAV on a quarter-on-quarter basis.

The Board monitors the above KPIs on a regular basis. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. For further details refer to the Investment Manager’s Report.

PRINCIPAL RISKS

The principal risks faced by the Company are set out below. The Board has put in place a robust process to assess and monitor these risks. A core element of this is the Company’s risk register. This identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of the assessment. This approach allows the effect of any mitigating procedures to be reflected in the final assessment.

The risk register and the operation of key controls in the Manager’s and other third party service providers’ systems of internal control, are reviewed on a regular basis by the Audit & Management Engagement Committee. In order to gain a more comprehensive understanding of the Manager’s and other third party service providers’ risk management processes and how these apply to the Company’s business, the Audit & Management Engagement Committee periodically receives presentations from BlackRock’s Internal Audit and Risk & Quantitative Analysis teams and reviews internal control reports from the Company’s service providers.

In relation to the 2014 UK Corporate Governance Code, the Board is comfortable that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period. The Board will continue to assess the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, on an ongoing basis.

The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out in the following table.

Principal Risk	Mitigation/Control
Counterparty
The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments.	Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties. The Depositary is now liable for restitution for the loss of financial instruments held in custody unless able to demonstrate the loss was a result of an event beyond its reasonable control.
Investment performance
Returns achieved are reliant primarily upon the performance of the portfolio. An inappropriate investment policy may lead to underperformance compared to the benchmark index, a loss of capital and dissatisfied shareholders.	To manage this risk the Board: -  regularly reviews the Company’s investment mandate and long term strategy; -  has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on; -  receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio; -  monitors and maintains an adequate spread of investments in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the investment policy; -  receives and reviews regular reports showing an analysis of the Company’s performance against the Euromoney Global Mining Index and other similar indices, including the performance of major companies in the sector; and -  has been assured that the Investment Manager has training and development programmes in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff.
Legal & Compliance
The Company has been accepted by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010. The Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the UK Listing Rules, Disclosure and Transparency Rules and the Market Abuse Regulation.	The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting. Compliance with the accounting rules affecting investment trusts are also carefully and regularly monitored. The Company Secretary, the Manager and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulation. The Board and the Manager also monitor changes in government policy and legislation which may have an impact on the Company.
Market
Market risk arises from volatility in the prices of the Company’s investments. It represents the potential loss the Company might suffer through realising investments in the face of negative market movements. Changes in general economic and market conditions, such as currency exchange rates, interest rates, rates of inflation, industry conditions, tax laws, political events and trends, including the impact of the UK leaving the EU and the results of the US Presidential election, can also substantially and adversely affect the securities and, as a consequence, the Company’s prospects and share price.	The Board considers the diversification of the portfolio, asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager.
Operational
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties and is dependent on the control systems of the Manager, BNY Mellon Trust & Depositary (UK) Limited (the Depositary) and the Bank of New York Mellon (International) Limited, who maintain the Company’s assets, dealing procedures and accounting records. The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. Failure by any service provider to carry out its obligations could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records (including cybersecurity risk) could prevent the accurate reporting and monitoring of the Company’s financial position.	Due diligence is undertaken before contracts are entered into with third party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board. Third party service providers produce internal control reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit & Management Engagement Committee. The Company’s assets are subject to a strict liability regime and, in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control. The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers on a regular basis and compliance with the investment management agreement annually. The Board also considers the business continuity arrangements of the Company’s key service providers.
Financial
The Company’s investment activities expose it to a variety of financial risks which include market risk, counterparty credit risk, liquidity risk and the valuation of financial instruments.	Details of these risks are disclosed in note 18 on pages 64 to 76 of the Annual Report and Financial Statements, together with a summary of the policies for managing these risks.
Marketing
Marketing efforts are inadequate or do not comply with relevant regulatory requirements. There is a failure to communicate adequately with shareholders or identify potential new shareholders resulting in reduced demand for the Company’s shares and a widening of the discount.	The Board reviews marketing strategy and initiatives and the Manager is required to provide regular updates on progress. BlackRock has a dedicated investment trust sales team visiting both existing and potential clients on a regular basis. Data on client meetings and issues raised are provided to the Board on a regular basis. All investment trust marketing documents are subject to appropriate review and authorisation.

VIABILITY STATEMENT

In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company for a period of three years. This is generally the investment holding period investors consider while investing in the natural resources companies sector. In its assessment of the viability of the Company the Directors have noted that:

-  the Company invests predominantly in highly liquid, large listed companies so its assets are readily realisable and provide a level of cash receipts in the form of interest and dividends;

-  the Company invests in mining companies with long life assets;

-  the Company’s forecasts for revenues, expenses and liabilities are relatively stable and it has largely fixed overheads which comprise a very small percentage of net assets (1.10%); and

-  the business model should remain attractive for much longer than three years, unless there is a significant deterioration in commodity markets or further regulatory change.

The Company will undertake its annual continuation vote at the forthcoming Annual General Meeting and the Board has reviewed the potential impact that this may have on the Company’s viability. The Board is confident that the continuation vote will be passed and have prepared the viability statement under this assumption.

The Directors have also reviewed:

-  the Company’s principal risks and uncertainties as set out above;

-  the potential impact of a fall in commodity equity markets on the value of the Company’s investment portfolio and underlying dividend income;

-  the ongoing relevance of the Company’s investment objective, business model and investment policy; and

-  the level of demand for the Company’s shares.

The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion which are based on:

-  processes for monitoring costs;

-  key financial ratios;

-  evaluation of risk management controls;

-  compliance with the investment objective;

-  portfolio risk profile;

-  share price discount to NAV;

-  gearing; and

-  counterparty exposure and liquidity risk.

Based on the results of their analysis, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

FUTURE PROSPECTS

The Board’s main focus is to maximise total returns over the longer term through investment in mining and metal assets. The outlook for the Company is discussed in both the Chairman’s Statement and the Investment Manager’s Report.

SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES

As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Company believes that it is in shareholders’ interests to consider human rights issues and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 37 of the Annual Report and Financial Statements.

MODERN SLAVERY ACT

As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

DIRECTORS, GENDER REPRESENTATION AND EMPLOYEES

The Directors of the Company on 31 December 2016 are set out in the governance structure and Directors’ biographies on page 25 of the Annual Report and Financial Statements. The Board currently consists of four male Directors and two female Directors. The Company does not have any employees; therefore there are no disclosures to be made in that respect.

The information set out on pages 13 to 24 of the Annual Report and Financial Statements forms part of this Strategic Report. The Strategic Report was approved by the Board at its meeting on 23 February 2017.

By order of the Board
CAROLINE DRISCOLL
FOR AND ON BEHALF OF
BlackRock Investment Management (UK) Limited
Company Secretary
23 February 2017

Transactions with the AIFM and the Investment Manager

BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BlackRock Investment Management (UK) Limited (BIM (UK)) continues to act as the Company’s Investment Manager under a delegation agreement with BFM.

The investment management fee due to BFM for the year ended 31 December 2016 amounted to £5,027,000 (2015: £5,312,000). At the year end, £1,532,000 (2015: £1,952,000) was outstanding in respect of the management fees.

In addition to the above services, BlackRock has provided marketing services. The total fees paid or payable for these services for the year ended 31 December 2016 amounted to £104,000 excluding VAT (2015: £17,000 excluding VAT). Marketing fees of £94,000 were outstanding as at 31 December 2016 (2015: £143,000).

Related Party Transactions

The Board consists of six non-executive Directors all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £45,000, the Chairman of the Audit & Management Engagement Committee/Senior Independent Director receives an annual fee of £37,500, and each other Director receives an annual fee of £30,000. All six members of the Board hold shares in the Company. Mr Buchan holds 29,000 ordinary shares, Mr Cheyne 24,000 ordinary shares, Mr Cockerill 36,789 ordinary shares, Mr Edey 20,000 ordinary shares, Ms Mosely 7,400 ordinary shares and Ms Lewis 2,429 ordinary shares. The amount of Directors’ fees outstanding at 31 December 2016 was £16,875 (2015: £19,375).

Statement of directors’ responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the financial statements under IFRS as adopted by the European Union.

Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

-  present fairly the financial position, financial performance and cash flows of the Group and Company;

-  select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

-  present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

-  make judgements and estimates that are reasonable and prudent;

-  state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

-  provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group and Company’s financial position and financial performance; and

-  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit & Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors confirm to the best of their knowledge that:

-  the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial positon and net return of the Group and Company; and

-  the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the positon of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

The 2014 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit & Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit & Management Engagement Committee’s Report on pages 38 to 41 of the Annual Report and Financial Statements. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 December 2016, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s and Company’s position, performance, business model and strategy.

For and on behalf of the Board
Ian Cockerill
Chairman
23 February 2017

Investment manager’s report

Portfolio performance

We are pleased to report that after five years in a row of negative returns for the mining sector, an unprecedented run of share price falls leading to a total fall of 82.8% from peak to trough, 2016 has at last broken the trend and it has done so in spectacular fashion. In the year to 31 December 2016, in sterling terms with income reinvested, the net asset value (NAV) of the Company was up by 92.9% and the share price was up by 100.6%, making it one of the best performing investment trusts. The return in the second half lagged the first half in part due to the low base from which the move commenced and also due to the Brexit fuelled collapse in sterling which happened at the end of June. More recently, it has been reassuring to see the share price moves supported by rising commodity prices across the suite. As covered later in the report, the performance varied by commodity and by period. Precious metals led the rally early in 2016 but then gave back some of the gains, initially on the back of profit taking and then on a further move lower in the gold price following the US Presidential election result. Base metal prices moved higher throughout the year, with copper joining in as the year ended. Bulk commodity prices soared with coking coal rising like a phoenix from the ashes after having declined for four years in a row.

By comparison, the Company’s benchmark, the Euromoney Global Mining Index, rose by 94.0% (in sterling terms with income reinvested). The majority of the Company’s underperformance in NAV happened in the first two months of 2016, as the lowest quality assets rallied and those with the highest indebtedness moved from the cusp of financial failure to survival. These huge moves happened very rapidly and against the underlying tone of the commodity market which was still suffering from demand uncertainty. After the slow start to the year in terms of relative return, the portfolio started to perform well as the quality bias in the portfolio delivered in the second half of the year.

Lastly, on income, our worst fears look like being short lived as the Company received more than expected in dividends and, at this stage, the outlook for 2017 appears more robust than expected at this time last year.

