BlackRock World Mining Trust Plc - Portfolio Update
September 19 2018 - 11:23AM
PR Newswire (US)
BLACKROCK WORLD
MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155) |
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All information is at
31 August 2018 and unaudited. |
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|
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Performance at month
end with net income reinvested |
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|
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One |
Three |
One |
Three |
Five |
|
|
Month |
Months |
Year |
Years |
Years |
|
Net asset value |
-9.8% |
-11.1% |
-5.4% |
88.6% |
0.2% |
|
Share price |
-6.7% |
-10.4% |
-4.1% |
90.6% |
-0.7% |
|
EMIX Global Mining Index
(Gross) |
-8.4% |
-9.3% |
-5.9% |
84.2% |
14.6% |
|
EMIX Global Mining Index
(Net)* |
-8.4% |
-9.4% |
-6.4% |
81.6% |
11.6% |
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(Total return) |
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|
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Sources: BlackRock, EMIX Global Mining Index, Datastream |
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* The Company’s
performance benchmark (the EMIX Global Mining Total Return Index)
may be calculated on either a Gross or a Net return basis.
Net return (NR) indices calculate the reinvestment of dividends net
of withholding taxes using the tax rates applicable to non-resident
institutional investors, and hence give a lower total return than
indices where calculations are on a Gross basis. As the
Company is subject to the same withholding tax rates for the
countries in which it invests, the NR basis is felt to be the most
accurate, appropriate, consistent and fair comparison for the
Company. Historically the benchmark data for the Company has
always been stated on a Gross basis, and therefore for transparency
both sets of benchmark data are provided in the table above.
Going forward it is the Board’s intention to monitor the Company’s
performance with reference to the NR version of the benchmark. |
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At month end |
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|
|
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Net asset value
including income1: |
403.83p |
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Net asset value capital
only: |
396.81p |
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1 Includes
net revenue of 7.02p |
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|
|
|
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Share price: |
357.50p |
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Discount to
NAV2: |
11.5% |
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Total assets: |
£827.5m |
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Net
yield3: |
4.4% |
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Net gearing: |
16.5% |
|
|
|
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Ordinary shares in
issue: |
176,455,242 |
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Ordinary shares held in
treasury: |
16,556,600 |
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Ongoing
charges4: |
1.00% |
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|
|
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2 Discount to NAV including income.
3 Based on quarterly interim dividends of 3.00p per
share declared on 25 April 2018 and 16 August 2018 in
respect of the year ending 31 December 2018 and a quarterly interim
dividend of 3.00p per share declared on 10 November 2017 and a
final dividend of 6.60p per share in respect of the year ended 31
December 2017.
4 Calculated as a percentage of average net assets and
using expenses, excluding finance costs, for the year ended 31
December 2017. |
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Sector |
%
Total |
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Country
Analysis |
%
Total |
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Assets |
|
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Assets |
|
|
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|
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Diversified |
47.8 |
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Global |
61.4 |
Copper |
21.1 |
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Latin America |
11.0 |
Gold |
13.7 |
|
Australasia |
10.7 |
Silver & Diamonds |
7.7 |
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Canada |
6.9 |
Industrial Minerals |
7.1 |
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Other Africa |
6.4 |
Steel |
1.0 |
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USA |
1.4 |
Zinc |
0.9 |
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South
Africa |
0.6 |
Nickel |
0.5 |
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Kazakhstan |
0.5 |
Aluminium |
0.4 |
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Indonesia |
0.5 |
Iron Ore |
0.1 |
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Russia |
0.4 |
Current Liabilities |
-0.3 |
|
Peru |
0.3 |
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----- |
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Argentina |
0.1 |
|
100.0 |
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Mexico |
0.1 |
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===== |
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Current Liabilities |
-0.3 |
|
|
|
|
----- |
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|
|
|
100.0 |
|
|
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===== |
Ten Largest Investments
Company |
% Total
Assets |
|
|
BHP |
10.5 |
Rio Tinto |
9.3 |
Vale |
9.0 |
Glencore |
8.0 |
First Quantum Minerals |
7.0 |
Teck Resources |
5.2 |
Sociedad Minera Cerro Verde |
3.3 |
Mountain Province Diamonds |
3.0 |
Lundin Mining |
2.7 |
Avanco Resources - royalty |
2.5 |
Commenting on the markets,
Evy Hambro and Olivia Markham, representing the Investment
Manager noted:
|
The Company’s NAV decreased by 9.8%
in August, underperforming its benchmark, the EMIX Global Mining
Index (net return), which declined by 8.4%. |
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At a macroeconomic level, continued
noise around trade wars, weakening data out of China and Emerging
Market volatility, weighed on the commodity complex generally.
During the month, the US announced sanctions on Turkey, with the
country experiencing currency weakness and accelerating inflation
levels. This weakness rippled through global currency markets,
spilling into other emerging markets, including Argentina and
Brazil. |
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Mined commodity prices were impacted
largely on the back of continued US dollar strength, reiterating
that the inverse relationship between metals and the US dollar
remains true. However, the commodity price movements seemed to be
disproportionate given that we are in an environment of very few
supply additions and physical markets remained reasonably
tight. Within the base metals, copper, nickel and zinc prices
fell by 5.0%, 8.8% and 8.0% respectively. For the precious metals,
gold, silver and platinum prices declined by 2.0%, 6.7% and 4.7%
respectively. The fact that gold declined during the month points
to the movements also being very dollar related, as mining and
precious metals both selling off does not signal a true risk-off
trade. (Commodity price returns in USD) |
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Within the Company’s portfolio, our
higher beta names underperformed in a downmarket, with our position
in First Quantum being amongst the largest detractors from relative
performance in August. In addition, despite Iluka Resources
reporting a 47% increase in Zircon pricing compared to the first
half of 2017, the company announced unexpected cost increases at
its rutile project in Sierra Leone. As a result, the share price
came under pressure, with our position in the company detracting
from relative performance. |
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Strategy and Outlook |
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After two strong years, investors
that have not been exposed to mining may now be questioning if they
have missed the opportunity. We are, however, still a long way
below the peak in 2011 and the sector continues to trade at a
valuation discount to broader equity markets. Meanwhile, free cash
flow in the sector is close to the highest it has ever been. That
said, we believe most mined commodities look reasonably fairly
priced and so our base case is that they remain range-bound at
current levels. Crucially, however, mining equities are still
pricing in commodity prices well below current spot prices and, as
such, we are constructive on the shares but fairly neutral on the
commodities themselves. Many still distrust the miners, expecting
them to make the same mistakes of the past in terms of poor capital
discipline. Our view though is that the pain of the recent
down-cycle is still too fresh in the minds of management teams for
this to become a widespread issue in the near-term. We have begun
to see moderate increases in sustaining capex announced but we
believe for the most part these have been necessary increases
rather than indicative of a widespread return to poor capital
discipline. |
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All data points are in GBP terms
unless stated otherwise. |
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19 September 2018 |
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Latest information is available by
typing www.blackrock.co.uk/brwm on the internet. 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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