TIDMBRWM
BlackRock World Mining Trust plc LEI - LNFFPBEUZJBOSR6PW155
Annual Results Announcement (Article 4 Transparency Directive, DTR 4.1)
for the year ended 31 December 2022
Performance record
As at As at
31 December 31 December
2022 2021
Net assets (£'000)¹ 1,299,285 1,142,874
Net asset value per ordinary share (NAV) (pence) 688.35 622.21
Ordinary share price (mid-market) (pence) 697.00 589.00
Reference Index2 - net total return 5,863.32 5,258.16
Premium/(discount) to net asset value3 1.3% (5.3)%
--------------- ---------------
Performance (with dividends reinvested)
Net asset value per share3 +17.7% +20.7%
Ordinary share price3 +26.0% +17.5%
Reference Index2 +11.5% +15.1%
--------------- ---------------
Performance since inception (with dividends
reinvested)
Net asset value per share3 +1,413.6% +1,187.8%
Ordinary share price3 +1,535.8% +1,198.1%
Reference Index2 +979.6% +868.2%
========= =========
For the For the
year ended year ended
31 December 31 December Change
2022 2021 %
Revenue
Net revenue profit after taxation (£'000) 76,013 78,910 -3.7
Revenue return per ordinary share (pence)4 40.68 43.59 -6.7
--------------- --------------- ---------------
Dividends per ordinary share (pence)
- 1st interim 5.50 4.50 +22.2
- 2nd interim 5.50 5.50 -
- 3rd interim 5.50 5.50 -
- Final 23.50 27.00 -13.0
--------------- --------------- ---------------
Total dividends paid and payable 40.00 42.50 -5.9
========= ========= =========
1 The change in net assets reflects portfolio movements, share
reissues and dividends paid during the year.
2 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total
return). With effect from 31 December 2019, the Reference Index changed to the
MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). Prior to
31 December 2019, the Reference Index was the EMIX Global Mining Index (net
total return). The performance returns of the Reference Index since inception
have been blended to reflect this change.
3 Alternative Performance Measures, see Glossary in the Annual
Report and Financial Statements.
4 Further details are given in the Glossary in the Annual Report
and Financial Statements.
CHAIRMAN'S STATEMENT
HIGHLIGHTS
* NAV per share +17.7%1 (with dividends reinvested)
* Share price +26.0%1 (with dividends reinvested)
* Total dividends of 40.00p per share
PERFORMANCE
I am pleased to report that your Company has reported another year of excellent
performance. Over the twelve months to 31 December 2022, the Company's net
asset value per share (NAV) returned +17.7%1 and the share price +26.0%1. In
comparison, over the same period, the Company's reference index, the MSCI ACWI
Metals & Mining 30% Buffer 10/40 Index (net total return), returned +11.5%, the
FTSE All-Share Index returned +0.3% and the UK Consumer Price Index (CPI)
increased by 9.2%.
OVERVIEW
As the Company's financial year began, the mining sector held up better than
broader equity markets, which recorded their worst month since March 2020, when
more widespread public health measures were introduced following the outbreak
of the COVID-19 pandemic. Supply constraints, coupled with increasing demand as
post-COVID-19 economic activity restarted, caused inflation to rise sharply and
the geopolitical events of early 2022, with Russia's unprovoked invasion of
Ukraine, exacerbated an already challenging market environment. For much of the
previous decade, markets have been characterised by low inflation and very low
interest rates, but the resulting rise in energy and food prices pushed
inflation in the UK to a 41-year high in October 2022. This, when added to
higher interest rates, had a pronounced impact on equity markets and caused a
deep fall in households' real disposable incomes.
Given the aforementioned headwinds, it is extremely impressive that the mining
sector delivered such strong gains in absolute terms and when compared with the
wider market. It is also important to remember that China, the world's largest
consumer of mined commodities, remained in varying stages of lockdowns for most
of the year. Miners should be applauded for being responsible in capital
allocation and balance sheet discipline during the prevailing market
environment. Whilst this practice is encouraging, companies will be compelled
to invest in growth in the medium to long term. The sector was also aided by
supply constraints across a number of commodities which kept prices higher and
the continued growth in demand for mined commodities for the transition to net
zero carbon emissions. Encouragingly, the Company's mining holdings
outperformed during the year, including the contribution from our unquoted
investments.
1 Alternative Performance Measures. All percentages calculated in sterling
terms with dividends reinvested. Further details of the calculation of
performance with dividends reinvested are given in the Glossary in the Annual
Report and Financial Statements.
REVENUE RETURN AND DIVIDS
This year was the second best year in the Company's history for income and only
marginally short of last year's record. Collectively, the balance sheets of
mining companies have never been stronger, reflecting tight financial
discipline and strength in commodity prices. By prioritising financial
stability and investor returns over growth, the mining sector has enabled
investors to continue to share in the fundamentals benefiting the underlying
companies.
The Company's revenue return per share for the year amounted to 40.68p compared
with 43.59p for the previous year, representing a slight decrease of 6.7%.
During the year, three quarterly interim dividends of 5.50p per share were paid
on 30 June 2022, 30 September 2022 and 22 December 2022. The Board is proposing
a final dividend payment of 23.50p per share for the year ended 31 December
2022. This, together with the quarterly interim dividends, makes a total of
40.00p per share (2021: 42.50p per share) representing a small decrease of 5.9%
on payments made in the previous financial year. As in past years, all
dividends are fully covered by income. In accordance with the Board's stated
policy, the total dividends represent substantially all of the year's available
income.
Subject to approval at the Annual General Meeting, the final dividend will be
paid on 26 April 2023 to shareholders on the Company's register on 10 March
2023, the ex-dividend date being 9 March 2023. It remains the Board's intention
to seek to distribute substantially all of the Company's available income along
similar lines in the future.
GEARING
The Company operates a flexible gearing policy which takes into account
prevailing market conditions. It is not intended that gearing will exceed 25%
of the net assets of the Group. Gearing at 31 December 2022 was 9.6%. Average
gearing over the year to 31 December 2022 was 11.2%.
MANAGEMENT OF SHARE RATING
The Board recognises the importance to investors that the market price of the
Company's shares should not trade at a significant premium or discount to the
underlying NAV. Accordingly, in normal market conditions, the Board may use the
Company's share buyback, sale of shares from treasury and share issuance powers
to ensure that the share price is broadly in line with the NAV, if it is deemed
to be in shareholders' interests.
I am pleased to report that during the year the Company reissued 5,071,920
ordinary shares from treasury for a net consideration of £34,902,000, at an
average price of 688.14p per share and an average 1.3% premium to NAV. Since
the year end up to 2 March 2023, a further 150,000 shares have been reissued
from treasury at an average premium over NAV of 1.5%, at an average price of
717.50p for a total consideration of £1,086,000. As at 28 February March 2023
the discount stood at 0.2%.
Resolutions to renew the authorities to issue and buy back shares will be put
to shareholders at the forthcoming Annual General Meeting.
BOARD COMPOSITION
Russell Edey has informed the Board of his intention to retire as a Director of
the Company following the Annual General Meeting in April 2023 and,
accordingly, will not be seeking re-election. Russell joined the Board in May
2014 and has acted as Chairman of the Audit Committee and Management Engagement
Committee and Senior Independent Director since May 2020. The Board would like
to express its strong appreciation for Russell's wise counsel and invaluable
contribution to the Company.
The Board has commenced a search to identify a new Director and a further
announcement will be made in due course. Following Mr Edey's retirement, Mr
Venkatakrishnan will be appointed as Chairman of the Audit Committee. Ms Lewis
will become Chair of the Management Engagement Committee and Ms Mosely will
become the Company's Senior Independent Director.
ANNUAL GENERAL MEETING
The Company's Annual General Meeting (AGM) will be held at the offices of
BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 18 April 2023
at 11.30 a.m. Details of the business of the meeting are set out in the Notice
of Meeting in the Annual Report and Financial Statements.
Shareholders who intend to attend the AGM should ensure that they have read and
understood the venue requirements for entry to the AGM. These requirements,
along with further arrangements for the AGM, can be found in the Directors'
Report in the Annual Report and Financial Statements. In the absence of any
reimposition of COVID-19 restrictions, the Board very much looks forward to
meeting with shareholders at the AGM.
OUTLOOK
The impact of the COVID-19 pandemic has receded, but the recovery of the global
economy has been hindered by geopolitical tensions and rising interest rates.
Since recognising the urgent need for policy tightening to combat inflationary
pressures on the back of soaring prices, the US Federal Reserve has raised
interest rates at the fastest pace in more than three decades, with most other
major developed central banks following suit. High inflation has sparked
cost-of-living crises and slowing global growth and, although central banks are
forecast to slow the rate of interest rate increases, the possibility of
recession for developed markets looms.
Whilst the macro environment in developed market economies continues to present
near-term headwinds for commodity markets, the structural backdrop with low
inventories, limited investment in new production and a more rapid recovery in
China than expected, are supportive tailwinds. The energy transition will
require enormous scale of investment by mining companies over the coming
decades. Mining companies are in an excellent financial position, with high
levels of free cash flow and solid balance sheets and these factors combined
with the above potential tailwinds could be a major factor in how 2023 shapes
up for the sector.
Against this backdrop, our Investment Manager remains cautiously optimistic for
the mining sector. The Board is also confident that the Company remains
well-placed to benefit from the transition to net zero carbon emissions which
will continue to create investment opportunities in those companies that
service the associated supply chains.
DAVID CHEYNE
Chairman
2 March 2023
INVESTMENT MANAGER'S REPORT
PORTFOLIO PERFORMANCE
We are pleased to report another strong year of absolute returns for the
Company in 2022. The year also marked a record in terms of another all-time
high in NAV and share price total returns as, since the Initial Public Offering
(IPO) of the Company in 1993 at 100p per share, the shares have delivered a NAV
total return of 1412.5% and a share price total return of 1535.8% against a
reference index total return of 979.6%. In addition, the year was also
significant for income after the record-breaking numbers in 2021. Despite not
quite matching last year's record, the total was well in excess of expectations
with all parts of the strategy contributing. Also, like last year, the
performance was split into distinct periods with excellent gains made during
the first four months, followed by falls during the summer before a decent
rally in the final quarter. This volatility allowed us to take advantage of
opportunities by adjusting holdings, as well as selling volatility out to the
market using options. It is also important to remember that the Company
delivered these gains against a broader market backdrop of strongly negative
returns across not just equities but also fixed income making the relative
return very valuable to investors.
COMMODITY PRICE MOVES
31 December % Change in % Change average
2022 2022
prices 2022 vs
2021
Commodity
Gold US$/oz 1,815.6 -0.4% +0.1%
Silver US$/oz 23.75 2.1% -13.3%
Platinum US$/oz 1,065 11.1% -11.8%
Palladium US$/oz 1,788 -9.4% -12.1%
Copper US$/lb 3.79 -14.1% -5.2%
Nickel US$/lb 13.56 +43.3% +42.1%
Aluminium US$/lb 1.07 -16.3% +9.3%
Zinc US$/lb 1.36 -16.3% +16.0%
Lead US$/lb 1.06 -0.1% -2.1%
Tin US$/lb 11.23 -37.1% -3.3%
Baltic Freight Rate 1,515 -31.7% -33.7%
West Texas Intermediate Oil (Cushing) US$/ 80.2 +6.7% +39.5%
barrel
Iron Ore fines 62% US$/t 118 -3.7% -24.5%
Thermal Coal US$/t 145.16 +18.5% +110.6%
Metallurgical Coal US$/t 279.45 -24.5% +63.4%
Lithium US$/lb 191.5 +101.6% +274.0%
========= ========= =========
Sources: Datastream and Bloomberg, December 2022.
Looking at the year more broadly, it was driven by a shifting macro backdrop
and a sharp uptick in geopolitical tensions. The former saw interest rates rise
across the world causing equities to derate on the back of both a higher cost
of capital but also fears of recessionary impacts to profit margins. These
issues were further compounded by the invasion of Ukraine by Russia which
triggered a range of consequences from spikes in oil prices, huge volatility in
European power costs and shortages of natural resources from oil/gas/metals/
fertilizers etc. China was also impacted by their zero COVID-19 policy which
badly damaged their economic growth. Given all of the above it is even more
remarkable that the mining sector not only managed to navigate its way through
this unscathed, but also posted such a strong year of gains and dividends.
Credit must go to the executive teams who have stayed the course of disciplined
capital allocation and strong balance sheets, as without this the sector would
surely have come unstuck given the huge macro challenges.
It would be remiss not to highlight the contribution from the investments in
illiquid assets during 2022. During the year two companies, Ivanhoe Electric
and Bravo Mining, completed successful IPOs at big premiums to the entry prices
paid by the Company. This happened despite the difficult conditions in
financial markets and is testament to the quality of the opportunities each
company has exposure to. In addition, Jetti Resources completed a successful
capital raise at a substantial premium to their last round and with more trial
projects moving into commercial discussion the outlook remains encouraging.
There is more detail on the illiquid portfolio later in this report.
For the year as a whole, the NAV of the Company was up by 17.7% with income
reinvested and the share price total return was 26.0%. This compares to the
FTSE 100 rising 4.7%, the Consumer Price Index up by 9.2% and the reference
index (MSCI ACWI Metals & Mining 30% Buffer 10/40 Index net total return) up by
11.5% (all percentages calculated in sterling terms with dividends reinvested).
PRESSURE BUILDING
2022 was a complicated year for the mining sector in many ways. If one had
known beforehand about the big macro headwinds such as slower growth in China,
rising rates and recessionary conditions across the developed world, most
people would have expected mining shares to have delivered negative returns for
the year. Therefore, to see the leading sectoral gains in financial markets for
the year coming from natural resources shares, with energy leading the way on
the back of supply disruption following Russia's invasion of Ukraine, makes it
easy to understand why generalist investors missed the opportunity. It is also
easy to understand their reticence to buy after such a long period of
outperformance.