Mining sector overview

The last few years have been difficult to work through due to the constant derating of equity valuations, declining commodity prices and companies unravelling numerous poor quality investments made during more optimistic times. The debt that was taken on to fund either M&A activity or unwise capital spending damaged the credibility of the sector and destroyed the stunning returns generated during the previous decade. In the Interim Report we bravely suggested that we were past the worst and in years to come investors will point to January 2016 as the low point in the cycle. Given the scale of upwards moves that followed, it now seems highly likely that this will prove to be the case.

In the early part of the year the rally in share prices seemed to be more to do with investors taking profits on short positions that were put on as the shares were falling. In fact, the peak in ‘short interest’ across the sector was in the first quarter of 2016 and the buying needed to close this out supported prices without commodity prices rallying to justify the upwards moves. As the year progressed, commodities, first led by precious metals and then followed by iron ore, coking coal, and zinc, started to support valuations. What had been years in a row of a vicious circle started to unwind and the pressure to close shorts/underweights built as company profitability increased. Companies whose balance sheets were seen as a negative quickly became the go-to-stocks due to the upside leverage from debt reduction. By the end of the summer, the five year vicious circle was well and truly broken.

Over the year, companies did a range of transactions to help deleverage balance sheets. Assets were sold, costs were cut, capital spending plans were shelved and, for the most, vulnerable dividends were suspended. 2016 turned out to be the lowest year since 2003 for M&A activity with only US$28 billion of deals conducted. In short, management tried everything to stop the rot of debt eating further into the equity value of their businesses. These efforts steadied the ship and shareholders should be thankful that so many companies have survived what was one of the worst periods of share price volatility ever seen in the sector.

Outside of the self-help actions taken by the companies, the demand side of the equation was assisted by an injection of liquidity into the Chinese economy. This boosted sentiment and helped buoy confidence allowing property prices to recover and business activity to increase. Soon, steel prices started to rise leading to increases in iron ore and other steel-making raw materials. In the summer, the world faced the uncertainty of the Brexit vote and this caused a severe fall in sterling which has been a significant help to the valuation of companies whose earnings are based in US dollars. In fact, the potential for the UK listed mining sector to be seen as the driver of income growth in 2017, and beyond, is very real due to rising profitability and US dollar based dividends being magnified by the depreciation in sterling.

During the second half of the year, investor confidence started to build on the back of reduced fears on China and commodity markets moving from being in surplus to being in deficit. Better than expected demand accelerated inventory depletion rates and brought forward the point when commodities moved from being in surplus to being in deficit. For example, it was notable in copper that the price only started to move higher from October onwards and this caused copper equities to lag the market for most of the year. We had been expecting this process to happen naturally, but the events of the second half of 2015 masked what was building as a normal cycle bottom and raised fears that things would never recover. Confidence in commodity demand was boosted further with the US election result, as expectations of a jump in business activity from the pro-growth Trump agenda drove metal prices to highs for the year.

Base metals

Given the moves seen during the year it certainly feels like 2016 marked the bottom of the base metal price cycle. For the year as a whole it was a clean sweep of upwards moves, as seen from the table below, with zinc and tin leading the way. However, when looked at using the average prices for 2016 versus the average prices for 2015 it tells a different story. The momentum is clearly positive as mentioned previously but for some of the metals the moves were second half weighted as the year-on-year average prices showed a negative rather than positive move. Copper prices were the most impacted by the late move with the price only breaking out to the upside in October. This meant that copper equities lagged the overall move in the sector until very late into the year. Given the significant weighting to copper producers in the Company (19.8% to copper equities) it was a significant contributor to the relative underperformance in the first half and there was only a partial catch up towards the year end. However, the Company is well positioned for 2017 as at current margins copper producers should be the biggest beneficiaries for such a change year-on-year.

Selected commodity price changes during 2016

	Price  31 December  2016	%  change  12  month	% change  average  2016  vs.  2015
Precious metals US$/oz
Silver	16.05	15.9	9.13
Gold	1,157.5	8.95	7.58
Platinum	898	3.46	-6.23
Base metals US$/lb
Tin	9.62	45.33	11.71
Zinc	1.16	60.59	8.34
Lead	0.91	11.27	4.43
Aluminium	0.77	13.58	-3.61
Copper	2.51	17.37	-11.63
Nickel	4.52	13.49	-19.02
Industrial commodities
Coking Coal US$/t	226	189.0	33.64
Thermal Coal US$/t Newcastle	94.7	87.15	11.45
Iron Ore – fines 62% Fe China Import US$/t	81.8	89.35	4.65
Uranium US$/lb	20.25	-40.88	-28.04
Lithium Carbonate CIF to China spot 99% US$/t	17,887	-9.96	143.43
Baltic Freight Rate Index US$	961	101.05	-5.53

Sources: Datastream and Bloomberg.

The key copper holding in the Company is First Quantum where it owns not just shares (3.3% in shares) but also has exposure to First Quantum corporate bonds. The company is aiming to complete a major debt refinance by mid-year using a project facility attached to their Cobre de Panama asset. This, combined with the ramp-up of expanded capacity in Zambia, leaves the company ideally positioned to deliver exposure to a deleveraging balance sheet, production growth and copper exposure. Shares in First Quantum rallied significantly during the year finishing up 217% in sterling terms. First Quantum debt started the year trading at 63 cents in the dollar and finished the year trading above par.

Another holding that offers similar exposure to both the ability to deleverage its balance sheet and growth in production is Cerro Verde (3.2% of the portfolio). The company went through a major expansion during the last three years and this has left the balance sheet weaker than its owners would like. We expect the company to refinance its short term debt in 2017 and then resume dividend payments in 2018. The Company also has exposure to copper via a group of other holdings such as Lundin (4.4% of the portfolio), Boliden (2.0% of the portfolio), Avanco (1.3% in shares) and OZ Minerals (0.9% of the portfolio). Lundin is in the process of completing the sale of its stake in the Tenke mine in DRC and this could result in a material special dividend during the second half of the year. Both Lundin and Boliden give the Company exposure to mines producing zinc, nickel and copper, all of which we feel have good potential for improved cash generation this year. Lundin was up 106.7% and Boliden was up 85.4% (both in sterling terms).

Like copper, nickel also started to rally in the second half of the year. This was based on improved demand and the prospect of further supply reductions on the back of mine closures in Indonesia. The Company has continued to maintain a material holding in Norilsk Nickel (4.5% of the portfolio) due to its world class assets that deliver exposure to nickel, copper and PGMs (platinum group metals). In addition, the company continues to offer low cost growth optionality and a sector leading dividend yield. Norilsk was a relative underperformer in 2016, rising only 58.2%, with nearly all the rally coming in the second half of the year.

Gold & precious metals

It was a year of two halves in the gold market as the price rose 25% in the first half of 2016 before handing back part of its gains later in the year, with the majority of the fall happening after the US Presidential election in November. For the year, the price finished up 9% in US dollar terms after falling 12.4% in the second half of the year. The first half rally was driven by a pick-up in demand for ‘safe-haven’ assets as diversification properties came to the fore on the back of equity market weakness, currency volatility and rising geopolitical uncertainty. Global equity markets suffered their worst start to a year since 2009 on heightened concerns over global economic growth. Meanwhile, soft US GDP data and dovish commentary from the US Federal Reserve pushed out expectations for further US interest rate rises. In the end, the US Federal Reserve did not raise rates in March as had been expected and instead revised its rate projections down from four hikes in 2016 to two. Central bank policy elsewhere in the world remained supportive of gold; the Bank of Japan introduced negative interest rates on a select portion of the banks’ reserves and Mario Draghi announced a further cut to interest rates in Europe, as well as an expansion of quantitative easing. At one point in the year, the entire spread of bonds issued by the Swiss National Bank were trading with negative yields.

From July onwards the gold market started to give back its gains made during the first half. The post Brexit high of US$1,369 made in July was swiftly followed with rising consumer confidence and reduced concerns regarding Chinese growth. In addition, markets started to price-in an increased probability that the US would raise rates and this cooled enthusiasm for gold, as well as seeing the dollar strengthen further. Political uncertainty continued with the US Presidential election; November saw the unexpected victory of President Donald Trump which dominated global markets. Contrary to widely held expectations that this would be supportive of gold, Trump’s acceptance speech saw global equity markets rotating to a pro-growth position. The back end of the US yield curve steepened significantly, increasing the opportunity cost of holding gold, a non-yielding asset. The message from markets following the US Presidential election appears to be that the reflation trend is set to begin. On the back of this, US 10-year Treasury yields rose to over 2.5% in December, and the US dollar strengthened as consumer confidence spiked to the highest level seen since August 2001. Dollar strength acted as a headwind for gold, as a more positive economic outlook was fuelled by Trump’s pledged stimulus measures. However, uncertainty regarding Trump’s administration, combined with wider global economic and political uncertainty, means the appeal of owning gold as a safe-haven asset remains high.

Turning to the physical market, key themes in 2016 were the impact of government restrictions in both India and China. In November, the Indian government decided to immediately withdraw the Rs 500 and Rs 1,000 notes which account for 85% of notes in circulation as part of the government’s plan to tackle corruption and tax evasion. They also introduced measures to dampen the demand for physical gold including a 1% excise duty on most gold purchases, as well as a compulsory declaration to authorities of large retail gold purchases. In China we also saw the government restrict gold purchases as part of measures designed to prevent capital outflows. As a result, gold in China was in short supply as evidenced by premiums paid on the Shanghai Gold Exchange which set new five year highs at over US$40/oz in December. It was a good year for investment demand for gold with ETFs adding 12.8mil oz, taking total holdings to 58.2mil oz at the end of the year.

The gold equities, as measured by the FTSE Gold Mines Index, rose by 59.5% in US dollar terms (90.2% in sterling terms), outperforming the industrial miners. Underweights to Barrick Gold and Newmont Mining (2.8% of the portfolio) hurt relative performance in the first half of the year as the rising gold price rapidly expanded both companies’ narrow profit margins and bolstered balance sheets. On the positive side, the Company benefited from the same dynamic through its position in AngloGold. Cost deflation was also a theme in the gold miner space, with ‘all-in sustaining costs’ of production declining with lower consumables, energy and currencies. There was management change at Goldcorp, with a new CEO David Garofalo taking office during a time of both operational problems at their Penasquito plant and labour issues at Cerro Negro. The Company’s underweight to Goldcorp added to relative performance. In the more junior part of the portfolio, performance was helped by exposure to key growth names such as Northern Star Resources (1.1% of the portfolio), OceanaGold (1.1% of the portfolio), Metals Exploration (0.5% of the portfolio) and TMAC Resources (0.4% of the portfolio). Following the price correction in the second half, exposure to gold producers that have a strong growth profile was increased further.

