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BlackRock World Mining Trust Plc - Portfolio Update

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By PR Newswire

PR Newswire

London, August 16

BLACKROCK WORLD MINING TRUST plc  (LEI - LNFFPBEUZJBOSR6PW155)
All information is at 31 July 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value 10.7% 7.1% 22.0% -5.7% -17.0%
Share price 10.4% 10.5% 31.1% -9.2% -12.7%
Euromoney Global Mining Index 10.1% 8.5% 18.1% 6.5% -2.2%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income1: 411.68p
Net asset value capital only: 405.85p
1 Includes net revenue of 5.83p
Share price: 368.25p
Discount to NAV2: 10.5%
Total assets: £819.1m
Net yield3: 4.3%
Net gearing: 12.8%
Ordinary shares in issue: 176,455,242
Ordinary shares held in treasury: 16,556,600
Ongoing charges4: 1.10%
2 Discount to NAV including income.
3 Based on a quarterly interim dividend of 3.00p per share declared on 4 May 2017 in respect of the year ending 31 December 2017, and an interim dividend of 4.00p per share and a final dividend of 9.00p per share in respect of the year ended 31 December 2016.
4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2016.
Sector % Total  Country Analysis % Total 
Assets  Assets 
Diversified 47.1 Global 64.2
Copper 20.9 Latin America 11.5
Gold 17.2 Australasia 10.8
Silver & Diamonds 7.5 Other Africa 7.0
Industrial Minerals 5.3 Canada 4.3
Iron Ore 1.1 South Africa 0.9
Zinc 0.7 Russia 0.4
Aluminium 0.2 Kazakhstan 0.4
----- India 0.2
100.0 USA 0.2
===== Emerging Europe 0.1
-----
100.0
=====
Ten Largest Investments

Company		 % Total
Assets
Rio Tinto 11.1
First Quantum Minerals 8.5
Glencore 8.2
BHP 7.6
Vale 6.8
Lundin Mining 4.1
Teck Resources 3.7
Newmont Mining 3.3
Sociedad Minera Cerro Verde 3.3
South32 2.8

   

Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
It was a strong month for the mining sector as economic data from China exceeded expectations, which sent mined commodity prices up almost across the board. Robust data included China’s official year-on-year Q2 GDP growth coming in at 6.9% (up from 6.7% in Q2 2016) and manufacturing PMI hitting a 4-month high of 51.1, indicating expansion. These data points eased concerns that tighter credit conditions could cause a sharp slowdown in China’s growth, concerns which had dragged mined commodity prices lower in April and May. Towards the end of the month, the mining sector entered the H1 reporting season and whilst most companies did not report until August, general themes that had begun to emerge were rising free cash flow, deleveraging and cash returns to shareholders.
Of the mined commodities, iron ore was the strongest, rising 15.6% to $74/tonne; well above analyst consensus for the 2017 average iron ore price which is below $60/tonne. Copper also performed well, gaining 6.9%, on signs of market tightness with news emerging that China, the world’s largest copper scrap consumer, may look to ban imports of low quality copper scrap from 2018. The gold price also gained 2.0% over the month, buoyed by continued US dollar weakness.
Among the Company’s unquoted investments, Avanco released its second quarter operational results with its Antas Mine producing copper and gold above guidance, while continuing to drop costs and generate free cash flow. Avanco is in the midst of an exploration programme which shows some exciting near mine and underground potential at Antas. In addition, the company released the pre-feasibility study on its second project Pedra Branca East which demonstrates attractive economics for a standalone underground mine targeting 24ktpa copper and 16koz of gold.
Strategy and Outlook
The mining sector is in the midst of reporting end Q2 results and rising free cash flow, deleveraging and cash returns to shareholders are emerging as the key themes. The miners’ latest results illustrate the turnaround we have seen in the mining sector since the beginning of 2016. Back then, to imagine the miners would be reporting these numbers in 18 months’ time, would have been considered outlandish. The key question for investors in mining companies today is whether the mining companies can maintain the same level of capital discipline shown in recent years, when cash generation of the industry improves.
We recognize that China remains the key risk for investors in the mining sector but we believe that the Chinese administration has shown itself willing and able to step in with support to avoid a ‘hard-landing’ type event. China should also benefit from a spill over effect from the general improvements we have seen in global economic growth in recent months; this is reflected by 2017 being expected to be the best year for China’s export growth since 2012. In addition, global growth is beating expectations and now looks to be synchronous for the first time in years. Meanwhile, commodity prices should be supported by constraints on the supply side resulting from the underinvestment we have seen in the sector, with global mining sector capex down 66% since the peak in 2012. Finally, mining shares are trading at attractive valuations relative to broader equity markets and their own history with price-to-book multiples close to historic lows.
All data points are in US dollar terms unless stated otherwise.
16 August 2017
ENDS
Latest information is available by typing www.brwmplc.co.uk on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

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