It is our belief that the trends of prior years, such as capital discipline and
strong balance sheets, have built strong foundations for the sector and it is
these factors that drove the outperformance in 2022. For example, if mining
companies had gone into the year with large capital spending plans and high
levels of debt, share prices would have fallen as sharply as in similar periods
from the past. The work that has been done to entrench capital discipline,
combined with keeping stronger balance sheets, in our view saved the day in
2022.
Another output of the improved capital allocation decisions has been a lower
level of reinvestment into production. This has allowed free cash flow to grow,
but, more importantly, it has meant limited new supply growth across the
industry. Given that the world economy now needs commodities to build the
projects for the energy transition, the absence of new supply has left
commodity markets extremely tight. In fact, at the end of 2022, inventories at
London Metal Exchange warehouses were at 25-year lows. Available inventories
for aluminium, copper, nickel and zinc decreased by over two-thirds during the
year. The low levels of stockpiles reflect a tension that has kept traders and
consumers gripped as demand weakened (due to China economic slowdown and
recessionary fears in developed markets), but constrained supplies kept prices
at levels higher than expected.
It is our expectation that the supply constraints are unlikely to ease during
the next few years due to the scarcity of "shovel ready" projects and high
permitting barriers. This has left companies focused on growth needing to
revisit mergers and acquisitions (M&A), as producing assets valued in the
equity markets often trade below the cost of building new capacity. In
Australia, BHP managed to agree terms to buy OZ Minerals after many months of
discussions. The deal looks set to complete in 2023 and the Company has
benefited materially from this deal due to having a large holding in OZ
Minerals. It is hard to see other deals happening due to the small number of
listed copper producers and fears of resource nationalism that continue to add
risk to moving capital into more remote regions e.g. the threat of closing
First Quantum's new Cobre de Panama mine.
Outside of sector specific issues, the geo-political tensions caused by
Russia's invasion of Ukraine further tightened markets due to the sanctions
imposed by other countries. This disrupted commodity supply chains at a time
when markets were already tight, further supporting prices at a time when
economic weakness would normally have seen them fall. As the year developed,
prices did cool during the summer, only to recover in Q4 2022 as China started
to ease COVID-19 restrictions. It will be interesting to see the impact that
post COVID-19 Chinese demand has on metals markets.
ESG ISSUES AND THE SOCIAL LICENSE TO OPERATE
Information on the way in which the Company seeks to manage risks related to
ESG (Environmental, Social and Governance) and the social license to operate is
covered in further detail in the Strategic Report within the Annual Report and
Financial Statements. The Investment Manager also seeks to understand the ESG
risks and opportunities facing companies and industries in the portfolio. As an
extractive industry, the mining sector naturally faces a number of ESG
challenges given its dependence on water, carbon emissions and geographical
location of assets. However, we consider that the sector can provide critical
infrastructure, taxes and employment to local communities, as well as materials
essential to technological development, enabling the carbon transition through
the production of the metals required for the technology underpinning that
transition.
The Investment Manager considers ESG insights and data, including
sustainability risks, within the total set of information in its research
process and makes a determination as to the materiality of such information as
part of the investment process used to build and manage the portfolio. Further
information on the Investment Manager's approach to ESG integration is set out
in the AIFMD Fund Disclosures in respect of the Company, available on the
Company's website. ESG insights are not the sole consideration when making
investment decisions but, in most cases, the Company will not invest in
companies which have high ESG risks (risks that affect a company's financial
position or operating performance) and which have no plans to address existing
deficiencies.
* The Investment Manager is also engaging with the executives of
portfolio companies in which the Company invests to understand how their
current business plans are compatible with achieving a net zero carbon
emissions economy by 2050.
* There will be cases where a serious event has occurred and, in that
case, the Investment Manager will assess whether the relevant portfolio
company is taking appropriate action to resolve matters before deciding
what to do.
* There will be companies which have derated (the downward adjustment
of multiples) as a result of an adverse ESG event or due to generally poor
ESG practices where there may consequently be opportunities to invest at a
discounted price. However, the Company will only invest in these
value-based opportunities if the portfolio managers are satisfied that
there is real evidence that the relevant company's culture has changed and
that better operating practices have been put in place.
* Given the activities that mining companies undertake, negative ESG
events can occur. However, there were very few company-specific events in
2022. This meant that ongoing engagement focused mainly on the Company's
holdings approach to the energy transition and how they plan to not only
benefit from the opportunities but also how they are going to decarbonise
their own operations.
During the year the main areas of focus in relation to ESG risks and issues
remained on Rio Tinto and Vale. By way of an update, at Rio Tinto work is
ongoing with historical owners, including the establishment of the Juukan Gorge
Legacy Foundation, which will support major cultural and social projects. At
Vale, the company has continued its journey to raise its ESG profile following
the tragic tailings related events from the last decade. Further changes have
also been made to the Vale board and its operating structure. The company was
also upgraded by Fitch on the back of the work they have done to improve their
ESG track record.
PRICE WEAKNESS BUT STRONG MARGINS
2022 saw prices generally down for the year as a whole, as well as lower
average prices versus the prior year. However, it is important not just to look
at the moves in isolation. For example, the average price of copper in 2022 was
down 5.2% compared with 2021 but the actual level of US$4.2/lb was the second
highest average price ever, leaving companies enjoying healthy margins. The
opposite is true for nickel where the prices were up year-on-year but the
average price was not as high as it had been in the past, but still at
extremely profitable levels for producers.
In precious metals, gold was the standout as the average price was flat for the
year compared to silver, platinum and palladium which were all lower. However,
gold companies seem to have suffered more from cost inflation as they did not
go into the inflationary environment with levels of profitability as high as
their industrial peers.
The standout commodity for the year was lithium, as the price soared driven by
demand exceeding estimates as electric vehicle (EV) adoption rates increased
across the world. In fact, the whole battery material suite looks set to see
strong demand as the transition away from the combustion engine gathers pace.
DO NOT FORGET THE INCOME
In 2021 the Company received record levels of income as the underlying
investments paid surplus cash back to their investors. Despite fearing that
this would be a peak and 2022 might be less favourable for investors, we are
delighted to report that once again companies honoured their commitments and
continued with a strategy of distributions. The chart in the Annual Report and
Financial Statements compares the payments received in 2021 and 2022 versus the
average payments received by the Company in prior years. It is clear just how
much higher these last two years have been and it is testament to the hard work
done during earlier years that has left the companies in a position to deliver
this.
It is also important to note how the portfolio investments have generally moved
to a more shareholder friendly strategy. In 2021 82% of the Company's assets
were exposed to companies paying dividends versus only 68% in 2013. Part of
this change has been due to changes in the portfolio, but by far the majority
has come from more and more companies moving to dividend paying mode as project
capital expenditure and debt repayment needs declined. In summary, the
combination of more companies paying dividends, combined with diversification
into royalties, should build in some resilience to general economic risks.
THE ENERGY TRANSITION
As alluded to earlier, the energy transition continues to gather pace. EVs are
taking market share away from combustion engine vehicles at levels well in
excess of expectations. The roll out of renewable power projects and related
infrastructure is happening far quicker than planned. This has in part been
driven by a desire by European countries to diversify away from Russian
supplied fossil fuels and the fact that with fossil fuel prices so high
renewable power is substantially more cost effective, not to mention helping
countries/companies to meet their net zero commitments.
Despite the positive news from 2022, it is clear that we remain very close to
the start of the energy transition cycle given the enormous scale of investment
that is going to be needed over the coming decades. Looking at the data for
renewable power, it is increasingly obvious how much more resource intensive it
is (see charts in the Annual Report and Financial Statements). On top of this
there will also be commodity demand from battery storage needs and the buildout
of the hydrogen economy.
It is also essential for mining companies to embrace the need to decarbonise
their own operations as future demand is likely to seek out supply from
companies that do not just meet quality but also have green credentials. This
move from "Brown to Green" presents a range of investment opportunities for the
Company both in trying to reduce the heavy discount rates applied to carbon
intensive production techniques, as well as new technologies that could solve
some of the more damaging historical processes.
BASE METALS
It was a volatile year for base metals with prices starting the year well on
strong western world demand and risks around supply amplified with the invasion
of Ukraine. However, as we approached the middle of the year, the macro-outlook
began to deteriorate with COVID-19 lockdowns in China, further weakness in the
Chinese property market and interest rate increases to tame inflation which led
to concerns around global growth, particularly in Europe as energy prices
became an increasing toll on consumer and economic activity. This resulted in
peak to trough declines of 30% to 40% across the base metal complex, which
combined with supply challenges, cost inflation and royalty increases created a
difficult environment for the producers. Given this, share prices fared far
better than might have been expected, a reflection of the balance sheet
strength of the producers and improving outlook for demand.
Encouragingly, as we approached the year end, several measures announced by the
Chinese government to support the economy, including relaxation of its zero
COVID-19 policies, buoyed sentiment with prices rallying from their Q3 lows.
Interestingly, when we look at the overall price performance for the year as
shown in the table in the Annual Report and Financial Statements, while the
majority of base metal prices finished the year lower, with the exception of
nickel, the average price received in 2022 was higher than the prior year,
supporting earnings for the producers. As we look forward into 2023 and the
potential impact of China re-opening, not only do we expect to see a
year-on-year pick-up in underlying demand, but also a re-stocking of
commodities such as copper and aluminium assuming China reverts back to its
pre-COVID-19 levels of inventory cover. Given the tightness in physical markets
and low level of base metal inventories today, this creates upside risk to
commodity prices over the next two years if Chinese growth stabilises and the
slowdown in the US economy is not protracted.
The copper price started the year strongly reaching US$4.85/lb in early March,
to subsequently trade between US$3.25/lb to US$3.70/lb for much of the second
half before rallying to US$3.79/lb at the end of the year as China looked to
stabilise its economy. Whilst the absolute copper price is high versus history,
the cumulative impact of cost inflation over the last five years has seen a
step change in the operating cost base of the industry with several mines
operating at cash breakeven levels during the low copper prices of Q3.
Copper is a clear beneficiary of the energy transition with more than 65% of
copper used for applications that deliver electricity, whilst at the same time
the industry is facing mine supply challenges resulting in a material deficit
in the market longer term. This is driven by a lack of new greenfield copper
projects, as well as deteriorating performance at existing assets, particularly
in Chile. The expectation was for 2022 to deliver a step-up in copper supply
with new projects such as QB2 (Teck Resources) and Qualleveco (Anglo American)
due to come online. However, as we approached the year end, a swathe of
production cuts has delayed growth until 2023/2024, leaving the physical market
tight with a lack of inventory becoming an increasing issue for industrial
users. Given the significant copper supply gap estimated longer term (3.5Mt gap
estimated by Macquarie Bank by 2030), we continue to believe that copper prices
need to remain above incentive prices to induce new supply into the market
which is an attractive position for existing low-cost producers.
As at the end of December 2022, the Company had 22.0% of the portfolio exposed
to copper producing companies which modestly detracted from performance for the
year. The Company's second largest copper exposure Freeport-McMoRan (4.0% of
the portfolio) continued to deliver operationally at Grasberg, as well as
executing on their US$3 billion buyback which they announced in late 2021.
Among our other copper producers, Ivanhoe Mines (1.8% of the portfolio) have
continued to surpass the market's expectation on the ramp-up of Kamoa-Kakula,
underpinning our confidence in the management team's ability to deliver value
from their other assets including the Western Forelands in the future. Among
our mid-cap holdings in the portfolio, there was exceptional performance from
Ivanhoe Electric which held an IPO during the year delivering close to a 100%
return from our pre-IPO investment, as well as Jetti Resources which raised
US$100 million at a substantially higher level than our entry price. Both are
discussed in detail in the unquoted section of the report. The portfolio has
also benefited from M&A activity during the year following BHP's cash offer for
OZ Minerals (1.2% of the portfolio) that was recommended by the OZ Minerals
Limited board in December 2022. Strategically the transaction brings
significant benefits to BHP given the proximity of OZ Minerals' assets to BHP's
Olympic Dam operation in South Australia and supports the build-out of an
Australian based copper basin for BHP in the years ahead. OZ Minerals have been
an exceptionally strong performer over a number of years where the Company
benefited from the re-rating of the company as they delivered operationally,
and they were also the operator of the OZ Minerals Brazil Royalty when they
acquired Avanco Resources in 2018.
The aluminium price finished the year down by 16%, facing similar global growth
headwinds as the copper market. In the first half of the year there were fears
that Russian exports of primary aluminium might be impacted by sanctions which
supported prices. However, whilst certain companies have chosen not to purchase
Russian material, there have been no sanctions imposed directly on Russian
aluminium exports and these tonnes have still entered the market. With power a
major cost component for aluminium smelters, higher energy costs have resulted
in 1.2mtpa of capacity curtailed in Europe. At an aluminium price of US$2,500/
tonne, WoodMac estimates that 30% of smelters are loss making on a full cost
basis, which provides a level of downside protection to the price. However,
increasing aluminium exports from China this year has largely capped the price.
As China's domestic demand improves into 2023, we would expect exports to
moderate, which in turn should support prices. The Company has exposure to two
aluminium producers Alcoa (1.2% of the portfolio) and Norsk Hydro (2.1% of the
portfolio) both of which have access to renewable, low cost energy for the
majority of their production, leaving them well positioned in the current
environment of high energy costs and longer term as the market places a greater
cost on carbon.
Nickel prices have been very volatile this year where a short squeeze
temporarily drove prices above US$100,000 a tonne before the LME suspended the
market and cancelled some trades in March. Similar to aluminium, Russia is also
a significant producer of nickel, but we are yet to see any supply disruptions.
Overall, the nickel price finished the year up by 43% with the market becoming
increasingly aware of the longer-term deficit building for high grade nickel
used in batteries. In Q4 2022, the Company made an investment in Lifezone which
announced a business combination with a Special Purpose Acquisition Company
(SPAC) GoGreen Investments which is listed on the New York Stock Exchange.