Elsewhere in the precious metals space, silver outperformed gold this year rising 15.9%. Silver has many industrial uses and tends to outperform in an accelerating global growth environment. The Company’s position in Fresnillo (1.9% of the portfolio) added to relative performance, as the stock first outperformed in the wake of the Brexit vote and then on the back of Trump related weakness in the Mexican peso which reduces Fresnillo’s cost of production and improves cash flow generation. This should boost the profitability of Industrias Penoles (1.0% of the portfolio), the parent company of Fresnillo, which is also held in the portfolio.

Total exposure to the diamond sector increased in 2016 and ended the year at 4.7% of the portfolio through names like Petra Diamonds (1.8% of the portfolio both equity and debt), Lucara Diamond (1.0% of the portfolio) and Mountain Province Diamonds (1.3% of the portfolio). With the US leading the global growth acceleration and remaining the largest diamond market in the world, the outlook for diamonds improved in the second half. These holdings are all likely to deliver strong margins and growth in production during 2017, leaving them well positioned to benefit from price increases that might arise on the back of a better market for diamonds.

Bulk commodities

The reversal in prices for bulk commodities during 2016 was spectacular. 2015 was the first decline in global demand for crude steel since 2009 with a 3.5% contraction. This year crude steel demand is estimated to have risen by a mere 0.5% but, given the low inventories throughout the production pipeline, this reversal of trend caused a rally in demand for steel making raw materials. Hard coking coal prices, having fallen from a high back in January 2011 of US$380/t to a low of US$73/t in November 2015, soared in 2016. The rally started on the back of changes to Chinese domestic coal production where the Government restricted production to 276 days a year for coal producers in April. Coking coal moved from its multi-year low of US$73/t in November 2015 to a high of US$309/t by November 2016. The squeeze in supply triggered aggressive restocking and, now that supply concerns have eased, prices have started to correct back to US$186/t – still a massive 226% up based on where they started the year.

The move higher in price resulted in huge windfalls for producers and those with the weakest balance sheets benefited the most due to their ability to use the cash to pay down debt and in turn reduce the risk implied in their share prices. A key beneficiary was Teck Resources (2.6% of the portfolio) whose debt started the year trading at less than 50 cents in the dollar and finished the year above par. The Company rebuilt its holding in the shares during the early part of the year and this delivered strong gains to the portfolio, both on a relative and absolute basis. Another key holding to benefit from this rally was South32 (2.7% of the portfolio). The company not only benefited from the rally in coking coal prices but also thermal coal and manganese. The combination of all three of these commodities moving higher should leave South32 in an excellent position to return surplus cash to shareholders in 2017 and, if so, it will be a key part of the growth in dividend income for the coming year.

Iron ore prices also rallied strongly but not to the same extent as that of coking coal. This was in part due to the improving demand for steel and flow through from steel producers who were able to raise prices around the world. The higher prices flowed down to the iron ore producers who were at the same time showing discipline with regards to production. In addition, there was also a subtle shift in tone from the miners as they all seemed to reduce volume targets and defer expansion plans. The combination of the above allowed traders, principally domestic Chinese groups, to move from being bearish to bullish and this caused a sudden and material rise in prices. In January, iron ore for delivery to China was trading below US$40/t and by December it was trading above US$80/t, a price not seen since 2014.

Given the move in prices, the leveraged companies were standout performers during the year. The Company has exposure to iron ore principally via the diversified mining companies such as Rio Tinto (10.0% of the portfolio), BHP Billiton (8.2% of the portfolio) and Vale (5.4% of the portfolio). Out of these three, Vale was the biggest year-on-year change to the portfolio. Following a visit to meet with management in Brazil during April, and subsequent review of our models, we took the decision to build a substantial position in Vale. The combination of improving commodity prices, a high probability of successful asset sales and management commitment to deleverage the balance sheet meant that the shares could see a significant rerating. This happened in the second half of the year and, given that the balance sheet repair work is not completed, it is likely that there is further for the shares to move as the company makes progress in this regard.

One final point to make is the resilience in costs despite the soaring commodity prices. Across the mining industry, producers continue to reduce costs where possible and iron ore miners have seen some of the steepest drops. The falls in costs have remained in place during the year and, as such, the combination of the rapid increase in prices and stability in costs has made the margin expansion even more powerful allowing companies to generate cash at levels well ahead of estimates.

Industrial metals

After an extremely strong 2015 in which the Chinese lithium carbonate price rose 162%, 2016 saw the price give back some of these gains with a 10% fall. However, demand continued to grow dramatically with batteries the most prominent and visible growth driver, with current estimates showing there was +30% growth in demand for lithium in 2016. During the year, the Company has maintained its exposure to the area with a position in Albermarle (1.4% of the portfolio), the world’s largest lithium producer, and initiated several positions in emerging producers. Exposure to the developers and emerging producers is part of a general strategy to add exposure to this high growth part of the mining market.

Another key area within this sector is mineral sands. These commodities benefit when global growth improves due to their principal use in the construction industry. The reversal of falls in the Chinese property sector, combined with better economic data in the US and other developed nations, has led to a reduction in inventories at the same time as producers have idled capacity. The Company has maintained its holding in Iluka Resources (1.7% of the portfolio), an Australian zircon and rutile producer, whichhas recently used its strong balance sheet to consolidate an African based producer of rutile at what looks to be the bottom of the cycle. The Company also has exposure to a junior developer called Sheffield Resources (0.2% of the portfolio) which is advancing the high grade Thunderbird deposit in Western Australia.

Longer term investments

In the Interim Report we outlined our belief that the sector had bottomed in January and that at this point in the cycle it made sense to increase exposure to smaller companies with projects at an earlier stage of development. Investing in these stocks is higher risk and reduces exposure to dividend bearing companies, but offsetting this is the potential for significant returns on capital. Over the year we invested in companies meeting these criteria including Nemaska Lithium (0.2% of the portfolio), Orocobre Minerals (0.1% of the portfolio), TMAC Resources (0.4% of the portfolio), Sheffield Resources (0.2% of the portfolio), Silver Mines (0.2% of the portfolio), Metals Exploration (0.5% of the portfolio), Pretium Resources (0.2% of the portfolio) and Arizona Mining (0.2% of the portfolio). In addition, exposure to existing longer term investments was increased further and we hope to grow this theme during the coming year. We are pleased to report that by the year end these investments had already delivered positive returns for shareholders but patience will be required whilst the development risks are overcome so that the full potential of the strategy can be unlocked.

Royalties and illiquid investments

4.4% of the Company’s portfolio is invested in unquoted investments. These, and any future investments, will be managed in line with the guidelines set by Board as outlined to shareholders in the Annual Report.

Avanco royalty contract

In October 2013, the Company signed a non-binding memorandum of understanding with Avanco Resources for a contractual royalty covering its exploration licenses within the world-class mineral district of Carajas in Brazil. A binding royalty agreement was subsequently signed in July 2014 in which the Company committed US$12 million in return for Net Smelter Return (net revenue after deductions for freight, smelter and refining charges) royalty payments comprising 2% on copper, 25% on gold and 2% on all other metals produced from their Antas North and Pedra Branca (Stage 1 and Stage 2) licenses. In addition, there will be a flat 2% royalty over all metals produced from any other discoveries within Avanco’s license area as at the time of the agreement.

In March 2016 the Company funded the final US$4 million for the royalty, taking the total invested up to the full US$12 million committed. The Antas North mine ramped-up on time and budget in the first half of 2016, with commercial production declared in the third quarter of 2016. At full production, Antas North is estimated to produce 12,000 tonnes of copper and 7,000 ounces of gold for the next ten years. The Company received two cash payments from the royalty in 2016 totalling US$1.58 million earned from revenues during the ramp-up of the mine in the second and third quarter. The royalty payment with respect to the fourth quarter of 2016 is expected in early 2017 and the mine continues to produce as expected.

In September, Avanco released the results of its Pedra Branca East Scoping Study. Avanco is in the process of completing a pre-feasibility study on a large scale underground mine at Pedra Branca East and, due to encouraging results to date, they have approved the commencement of an underground mine which will enable a small amount of initial ore to be processed at the Antas plant. This should add an additional 3,000 tonnes of production annually for the next couple of years. The bigger project of the large scale underground mine will target 24,000 tonnes of copper production at an operating cost of US$1.14/lb for copper. This project will likely require US$170 million of capital expenditure and, given that Avanco has no debt and is cash flow positive, there are a range of options on how to finance this.

Since the previous annual SRK valuation as at 31 December 2015, the mine on the area subject to the royalty, Antas North, has moved from development to commercial production during 2016. Additionally, SRK now include a contribution from Pedra Branca East into their Preferred Technical Valuation, recognising the scoping study work that has been completed during 2016. This progress towards production has given a greater degree of confidence in the underlying parameters and therefore justifies inclusion within the overall valuation of the investment but still at a heavily discounted level due to not yet being in production.

Further information is available in the Pedra Branca East Scoping Study and Development of Decline dated 12 September 2016 which can be found at http://www.avancoresources.com/content/investor-centre/asx-announcements/.

Following an independent valuation by SRK Consulting (UK) Limited (SRK) of the Avanco Royalty investment there has been an upwards revaluation to US$25.2 million (previously US$12 million) resulting in an estimated uplift to the NAV per share of 6.05 pence (based on an exchange rate of 1$ = £0.8093). This investment now represents approximately 2.7% of the Company’s net assets. The change was reflected in the NAV calculated as at close of business on 10 February 2017.

Banro gold-linked linked preference share

The Company’s portfolio has a 1.8% exposure to a gold-linked preference share issued by Canadian listed gold company Banro Corporation. The preference share provides exposure to the gold price, as well as to production growth, with the principal value moving in line with the gold price and the coupon ranging between 10% and 15% depending on Banro’s overall level of production. Since the Company purchased the preference share in April 2013, the Company has received a total of US$10.1 million in dividends, with deferred dividends expected to be received in the first half of 2017.

