BlackRock World Mining Trust Plc - Portfolio Update
September 14 2017 - 7:34AM
PR Newswire (US)
BLACKROCK WORLD
MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155) |
|
All information is at
31 August 2017 and unaudited. |
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|
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Performance at month
end with net income reinvested |
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|
|
|
One |
Three |
One |
Three |
Five |
|
|
Month |
Months |
Year |
Years |
Years |
|
Net asset value |
8.3% |
18.8% |
41.9% |
7.1% |
-8.1% |
|
Share price |
6.4% |
17.3% |
44.1% |
0.1% |
-3.8% |
|
Euromoney Global Mining
Index |
8.9% |
20.1% |
37.9% |
17.3% |
5.9% |
|
(Total return) |
|
|
|
|
|
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Sources: BlackRock,
Euromoney Global Mining Index, Datastream |
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At month end |
|
|
|
|
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Net asset value
including income1: |
442.72p |
|
Net asset value capital
only: |
437.80p |
|
1 Includes
net revenue of 4.92p |
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|
|
|
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Share price: |
388.50p |
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Discount to
NAV2: |
12.2% |
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Total assets: |
£895.0m |
|
Net
yield3: |
3.9% |
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Net gearing: |
15.0% |
|
|
|
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Ordinary shares in
issue: |
176,455,242 |
|
Ordinary shares held in
treasury: |
16,556,600 |
|
Ongoing
charges4: |
1.10% |
|
|
|
|
2 Discount to NAV including income.
3 Based on quarterly interim dividends of 3.00p per
share declared on 4 May 2017 and 10 August 2017 in
respect of the year ending 31 December 2017 and a final
dividend of 9.00p per share in respect of the year ended
31 December 2016.
4 Calculated as a percentage of average net assets and
using expenses, excluding finance costs, for the year ended 31
December 2016. |
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|
|
Sector |
%
Total |
|
Country
Analysis |
%
Total |
|
Assets |
|
|
Assets |
|
|
|
|
|
Diversified |
49.4 |
|
Global |
65.8 |
Copper |
19.6 |
|
Latin America |
11.1 |
Gold |
17.3 |
|
Australasia |
10.7 |
Silver & Diamonds |
7.1 |
|
Other Africa |
6.4 |
Industrial Minerals |
4.9 |
|
Canada |
4.2 |
Iron Ore |
1.1 |
|
South Africa |
0.8 |
Zinc |
0.8 |
|
Russia |
0.5 |
Aluminium |
0.2 |
|
Kazakhstan |
0.4 |
Net current liabilities |
(0.4) |
|
USA |
0.2 |
|
----- |
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India |
0.2 |
|
100.0 |
|
Emerging Europe |
0.1 |
|
===== |
|
Net current
liabilities |
(0.4) |
|
|
|
|
----- |
|
|
|
|
100.0 |
|
|
|
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===== |
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Ten Largest Investments |
|
|
|
|
Company |
%
Total
Assets |
|
BHP |
10.6 |
|
Rio Tinto |
9.4 |
|
First Quantum
Minerals |
8.2 |
|
Glencore |
8.1 |
|
Vale |
7.0 |
|
Teck Resources |
4.4 |
|
Lundin Mining |
4.0 |
|
Sociedad Minera Cerro
Verde |
3.2 |
|
Newmont Mining |
3.2 |
|
South32 |
2.6 |
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Commenting on the markets, Evy
Hambro and Olivia Markham, representing the Investment Manager
noted: |
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Performance |
|
Macroeconomic data points were mixed
during the period with a confluence of factors keeping equity
markets broadly flat (as displayed by a 0.1% increase in the MSCI
World Index). China’s Purchasing Manager’s Index (PMI) recorded a
reading of 51.7, up from 51.4 in July, whilst elsewhere, it was
announced that US domestic inflation increased at its slowest pace
since 2015, boosting expectations that the Federal Reserve will
delay increasing interest rates. These supportive factors were
offset by rising political tensions around North Korea’s nuclear
program and negative investor sentiment around the upcoming
European Central Bank meeting and speed of tapering of bond
purchases. For the mining sector, performance was positive for the
base metals during the month, with nickel, zinc, copper and
aluminium increasing by 15.5%, 12.8%, 6.7% and 10.7%
respectively. Iron ore also saw positive performance,
increasing by 4.5% during the month. |
|
The mining sector finished H1 2017
reporting during the month, and the strong results announced
evidenced a remarkable turnaround in the financial health of mining
companies since the start of 2016. Within 18 months, the
mining sector has gone from the market believing it was on the
brink of bankruptcy, back to strong profits, robust free cash flow
and rising dividends having returned +99% over that period, as
measured by the Euromoney Global Mining Index. The key themes
that emerged from the H1 reporting season were rising free cash
flow, deleveraging and returning capital to shareholders, all
fuelled by the significant improvement we have seen in mined
commodity prices and costs of production. |
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Strategy and Outlook |
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The latest round of reporting
highlights the remarkable turnaround in the financial health of the
mining sector. For some time, we have been confident that January
2016 marked the bottom of the mining cycle as, back then, the
market was concerned about a ‘hard-landing’ in China as well as
mining companies’ stretched balance sheets. Today, balance sheets
are in much better shape and given current commodity prices, we are
optimistic about a continued recovery in share prices. The mining
sector has among the highest free cash flow yield out of any global
sector and given the improvement in balance sheets, we expect lower
earnings volatility relative to the previous three years to help
drive a re-rating. |
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Whilst the mining sector has
performed strongly, we are only back at July 2014 levels and still
a very long way below the peak in 2011. Mined commodity prices have
surged above analyst expectations, with copper and iron ore at
3-year highs and zinc at a 10-year high for example, sparking fears
of a pull back. However, importantly, mining shares are still
pricing in commodity prices well below current spot prices. |
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We recognise that China remains the
key risk for investors in the mining sector but believe that the
Chinese administration has shown itself willing and able to step in
with support to avoid a ‘hard-landing’ type event. Reform measures
put in place by the government across a range of industries,
including steel, coal and aluminium, to tackle pollution and excess
capacity have been more effective than many expected and improved
the profitability across a number of sectors, which we see as a key
benefit in the longer-term. China should also benefit from a
spillover effect from the wider improvements we have seen in global
economic growth in recent months. Concerns mounted in Q2 2017 of
this year that tighter credit conditions in the country could lead
to a slowdown. However, economic data has continued to defy the
sceptics and exceed expectations with, for example, China’s steel
PMI data coming in at a 16-month high. |
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Meanwhile, commodity prices should
also be supported by constraints on the supply side resulting from
the underinvestment we have seen in the mining sector in recent
years, with global mining sector capex down 66% since the peak in
2012. The key question for investors today is whether the mining
companies can maintain the same level of capital discipline or will
they slip back into bad habits? For now, we feel the pain of the
recent down-cycle is still too fresh and rhetoric from management
teams gives us optimism that the sector’s focus remains on
shareholder returns. |
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All data points are in US dollar
terms unless stated otherwise. |
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14 September 2017 |
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ENDS |
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Latest information is available by
typing www.brwmplc.co.uk on the internet, "BLRKINDEX" on Reuters,
"BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).
Neither the contents of the Manager’s website nor the contents of
any website accessible from hyperlinks on the Manager’s website (or
any other website) is incorporated into, or forms part of, this
announcement. |
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