Lifezone has a controlling shareholding in Kabanga, the largest and
highest-grade undeveloped nickel project globally, located in Tanzania. The
project has significant backing from BHP the world's largest mining company
which has invested US$100 million into the asset at a see-through valuation of
US$627 million to acquire 14.3% of the project, with the option to acquire a
51% interest once the feasibility study is completed by the end of 2023.
BULK COMMODITIES AND STEEL
It was a challenging year for the iron ore market with average prices 24.5%
lower year-on-year, with demand undermined by China's zero COVID-19 policy and
ongoing weakness in China's key steel intensive property sector. Whilst the
market enjoyed a post Beijing Winter Olympics restock in first quarter seeing
prices hold a healthy range between US$120-140/tonne during the first half of
the year, they subsequently averaged below US$100/tonne during the second half
of the year bottoming at US$80/tonne in the third quarter as Chinese steel
margins turned negative and uncertainty around China's COVID-19 policy saw
further de-stocking by customers.
China's shift in COVID-19 policy and further support announced for the property
sector at the end of the year, has seen prices rally back above US$100/tonne as
the market looks to price in the impact of China re-opening. As we look into
2023, we expect to see a recovery in construction activity, which combined with
first quarter seasonality in the iron ore market with both Brazilian and
Australian tonnes exposed to weather events, it provides a constructive
backdrop for the price during the first half of the year. Among the 'big 4'
producers there is modest (1%) growth in supply this year which will be second
half weighted and we continue to see the producers being disciplined around
volumes which should be supportive of the price over the medium term. During
the course of the year, we had the opportunity to visit BHP's and Rio Tinto's
key iron ore assets in the Pilbara Region of Western Australia which enabled us
to learn more about the world class size and grade of these assets, their
approach to ESG and the focus on decarbonising their operations.
The Company's exposure to iron ore is in the diversified majors BHP, Vale and
Rio Tinto, which have performed well this year returning 30%, 35% and 19%
respectively. In addition, the Company has exposure to two pure play high grade
iron ore producers Champion Iron and Labrador Royalty Company which have
returned 41% and -6% respectively, as well as Mineral Resources which is
looking to grow its iron ore business alongside its lithium, mining service and
gas business which finished the year up by 45%.
Coal markets have been one of the most interesting commodity markets over the
last couple of years with record prices achieved for both metallurgical and
thermal coal during 2022. Thermal coal markets have benefited from tightness in
global energy markets particularly in Europe due to the ban of Russian coal
imports, limited supply growth due to ESG pressures and higher than normal
levels of rainfall in Australia which accounts for 60% of seaborne supply. With
levels of gas storage in Europe above average levels at the end of 2022, we
have seen European gas prices decline which poses a risk to thermal coal
prices. However, given the tightness in the market for high grade Australian
thermal coal, prices have held at a record level of US$400/tonne at the end of
2022. As we look into 2023, we continue to see a tight market for thermal coal
given much of Europe's coal and inventory build was sourced from Russia, but
with supply from Australia expected to recover in 2023 after record rain
impacts in 2022, a moderation in thermal coal prices from record levels is
likely.
The Company's thermal coal exposure is via our 7.7% position in Glencore, which
is using elevated thermal coal prices to deleverage the business and remains
focused on decreasing its coal exposure overtime. Glencore has indicated that
they intend to return excess cashflow above their net debt target of US$10
billion. This implies a 15% capital return yield for 2022 which is industry
leading and will result in a circa 10% decline in their share capital
outstanding. The Company has no exposure to pure play thermal coal producers.
The seaborne metallurgical coal price reached a new all-time high during the
first half of the year at circa US$500/tonne, supported by Russian supply
concerns (5% of global supply), tightness in the thermal coal market, as well
as the flooding in Australia which impacted supply. However, as we moved into
the second half of the year, prices moderated as weaker steel demand in Europe
began to bite with the metallurgical coal price finishing the year at US$295/
tonne (Premium Hard Coking Coal, FOB). During the course of the year, we saw a
number of production downgrades announced including Anglo American reducing
volume guidance for its Grosvenor mine in Queensland and Teck Resources
reducing guidance at Elkview due to operational issues. This, combined with
limited investment into new supply and seasonal weather events, leaves the
coking coal market susceptible to upside spikes in prices which has been a
consistent feature of this market in recent years. The Company's exposure to
metallurgical coal remains in the two leading producers of BHP and Teck
Resources which have been able to generate very strong levels of free cash flow
from their coking coal businesses to support returns to shareholders. (All data
reported in pounds sterling terms.)
PRECIOUS METALS
The last three years have seen a largely rangebound price environment for
precious metals, with the average annual gold price between 2020 to 2022 within
1.7% of each other in US dollar terms. This is a remarkable level of stability
for a commodity, with the gold price driven by two opposing forces over the
last year. On the positive side we have seen rising inflation, elevated
geopolitical and market risk, while on the other hand the impact of interest
rate hikes to combat inflation which has seen real rates for Government bonds
flip from negative to positive over the course of the year. As we approached
the year end, we saw the gold price rally and breakthrough US$1800/oz on the
back of China's reopening news, the knock-on impact from a weaker US dollar and
the potential for the Federal Reserve (the Fed) to slow the pace of interest
rate hikes as inflation started to moderate.
With positive real interest rates in the US and most global economies, the
appeal for non-yielding gold in the short term is limited. The performance of
gold over the next 12 months is likely to be driven by the Fed's ability to
tame inflation and whether they can effectively bring down inflation to their
targeted level, or whether inflation remains at a structurally higher level
than in the past which should raise inflation expectations supportive of the
gold price.
An encouraging feature of the gold equity market over recent years has been the
increased focus on shareholder returns, free cash flow and dividends. However,
results in 2022 have shown margin compression due to rising labour, energy and
other input costs. Whilst the portfolio has continued to hold a lower
allocation (13.0%) to gold companies versus a similar time last year (16.4%) we
have maintained our strategy of focusing on high quality producers which have
an attractive operating margin and solid production profile and resource base.
This includes the Company's exposure to the royalty companies Franco Nevada
(2.6% of the portfolio) and Wheaton Precious Metals (2.3% of the portfolio)
which outperformed the gold equities during the year given their stronger
margins and lack of exposure to cost inflation. In addition, the Company's
exposure to Endeavour Mining (0.6% of the portfolio) and Northern Star
Resources (1.2% of the portfolio), both mid-cap growth focused gold companies,
added to performance as the benefit of volume growth helped offset some of the
cost inflation in the sector.
Demand for the Platinum Group Metals (PGMs) continues to be impacted by the
weakness in global auto production and the share gains from electric vehicles
(over internal combustion engines) which do not use PGMs. While Russia is a
major producer of PGMs, accounting for 40% of global palladium production,
there has been minimal impact to Russian PGM supply. During 2022 there was
mixed performance from the PGMs with the platinum price (+11%) outperforming
the palladium price (-9%).
We continue to remain positive on the medium-term outlook for the PGMs and
believe the PGM basket will remain high relative to history given limited new
supply and increasing PGM loadings for auto catalysts to meet rising emissions
standards. The Company has reduced its exposure to pure play PGM producers
during the year which represented 2.0% of the portfolio at the year end. In
addition, the Company has exposure to PGMs via its holding in Anglo American
(5.2% the portfolio) which owns 79% of Anglo American Platinum. The standout
performer among our PGM exposure during the year was our investment in Bravo
Metals, a PGM exploration company focused on the Luanga project in Brazil which
they acquired from Vale. As outlined in the unquoted section of the report, the
company's IPO during the year resulted in a 170% uplift from our pre-IPO
investment made in early 2022 and finished the year above its IPO price with
early results from its drilling campaign confirming and, in a number of
instances, exceeding the historical drilling results from Vale showing
previously unidentified rhodium and nickel sulphide mineralisation in the assay
results.
ENERGY TRANSITION METALS
Growth in battery electric vehicles (BEVs) continued in 2022, creating
significant demand for the materials that enable that transition. Demand for
pure battery electric vehicles grew 40% in 2022 to 267,000 units (16% of all
new car registrations in 2022), with demand for plug-in hybrids also growing.
This growth has been mainly driven by China, with Europe and the US lagging. We
expect this structural growth to continue and accelerate particularly in the
US, driven by increased model launches, strengthening consumer preference due
to technological advantage and government policy. Of particular note in 2022,
was the announcement of the US Inflation Reduction Act. As well as other
climate change related measures, this policy supports EV demand through
significant subsidies of up to US$7,500 per car. This is expected to support US
BEV demand in 2023. The Company has exposure to the raw materials that go into
EV batteries and the e-motor.
Lithium is a critical component of an EV battery and demand for lithium has
been strong this year with the market firmly in deficit and benchmark Chinese
prices reaching all-time highs in November, finishing 2022 up by 101.6%. The
Company added to its lithium holdings in late 2021, establishing a position in
SQM and Sigma Lithium both of which have performed well in this environment
returning 78% and 207% respectively (GBP returns). We also added a new position
in relative underperformer Albemarle in June and Mineral Resources in October,
as they too stand to benefit from the continued tight demand supply situation
in lithium, as well as their own volume growth. The Company has a 2.1% position
across its lithium holdings.
A critical component of the electric car is also the e-motor, which most
commonly uses a Praseodymium-Neodymium (NdPr) magnet, an alloy of two rare
earth elements (REE). REE are commonly mined and processed in China and have
been deemed of strategic importance by both Europe and the US. The Company has
exposure to REEs through Lynas, a REE miner and processor crucially based in
Malaysia and Australia. In 2022 Lynas equity fell by 19.1%, but the company
announced in June that they had won a contract from the US Department of
Defence to deliver a US rare earth separation facility, underscoring the
strategic growth opportunity.
EV battery raw materials include cobalt, where LME prices fell by 26.3% as
supply increased faster than demand; the market is moving to lower cobalt
intensity cathode materials with higher nickel or lithium iron phosphate
chemistry (LFP). Supply growth is set to continue with cobalt being a
by-product of many of the Indonesian nickel projects announced and currently
ramping. In addition, 2023 may be impacted by the release of 10,000 tonnes of
stockpiled cobalt from the Tenke mine in the Democratic Republic of the Congo
(DRC) which has been unable to export in the second half of 2022 due to a
government dispute. Glencore's Mutanda mine in the DRC ramped-up production in
2022, supporting circa 50% growth in cobalt production in the first nine months
of the year. Glencore, in which the Company has a 7.7% position, saw its share
price rise by 47.3% during 2022. Glencore is a globally significant cobalt
producer which produced 22% of mine production in 2020 and this is set to
increase with Mutanda's ramp-up.
ROYALTY AND UNQUOTED INVESTMENTS
Over the last year the Company has been busy growing the unquoted part of the
portfolio and we are delighted to report that this has delivered great
performance through a combination of IPOs, financing valuation uplifts and
strong income generation. As mentioned in previous reports, the focus of the
unquoted investments is to seek to generate both capital growth and income to
deliver the superior total return goal for the portfolio. Ongoing income from
the royalty investments has continued with the OZ Minerals Brazil Royalty
starting to benefit from the ramp-up of the Pedra Branca mine, whilst the Vale
Debentures enjoyed a better period of production despite lower iron ore prices
year-on-year.
Key highlights in the unquoted equity sleeve include Ivanhoe Electric which
completed its IPO in June despite the difficult market conditions. This
resulted in an increase in the value of the holding of over 100% in less than
10 months since the position was acquired. Elsewhere Bravo Mining completed its
IPO in July at a valuation 170% higher than the price paid for the shares in
May 2022. Both positions finished the year at a price higher than IPO and will
no longer be reported in the unquoted section of the portfolio as they are now
fully tradeable securities. Jetti Resources completed its Series D financing,
raising US$100 million at a substantial valuation uplift to our investment made
at the beginning of 2022. OZ Minerals received a takeover offer from BHP which
has been recommended by the OZ Minerals board and is expected to complete in Q2
of 2023 which will see BHP become the operator of the mines linked to our
royalty.
As at the end of 2022, the unquoted and illiquid investments in the portfolio
amounted to 6.6% of the portfolio and consist of the OZ Minerals Brazil
Royalty, the Vale Debentures, Jetti Resources and MCC Mining. These, and any
future investments, will be managed in line with the guidelines set by the
Board as outlined to shareholders in the Strategic Report.
We continue to actively look for opportunities to grow royalty exposure given
it is a key differentiator of the Company and an effective mechanism to lock-in
long-term income which further diversifies the Company's revenues.
OZ MINERALS BRAZIL ROYALTY CONTRACT
In July 2014 the Company signed a binding royalty agreement with Avanco
Minerals. The Company invested US$12 million in return for a 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 mines built on Avanco's Antas North and Pedra Branca
licences. In addition, there is a flat 2% royalty over all metals produced from
any other discoveries within Avanco's licence area as at the time of the
agreement.
In 2018 Avanco was successfully acquired by OZ Minerals, an Australian based
copper and gold producer for A$418 million, with the royalty now assumed by OZ
Minerals. Since our initial US$12 million investment was made, we have received
US$22.1 million in royalty payments, with the royalty achieving full payback on
the initial investment in 3½ years. As at the end of December 2022, the royalty
was valued at £21.2 million (1.5% NAV) which equates to a 297.1% return on the
initial US$12 million invested.
In 2021 OZ Minerals achieved a significant milestone and commenced mining of
Pedra Branca ore. This year we have seen the ramp-up progress ahead of plan
with Pedra Branca on track to achieve its 2022 guidance of 10-12kt copper and
8-10koz gold, with the company targeting production beyond this level in 2023.
We continue to remain optimistic on the longer-term optionality provided by the
royalty via the development of Pedra Branca West, as well as greenfield
exploration over the licence area.