Operational results at Banro were in line with guidance in 2016 and, as of the end of the third quarter, had produced 147,242 ounces of gold from Twangiza and Namoya combined with a total all-in sustaining cost of US$963 per ounce. Namoya, the company’s second asset, declared commercial production on 1 January 2016 and continued to ramp-up during the year reaching a production rate in line with steady state operations in the third quarter at 28,190 ounces per annum. Production is expected to further increase in 2017 as Namoya operates at higher rates for the entire year.

As at the end of the year, the Board in conjunction with a recommendation from the BlackRock Pricing Committee, has applied a 30% discount to the valuation of the gold-linked preference share. This is in excess of the discount to par value that the senior secured notes have traded at during the last year due to the gold linked preference share ranking behind the notes. At the end of January, Banro announced a proposed refinancing of its outstanding debt (including the Company's gold-linked preference share). Should the deal be approved by shareholders, this would lead to the Company reducing its exposure to Banro and an uplift in the carrying value due to removal of the 30% discount.

Fixed income securities

The Company continues to have a significant part of the portfolio allocated to fixed income securities. As at the end of 2016, the Company had 9.4% of the portfolio in corporate debt. First Quantum debt made up the largest exposure to a single issuer at 6.1% of the Company’s assets. During the year, Hudbay Minerals refinanced a bond held by the Company which forced the Company to sell the holding. Given the current market conditions, it is likely that it will be hard to replace this exposure due to the low coupons on new debt being issued. The remaining holdings mostly mature after 2020 and it is likely they will be held until maturity assuming the cost of debt for the company provides an attractive arbitrage opportunity and the credit worthiness of the issuers remains suitable.

Derivatives activity

The Company sometimes holds positions in derivatives contracts with virtually all of the activity focused on selling either puts or calls in order to increase or decrease position sizes and take advantage of high prices paid for exposure to volatility. These derivative positions, which are small in comparison with the size of the Company, usually have the effect of obliging us to buy or sell stock or futures at levels we believe are attractive. During 2016, we primarily focused on writing short dated options to maximise the price paid for the implied volatility and at the same time minimise the duration of the exposure. The overall strategy worked well during the year and income from option writing was £6.39 million. At the end of 2016 the Company had three put option positions with time still to run and two expired worthless in January 2017.

Gearing

At 31 December 2016, the Company had debt net of group cash amounting to £83.8 million, representing gearing of 12.4%. For the most part, this gearing has been drawn down against the higher yielding mining company corporate bonds and is predominantly denominated in the same currency as that of the bonds. Gearing, which can be drawn down or repaid at any time, is used in the portfolio to take tactical advantage of market volatility and opportunities, as well as enhance overall returns during the medium to long term.

Outlook and strategy for 2017

After such a strong year it is hard to imagine 2017 being a repeat of 2016 given we are starting the year from a much higher base. Nonetheless, the outlook is promising. Corporate balance sheets seem to have passed the point of maximum leverage and should commodity prices remain around current levels they will rapidly deleverage. If management teams can hold themselves back from either investing the cash back into new projects, or using it for corporate transactions, then long suffering shareholders should benefit as debt is paid down and increased returns become possible.

Given the scale of the share price moves last year it is likely that equity volatility will revert to the normal levels seen in prior years. This means that the Company will be paid less for the risk it takes in selling volatility and in turn the opportunity to generate income from this area will be reduced. However, dividends are expected to grow in 2017 as companies either increase the amounts paid out or return to paying them after having been forced to cancel them in the downturn. In addition, we see room for other companies to return surplus cash by either paying special dividends or starting share buyback programmes.

It is our hope that during 2017 common sense prevails and mining companies do not restart mothballed production too rapidly or dust off capex plans as the recovery is still in its early days. The outlook for the global economy feels better, but with China still navigating its way through its varied challenges, and the developed economies having to accommodate a new US President and Brexit, the outlook, although positive, is still fraught with uncertainty. The last thing this sector needs after the pain of the last five years is the threat of new supply just as commodity markets are finally moving into balance. If it can get it right however, the opportunities are compelling.

Evy Hambro and Olivia Markham
BlackRock Investment Management (UK) Limited
23 February 2017

Ten largest investments as at 31 December 2016

Set out below is a brief description by the Investment Manager of the Company’s ten largest investments.

Rio Tinto: 10.0% (2015: 10.7%) is the world’s second largest mining company by market capitalisation. It has interests over a broad range of metals and minerals including iron ore, aluminium, copper, coal, industrial minerals, gold and uranium. Rio Tinto has a strong balance sheet, currently stronger than its stated 20% to 30% gearing targeted range, which should help the company both sustain its dividend policy of a 40% to 60% pay-out of earnings and drive organic growth and shareholder returns. The most significant organic growth project is the Oyu Tolgoi phase II copper project in Mongolia. In 2016, Rio announced productivity targets to drive US$5 billion of free cash flow over the next five years and further drive shareholder returns. Towards the end of the year, news of SEC investigation into activity in deals done around securing of licences at Simandou caused concern and we look to see how this develops in 2017.

First Quantum Minerals*: 9.4% (2015: 6.7%) is an integrated copper producer whose principal operating assets are in Zambia. First Quantum is in the midst of a significant expansion of the business, most notable the Cobre Panama mine in Panama. At the beginning of 2016, we saw the company take action to de-risk the balance sheet, including in the first half of 2016 the successful sale of the Kevista nickel mine for US$712 million to Boliden. In addition, the company refinanced its US$3 billion credit facility with a new US$1.8 billion facility with improved financial covenants and amortization schedule. Through the course of 2016, management added to a copper price hedge to ensure the capital availability for the Cobre Panama expenditure. Elsewhere, at the Sentinel copper mine in the DRC, the company successfully commissioned the second power line to ensure power availability; commercial production at Sentinel is expected in 2017. The Company holds both the equity and senior unsecured debt.

BHP Billiton: 8.2% (2015: 11.3%) is the world’s largest mining company by market cap. The company is an important global player in a number of commodities including iron ore, copper, coal, manganese, aluminium, diamonds and uranium. During the first half of 2016, the company ended its progressive dividend policy, cutting its dividend by 75%. Going forward, the company will pay out a minimum of 50% of underlying profit, with the ability to pay additional amounts depending on capital needs within the business. After the tragic tailings dam collapse at Samarco last year, the company defined a framework agreement subject to court ratification which has been challenged; resolution is expected in 2017. BHP is a 50% owner in Samarco alongside Vale.

Glencore: 7.3% (2015: 3.8%) is a diversified miner with activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. In addition, the company provides financing, logistics, marketing and purchasing services to producers and consumers of commodities. Glencore remains focused on preserving its investment grade credit rating targeting a BBB+ rating over the medium term. The Company has met asset sale proceeds of US$4 billion to US$5 billion, with the company successfully selling a 40% equity stake in its agriculture business for US$2.5 billion in April 2016. Since mid-2015 the company has been focused on rapidly de-gearing the balance sheet, targeting a net debt position of US$17 to US$18 billion by December 2016 versus net debt of US$26 billion in December 2015.

Vale: 5.4% (2015: 0.1%) is a Brazilian-based diversified mining company and the world's largest producer of iron ore as well as rising outputs of copper, coal and fertilisers. Its main mining operations are in Brazil, Canada, Australia, Indonesia and Mozambique and the dominant earnings and cash flow driver continues to be its Brazilian based iron ore operations. During 2016, the company significantly de-geared through a divestment programme and significant cash flow generation from its mining operations. Divestments include the announced sale of the fertilisers business to Mosaic for US$2.5 billion and a deal to sell a stake of its Mozambique coal assets to Mitsui. This year will see the ramp-up of S11D, a significant growth project in iron ore. Vale is a 50% owner in Samarco alongside BHP Billiton.

Norilsk Nickel: 4.5% (2015: 5.0%) is the world’s largest nickel and palladium producer, with significant platinum and copper production. It is a Russian company whose core assets are located in northern Siberia, within the Arctic Circle. The company has benefited from the significant weakening in the Russian rouble in recent years.

Lundin Mining*: 4.4% (2015: 5.3%) is a base metals producer with operations in Chile, Europe and the US. In November this year, Lundin announced they had successfully negotiated a deal to sell their 24% stake in Tenke to China Molybdenum for US$1.2 billion. Freeport announced that it had entered an agreement to sell its 56% interest in Tenke for US$2.65 billion to China Molybdenum earlier in the year and prompted Lundin’s exit. Other key news events this year for Lundin included its key asset Candelaria receiving permits for construction of a new tailings dam to ensure operations out to 2030 and beyond. Last year saw Lundin also start development to access Eagle east – a mine life extension project at their nickel/copper Eagle mine in Canada. The Company holds both the equity and the 7.875% senior secured notes due 2022.

Sociedad Minera Cerro Verde: 3.2% (2015: 3.8%) is a copper and molybdenum operation in Peru operated by Freeport-McMoRan Copper & Gold where Freeport maintain a 53.6% ownership in the company. In 2013, construction activities commenced on the US$4.4 billion large-scale expansion of the asset which will see copper production more than double from 210kt in 2015 to 560kt in 2017. The project successfully ramped-up during 2016 with significant cash flows and dividend payments expected from 2018.

Newmont Mining: 2.8% (2015: nil) is one of the world’s leading gold producers with the majority of its production from North America and Australia. In recent years, Newmont has divested assets to build a longer-life, lower cost asset portfolio. On 30 June 2016, the company sold its interest in the Batu Hijau project in Indonesia for US$920 million in cash to be used for debt repayment. Last year saw two of Newmont’s growth projects, Merian and Long Canyon completed on time and on budget; both will ramp-up during 2017. In October, Newmont also announced an update to its dividend policy with a 25% pay-out of free cash flow targeted.

Newcrest Mining: 2.8% (2015: 1.6%) is a major Australian-based gold producer operating in four countries. Newcrest has an industry leading reserve life and cost position. 2016 saw through-put at the Lihir operation in PNG increase to the targeted 13mt and 2017 should see further progress. Newcrest also agreed to sell its 50% interest in the Hidden Valley joint venture for US$1. Longer term the company has organic growth potential at its Wafi-Golpu project in PNG.

* Includes fixed interest securities. All percentages reflect the value of the holding as a percentage of total investments. Percentages in brackets represent the value of the holding as at 31 December 2015. Together, the ten largest investments represent 58.0% of total investments (31 December 2015: 56.6%).