In August 2022, OZ Minerals received an initial indicative proposal from BHP to
acquire the company in an all-cash deal at A$25 per share. This offer was
rejected by the OZ Minerals board with BHP submitting a revised offer of
A$28.25 per share which was unanimously recommended in November 2022. The deal
remains subject to approval by OZ Minerals shareholders with the deal expected
to close in Q2 2023. This will see BHP operate the Brazilian assets and assume
the royalty, consistent with the mechanism used when OZ Minerals acquired
Avanco in 2018. We believe that BHP's strong operating focus, balance sheet
strength and ESG credentials leaves the Brazilian operations in a very strong
set of hands.
VALE DEBENTURES
At the beginning of 2019, the Company completed a significant transaction to
increase its holding in Vale Debentures. The Debentures consist of a 1.8% net
revenue royalty over Vale's Northern System and Southeastern System iron ore
assets in Brazil, as well as a 1.25% royalty over the Sossego copper mine. We
consider that the iron ore assets are world class given their grade, cost
position, infrastructure and resource life which is well in excess of 50 years.
As at the end of December 2022 the Company's exposure to the Vale Debentures
was 2.6%.
Dividend payments are expected to grow once royalty payments commence on the
Southeastern System in 2024 and volumes from S11D and Serra Norte improve into
2023 where project ramp-ups have been challenged in 2022 by licencing
requirements. In December, Vale reduced its longer-term iron ore production
profile in light of licencing challenges and also a greater focus on high grade
material. This now sees Vale target modest volume growth from the Northern
System out to 2026, but the improvement in grade, to the extent achieved, will
aid received pricing that the royalty will benefit from.
Despite the decline in iron ore prices during 2022, the Debentures continue to
offer an attractive yield of circa 10% based on the 1H-22 annualised dividend.
This is an attractive yield for a royalty investment, with this value
opportunity recognised by other listed royalty producers, Franco Nevada and
Sandstorm royalties, which have both acquired stakes in the Debentures since
the sell-down occurred in 2021.
Whilst the Vale Debentures are a royalty, they are also a listed security on
the Brazilian National Debentures System. As we have highlighted in previous
reports, shareholders should be aware that historically there has been a low
level of liquidity in the Debentures and price volatility is to be expected.
However, we expect this progressively to improve following the sell down in
April 2021.
IVANHOE ELECTRIC
In early August 2021 the Company made a US$20 million investment (equivalent to
1.3% of NAV) into Ivanhoe Electric, an exploration and mining business focused
on identifying and developing "electric metals" (copper, nickel, gold and
silver) required for the energy transition. The exploration portfolio is
focused in the US where they have developed a proprietary exploration
technology that has the ability to identify mineral resources at greater depths
than existing methods. The team is led by Robert Friedland who has a successful
track-record of identifying and developing world class mineral deposits such as
Voisey's Bay, Oyu Tolgoi and Kamoa-Kukula.
In June 2022 Ivanhoe Electric (2.4% of the portfolio) successfully completed an
IPO at US$11.75 per share. The Company's investment consisted of common shares
of Ivanhoe Electric, as well as convertible notes which convert at a discount
to the IPO price into Ivanhoe Electric shares with a total return of 91% on our
initial investment. During the course of 2022, the company has been focused on
exploration drilling at their Santa Cruz asset in Arizona which is the
third-largest undeveloped copper deposit in the US. An updated Santa Cruz
resource estimate and Preliminary Economic Analysis report is due to be
released in the first half of 2023 and we expect to see significant growth in
the size of the resource, based on recent drilling success at the existing
Santa Cruz deposit, as well as new discoveries at East Ridge and Texaco. 2023
is set to be an exciting year for Ivanhoe Electric with the company potentially
offering significant strategic benefit as a future low carbon producer of
copper in the US.
JETTI RESOURCES
In early 2022 the Company made an investment into mining technology company
Jetti Resources which has developed a new catalyst that appears to improve
copper recovery from primary copper sulphides (specifically copper contained in
chalcopyrite, which is often uneconomic) under conventional leach conditions.
Jetti is currently trialling their technology at 35 mines where they will look
to integrate their catalyst into existing heap leach SX-EW mines to improve
recoveries at a low capital cost. The technology has been demonstrated to work
at scale at the Pinto Valley copper mine, with further trials at different
copper assets planned for this year. If Jetti's technology is proven to work at
scale we see material valuation upside, with Jetti sharing in the economics of
additional copper volumes recovered through the application of their catalyst.
During the second half of 2022 we are pleased to report that Jetti completed
its Series D financing to raise US$100 million at a substantially higher
valuation than when our investment was made at the beginning of 2022. This sees
the company fully financed to execute on their expected growth plans in the
years ahead. As at the end of December, Jetti represented 2.1% of the
portfolio.
MCC MINING
MCC Mining (0.4% of the portfolio) operates as a mineral exploration company
focused on exploring for copper in Columbia. The company has several large
porphyry targets which we believe could have significant potential.
Shareholders include other mid to large cap copper miners, which is another
indication of the strategic value of the company. The valuation of the company
is based on the US$170.7 million equity value implied by the April 2022 equity
raise. The money raised will fund a drilling campaign which commenced in Q4
2022 at their Comita project, a joint venture with Rio Tinto, with drilling on
two other projects (Urrao and Pantanos) expected to commence in mid-2023.
Importantly, MCC's three projects are located in the Forestry Reserve in
Colombia which allows for exploration drilling in the forestry reserve based on
new regulations introduced in Colombia in early 2022.
BRAVO MINING
Bravo Mining (0.9% of NAV) is a Brazil-based mineral exploration and
development company focused on advancing the Luanga platinum group metals/gold/
nickel project in the world-class Carajas Mineral Province of Brazil. Due to
our belief in the asset's potential, the Company participated in a pre-IPO
round in April 2022, at a $39 million valuation. The proceeds of the raise were
used to fund drilling and survey work. Since the pre-IPO round the company has
decided to IPO, which completed in July at C$1.75/share. This represents a 170%
return since the Company's investment.
During the course of 2022, Bravo has been focused on drilling the historical
resource at Luanga which has confirmed and, in a number of cases, exceeded the
expectations of the original resource. With less than half of the phase 1
drilling analysed and a similar sized drill program scheduled for 2023, we
expect to see substantial growth in Luanga's resource where recent results show
rhodium and potential for nickel sulphide which was previously unknown. Bravo
is still in the early days of its journey and highlights the potential value
unlock available by backing quality management in attractive geological areas.
DERIVATIVES ACTIVITY
The Company from time to time enters into derivatives contracts, mostly
involving the sale of "puts" and "calls". These are taken to revenue and are
subject to strict Board guidelines which limit their magnitude to an aggregate
10% of the portfolio. In 2022 income generated from options was £7.3 million in
line with contributions from prior periods. During the year opportunities
presented themselves in the first few months and once again during the autumn
and into winter when volatility was priced at elevated levels. At the end of
the period the Company had 2.6% of the net assets exposed to derivatives and
the average exposure to derivatives during the period was less than 5%.
GEARING
At 31 December 2022, the Company had £125.0 million of net debt, with a gearing
level of 9.6%. The debt is held principally in US dollar rolling short-term
loans and managed against the value of the debt securities and the high
yielding royalty positions in the Company. During the year the Company sought
to maximise the use of gearing against the equity holdings rather than debt
securities. This was driven by the risk adjusted relative value available in
shares where dividend yields were mostly in excess of the coupons being paid on
the bonds. Since the companies in the portfolio also have strong balance
sheets, it was opportune to gear up the equity portfolio of the Company since
we were not adding debt to holdings that were already heavily leveraged
themselves.
Shareholders should note that the total gearing available to the Company has
increased during the year due to the rise in assets but remains within the
percentage limits set by the Board. On the back of this, facilities were
refreshed with our lenders and stand at £200 million for loans and £30 million
for the overdraft. The current average cost of debt for the Company remains low
at 2.82% and is linked to SONIA following the demise of LIBOR.
OUTLOOK
At the macro level it seems likely that the peak in the pace of interest rate
increases is behind us and, if anything, the economic background should become
more supportive for economic activity during the year assuming inflation
pressures start to fade. On the geo-political front, it is very hard to gauge
what will happen, but even if there is an end to conflict it will be many years
before sanctions are lifted and commodity trade routes reopen meaning that
ongoing disruption to supply will last longer than the conflict.
With the energy transition well under way and the Chinese economy emerging from
its self-imposed COVID-19 related disruption, the outlook for commodities
demand is strong. At the same time supply remains constrained by a range of
issues from permitting, elevated capital expenditure, delays due to ESG factors
and a scarcity of projects. It is these factors that fuel our ongoing positive
outlook for commodity prices and the fact that they are not yet priced into
valuations means there are plenty of opportunities within the mining equity
market.
At the company levels, despite all of the uncertainties at the start of the new
year, the mining sector goes forward on a strong footing as corporate balance
sheets remain some of the strongest of any equity sector. In addition, profit
margins continue at very healthy levels even after adjusting for the cost
inflation seen during the last year. However, it is worth pointing out that
free cash might easily be impacted by capital expenditure and decarbonisation
projects as the sector transitions to producing "greener" commodities needed
for the energy transition. The priority to allocate cash flow into these areas
means that there could be less available for dividends and as such the Company
might see a lower level of distributions. In the results announced to date in
2023, dividends from some of our portfolio companies have decreased.
EVY HAMBRO AND OLIVIA MARKHAM
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
2 March 2023
TEN LARGEST INVESTMENTS
1 + BHP (2021: 2nd)
Diversified mining group
Market value: £135,048,000
Share of investments: 9.5% (2021: 7.7%)
The world's largest diversified mining group by market capitalisation. The
group is an important global player in a number of commodities including iron
ore, copper, thermal and metallurgical coal, manganese, nickel, silver and
diamonds.
2 - Vale1,2 (2021: 1st)
Diversified mining group
Market value: £130,476,000
Share of investments: 9.1% (2021: 8.5%)
One of the largest mining groups in the world, with operations in 30 countries.
Vale is the world's largest producer of iron ore and iron ore pellets and the
world's largest producer of nickel. The group also produces manganese ore,
ferroalloys, metallurgical and thermal coal, copper, platinum group metals,
gold, silver and cobalt.
3 = Glencore (2021: 3rd)
Diversified mining group
Market value: £109,508,000
Share of investments: 7.7% (2021: 7.7%)
One of the world's largest globally diversified natural resources groups. The
group's operations include approximately 150 mining and metallurgical sites and
oil production assets. Glencore's mined commodity exposure includes copper,
cobalt, nickel, zinc, lead, ferroalloys, aluminium, thermal coal, iron ore,
gold and silver.
4 = Anglo American3 (2021: 4th)
Diversified mining group
Market value: £73,942,000
Share of investments: 5.2% (2021: 7.5%)
A global mining group. The group's mining portfolio includes bulk commodities
including iron ore, manganese, metallurgical coal, base metals including copper
and nickel and precious metals and minerals including platinum and diamonds.
Anglo American has mining operations globally, with significant assets in
Africa and South America.
5 + Rio Tinto (2021: 7th)
Diversified mining group
Market value: £63,652,000
Share of investments: 4.5% (2021: 4.2%)
One of the world's leading mining groups. The group's primary product is iron
ore, but it also produces aluminium, copper, diamonds, gold, industrial
minerals and energy products.
6 + First Quantum Minerals1 (2021: 10th)
Copper producer
Market value: £58,504,000
Share of investments: 4.1% (2021: 2.9%)
A Canadian-based mining and metals group with principal activities that include
mineral exploration, development and mining. Its main product is copper.
7 - ArcelorMittal1 (2021: 6th)
Steel producer
Market value: £57,127,000
Share of investments: 4.0% (2021: 5.2%)
A multinational steel manufacturing group, with a focus on producing safe
sustainable steel. The group has operations across the globe and is the largest
steel manufacturer in North America, South America and Europe.
8 - Freeport-McMoRan3 (2021: 5th)
Copper producer
Market value: £56,549,000
Share of investments: 4.0% (2021: 6.2%)
A global mining group which operates large, long-lived, geographically diverse
assets with significant proven and probable reserves of copper, gold and
molybdenum.
9 - Teck Resources (2021: 8th)
Diversified mining group
Market value: £51,395,000
Share of investments: 3.6% (2021: 3.6%)
A diversified mining group headquartered in Canada. The company is engaged in
mining and mineral development with operations and projects in Canada, the US,
Chile and Peru. The group has exposure to copper, zinc, metallurgical coal and
energy.
10 + Franco Nevada (2021: 14th)
Gold royalty
Market value: £37,460,000
Share of investments: 2.6% (2021: 2.2%)
A leading gold-focused royalty and streaming group with the largest and most
diversified portfolio of cash-flow producing assets. Its business model
provides investors with gold price and exploration optionality while limiting
exposure to cost inflation.
1 Includes fixed income securities.
2 Includes investments held at Directors' valuation.
3 Includes options.
All percentages reflect the value of the holding as a percentage of total
investments. For this purpose, where more than one class of securities is held,
these have been aggregated.
Together, the ten largest investments represented 54.3% of total investments of
the Company's portfolio as at 31 December 2022 (ten largest investments as at
31 December 2021: 57.0%).
INVESTMENTS AS AT 31 DECEMBER 2022
Main Market
geographical value % of
exposure £'000 investments
Diversified
BHP Global 135,048 9.5
Vale Global 93,137 } 9.1
Vale Debentures*#^ Global 37,339
Glencore Global 109,508 7.7
Anglo American Global 74,626 } 5.2
Anglo American Call Option 20/01/23 GBP£31.40 Global (684)
Rio Tinto Global 63,652 4.5
Teck Resources Global 51,395 3.6
Trident Global 5,793 0.4
--------------- ---------------
569,814 40.0
========= =========
Copper
First Quantum Minerals* Global 58,504 4.1
Freeport-McMoRan Global 56,848 } 4.0
Freeport-McMoRan Put Option 20/01/23 US$37 Global (299)
OZ Minerals Brazil Royalty# Latin 21,199 } 2.7
America
OZ Minerals Australasia 17,320
Ivanhoe Electric United 23,753 } 2.4
States
I-Pulse* United 10,727
States
Jetti Resources# Global 29,873 2.1
Ivanhoe Mines Other Africa 25,364 1.8
Sociedad Minera Cerro Verde Latin 17,171 1.2
America
Develop Global Australasia 15,316 1.1
Solaris Resources Latin 8,889 0.6
America
Ero Copper Latin 6,316 0.4
America
Antofagasta Latin 6,291 0.4
America
MCC Mining# Latin 5,819 0.4
America
Aurubis Global 5,139 0.4
Lundin Mining Global 3,490 0.2
Hudbay Global 2,371 0.2
SolGold Latin 346 -
America
--------------- ---------------
314,437 22.0
========= =========
Gold
Franco Nevada Global 37,460 2.6
Barrick Gold Global 32,994 2.3
Wheaton Precious Metals Global 32,472 2.3
Newmont Corporation Global 27,014 1.9
Newcrest Mining Australasia 19,719 1.4
Northern Star Resources Australasia 17,160 1.2
Endeavour Mining Other Africa 9,119 0.6
Agnico Eagle Mines Canada 6,594 0.5
Polymetal International United 2,306 0.2
Kingdom
Polyus Russia - -
--------------- ---------------
184,838 13.0
========= =========
Steel
ArcelorMittal* Global 57,127 4.0
Nucor United 28,520 } 2.0
States
Nucor Call Option 20/01/23 US$136 United (244)
States
Steel Dynamics United 22,285 1.6
States
Stelco Holdings Canada 7,457 0.5
--------------- ---------------
115,145 8.1
========= =========
Industrial Minerals
Sigma Lithium Latin 15,728 1.1
America
Albemarle Global 13,936 1.0
Mineral Resources Australasia 13,721 1.0
Sociedad Quimica y Minera ADR Latin 13,506 1.0
America
Iluka Resources Australasia 11,973 0.8
Lynas Rare Earths Australasia 10,191 0.7
Chalice Mining Australasia 7,602 0.5
Sheffield Resources Australasia 5,945 0.4
--------------- ---------------
92,602 6.5
========= =========
Aluminium
Norsk Hydro Global 30,036 2.1
Alcoa Global 16,798 1.2
--------------- ---------------
46,834 3.3
========= =========
Iron Ore
Labrador Iron Canada 24,172 1.7
Champion Iron Canada 14,546 1.0
Deterra Royalties Australasia 5,202 0.4
Equatorial Resources Other Africa 313 -
--------------- ---------------
44,233 3.1
========= =========
Platinum Group Metals
Bravo Mining Latin 11,287 0.9
America
Northam Platinum Global 6,050 0.4
Impala Platinum South Africa 6,011 0.4
Sibanye Stillwater South Africa 3,768 0.3
--------------- ---------------
27,656 2.0
========= =========
Nickel
Nickel Mines Indonesia 10,806 0.8
Bindura Nickel Global 60 -
Lifezone SPAC PIPE Commitment# Global - -
--------------- ---------------
10,866 0.8
========= =========
Mining Services
Epiroc Global 6,184 0.4
--------------- ---------------
6,184 0.4
========= =========
Uranium
Cameco Canada 5,363 0.4
--------------- ---------------
5,363 0.4
========= =========
Other
Woodside Energy Group Australasia 3,638 0.3
--------------- ---------------
3,638 0.3
========= =========
Zinc
Titan Mining United 2,007 0.1
States
--------------- ---------------
2,007 0.1
========= =========
Comprising: 1,423,617 100.0
========= =========
- Investments 1,424,844 100.1
- Options (1,227) (0.1)
--------------- ---------------
1,423,617 100.0
========= =========
* Includes fixed income securities.
# Includes investments held at Directors' valuation.
Mining royalty contract.
^ The investment in the Vale Debentures is illiquid and has been valued
using secondary market pricing information provided by the Brazilian Financial
and Capital Markets Association (ANBIMA).
All investments are in equity shares unless otherwise stated.
The total number of investments as at 31 December 2022 (including options
classified as liabilities on the balance sheet) was 68 (31 December 2021: 56).
As at 31 December 2022 the Company did not hold any equity interests in
companies comprising more than 3% of a company's share capital.
PORTFOLIO ANALYSIS AS AT 31 DECEMBER 2022
Commodity Exposure1
2022 portfolio 2021# portfolio 2022 Reference
Index*
Diversified 39.5% 39.4%
40.0%
Copper 22.0% 21.5% 9.3%
Gold 13.0% 16.4% 20.6%
Steel 8.1% 7.7% 16.5%
Industrial 6.5% 4.1% 2.4%
Minerals
Aluminium 3.3% 3.3% 3.8%
Iron Ore 3.1% 2.8% 3.9%
Platinum Group 2.0% 3.1% 2.6%
Metals
Nickel 0.8% 1.4% 0.1%
Mining Services 0.4% 0.0% 0.1%
Uranium 0.4% 0.0% 0.0%
Other& 0.3% 0.0% 0.9%
Zinc 0.1% 0.2% 0.4%
1 Based on index classifications.
# Represents exposure at 31 December 2021.
* MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
& Represents a very small exposure.
Geographic Exposure1
2022
Global 69.2%
Australasia 9.0%
Latin America 7.5%
Other2 7.1%
Canada 4.1%
Other Africa (ex South 2.4%
Africa)
South Africa 0.7%
2021
Global 69.9%
Latin America 8.0%
Other3 7.4%
Australasia 6.3%
South Africa 3.1%
Other Africa (ex South 3.1%
Africa)
Canada 2.2%
1 Based on the principal commodity exposure and place of operation of each
investment.
2 Consists of Indonesia, Russia, United Kingdom and United States.
3 Consists of Indonesia, Russia and United States.
STRATEGIC REPORT
The Directors present the Strategic Report of BlackRock World Mining Trust plc
for the year ended 31 December 2022. The aim of the Strategic Report is to
provide shareholders with the information to assess how the Directors have
performed their duty to promote the success of the Company for the collective
benefit of shareholders.
The Chairman's Statement together with the Investment Manager's Report form
part of this Strategic Report. The Strategic Report was approved by the Board
at its meeting on 2 March 2023.
Principal activities
The Company carries on business as an investment trust and has a premium
listing on the London Stock Exchange. Its principal activity is portfolio
investment and that of its subsidiary, BlackRock World Mining Investment
Company Limited (together the Group), is investment dealing. The Company was
incorporated in England on 28 October 1993 and this is the 29th Annual Report.
Investment trusts are pooled investment vehicles which allow exposure to a
diversified range of assets through a single investment, thus spreading
investment risk.
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 BlackRock Fund Managers Limited (the Manager). Matters
reserved 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), as implemented, retained and onshored in the UK,
the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers
Limited 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). The Manager, operating under guidelines determined by the
Board, 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.
The Company delegates fund accounting services to the Manager, which in turn
sub-delegates these services to The Bank of New York Mellon (International)
Limited (BNYM) (the Fund Accountant) and also sub-delegates registration
services to the Registrar, Computershare Investor Services PLC. Other service
providers include the Depositary (also BNYM). Details of the contractual terms
with these service providers and more details of sub-delegation arrangements in
place governing custody services are set out in the Directors' Report in 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 actively managed with the objective of
maximising total returns. 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.
Up to 10% of gross assets may be held in 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.
As approved by shareholders in August 2013, 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 March 2015 the Board refined the guidelines associated with the Company's
royalty strategy and proposed to maintain the 20% maximum exposure to royalties
but the royalty/unquoted portfolio should itself deliver diversification across
operator, country and commodity. To this end, new investments into individual
royalties/unquoted investments should not exceed circa 3% of gross assets at
the time of investment. Total exposure to any single operator, including other
issued securities such as debt and/or equity, where greater than 30% of that
operator's revenues come from the mine over which the royalty lies, must also
not be greater than 3% at the time of investment. In addition, the guidelines
require that the Investment Manager must, at the time of investment, manage
total exposure to a single operator, via reducing exposure to listed securities
if they are also held in the portfolio, in a timely manner where royalties/
unquoted investments are revalued upwards. In the jurisdictions where statutory
royalties are possible (in countries where mineral rights are privately owned)
these will be preferred and in respect of contractual royalties (a contractual
obligation entered into by the operator and typically unsecured) the valuation
must take into account the higher credit risk involved. Board approval will
continue to be required for all royalty/unquoted investments.
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.
No material change will be made to the investment policy without shareholder
approval.
Gearing
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 14.7% and, at the financial
reporting date, net gearing (calculated as borrowings less cash and cash
equivalents as a percentage of net assets) stood at 9.6% of shareholders' funds
(2021: 9.9%). For further details on borrowings refer to note 14 in the
Financial Statements and the Alternative Performance Measure in the Glossary,
both contained in the Annual Report and Financial Statements.
Portfolio analysis
Information regarding the Company's investment exposures is contained within
Section 2 (Portfolio), with information on the ten largest investments above,
the investments listed above and portfolio analysis above. Further information
regarding investment risk and activity throughout the year can be found in the
Investment Manager's Report above.
As at 31 December 2022, the Level 3 unquoted investments (see note 18 in the
Financial Statements in the Annual Report and Financial Statements) in the OZ
Minerals Brazil Royalty and preferred shares and equity shares of Jetti
Resources and MCC Mining were held at Directors' valuation, representing a
total of £56,891,000 (US$67,269,000) (2021: £33,412,000 (US$45,255,000)).
Unquoted investments can prove to be more risky than listed investments.
Continuation vote
As agreed by shareholders in 1998, an ordinary resolution for the continuation
of the Company is proposed at each Annual General Meeting. 2022 was another
solid year with mining companies continuing down the path of capital
discipline, balance sheets in strong shape and earnings and dividends exceeding
expectations. The Directors remain confident on the value available in the
sector and therefore recommend that shareholders vote in support of the
Company's continuation.
Performance
Details of the Company's performance for the year are given in the Chairman's
Statement above. The Investment Manager's Report above includes a review of the
main developments during the year, together with information on investment
activity within the Company's portfolio.
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 £
202,420,000 (2021: £192,470,000) of which £76,013,000 (2021: £78,910,000) is
revenue profit.
It is the Board's intention to distribute substantially all of the Company's
available income. The Directors recommend the payment of a final dividend as
set out in the Chairman's Statement above. Dividend payments/payable for the
year ended 31 December 2022 amounted to £75,405,000 (2021: £78,331,000).
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
above.
Employees, social, community and human rights issues
As an investment trust, the Company has no direct social or community
responsibilities or impact on the environment and the Company has not adopted
an ESG investment strategy or exclusionary screens. However, the Directors
believe that it is important and in shareholders' interests to consider human
rights issues and environmental, social and governance factors when selecting
and retaining investments. Details of the Company's approach to ESG integration
are set out in the Annual Report and Financial Statements and details of the
Manager's approach to ESG integration are set out in 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. The Investment Manager
considers modern slavery as part of supply chains and labour management within
the investment process. 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 are set out in the Directors' Biographies in the
Annual Report and Financial Statements. The Board consists of three male
Directors and two female Directors. The Company's policy on diversity is set
out in the Annual Report and Financial Statements. The Company does not have
any executive employees.
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objectives. The key
performance indicators (KPIs) used to measure the progress and performance of
the Company over time and which are comparable to other investment trusts are
set out below. As indicated in the footnote to the table, some of these KPIs
fall within the definition of 'Alternative Performance Measures' under guidance
issued by the European Securities and Markets Authority (ESMA) and additional
information explaining how these are calculated is set out in the Glossary in
the Annual Report and Financial Statements. Additionally, the Board regularly
reviews the performance of the portfolio, as well as the net asset value and
share price of the Company and compares this against various companies and
indices. Information on the Company's performance is given in the Chairman's
Statement above.
Year Year
ended ended
31 31
December December
2022 2021
Net asset value total return1,2 17.7% 20.7%
Share price total return1,2 26.0% 17.5%
Premium/(discount) to net asset value2 1.3% (5.3)%
Revenue earnings per share 40.68p 43.59p
Total dividends per share 40.00p 42.50p
Ongoing charges2,3 0.95% 0.95%
Ongoing charges on gross assets2,4 0.84% 0.84%
========= =========
1 This measures the Company's NAV and share price total return, which
assumes dividends paid by the Company have been reinvested.
2 Alternative Performance Measures, see Glossary in the Annual Report and
Financial Statements.
3 Ongoing charges represent the management fee and all other operating
expenses, excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation, prior year expenses written back
and certain non-recurring items, as a % of average daily net assets.
4 Ongoing charges based on gross assets represent the management fee and
all other operating expenses, excluding finance costs, direct transaction
costs, custody transaction charges, VAT recovered, taxation, prior year
expenses written back and certain non-recurring items, as a % of average daily
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 (subject to certain adjustments and
deductions).
Principal risks
The Company is exposed to a variety of risks and uncertainties. As required by
the 2018 UK Corporate Governance Code (the UK Code), the Board has put in place
a robust ongoing process to identify, assess and monitor the principal risks
and emerging risks facing the Company including those that would threaten its
business model. A core element of this process is the Company's risk register
which 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.
The risk register, its method of preparation and the operation of key controls
in BlackRock's and third-party service providers' systems of internal control,
are reviewed on a regular basis by the Audit Committee. In order to gain a more
comprehensive understanding of BlackRock's and other third-party service
providers' risk management processes and how these apply to the Company's
business, BlackRock's internal audit department provides an annual presentation
to the Audit Committee chairs of the BlackRock investment trusts setting out
the results of testing performed in relation to BlackRock's internal control
processes. The Audit Committee also periodically receives and reviews internal
control reports from BlackRock and the Company's service providers.