Investments as at 31 December 2016

	Main  geographical exposure	Market  value  £’000	%  of investments
Diversified
Rio Tinto	Global	75,854	10.0
Rio Tinto Put Option 20/01/17 US$31	Global	(94)	-
Rio Tinto Put Option 20/01/17 US$32	Global	(161)	-
BHP Billiton	Global	61,988	8.2
Glencore	Global	55,470	7.3
Vale	Global	40,845	5.4
Norilsk Nickel	Russia	33,940	4.5
Lundin Mining*	Global	33,769	4.4
South32	Australia	20,716	2.7
Teck Resources	Global	19,459	2.6
Teck Resources Put Option 20/01/17 CAD$28	Global	(600)	(0.1)
Boliden	Sweden	14,897	2.0
Umicore	Global	3,003	0.4
		--------	--------
		359,086	47.4
		--------	--------
Copper
First Quantum Minerals*	Global	71,630	9.4
Avanco Resources#~	Brazil	29,733	3.9
Sociedad Minera Cerro Verde	Peru	23,984	3.2
Nevsun Resources	Eritrea	14,990	2.0
OZ Minerals	Australia	6,935	0.9
Ivanhoe Mines	DRC	1,410	0.2
Metals X	Australia	984	0.1
Katanga Mining	DRC	917	0.1
		--------	--------
		150,583	19.8
		--------	--------
Gold
Newmont Mining	Global	21,369	2.8
Newcrest Mining	Australia	20,939	2.8
Banro Barbados +#>	DRC	13,637	1.8
Agnico Eagle Mines	Canada	11,298	1.5
Randgold Resources	Africa	10,510	1.4
Franco-Nevada	Global	10,259	1.4
Eldorado Gold	Global	8,896	1.2
Northern Star Resources	Australia	8,485	1.1
OceanaGold	Global	8,089	1.1
Detour Gold	Canada	7,272	1.0
Alamos Gold	Mexico	5,540	0.6
Metals Exploration	Global	4,053	0.5
TMAC Resources	Canada	3,221	0.4
Shanta Gold convertible	Tanzania	2,315	0.3
Pretium Resources	Canada	1,670	0.2
Beadell Resources	Australia	1,553	0.2
Westgold Resources	Australia	1,453	0.2
Stratex International	Turkey	580	0.1
		--------	--------
		141,139	18.6
		--------	--------
Silver & Diamonds
Fresnillo	Mexico	14,640	1.9
Petra Diamonds*	South Africa	13,833	1.8
Silver Wheaton	Canada	12,464	1.6
Mountain Province Diamonds	Canada	10,165	1.3
Industrias Penoles	Mexico	7,548	1.0
Lucara Diamond	Botswana	7,314	1.0
Tahoe Resources	Global	4,002	0.5
Sierra Metals	Peru	2,015	0.3
Silver Mines	Australia	1,631	0.2
Volcan	Peru	1,090	0.1
MAG Silver	Mexico	445	0.1
		--------	--------
		75,147	9.8
		--------	--------
Industrial Minerals
Iluka Resources	Australia	12,763	1.7
Albemarle	Global	9,756	1.4
Sheffield Resources	Australia	1,861	0.2
Nemaska Lithium >	Canada	1,651	0.2
Bacanora Minerals	Mexico	1,093	0.1
Orocobre	Australia	776	0.1
		--------	--------
		27,900	3.7
		--------	--------
Zinc
Nyrstar	Global	3,040	0.4
Arizona Mining	Global	1,585	0.2
		--------	--------
		4,625	0.6
		--------	--------
Iron Ore
Equatorial Resources	Republic of Congo	730	0.1
		--------	--------
		730	0.1
		--------	--------
Other
Bindura Nickel	Zimbabwe	102	–
		--------	--------
		102	–
		--------	--------
Portfolio		759,312	100.0
		--------	--------

*               Includes fixed interest investments.
#              Investments held at Directors’ valuation.
+              Includes Banro gold-linked preference share.
~              Includes mining royalty contract.
>              Includes warrant investments.

All investments are in equity shares unless otherwise stated.
The total number of investments as at 31 December 2016 (including options classified as liabilities on the balance sheet) was 60 (31 December 2015: 56).
As at 31 December 2016 the Company held equity interests in four companies comprising more than 3% of a company’s share capital as follows: Metals Exploration; Silver Mines; Stratex International; and Avanco Resources.

Portfolio analysis as at 31 December 2016

COMMODITY EXPOSURE*

	BlackRock World Mining Trust plc 2016	BlackRock World Mining Trust plc 2015	Euromoney Global Mining Index 2016
	%	%	%
Coal	0.0	0.0	5.0
Aluminium	0.0	0.5	2.5
Other	0.0	0.5	3.8
Iron Ore	0.1	0.1	1.6
Zinc	0.6	0.0	1.9
Industrial Minerals	3.7	6.5	1.0
Silver & Diamonds	9.8	13.2	6.0
Gold	18.6	17.7	23.7
Copper	19.8	21.0	10.7
Diversified	47.4	40.5	43.8

GEOGRAPHICAL EXPOSURE*

2016

Global	57.1%
Latin America	11.2%
Australia	10.2%
Africa (ex SA)	6.9%
Other***	6.6%
Canada	6.2%
South Africa	1.8%

2015

Global	48.7%
Latin America	14.9%
Australia	10.0%
Africa (ex SA)	9.1%
Other**	7.3%
Canada	5.9%
South Africa	4.1%

* Based on the principal commodity exposure and place of operation of each investment.
** Consists of Indonesia, Russia, Serbia, Sweden and Turkey.
*** Consists of Russia, Sweden and Turkey.

Consolidated statement of comprehensive income for the year ended 31 December 2016

	Notes	Revenue  2016  £’000	Revenue  2015  £’000	Capital  2016  £’000	Capital  2015  £’000	Total  2016  £’000	Total  2015  £’000
Income from investments	3	22,383	30,503	-	-	22,383	30,503
Other income	3	6,487	8,742	-	-	6,487	8,742
		--------	--------	--------	--------	--------	--------
		28,870	39,245	-	-	28,870	39,245
		--------	--------	--------	--------	--------	--------
Profit/(loss) on investments held at fair value through profit or loss		-	-	326,525	(236,061)	326,525	(236,061)
Loss on foreign exchange		-	-	(11,981)	(2,942)	(11,981)	(2,942)
		--------	--------	--------	--------	--------	--------
Total		28,870	39,245	314,544	(239,003)	343,414	(199,758)
		--------	--------	--------	--------	--------	--------
Expenses
Investment management fee	4	(1,179)	(1,328)	(3,848)	(3,984)	(5,027)	(5,312)
Other operating expenses	5	(895)	(1,030)	(13)	(13)	(908)	(1,043)
		--------	--------	--------	--------	--------	--------
Total operating expenses		(2,074)	(2,358)	(3,861)	(3,997)	(5,935)	(6,355)
		--------	--------	--------	--------	--------	--------
Net profit/(loss) before finance costs and taxation		26,796	36,887	310,683	(243,000)	337,479	(206,113)
Finance costs	6	(309)	(288)	(940)	(864)	(1,249)	(1,152)
		--------	--------	--------	--------	--------	--------
Net profit/(loss) on ordinary activities before taxation		26,487	36,599	309,743	(243,864)	336,230	(207,265)
Taxation		(3,184)	(3,855)	866	989	(2,318)	(2,866)
		--------	--------	--------	--------	--------	--------
Profit/(loss) for the year		23,303	32,744	310,609	(242,875)	333,912	(210,131)
		--------	--------	--------	--------	--------	--------
Earnings/(loss) per ordinary share	8	13.19p	18.47p	175.85p	(137.00)p	189.04p	(118.53)p
		========	========	========	========	========	========

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

The Company does not have any other comprehensive income. The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income.

Consolidated and parent statements of changes in equity for the year ended 31 December 2016

Group	Note	Ordinary  share  capital  £’000	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 31 December 2016
At 31 December 2015		9,651	127,155	116,471	22,779	55,022	46,235	377,313
Total comprehensive income:
Net profit for the year		–	–	–	–	310,609	23,303	333,912
Transactions with owners, recorded directly to equity:
Share purchase costs		–	–	(9)	–	–	–	(9)
Ordinary shares purchased into treasury		–	–	(1,873)	–	–	–	(1,873)
Dividends paid	7	–	–	–	–	–	(31,797)	(31,797)
		--------	--------	--------	--------	--------	--------	--------
At 31 December 2016		9,651	127,155	114,589	22,779	365,631	37,741	677,546
		========	========	========	========	========	========	========
For the year ended 31 December 2015
At 31 December 2014		9,651	127,155	116,471	22,779	297,897	50,721	624,674
Total comprehensive income:
Net (loss)/profit for the year		–	–	–	–	(242,875)	32,744	(210,131)
Transactions with owners, recorded directly to equity:
Dividends paid	7	–	–	–	–	–	(37,230)	(37,230)
		--------	--------	--------	--------	--------	--------	--------
At 31 December 2015		9,651	127,155	116,471	22,779	55,022	46,235	377,313
		========	========	========	========	========	========	========

   

Company	Note	Ordinary  share  capital  £’000	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 31 December 2016
At 31 December 2015		9,651	127,155	116,471	22,779	62,504	38,753	377,313
Total comprehensive income:
Net profit for the year		–	–	–	–	310,611	23,301	333,912
Transactions with owners, recorded directly to equity:
Share purchase costs		–	–	(9)	–	–	–	(9)
Ordinary shares purchased into treasury		–	–	(1,873)	–	–	–	(1,873)
Dividends paid	7	–	–	–	–	–	(31,797)	(31,797)
		--------	--------	--------	--------	--------	--------	--------
At 31 December 2016		9,651	127,155	114,589	22,779	373,115	30,257	677,546
		========	========	========	========	========	========	========
For the year ended 31 December 2015
At 31 December 2014		9,651	127,155	116,471	22,779	309,346	39,272	624,674
Total comprehensive income:
Net (loss)/profit for the year		–	–	–	–	(246,842)	36,711	(210,131)
Transactions with owners, recorded directly to equity:
Dividends paid	7	–	–	–	–	–	(37,230)	(37,230)
		--------	--------	--------	--------	--------	--------	--------
At 31 December 2015		9,651	127,155	116,471	22,779	62,504	38,753	377,313
		========	========	========	========	========	========	========