The Board has undertaken a robust assessment of both the principal and emerging
risks facing the Company, including those that would threaten its business
model, future performance, solvency or liquidity. Over the course of 2020 and
through to the present time, the COVID-19 pandemic has given rise to
unprecedented challenges for businesses across the globe. Additionally, the
risk that unforeseen or unprecedented events including (but not limited to)
heightened geo-political tensions such as the war in Ukraine, high inflation
and the current cost of living crisis has had a significant impact on global
markets. The Board has taken into consideration the risks posed to the Company
by these events and incorporated these into the Company's risk register. The
threat of climate change has also reinforced the importance of more sustainable
practices and environmental responsibility for investee companies.
Emerging risks are considered by the Board as they come into view and are
incorporated into the existing review of the Company's risk register. They were
also considered as part of the annual evaluation process. Additionally, the
Manager considers emerging risks in numerous forums and the BlackRock Risk and
Quantitative Analysis team produces an annual risk survey. Any material risks
of relevance to the Company through the annual risk survey will be communicated
to the Board.
The Board will continue to assess these risks on an ongoing basis. In relation
to the UK Code, the Board is confident 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 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 Due diligence is undertaken before
incur if a counterparty is unable (or contracts are entered into and exposures
unwilling) to perform on its commitments. are diversified across a number of
counterparties.
The Depositary is 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
The returns achieved are reliant primarily To manage this risk the Board:
upon the performance of the portfolio.
· regularly reviews the Company's
The Board is responsible for: investment mandate and long-term strategy;
· has set investment restrictions
· deciding the investment strategy and guidelines which the Investment Manager
to fulfil the Company's objective; and monitors and regularly reports on;
· monitoring the performance of the · receives from the Investment
Investment Manager and the implementation Manager a regular explanation of stock
of the investment strategy. selection decisions, portfolio exposure,
gearing and any changes in gearing, and the
An inappropriate investment policy may lead rationale for the composition of the
to: investment portfolio;
· oversees the maintenance of an
· underperformance compared to the adequate spread of investments in order to
reference index; minimise the risks associated with
· a reduction or permanent loss of particular countries or factors specific to
capital; and particular sectors, based on the
· dissatisfied shareholders and diversification requirements inherent in
reputational damage. the investment policy; and
· receives and reviews regular
reports showing an analysis of the
Company's performance against other
indices, including the performance of major
companies in the sector.
The Board is also cognisant of the ESG analysis is integrated into the
long-term risk to performance from Manager's investment process as set out in
inadequate attention to ESG issues and in the Annual Report and Financial Statements.
particular the impact of climate change. This is overseen by the Board.
Legal and regulatory compliance
The Company has been approved by HM Revenue The Investment Manager monitors investment
& Customs as an investment trust, subject movements, the level and type of forecast
to continuing to meet the relevant income and expenditure and the amount of
eligibility conditions, and operates as an proposed dividends to ensure that the
investment trust in accordance with Chapter provisions of Chapter 4 of Part 24 of the
4 of Part 24 of the Corporation Tax Act Corporation Tax Act 2010 are not breached.
2010. As such, the Company is exempt from The results are reported to the Board at
corporation tax on capital gains tax on the each meeting.
profits realised from the sale of its
investments. Compliance with the accounting rules
affecting investment trusts is also
Any breach of the relevant eligibility carefully and regularly monitored.
conditions could lead to the Company losing
investment trust status and being subject The Company Secretary, Manager and the
to corporation tax on capital gains Company's professional advisers provide
realised within the Company's portfolio. In regular reports to the Board in respect of
such event, the investment returns of the compliance with all applicable rules and
Company may be adversely affected. regulations. The Board and the Manager also
monitor changes in government policy and
A serious breach could result in the legislation which may have an impact on the
Company and/or the Directors being fined or Company.
the subject of criminal proceedings or the
suspension of the Company's shares which The Company's Investment Manager,
would in turn lead to a breach of the BlackRock, at all times complies with the
Corporation Tax Act 2010. sanctions administered by the UK Office of
Financial Sanctions Implementation, the
Amongst other relevant laws, the Company is United States Treasury's Office of Foreign
required to comply with the provisions of Assets Control, the United Nations,
the Companies Act 2006, the Alternative European Union member states and any other
Investment Fund Managers' Directive as applicable regimes.
implemented, retained and onshored in the
UK (AIFMD), the UK Listing Rules,
Disclosure Guidance and Transparency Rules
and the Market Abuse Regulation (as
retained and onshored in the UK).
Market
Market risk arises from volatility in the The Board considers the diversification of
prices of the Company's investments. It the portfolio, asset allocation, stock
represents the potential loss the Company selection and levels of gearing on a
might suffer through realising investments regular basis and has set investment
in the face of negative market movements. restrictions and guidelines which are
monitored and reported on by the Investment
Changes in general economic and market Manager.
conditions, such as currency exchange
rates, interest rates, rates of inflation, The Board monitors the implementation and
industry conditions, tax laws, political results of the investment process with the
events and trends, can also substantially Investment Manager.
and adversely affect the securities and, as
a consequence, the Company's prospects and The Board also recognises the benefits of a
share price. closed-end fund structure in extremely
volatile markets such as those experienced
Market risk includes the potential impact as a consequence of the COVID-19 pandemic
of events which are outside the Company's and the Russia/Ukraine conflict. Unlike
control, including (but not limited to) open-ended counterparts, closed-end funds
heightened geo-political tensions and are not obliged to sell-down portfolio
military conflict, a global pandemic and holdings at low valuations to meet
high inflation. liquidity requirements for redemptions.
During times of elevated volatility and
Companies operating in the sectors in which market stress, the ability of a closed-end
the Company invests may be impacted by new fund structure to remain invested for the
legislation governing climate change and long term enables the Investment Manager to
environmental issues, which may have a adhere to disciplined fundamental analysis
negative impact on their valuation and from a bottom-up perspective and be ready
share price. to respond to dislocations in the market as
opportunities present themselves.
The Investment Manager seeks to understand
the Environmental, Social and Governance
(ESG) risks and opportunities facing
companies and industries in the portfolio.
The Company has not adopted an ESG
investment strategy and does not exclude
investment in stocks based on ESG criteria,
but the Investment Manager considers ESG
information when conducting research and
due diligence on new investments and again
when monitoring investments in the
portfolio. Further information on
BlackRock's approach to ESG integration can
be found in the Annual Report and Financial
Statements.
Operational
In common with most other investment trust Due diligence is undertaken before
companies, the Company has no employees. contracts are entered into with third-party
The Company therefore relies on the service providers. Thereafter, the
services provided by third-parties and is performance of the provider is subject to
dependent on the control systems of the regular review and reported to the Board.
Manager, the Depositary and Fund Accountant
which maintain the Company's assets, The Board reviews on a regular basis an
dealing procedures and accounting records. assessment of the fraud risks that the
Company could potentially be exposed to and
The security of the Company's assets, also a summary of the controls put in place
dealing procedures, accounting records and by the Manager, Depositary, Custodian, Fund
adherence to regulatory and legal Accountant and Registrar specifically to
requirements depend on the effective mitigate these risks.
operation of the systems of these
third-party service providers. There is a Most third-party service providers produce
risk that a major disaster, such as floods, Service Organisation Control (SOC 1)
fire, a global pandemic, or terrorist reports to provide assurance regarding the
activity, renders the Company's service effective operation of internal controls as
providers unable to conduct business at reported on by their reporting accountants.
normal operating effectiveness. These reports are provided to the Audit
Committee for review. The Committee would
Failure by any service provider to carry seek further representations from service
out its obligations to the Company could providers if not satisfied with the
have a material adverse effect on the effectiveness of their control environment.
Company's performance. Disruption to the
accounting, payment systems or custody The Company's financial instruments held in
records (including cyber security risk) custody are subject to a strict liability
could prevent the accurate reporting and regime and, in the event of a loss of such
monitoring of the Company's financial financial instruments, the Depositary must
position. return financial 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 on an ongoing basis
and reviews these as part of its review of
the Company's risk register. In respect of
the risks which were posed by the COVID-19
pandemic in terms of the ability of service
providers to function effectively, the
Board received reports from key service
providers setting out the measures that
they had put in place to address the
crisis, in addition to their existing
business continuity framework. Having
considered these arrangements and reviewed
service levels, the Board is confident that
a good level of service has been and will
be maintained.
Financial
The Company's investment activities expose Details of these risks are disclosed in
it to a variety of financial risks which note 18 to the Financial Statements in the
include market risk, counterparty credit Annual Report and Financial Statements,
risk, liquidity risk and the valuation of together with a summary of the policies for
financial instruments. managing these risks.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks and these principal risks and uncertainties are equally
applicable for the current financial year.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the
Directors have assessed the prospects of the Company over a longer period than
the twelve months referred to by the 'Going Concern' guidelines. The Company is
an investment trust with the objective of providing an attractive level of
income return together with capital appreciation over the long term.
The Directors expect the Company to continue for the foreseeable future and
have therefore conducted this review for a period up to the Annual General
Meeting in 2026. The Directors assess viability over a rolling three-year
period as they believe it best balances the Company's long-term objective, its
financial flexibility and scope, with the difficulty in forecasting economic
conditions which could affect both the Company and its shareholders. The
Company also undertakes a continuation vote every year with the next one taking
place at the forthcoming Annual General Meeting.
In making an assessment on the viability of the Company, the Board has
considered the following:
· the impact of a significant fall in commodity markets on the value of
the Company's investment portfolio;
· the ongoing relevance of the Company's investment objective, business
model and investment policy in the prevailing market;
· the principal and emerging risks and uncertainties, as set out above,
and their potential impact;
· the level of ongoing demand for the Company's shares;
· the Company's share price discount/premium to NAV;
· the liquidity of the Company's portfolio; and
· the level of income generated by the Company and future income and
expenditure forecasts.
The Directors have concluded that there is a reasonable expectation that the
Company will continue in operation and meet its liabilities as they fall due
over the period of their assessment based on the following considerations:
· the Investment Manager's compliance with the investment objective and
policy, its investment strategy and asset allocation;
· the portfolio is liquid and mainly comprises readily realisable assets
which continue to offer a range of investment opportunities for shareholders as
part of a balanced investment portfolio;
· the operational resilience of the Company and its key service
providers and their ability to continue to provide a good level of service for
the foreseeable future;
· the effectiveness of business continuity plans in place for the
Company and its key service providers;
· the ongoing processes for monitoring operating costs and income which
are considered to be reasonable in comparison to the Company's total assets;
· the Board's discount management policy; and
· the Company is a closed-end investment company and therefore does not
suffer from the liquidity issues arising from unexpected redemptions.
In addition, the Board's assessment of the Company's ability to operate in the
foreseeable future is included in the Going Concern Statement which can be
found in the Directors' Report in the Annual Report and Financial Statements.
Section 172 statement: Promoting the success of the Company
The Companies (Miscellaneous Reporting) Regulations 2018 require directors of
large companies to explain more fully how they have discharged their duties
under Section 172(1) of the Companies Act 2006 in promoting the success of
their companies for the benefit of members as a whole. This includes the likely
consequences of their decisions in the longer term and how they have taken
wider stakeholders' needs into account.
The disclosure that follows covers how the Board has engaged with and
understands the views of stakeholders and how stakeholders' needs have been
taken into account, the outcome of this engagement and the impact that it has
had on the Board's decisions. The Board considers the main stakeholders in the
Company to be the Manager, Investment Manager and the shareholders. In addition
to this, the Board considers investee companies and key service providers of
the Company to be stakeholders; the latter comprise the Company's Depositary,
Registrar, Fund Accountants and Brokers.
Stakeholders
Shareholders Manager and Other key service Investee companies
Investment Manager providers
Continued shareholder The Board's main In order for the Portfolio holdings
support and working relationship Company to function are ultimately
engagement are is with the Manager, as an investment shareholders' assets
critical to the who is responsible trust with a listing and the Board
continued existence for the Company's on the premium recognises the
of the Company and portfolio management segment of the importance of good
the successful (including asset official list of the stewardship and
delivery of its allocation, stock and Financial Conduct communication with
long-term strategy. sector selection) and Authority (FCA) and investee companies in
The Board is focused risk management, as trade on the London meeting the Company's
on fostering good well as ancillary Stock Exchange's investment objective
working relationships functions such as (LSE) main market for and strategy. The
with shareholders and administration, listed securities, Board monitors the
on understanding the secretarial, the Board relies on a Manager's stewardship
views of shareholders accounting and diverse range of arrangements and
in order to marketing services. advisors for support receives regular
incorporate them into The Manager has in meeting relevant feedback from the
the Board's strategy sub-delegated obligations and Manager in respect of
and objective in portfolio management safeguarding the meetings with the
maximising total to the Investment Company's assets. For management of
returns to Manager. Successful this reason, the investee companies.
shareholders through management of Board considers the
a worldwide portfolio shareholders' assets Company's Depositary,
of mining and metal by the Investment Registrar, Fund
securities. Manager is critical Accountants and
for the Company to Brokers to be
successfully deliver stakeholders. The
its investment Board maintains
strategy and meet its regular contact with
objective. The its key external
Company is also service providers and
reliant on the receives regular
Manager as AIFM to reporting from them
provide support in through the Board and
meeting relevant Committee meetings,
regulatory as well as outside of
obligations under the the regular meeting
AIFMD and other cycle.
relevant legislation.
A summary of the key areas of engagement undertaken by the Board with its key
stakeholders in the year under review and how Directors have acted upon this to
promote the long-term success of the Company are set out in the table below.
Area of Issue Engagement Impact
Engagement
Investment The Board is committed to The Board worked closely The portfolio activities
mandate and promoting the role and with the Investment undertaken by the
objective success of the Company in Manager throughout the Investment Manager can be
delivering on its year in further developing found in their Report
investment mandate to investment strategy and above. The Investment
shareholders over the long underlying policies, not Manager continues to
term. simply for the purpose of actively look for
achieving the Company's opportunities to grow
The Board also has investment objective but royalty exposure given it
responsibility to in the interests of is a key differentiator of
shareholders to ensure shareholders and future the Company and an
that the Company's investors. In addition the effective mechanism to
portfolio of assets is Company continues to seek lock-in long-term income
invested in line with the out new unquoted which further diversifies
stated investment investments which could the Company's revenues.
objective and in a way add long-term value.
that ensures an Details regarding the
appropriate balance Company's NAV and share
between spread of risk and price performance can be
portfolio returns. found in the Chairman's
Statement above and in
this Strategic Report.
Responsible More than ever, the The Board works closely The Board and the
investing importance of good with the Investment Investment Manager believe
governance and Manager to regularly there is likely to be a
sustainability practices review the Company's positive correlation
are key factors in making performance, investment between strong ESG
investment decisions. policy and strategy to practices and investment
Climate change is becoming seek to ensure that the performance over time.
a defining factor in Company's investment This is especially
companies' long-term objective continues to be important in mining given
prospects across the met in an effective and the long investment cycle
investment spectrum with responsible way in the and the impact of ESG
significant and lasting interests of shareholders practices on the ability
implications for economic and future investors. The of a mining company to
growth and prosperity. The Company has not adopted an maintain its social
mining industries in which ESG investment strategy licence to operate. ESG is
the Company's investment and does not exclude one of the many factors
universe operate are investment in stocks based that we look at and site
facing ethical and on ESG criteria, but the visits to companies'
sustainability issues that Board believes that operations (when
cannot be ignored by asset responsible investment and circumstances permit)
managers and investment sustainability are provide valuable insights
companies alike. integral to the into their ESG practices.
longer-term delivery of The Investment Manager has
the Company's success. continued to engage with
investee companies
The Investment Manager's virtually and has, where
approach to the necessary, conducted
consideration of ESG virtual site visits.
factors in respect of the
Company's portfolio, as In 2020, BlackRock exited
well as the Investment its active public debt and
Manager's engagement with equity investment in
investee companies to businesses generating
encourage sound corporate greater than 25% of their
governance practices, are revenue from thermal coal
kept under review by the production due to the
Board. The Board also heightened risks
expects to be informed by associated with their
the Investment Manager of economic activity. During
any sensitive voting the year under review, the
issues involving the Company has had no
Company's investments. exposure to companies
whose principal activity
The Investment Manager is the extraction of
reports to the Board in thermal coal.
respect of its approach to
ESG integration; a summary Within the parameters of
of BlackRock's approach to the Company's existing
ESG integration is set out investment policy, the
in the Annual Report and Investment Manager is
Financial Statements. The continuing to look for
Investment Manager's opportunities to deploy
approach to engagement capital in growth
with investee companies investments that should
and voting guidelines is benefit from the energy
summarised in the Annual transition. It is likely
Report and Financial that this area will become
Statements and further a more significant part of
detail is available on the the portfolio.
BlackRock website.
Shareholders Continued shareholder The Board is committed to The Board values any
support and engagement are maintaining open channels feedback and questions
critical to the continued of communication and to from shareholders ahead of
existence of the Company engage with shareholders. and during Annual General
and the successful The Company welcomes and Meetings in order to gain
delivery of its long-term encourages attendance and an understanding of their
strategy. participation from views and will take action
shareholders at its Annual when and as appropriate.
General Meetings. Feedback and questions
Shareholders will have the will also help the Company
opportunity to meet the evolve its reporting,
Directors and Investment aiming to make reports
Manager and to address more transparent and
questions to them understandable.
directly. The Investment
Manager will also provide Feedback from all
a presentation on the substantive meetings
Company's performance and between the Investment
the outlook for the mining Manager and shareholders
sector. will be shared with the
Board. The Directors will
The Annual Report and Half also receive updates from
Yearly Financial Report the Company's broker and
are available on the Kepler, marketing
BlackRock website and are consultants, on any
also circulated to feedback from
shareholders either in shareholders, as well as
printed copy or via share trading activity,
electronic communications. share price performance
In addition, regular and an update from the
updates on performance, Investment Manager.
monthly factsheets, the
daily NAV and other The portfolio management
information are also team attended a number of
published on the website professional investor
at www.blackrock.com/uk/ meetings (many by video
brwm. conference) and held
discussions with a number
The Board also works of wealth management desks
closely with the Manager and offices in respect of
to develop the Company's the Company during the
marketing strategy with year under review.
the aim of ensuring
effective communication Portfolio holdings are
with shareholders. ultimately shareholders'
assets and the Board
Unlike trading companies, recognises the importance
one-to-one shareholder of good stewardship and
meetings normally take the communication with
form of a meeting with the investee companies in
Investment Manager as meeting the Company's
opposed to members of the investment objective and
Board. The Company's strategy. The Board
willingness to enter into monitors the Manager's
discussions with stewardship arrangements
institutional shareholders and receives regular
is also demonstrated by feedback from the
the programmes of Investment Manager in
institutional respect of meetings with
presentations by the the management of
Investment Manager. portfolio companies.
If shareholders wish to
raise issues or concerns
with the Board, they are
welcome to do so at any
time. The Chairman is
available to meet directly
with shareholders
periodically to understand
their views on governance
and the Company's
performance where they
wish to do so. He may be
contacted via the Company
Secretary whose details
are given in the Annual
Report and Financial
Statements.
Management The Board recognises the The Board monitors the The Board continues to
for share importance to shareholders Company's discount on an monitor the Company's
rating that the market price of ongoing basis and receives premium/discount to NAV
the Company's shares regular updates from the and will look to issue or
should not trade at either Manager and the Company's buy back shares if it is
a significant discount or Brokers regarding the deemed to be in the
premium to their level of discount. The interests of shareholders
prevailing NAV. The Board Board believes that the as a whole. The Company
believes this may be best way of maintaining participates in a focused
achieved by the use of the share rating at an investment trust sales and
share buyback powers and optimal level over the marketing initiative
the issue of shares. long term is to create operated by the Manager on
demand for the shares in behalf of the investment
the secondary market. To trusts under its
this end, the Investment management. Further
Manager is devoting details are set out in the
considerable effort to Annual Report and
broadening the awareness Financial Statements.
of the Company,
particularly to wealth During the financial year
managers and to the wider the Company reissued
retail market. 5,071,920 shares from
treasury. A further
In addition, the Board has 150,000 shares have been
worked closely with the reissued from treasury
Manager to develop the since the year end. As at
Company's marketing 28 February 2023 the
strategy, with the aim of Company's shares were
ensuring effective trading at a discount of
communication with 0.2% to the cum income
existing shareholders and NAV.
to attract new
shareholders to the
Company in order to
improve liquidity in the
Company's shares and to
sustain the share rating
of the Company.
Service The Board acknowledges the The Manager reports to the All performance
levels of importance of ensuring Board on the Company's evaluations were performed
third-party that the Company's performance on a regular on a timely basis and the
providers principal suppliers are basis. The Board carries Board concluded that all
providing a suitable level out a robust annual third-party service
of service, including the evaluation of the providers, including the
Investment Manager in Manager's performance, Manager and Investment
respect of investment their commitment and Manager, were operating
performance and delivering available resources. effectively and providing
on the Company's a good level of service.
investment mandate; the The Board performs an
Custodian and Depositary annual review of the The Board has received
in respect of their duties service levels of all updates in respect of
towards safeguarding the third-party service business continuity
Company's assets; the providers and concludes on planning from the
Registrar in its their suitability to Company's Manager,
maintenance of the continue in their role. Custodian, Depositary,
Company's share register The Board receives regular Fund Accountant, Registrar
and dealing with investor updates from the AIFM, and Printer and is
queries; and the Company's Depositary, Registrar and confident that
Brokers in respect of the Brokers on an ongoing arrangements are in place
provision of advice and basis. to ensure a good level of
acting as a market maker service will continue to
for the Company's shares. The Board has also worked be provided and that
closely with the Manager measures are in place so
to gain comfort that that working remotely,
relevant business which occurred during the
continuity plans are COVID-19 pandemic, can be
operating effectively for reinstated.
all of the Company's key
service providers.
Board The Board is committed to All Directors are subject As at the date of this
composition ensuring that its own to a formal evaluation report, the Board was
composition brings an process on an annual basis comprised of three men and
appropriate balance of (more details and the two women. Under the AIC
knowledge, experience and conclusions of the 2022 Code the tenure of a
skills, and that it is evaluation process are director who is elevated
compliant with best given in the Annual Report to Chairman may be
corporate governance and Financial Statements). extended by three years.
practice under the UK All Directors stand for The Board has decided that
Code, including guidance re-election by this extension should
on tenure and the shareholders annually. apply to Mr Cheyne's
composition of the Board's tenure which will
committees. Shareholders may attend therefore be extended
the Annual General Meeting until the Annual General
and raise any queries in Meeting in the Spring of
respect of Board 2024. Mr Edey, who will be
composition or individual reaching his nine year
Directors in person or may tenure in May, will not be
contact the Company seeking re-election at the
Secretary or the Chairman forthcoming Annual General
using the details provided Meeting. The Board is
in the Annual Report and currently undertaking a
Financial Statements with review of succession
any issues. planning arrangements
having identified the need
for a new Director when Mr
Edey retires. Details of
each Director's
contribution to the
success and promotion of
the Company are set out in
the Directors' Report in
the Annual Report and
Financial Statements and
details of the Directors'
biographies can be found
in the Annual Report and
Financial Statements.
The Directors are not
aware of any issues that
have been raised directly
by shareholders in respect
of Board composition in
the year under review.
Details for the proxy
voting results in favour
and against individual
Directors' re-election at
the 2022 Annual General
Meeting are given on the
Manager's website at
www.blackrock.com/uk/brwm.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES AND APPROACH
The Board's approach
Environmental, Social and Governance (ESG) issues can present both
opportunities and threats to long term investment performance. The Company's
investment universe comprises sectors that are undergoing significant
structural change and are likely to be highly impacted by increasing regulation
as a result of climate change and other social and governance factors. Your
Board is committed to ensuring that we have appointed a Manager that integrates
ESG considerations into its investment process, and has the skill to navigate
the structural transition that the Company's investment universe is undergoing.
The Board believes effective engagement with company management is, in most
cases, the most effective way of driving meaningful change in the behaviour of
investee company management. While the Company does not have an ESG or impact
focused investment strategy or apply exclusionary screens, as a general
approach the Company will not invest in companies which have high ESG risks and
no plans to address existing deficiencies. Where the Board is not satisfied
that an investee company is taking steps to address matters of an ESG nature,
it may discuss with the Manager how this situation might be resolved, including
potentially by a full disposal of shares.
ESG integration does not change the Company's investment objective or constrain
the Investment Manager's investable universe, and does not mean that an ESG or
impact focused investment strategy or any exclusionary screens have been or
will be adopted by the Company. Similarly, ESG integration does not determine
the extent to which the Company may be impacted by sustainability risks. More
information on BlackRock's global approach to ESG integration, as well as
activity specific to the BlackRock World Mining Trust plc portfolio is set out
below.
The Company does not meet the criteria for Article 8 or 9 products under the EU
Sustainable Finance Disclosure Regulation (SFDR) and the investments underlying
this financial product do not take into account the EU criteria for
environmentally sustainable economic activities. The Investment Manager has
access to a range of data sources, including principal adverse indicator (PAI)
data, when making decisions on the selection of investments. However, whilst
BlackRock considers ESG risks for all portfolios and these risks may coincide
with environmental or social themes associated with the PAIs, the Company does
not commit to considering PAIs in driving the selection of its investments.
Additional information on ESG integration, sustainability risk and SFDR is set
out in the AIFMD Fund Disclosures available on the Company's website.
BlackRock World Mining Trust plc - BlackRock Investment Stewardship engagement
with portfolio companies in 2022
Given the Board's belief in the importance of engagement and communication with
portfolio companies, they receive regular updates from the Investment Manager
in respect of activity undertaken for the year under review. The Investment
Manager engages with company management teams and undertakes company meetings
to identify the best management teams with the ability to create value for
shareholders over the long term. In addition, BlackRock also has a separate
BlackRock Investment Stewardship (BIS) team. Consistent with BlackRock's
fiduciary duty as an asset manager, BIS seeks to support investee companies in
their efforts to deliver long-term durable financial performance on behalf of
BlackRock's clients. BIS engages with investee companies to build its
understanding of these companies' approach to addressing material risks and
opportunities. The Board notes that over the year to 31 December 2022, 58 total
company engagements were held with the management teams of 37 portfolio
companies representing 55% of the portfolio by value at 31 December 2022. To
put this into context, there were 69 companies in the BlackRock World Mining
Trust plc portfolio at 31 December 2022. Additional information is set out in
the table below and charts in the Annual Report and Financial Statements as
well as the key engagement themes for the meetings held in respect of the
Company's portfolio holdings.
Year ended
31 December
2022
Number of engagements held 58
Number of companies met 37
% of equity investments covered 55
Shareholder meetings voted at 61
Number of proposals voted on 648
Number of votes against management 36
% of total votes represented by votes against management 5.2
=========
Source: Institutional Shareholder Services as at 31 December 2022.