Consolidated and parent statements of financial position as at 31 December 2016

	Notes	2016  Group  £’000	2016  Company  £’000	2015  Group  £’000	2015  Company  £’000
Non current assets
Investments held at fair value through profit or loss		760,167	769,152	426,085	435,067
		--------	--------	--------	--------
		760,167	769,152	426,085	435,067
		--------	--------	--------	--------
Current assets
Other receivables		5,153	5,153	3,797	3,797
Cash held on margin deposit with brokers		2,412	2,412	1,340	1,277
Cash and cash equivalents		68	68	13,223	5,307
		--------	--------	--------	--------
		7,633	7,633	18,360	10,381
		--------	--------	--------	--------
Total assets		767,800	776,785	444,445	445,448
		--------	--------	--------	--------
Current liabilities
Other payables		(2,931)	(3,997)	(6,254)	(7,257)
Derivative financial liabilities held at fair value through profit or loss		(855)	(855)	(161)	(161)
Bank overdraft		(1,324)	(9,243)	–	–
Bank loans		(84,976)	(84,976)	(60,708)	(60,708)
		--------	--------	--------	--------
		(90,086)	(99,071)	(67,123)	(68,126)
		--------	--------	--------	--------
Total assets less current liabilities		677,714	677,714	377,322	377,322
		--------	--------	--------	--------
Non current liabilities
Deferred tax liabilities		(168)	(168)	(9)	(9)
		--------	--------	--------	--------
Net assets		677,546	677,546	377,313	377,313
		--------	--------	--------	--------
Equity attributable to equity holders
Ordinary share capital	9	9,651	9,651	9,651	9,651
Share premium account		127,155	127,155	127,155	127,155
Special reserve		114,589	114,589	116,471	116,471
Capital redemption reserve		22,779	22,779	22,779	22,779
Capital reserves		365,631	373,115	55,022	62,504
Revenue reserve		37,741	30,257	46,235	38,753
		--------	--------	--------	--------
Total equity		677,546	677,546	377,313	377,313
		========	========	========	========
Net asset value per ordinary share	8	383.98p	383.98p	212.83p	212.83p
		========	========	========	========

Consolidated and parent cash flow statements for the year ended 31 December 2016

	2016  Group  £’000	2016  Company  £’000	2015  Group  £’000	2015  Company  £’000
Operating activities
Profit/(loss) before taxation*	336,230	336,230	(207,265)	(207,273)
Add back finance costs	1,249	1,249	1,152	1,152
(Gains)/losses on investments held at fair value through profit or loss including transaction costs	(326,525)	(326,528)	236,061	240,028
Net movement on foreign exchange	11,981	11,981	2,942	2,942
Sales of investments held at fair value through profit or loss	264,377	264,377	230,407	230,407
Purchases of investments held at fair value through profit or loss	(271,240)	(271,240)	(197,355)	(197,355)
(Increase)/decrease in other receivables	(1,356)	(1,356)	2,187	1,517
Decrease in other payables	(660)	(660)	(191)	(166)
Decrease in amounts due from brokers	–	–	18	18
Net movement in cash held on margin deposit with brokers	(1,072)	(1,072)	344	343
(Decrease)/increase in amounts due to brokers	(2,714)	(2,714)	2,714	2,714
	--------	--------	--------	--------
Net cash inflow from operating activities before interest and taxation	10,270	10,267	71,014	74,327
	--------	--------	--------	--------
Interest paid	(1,249)	(1,249)	(1,242)	(1,242)
Taxation paid	(1,495)	(1,495)	(441)	(441)
Taxation on overseas investment income included within gross income	(613)	(613)	(1,651)	(1,651)
	--------	--------	--------	--------
Net cash inflow from operating activities	6,913	6,910	67,680	70,993
	--------	--------	--------	--------
Financing activities
Drawdown/(repayment) of loans	24,268	24,268	(48,305)	(48,305)
Dividends paid	(31,797)	(31,797)	(37,230)	(37,230)
Shares purchased into treasury	(1,882)	(1,882)	–	–
	--------	--------	--------	--------
Net cash outflow from financing activities	(9,411)	(9,411)	(85,535)	(85,535)
	--------	--------	--------	--------
Decrease in cash and cash equivalents	(2,498)	(2,501)	(17,855)	(14,542)
	--------	--------	--------	--------
Cash and cash equivalents at start of the year	13,223	5,307	31,054	19,825
Effect of foreign exchange rate changes	(11,981)	(11,981)	24	24
	--------	--------	--------	--------
Cash and cash equivalents at end of the year	(1,256)	(9,175)	13,223	5,307
	========	========	========	========
Comprised of:
Cash & cash equivalents	68	68	13,223	5,307
Bank overdraft	(1,324)	(9,243)	–	–
	--------	--------	--------	--------
*   Includes dividends and interest received in the year of £13,253,000 and £6,157,000 (2015: £25,713,000 and £6,634,000) respectively.

Notes to the financial statements

1. Principal activity

The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

The principal activity of the subsidiary, BlackRock World Mining Investment Company Limited, is investment dealing.

2. Accounting policies

The principal accounting policies adopted by the Group and Company are set out below.

(a) Basis of preparation

The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes. All of the Group’s operations are of a continuing nature.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (AIC), revised in November 2014, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

Substantially, all of the assets of the Group and Company consist of securities that are readily realisable and, accordingly, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Consequently, the Directors have determined that it is appropriate for the financial statements to be prepared on a going concern basis.

The Group’s and the Company’s financial statements are presented in sterling, which is the functional currency of the Group and the Company and the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2016 and have not been applied in preparing these financial statements (major changes and new standards issued are detailed below). None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Group.

IFRS 9 – Financial Instruments (2014) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement, the revised standard is principles based depending on the business model and nature of cash flows. Under this approach, instruments are measured at either amortised cost or fair value. Under IFRS 9 equity and derivative investments will be held at fair value because they fail the ‘solely payments of principal and interest’ test and debt investments will be held at fair value because the business model is to manage them on a fair value basis. The standard is effective from 1 January 2018 with earlier application permitted. The Group does not plan to early adopt this standard.

Amendments to IFRS 10, IFRS 12 and IAS 28 (amendments to IFRS 12 are effective 1 January 2016, a date is to be determined for IFRS 10 and IAS 28) are in relation to applying the consolidation exception for investment entities. The Group does not expect the eventual impact of these amendments to be significant.

Amendments to IAS 1 (effective 1 January 2016) require changes to the presentation of financial instruments. The amendment is not expected to have a significant effect on the measurement of amounts recognised in the financial statements of the Company.

Amendments to IAS 7 - Disclosure initiative Statement of Cash Flows (effective 1 January 2017). The amendments are not expected to have a significant effect on the presentation of the Cash Flow Statement within the financial statements of the Company.

Amendments to IAS 12 – Recognition of deferred tax assets for unrealised losses (effective 1 January 2017). The amendment is not expected to have a significant effect on the measurement of amounts recognised in the financial statements of the Company.

IFRS 14 – Regulatory Deferral Accounts (effective 1 January 2016) allows first time IFRS adopters to continue to account for ‘regulatory deferral account balances’ in accordance with previous GAAP. The Company has no such accounts and, therefore, the provisions of the standard are not applicable.

IFRS 15 – Revenue from Contracts with Customers (effective 1 January 2017) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures. Given the nature of the Company’s revenue streams from financial instruments, the provisions of this standard are not expected to have a material impact.

IFRS 16 – Leases (effective 1 January 2019). The Company does not enter into lease agreements, therefore the provisions of this standard are not applicable.

(b) Basis of consolidation

The consolidated financial statements are made up to 31 December each year and incorporate the financial statements of the Company and its wholly-owned subsidiary, BlackRock World Mining Investment Company Limited. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated.

(c) Presentation of the Consolidated Statement of Comprehensive Income

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Statement of Comprehensive Income.

(d) Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business being investment business.

(e) Income

Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the period end are treated as revenue for the period. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each particular case. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest income and expenses are accounted for on an accruals basis.

Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. Where the purpose of the option is the generation of income, the premium is treated as a revenue item. Where the purpose of the option is the maintenance of capital, the premium is treated as a capital item.

Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue column of the Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Company’s investment portfolio and represents an incidental part of a larger capital transaction, in which case any premium arising are allocated to the capital column of the Statement of Comprehensive Income. When an option is closed out or exercised the gain or loss is accounted for as capital.

Royalty income from contractual rights is measured at the fair value of the consideration received or receivable where the Manager can reliably estimate the amount, pursuant to the terms of the agreement. Royalty income from contractual rights received comprise of a return of income and a return of capital based on the underlying cost of the contract and, accordingly, the return of income element is taken to the revenue account and the return of capital element is taken to the capital account. These amounts are disclosed in the Consolidated Statement of Comprehensive Income within income from investments and gains/losses on investments held at fair value through profit or loss, respectively.

The useful life of the contractual rights will be determined by reference to the contractual arrangements, the planned mine life on commencement of mining and the underlying cost of the contractual rights will be revalued on a systematic basis using the units of production method over the life of the contractual rights which is estimated using available estimated proved and probable reserves specifically associated with the mine. The Investment Manager relies on public disclosures for information on proven and probable reserves from the operators of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of contractual rights and iron ore reserves. These are disclosed in the Consolidated Statement of Comprehensive Income within gains/losses on investments held at fair value through profit or loss.

 (f) Expenses

All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows:

-  expenses which are incidental to the acquisition of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed in note 10 on page 61 of the Annual Report and Financial Statements;

-  the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board’s expected long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio;

-  expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

(g) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

Where expenses are allocated between capital and revenue, any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay less taxation in the future have occurred at the financial reporting date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred taxation assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(h) Investments held at fair value through profit or loss

The Company’s investments, including contractual rights, are classified as held at fair value through profit or loss in accordance with IAS 39 – ‘Financial Instruments: Recognition and Measurement’ and are managed and evaluated on a fair value basis in accordance with its investment strategy.

All investments, including contractual rights, are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Contractual rights are recognised on the completion date, where a purchase of the rights is under a contract, and is initially measured at fair value excluding transaction costs. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.

The fair value of the financial instruments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. For all financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed by the Board to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm’s length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible).

The gains and losses from changes in fair value of contractual rights are taken to the Consolidated Statement of Comprehensive Income and arise as a result of the revaluation of the underlying cost of the contractual rights, changes in commodity prices and changes in estimates of proven and probable reserves specifically associated with the mine.

Under IFRS, the investment in the subsidiary in the Company’s Statements of Financial Position is fair valued which is deemed to be the net asset value of the subsidiary. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as ‘Gains or losses on investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the purchase or sale of investments.

(i) Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the Statements of Financial Position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(j) Other receivables and other payables

Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value.

(k) Dividends payable

Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid.

Dividends payable to equity shareholders are recognised in the Statements of Changes in Equity and have become a liability of the Group when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend.

(l) Foreign currency translation

Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in the losses on investments held at fair value through profit or loss in the Consolidated Statement of Comprehensive Income.

(m) Cash and cash equivalents

Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

(n) Bank borrowings

Bank overdrafts and loans are recorded as the proceeds received. Finance charges, including any premium payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Consolidated Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

(o) Derivatives

Derivatives are classified as financial instruments held at fair value through profit or loss held for trading and are initially recognised at fair value. The derivatives are subsequently held at fair value based on the bid/offer prices of the options written to which the Group and Company are exposed. The value of the option is subsequently marked-to-market to reflect the fair value of the option based on traded prices. Where the premium is taken to revenue, an appropriate amount is shown as capital return such that the total return reflects the overall change in the fair value of the option. When an option is closed out or exercised the gain or loss is accounted for as a capital gain or loss.

(p) Critical accounting estimates and judgements

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Fair value of unquoted financial instruments

When the fair values of financial assets and financial liabilities recorded in the Statements of Financial Position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of valuation models.

(a) The fair value of the Avanco contractual rights was assessed by an independent valuer with a recognised and relevant professional qualification. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The estimates include considerations of production profiles, commodity prices, cash flows and discount rates. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the Statements of Financial Position and the level where the instruments are disclosed in the fair value hierarchy. To assess the significance of a particular input to the entire measurement, the external valuer performs sensitivity analysis.

(b) The investment in the Banro gold linked preference share is valued by reference to gold prices and an illiquidity discount to reflect the discount to par value at which the senior secured notes issued by Banro have traded during the year.

(c) The investment in the subsidiary company is valued based on the net assets of the subsidiary company which is considered appropriate based on the nature and volume of transactions in the subsidiary company.

The key assumptions used to determine the fair value of the unquoted financial instruments and sensitivity analyses are provided in note 18 of the Annual Report and Financial Statements.

3. Income

	2016  £’000	2015  £’000
Investment income:
UK listed dividends	4,727	9,782
Overseas listed dividends*	9,008	14,460
Special dividends	1,038	71
Income from contractual rights (Avanco royalty)	1,595	–
Fixed interest income	6,015	6,190
	--------	--------
	22,383	30,503
	--------	--------
Other income:
Option premiums	6,397	8,647
Deposit interest	6	26
Profit on futures	–	25
Stock lending income	84	44
Underwriting commission and other income	–	–
	--------	--------
	6,487	8,742
	--------	--------
Total income	28,870	39,245
	========	========
Total income comprises:
Dividends	14,773	24,313
Deposit interest	6	26
Option premiums	6,397	8,647
Income from contractual rights	1,595	–
Fixed interest income	6,015	6,190
Profit on futures	–	25
Stock lending income	84	44
	--------	--------
	28,870	39,245
	--------	--------
* Includes £1,153,000 from Banro.

During the year ended 31 December 2016, the Company received option premiums of £6,800,000 (2015: £8,503,000) for writing covered call options for the purposes of revenue generation. Options written for income purposes are credited to the revenue column of the Consolidated Statement of Comprehensive Income and recognised evenly over the life of the option contracts and amounted to £6,397,000 (2015: £8,647,000).

4. Investment management fee

	2016  Revenue  £’000	Capital  £’000	Total  £’000	2015  Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	1,179	3,848	5,027	1,328	3,984	5,312
	--------	--------	--------	--------	--------	--------
Total	1,179	3,848	5,027	1,328	3,984	5,312
	========	========	========	========	========	========

With effect from 1 October 2015 the annual management fee was reduced to 0.80% of net assets. However, in the event that the NAV per share increases on a quarter-on-quarter basis, the fee will then be paid on gross assets for the quarter. During the year, £4,472,000 (2015: £5,312,000) of the investment management fee was generated from net assets and £555,000 (2015: £nil) from the gearing effect on gross assets. The average of the net assets under management during 2016 was £537,003,000 (2015: £526,273,000).

Until 31 March 2015 the investment management fee was levied quarterly at a rate of 1.3% per annum, based on the value of gross assets on the last day of each quarter.

Between 1 April 2015 and 30 June 2015, the annual management fee was reduced to:

-  1.10% on the first £500 million of gross assets

-  0.70% on the next £500 million

-  0.40% on gross assets above £1 billion

Between 1 July 2015 and 30 September 2015 the annual management fee was increased to:

-  1.20% on the first £500 million of gross assets

-  1.00% on the next £500 million

-  0.85% on gross assets above £1 billion

75% of the management fees are allocated to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income.

5. Other operating expenses

	2016  £’000	2015  £’000
Allocated to revenue
Custody fee	91	90
Auditors’ remuneration:
– audit services	31	29
– other assurance services*	6	6
Registrar’s fee	78	72
Directors’ emoluments**	228	256
Broker fees	–	269
Depositary fees	60	62
Marketing expenses	149	17
Other administrative costs	252	229
	--------	--------
	895	1,030
	--------	--------
Allocated to capital
	--------	--------
Transaction charges	13	13
	--------	--------
	908	1,043
	========	========
	2016	2015
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, excluding finance costs, transaction costs and taxation were***:	1.10%	1.21%
	--------	--------
The Company’s ongoing charges, calculated as a percentage of average gross assets and using expenses, excluding finance costs, transaction costs and taxation were****:	0.96%	1.08%
	--------	--------

*        Fees paid to the auditors for other assurance services of £6,200 excluding VAT (2015: £6,500) relate to the review of the half yearly financial statements.
**       Details of the Directors' emoluments are given in the Directors’ Remuneration Report on page 32 of the Annual Report and Financial Statements. The emoluments of Ian Cockerill, Chairman, who previously was also the highest paid Director, were £54,547 (2015: £51,280). His emoluments include taxable benefits for reimbursement of travel expenses.
***     Ongoing charges based on net assets represent the management fee and all other operating expenses, excluding finance costs, transaction charges and taxation, as a % of average net assets.
****    Ongoing charges based on gross assets represent the management fee and all other operating expenses, excluding finance costs, transaction costs and taxation, as a % of average gross assets. Gross assets are calculated based on net assets during the year before the deduction of the bank overdraft and loans.
 

6. Finance costs

	2016  Revenue  £’000	Capital  £’000	Total  £’000	2015  Revenue  £’000	Capital  £’000	Total  £’000
Interest on bank loans	289	881	1,170	271	812	1,083
Interest on bank overdraft	20	59	79	17	52	69
	--------	--------	--------	--------	--------	--------
Total	309	940	1,249	288	864	1,152
	========	========	========	========	========	========

7. Dividends

Under IFRS, final dividends are not recognised until they are approved by shareholders, and special and interim dividends are not recognised until they are paid. They are also debited directly to reserves. Amounts recognised as distributable to ordinary shareholders for the period to 31 December were debited to the revenue reserve. These amounts are as follows:

	2016  £’000	2015  £’000
Interim ordinary dividend in respect of the year ended 31 December 2016 of 4.00p per share, declared on 25 August 2016 and paid on 16 September 2016	7,058	12,410
Final ordinary dividend in respect of the year ended 31 December 2015 of 14.00p per share, approved by shareholders on 24 March 2016 and paid on 8 May 2016	24,739	24,820
	--------	--------
	31,797	37,230
	========	========

The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in this legislation.

	2016  £’000	2015  £’000
Dividends paid or proposed on equity shares:
Interim ordinary dividend paid of 4.00p (2015: 7.00p)	7,058	12,410
Proposed final ordinary dividend of 9.00p per share (2015: 14.00p)*	15,881	24,820
	--------	--------
	22,939	37,230
	--------	--------
* Based on 176,455,242 (2015: 177,287,242) ordinary shares.

8. Consolidated earnings and net asset value per ordinary share

Revenue and capital returns per share and net asset value per share are shown below and have been calculated using the following:

	2016	2015
Net revenue profit attributable to ordinary shareholders (£’000)	23,303	32,744
Net capital profit/(loss) attributable to ordinary shareholders (£’000)	310,609	(242,875)
	--------	--------
Total profit/(loss) attributable to ordinary shareholders (£’000)	333,912	(210,131)
	========	========
Equity shareholders’ funds (£’000)	677,546	377,313
	========	========
The weighted average number of ordinary shares in issue during the year, on which the return per ordinary share was calculated was:	176,639,636	177,287,242
The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was:	176,455,242	177,287,242
	--------	--------
Revenue earnings per share	13.19p	18.47p
Capital earnings/(loss) per share	175.85p	(137.00p)
	--------	--------
Total profit/(loss) per share	189.04p	(118.53p)
	--------	--------
Net asset value per share	383.98p	212.83p
Ordinary share price (mid-market)	336.50p	181.00p
	========	========

9. Called up Share capital

	Ordinary  shares  number  (nominal)	Treasury  shares  number  (nominal)	Total  shares	£’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5p each
	--------	--------	--------	--------
Allotted, issued and fully paid:
	--------	--------	--------	--------
At 1 January 2016	177,287,242	15,724,600	193,011,842	9,651
	--------	--------	--------	--------
Purchase of ordinary shares	(832,000)	832,000	–	–
	--------	--------	--------	--------
At 31 December 2016	176,455,242	16,556,600	193,011,842	9,651
	========	========	========	========

During the year ended 31 December 2016, the Company purchased 832,000 (2015: nil) shares for a total consideration of £1,882,000 (2015: nil) including costs. No shares have been purchased since the year end and up to and including the date of this report.

10. Share Premium and reserves

Group	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserve –  arising on  investments  sold  £’000	Capital  reserve –  arising on  investments  held  £’000	Revenue  reserve  £’000
At 1 January 2016	127,155	116,471	22,779	311,996	(256,974)	46,235
Movement during the year:
Total comprehensive income:
(Losses)/profit for the year	–	–	–	(15,879)	326,488	23,303
Transactions with owners:
Ordinary shares purchased into treasury	–	(1,882)	–	–	–	–
Dividends paid	–	–	–	–	–	(31,797)
	--------	--------	--------	--------	--------	--------
At 31 December 2016	127,155	114,589	22,779	296,117	69,514	37,741
	========	========	========	========	========	========

   

Company	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserve –  arising on  investments  sold  £’000	Capital  reserve –  arising on  investments  held  £’000	Revenue  reserve  £’000
At 1 January 2016	127,155	116,471	22,779	311,996	(249,492)	38,753
Movement during the year:
Total comprehensive income:
(Losses)/profit for the year	–	–	–	(15,879)	326,490	23,301
Transactions with owners:
Ordinary shares purchased into treasury	–	(1,882)	–	–	–	–
Dividends paid	–	–	–	–	–	(31,797)
	--------	--------	--------	--------	--------	--------
At 31 December 2016	127,155	114,589	22,779	296,117	76,998	30,257
	========	========	========	========	========	========

The net revenue profit before distribution dealt with in the financial statements of the parent company was £23,301,000 (2015: £36,711,000). As permitted under section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements.

The share premium account and capital redemption reserve are not distributable profits under the Companies Act 2006. The special reserve may be used as distributable profits for all purposes and in particular the repurchase by the Company of its ordinary shares. Under the Company’s Articles, the Company is permitted to distribute accumulated realised capital profits in the form of dividends.

11. Risk Management Policies and Procedures

Valuation of Financial Instruments

Financial assets and financial liabilities are either carried in the Statements of Financial Position at their fair value (investment and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Group to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Group are explained in the accounting policies note to the Financial Statements on page 54 of the Annual Report and Financial Statements.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price in an active market for an identical instrument. These include exchange traded derivative option contracts. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Level 2 – Valuation techniques used to price securities based on observable inputs. This category includes instruments valued using quoted market prices in active markets for identical instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives, include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant impact on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable ’ requires significant judgement by the Investment Manager. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Company.

Valuation process and techniques for Level 3 valuations

The Directors engage a mining consultant, an independent valuer with a recognised and relevant professional qualification, to conduct a periodic valuation of the contractual rights and the fair value of the contractual rights is assessed with reference to relevant factors. At the reporting date the income streams from contractual rights have been valued on the net present value of the pre-tax cash flows discounted at a rate the external valuer considers reflects the risk associated with the project. The valuation model uses discounted cash flow analysis which incorporates both observable and non-observable data. Observable inputs include assumptions regarding current rates of interest and commodity prices. Unobservable inputs include assumptions regarding production profiles, price realisations, cost of capital and discount rates. In determining the discount rate to be applied, the external valuer considers the country and sovereign risk associated with the project, together with the time horizon to the commencement of production and the success or failure of projects of a similar nature. To assess the significance of a particular input to the entire measurement, the external valuer performs sensitivity analysis. The external valuer has undertaken an analysis of the impact of using alternative discount rates on the fair value of contractual rights.

This investment in contractual rights is reviewed regularly to ensure that the initial classification remains correct given the asset’s characteristics and the Group’s investment policies. The contractual rights are initially recognised using the transaction price as the best evidence of fair value at acquisition and are subsequently measured at fair value, taking into consideration the relevant IFRS 13 requirements. In arriving at their estimates of market values, the valuers have used their market knowledge and professional judgement. The Group classifies the fair value of this investment as Level 3.

Valuations are the responsibility of the Directors of the Company. In arriving at a final valuation, the Directors consider the independent valuer’s report, the significant assumptions used in the fair valuation and the review process undertaken by BlackRock’s Pricing Committee. The valuation of unquoted investments is performed on a quarterly basis by the Portfolio Managers and reviewed by the Pricing Committee of the Investment Manager. On a quarterly basis the Portfolio Managers will review the valuation of the contractual rights and inputs for significant changes. A valuation of contractual rights is performed annually by an external valuer, SRK Consulting (UK) Limited, and reviewed by the Pricing Committee of the Investment Manager. The valuations are also subject to quality assurance procedures performed within the Pricing Committee. On a semi-annual basis, after the checks above have been performed, the Investment Manager presents the valuation results to the Directors. This includes a discussion of the major assumptions used in the valuations. There were no changes in valuation techniques during the year.

Fair values of financial assets and financial liabilities

Financial assets and financial liabilities are either carried in the Statements of Financial Position at their fair value (investment and derivatives) or at an amount which is a reasonable approximation of fair value (cash and cash equivalents, collateral pledged, other receivables, other payables and bank loans and overdrafts).

The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets at fair value through profit or loss  at 31 December 2016 – Group	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity	655,028	4	13,633	668,665
Fixed interest securities	68,015	3,570	–	71,585
Investment in contractual rights	–	–	19,917	19,917
	--------	--------	--------	--------
	723,043	3,574	33,550	760,167
Liabilities:
Derivative financial instruments – written options	–	(855)	–	(855)
	--------	--------	--------	--------
	723,043	2,719	33,550	759,312
	========	========	========	========

   

Financial assets at fair value through profit or loss at 31 December 2015 – Group	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity	352,482	76	10,572	363,130
Fixed interest securities	54,813	–	–	54,813
Investment in contractual rights	–	–	8,142	8,142
	--------	--------	--------	--------
	407,295	76	18,714	426,085
Liabilities:
Derivative financial instruments – written options	–	(161)	–	(161)
	--------	--------	--------	--------
	407,295	(85)	18,714	425,924
	========	========	========	========

   

Financial assets at fair value through profit or loss  at 31 December 2016 – Company	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity	655,028	4	22,618	677,650
Fixed interest securities	68,015	3,570	–	71,585
Investment in contractual rights	–	–	19,917	19,917
	--------	--------	--------	--------
	723,043	3,574	42,535	769,152
Liabilities:
Derivative financial instruments – written options	–	(855)	–	(855)
	--------	--------	--------	--------
	723,043	2,719	42,535	768,297
	========	========	========	========

   

Financial assets at fair value through profit or loss  at 31 December 2015 – Company	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity	352,482	76	19,554	372,112
Fixed interest securities	54,813	–	–	54,813
Investment in contractual rights	–	–	8,142	8,142
	--------	--------	--------	--------
	407,295	76	27,696	435,067
Liabilities:
Derivative financial instruments – written options	–	(161)	–	(161)
	--------	--------	--------	--------
	407,295	(85)	27,696	434,906
	========	========	========	========

A reconciliation of fair value measurement in Level 3 is set out below.

Level 3 Financial assets at fair value through profit or loss  at 31 December – Group	2016  £’000	2015  £’000
Opening fair value	18,714	17,864
Purchases at cost	–	7,685
Disposals	–	(8,861)
Total gains or losses included in gains/(losses) on investments in the Consolidated Statement of Comprehensive Income:
– assets disposed during the year	–	2,370
– assets held at the end of the year	14,836	(344)
	--------	--------
Closing balance	33,550	18,714
	========	========

   

Level 3 Financial assets at fair value through profit or loss  at 31 December – Company	2016  £’000	2015  £’000
Opening fair value	27,696	30,813
Purchases at cost	–	7,685
Disposals	–	(8,861)
Total gains or losses included in gains/(losses) on investments in the Consolidated Statement of Comprehensive Income:
– assets disposed during the year	–	2,370
– assets held at the end of the year	14,839	(4,311)
	--------	--------
Closing balance	42,535	27,696
	========	========

Level 3 valuation process and techniques used by the Company are explained in the accounting policies in note 2(h). A more detailed description of the techniques is found on page 73 of the Annual Report and Financial Statements under ‘Valuation process and techniques’.

Quantitative information of significant unobservable inputs – Level 3 – Group and Company

Description	2016  £’000	2015  £’000	Valuation technique	Unobservable input
Banro gold-linked preference share	13,633	10,572	Discount to gold prices	30% Illiquidity discount
	--------	--------	--------	--------
Avanco	19,917	8,142	Discount cash flows	Discount rate – weighted average cost of capital Average gold and copper prices
	--------	--------	--------	--------
Investment in subsidiary company	8,985	8,982	Net assets	Net assets
	========	========	========	========

Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy, together with an estimated quantitative sensitivity analysis, as at 31 December 2016 are as shown below. The rationale for the explanation of the illiquidity discount is given in the Investment Manager’s Report.

Description	Input	Estimated sensitivity used*	Impact on fair value
Banro gold-linked preference share	Average gold prices	10%	£1.4m
	--------	--------	--------
Avanco royalty	Discount rate – weighted average cost of capital Average gold and copper prices	1% 10%	£2.2m £4.8m
	========	========	========

*     The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.

The sensitivity impact on fair value is calculated based on the sensitivity estimates set out by the independent valuer in its report on the valuation of contractual rights. Significant increases/(decreases) in estimated commodity prices and discount rates in isolation would result in a significantly higher/(lower) fair value measurement. Generally, a change in the assumption made for the estimated value is accompanied by a directionally similar change in the commodity prices and discount rates.

12. Contingent liabilities

There were no contingent liabilities at 31 December 2016 (2015: nil).

13. Publication of Non Statutory Accounts

The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The Annual Report and Financial Statements for the year ended 31 December 2016 will be filed with the Registrar of Companies after the Annual General Meeting.

The figures set out above have been reported upon by the auditor, whose report for the year ended 31 December 2016 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

The comparative figures are extracts from the audited financial statements of BlackRock World Mining Trust plc and its subsidiary for the year ended 31 December 2015, which have been filed with the Registrar of Companies. The report of the auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act 2006.

14. Annual Report and Financial Statements

Copies of the Annual Report and Financial Statements will be published shortly and will be available from the registered office, c/o The Secretary, BlackRock World Mining Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

15. Annual General Meeting

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 4 May 2017 at 11.30 a.m.

ENDS

The Annual Report and Financial Statements will also be available on the BlackRock website at www.blackrock.co.uk/brwm. Neither the contents of the website nor the contents of any website accessible from hyperlinks on the website (or any other website) is incorporated into, or forms part of, this announcement.

For further information, please contact:

Mark Johnson, Head of Closed End Funds, BlackRock Investment Management (UK) Limited – Tel:  020 7743 2300

Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited – Tel:  020 7743 4511

Emma Phillips, Media & Communications, BlackRock Investment Management (UK) Limited – Tel:  020 7743 2922

Press Enquiries:

Lucy Horne, Lansons Communications – Tel:  020 7294 3689
E-mail:  lucyh@lansons.com

23 February 2017
12 Throgmorton Avenue
London EC2N 2DL