The importance and challenges of considering ESG when investing in the Natural
Resources Sector and Blackrock's approach to ESG integration
Environmental Social Corporate Governance
Impact As well as the longer-term BlackRock believes it is As with all companies,
contribution to carbon vital that natural good corporate governance
emissions and the impact resources companies is especially critical for
on the environment, the maintain their social natural resources
activities undertaken by licence to operate. BIS' companies. The performance
many companies in the Global Principles and effectiveness of the
portfolio such as digging underscore our belief that board is critical to the
mines will inevitably have companies are best placed success of a company, the
an impact on local to deliver value for protection of
surroundings. It is long-term shareholders shareholders' interests,
important how companies like BlackRock's clients and long-term shareholder
manage this process and when they also consider value creation. Governance
ensure that an appropriate the interests of their issues, including the
risk oversight framework other key stakeholders, management of material
is in place, with which generally will sustainability issues that
consideration given to all include workers, business have a significant impact
stakeholders. The partners (such as for natural resources
significant fall in the suppliers and companies, all require
market cap of companies distributors), clients and effective leadership and
like Vale, after the consumers, government and oversight from a company's
Brumadinho dam collapse, the communities in which board.
highlights the key role they operate. We believe companies with
that ESG has on share In our experience, experienced, engaged and
price performance. companies that build diverse directors, who are
BlackRock's approach to strong relationships with effective in actively
climate risk and their stakeholders are advising and overseeing
opportunities and the more likely to meet their management as a board, are
global energy transition own strategic objectives, well-positioned to deliver
is based on our role as a while poor relationships long-term value creation.
fiduciary to our clients. may create adverse impacts
As the world works toward that expose a company to
a transition to a legal, regulatory,
low-carbon economy, we are operational and
interested in hearing from reputational risks and
companies about their jeopardise their ability
strategies and plans for to deliver sustainable,
responding to the long-term financial
challenges and capturing performance.
the opportunities that
this transition creates.
When companies consider
climate-related risks, it
is likely that they will
also assess their impact
and dependence on natural
capital.
BIS held 3,693 engagements with 2,464 unique companies globally between 1 July
2021 and 30 June 2022. Globally, BIS voted on behalf of those clients who
authorised us to do so, at more than 18,000 shareholder meetings on more than
173,000 proposals. Similar to previous years, shareholder proposals represented
less than 1% of the total proposals BIS voted on during in the year to 30 June
2022. More detail can be found at: www.blackrock.com/corporate/literature/
publication/2022-investment-stewardship-voting-spotlight.pdf
Environmental Social Corporate Governance
BIS - BIS held 2,058 engagements on BIS held 1,283 engagements BIS centers our
Examples climate and natural capital related to company impacts stewardship work in
of topics. on people. corporate governance. That
approach BIS voted to signal concerns In the year to 30 June is why board quality and
to voting about climate action or 2022, BIS voted on 200 effectiveness remain a top
and disclosure at 234 companies shareholder proposals engagement priority, and a
engagement (321 last year). BIS did not related to social issues. key factor in the majority
across ESG support the election of 176 BIS supported 38 of votes cast on behalf of
categories directors for climate-related shareholder proposals clients.
(year concerns (254 last year). relating to company BIS held 2,326 engagements
ended 30 In the year to 30 June 2022, impacts on people on board quality and
June 2022) BIS continued to focus its (social-related proposals) effectiveness; 2,115
1 stewardship efforts where the out of 200, i.e., focused on strategy,
energy transition is likely to approximately 19%. purpose and financial
materially impact a company's resilience; and 1,352 on
performance. To that end, the incentives aligned with
BIS Climate Focus Universe, value creation.
which includes over 1,000 Like last year, the
carbon-intensive public leading reasons for BIS
companies, represents nearly not supporting director
90% of the global scope 1 and 2 elections in the year to
GHG emissions of the companies 30 June 2022 - and
in which BlackRock invests on management proposals more
behalf of our clients. More broadly - were
detail can be found at governance-related: 1)
www.blackrock.com/corporate/ lack of board
literature/publication/ independence, 2) lack of
blk-climate-focus-universe.pdf. board diversity, 3)
directors having too many
board commitments and 4)
executive compensation
that was not aligned with
company strategy or
long-term performance.
BIS did not support 1,521
companies globally over
concerns about board
independence.
BIS did not support 936
companies globally for
concerns related to board
diversity.
BIS did not support 661
companies globally for
concerns related to
overcommitment.
BIS did not support 576
companies due to concerns
over compensation.
1 The data in this table applies to BIS' engagements globally. Most
engagement conversations cover multiple topics. BIS' engagement statistics
reflect the primary topics discussed during the meeting. More detail can be
found at: www.blackrock.com/corporate/literature/publication/
2022-investment-stewardship-voting-spotlight.pdf
BlackRock's approach to ESG integration
BlackRock believes that sustainability risk - and climate risk in particular -
now equates to investment risk, and this will drive a profound reassessment of
risk and asset values as investors seek to react to the impact of climate
policy changes. This in turn (in BlackRock's view) is likely to drive a
significant reallocation of capital away from traditional carbon intensive
industries over the next decade. BlackRock believes that carbon-intensive
companies will play an integral role in unlocking the full potential of the
energy transition, and to do this, they must be prepared to adapt, innovate and
pivot their strategies towards a low carbon economy.
As part of BlackRock's structured investment process, ESG risks and
opportunities (including sustainability/climate risk) are considered within the
portfolio management team's fundamental analysis of companies and industries.
ESG factors are an important consideration of the BlackRock Natural Resources
Team's investment process and the Company's portfolio managers work closely
with BIS to assess the governance quality of companies and understand any
potential issues, risks or opportunities.
As part of their approach to ESG integration, the portfolio managers use ESG
information when conducting research and due diligence on new investments and
again when monitoring investments in the portfolio. In particular, portfolio
managers now have access to 1,200 key ESG performance indicators in Aladdin
(BlackRock's proprietary trading system) from third-party data providers.
BlackRock's internal sustainability research framework scoring is also
available alongside third-party ESG scores in core portfolio management tools.
BlackRock's analysts' sector expertise and local market knowledge allows it to
engage with companies through direct interaction with management teams and
conducting site visits. In conjunction with the portfolio management team, BIS
meets with boards of companies frequently to evaluate how they are
strategically managing their longer-term issues, including those surrounding
ESG and the potential impact these may have on company financials. BIS's and
the portfolio management team's understanding of ESG issues is further
supported by BlackRock's Sustainable and Transition Solutions (STS) function.
STS looks to advance ESG research and integration, active engagement and the
development of sustainable investment solutions across the firm.
Investment stewardship
Consistent with BlackRock's fiduciary duty as an asset manager, BIS seeks to
support investee companies in their efforts to deliver long-term durable
financial performance on behalf of our clients. These clients include public
and private pension plans, governments, insurance companies, endowments,
universities, charities and, ultimately, individual investors, among others.
BIS serves as an important link between BlackRock's clients and the companies
they invest in. Clients depend on BlackRock to help them meet their investment
goals; the business and governance decisions that companies make will have a
direct impact on BlackRock's clients' long-term investment outcomes and
financial well-being.
Global principles
BlackRock's approach to corporate governance and stewardship is comprised in
BIS' Global Principles and market-specific voting guidelines. BIS' policies set
out the core elements of corporate governance that guide its investment
stewardship activities globally and within each regional market, including when
voting at shareholder meetings for those clients who have authorised BIS to
vote on their behalf. Each year, BIS reviews its policies and updates them as
necessary to reflect changes in market standards and regulations, insights
gained over the year through third-party and its own research, and feedback
from clients and companies. BIS' Global Principles are available on its website
at www.blackrock.com/corporate/literature/fact-sheet/
blk-responsible-investment-engprinciples-global.pdf
Market-specific proxy voting guidelines
BIS' voting guidelines are intended to help clients and companies understand
its thinking on key governance matters. They are the benchmark against which it
assesses a company's approach to corporate governance and the items on the
agenda to be voted on at a shareholder meeting. BIS applies its guidelines
pragmatically, taking into account a company's unique circumstances where
relevant. BlackRock informs voting decisions through research and engages as
necessary. BIS reviews its voting guidelines annually and updates them as
necessary to reflect changes in market standards, evolving governance practice
and insights gained from engagement over the prior year.
BIS' market-specific voting guidelines are available on its website at
www.blackrock.com/corporate/about-us/investment-stewardship#
stewardship-policies
BlackRock is committed to transparency in terms of disclosure on its
stewardship activities on behalf of clients. BIS publishes its stewardship
policies - such as the Global Principles, engagement priorities, and voting
guidelines - to help BlackRock's clients understand its work to advance their
interests as long-term investors in public companies. Additionally, BIS
published both annual and quarterly reports detailing its stewardship
activities, as well as vote bulletins that describe its rationale for certain
votes at high profile shareholder meetings.
More detail in respect of BIS reporting can be found at www.blackrock.com/
corporate/about-us/investment-stewardship
BlackRock's reporting and disclosures
In terms of its own reporting, BlackRock believes that the Sustainability
Accounting Standards Board provides a clear set of standards for reporting
sustainability information across a wide range of issues, from labour practices
to data privacy to business ethics. For evaluating and reporting
climate-related risks, as well as the related governance issues that are
essential to managing them, the Task Force on Climate-related Financial
Disclosures (TCFD) provides a valuable framework. BlackRock recognises that
reporting to these standards requires significant time, analysis, and effort.
BlackRock's 2021 TCFD report can be found at www.blackrock.com/corporate/
literature/continuous-disclosure-and-important-information/
tcfd-report-2021-blkinc.pdf
BY ORDER OF THE BOARD
CAROLINE DRISCOLL
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary
2 March 2023
RELATED PARTY TRANSACTIONS
The Board currently consists of five 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 £49,350, the
Chairman of the Audit Committee/Senior Independent Director receives an annual
fee of £41,475, and each other Director receives an annual fee of £33,600. All
five members of the Board hold shares in the Company. Mr Cheyne holds 35,000
ordinary shares, Mr Edey holds 20,000 ordinary shares, Ms Lewis holds 5,362
ordinary shares, Ms Mosely holds 7,400 ordinary shares and Mr Venkatakrishnan
holds 1,000 ordinary shares. The amount of Directors' fees outstanding at 31
December 2022 was £16,000 (2021: £14,375).
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
in accordance with UK-adopted International Accounting Standards (IAS).
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 those 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 UK-adopted IAS, subject to any material departures disclosed
and explained in the financial statements;
· provide additional disclosures when compliance with the specific
requirements in accordance with UK-adopted IAS is insufficient to enable users
to understand the impact of particular transactions, other events and
conditions on the Group's 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 Committee in accordance with the
Companies Act 2006 and applicable regulations, including the requirements of
the Listing Rules and the Disclosure Guidance 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, whose names are listed in the Annual Report and
Financial Statements, confirm to the best of their knowledge that:
· the financial statements, which have been prepared in accordance with
UK-adopted IAS, give a true and fair view of the assets, liabilities, financial
position 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 position of the Group and Company, together with a description
of the principal risks and uncertainties that it faces.
The 2018 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 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
Committee's Report in 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 2022, 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
DAVID CHEYNE
Chairman
2 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2022
2022 2021
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Income from investments 3 78,087 811 78,898 80,558 - 80,558
held at fair value through
profit or loss
Other income 3 7,909 - 7,909 7,118 - 7,118
--------------- --------------- --------------- --------------- --------------- ---------------
Total revenue 85,996 811 86,807 87,676 - 87,676
========= ========= ========= ========= ========= =========
Net profit on investments - 152,937 152,937 - 122,374 122,374
held at fair value through
profit or loss
Net loss on foreign - (17,645) (17,645) - (1,696) (1,696)
exchange
--------------- --------------- --------------- --------------- --------------- ---------------
Total 85,996 136,103 222,099 87,676 120,678 208,354
========= ========= ========= ========= ========= =========
Expenses
Investment management fee 4 (2,615) (8,031) (10,646) (2,252) (6,978) (9,230)
Other operating expenses 5 (1,037) (28) (1,065) (1,034) (9) (1,043)
--------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (3,652) (8,059) (11,711) (3,286) (6,987) (10,273)
========= ========= ========= ========= ========= =========
Net profit on ordinary 82,344 128,044 210,388 84,390 113,691 198,081
activities before finance
costs and taxation
Finance costs 6 (1,182) (3,520) (4,702) (374) (1,117) (1,491)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary 81,162 124,524 205,686 84,016 112,574 196,590
activities before taxation
Taxation (charge)/credit (5,149) 1,883 (3,266) (5,106) 986 (4,120)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary 76,013 126,407 202,420 78,910 113,560 192,470
activities after taxation
========= ========= ========= ========= ========= =========
Earnings per ordinary 8 40.68 67.64 108.32 43.59 62.73 106.32
share (pence) - basic and
diluted
========= ========= ========= ========= ========= =========
The total column of this statement represents the Group's Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards (IASs). The supplementary revenue and capital accounts 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. All
income is attributable to the equity holders of the Group.
The Group does not have any other comprehensive income (2021: £nil). The net
profit for the year disclosed above represents the Group's total comprehensive
income.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 DECEMBER 2022
Called Share Capital
up share premium redemption Special Capital Revenue
capital account reserve reserve reserves reserve Total
Group Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
For the year
ended 31 December
2022
At 31 December 9,651 138,818 22,779 155,123 742,430 74,073 1,142,874
2021
Total
comprehensive
income:
Net profit for - - - - 126,407 76,013 202,420
the year
Transactions with
owners, recorded
directly to
equity:
Ordinary shares 9,10 - 9,289 - 25,683 - - 34,972
reissued from
treasury
Share reissue 9,10 - - - (70) - - (70)
costs
Dividends paid1 7 - - - - - (80,911) (80,911)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 9,651 148,107 22,779 180,736 868,837 69,175 1,299,285
2022
========= ========= ========= ========= ========= ========= =========
For the year
ended 31 December
2021
At 31 December 9,651 127,155 22,779 103,992 628,870 38,378 930,825
2020
Total
comprehensive
income:
Net profit for - - - - 113,560 78,910 192,470
the year
Transactions with
owners, recorded
directly to
equity:
Ordinary shares - 11,663 - 51,651 - - 63,314
reissued from
treasury
Share reissue - - - (127) - - (127)
costs
Ordinary shares - - - (390) - - (390)
purchased into
treasury
Share purchase - - - (3) - - (3)
costs
Dividends paid2 7 - - - - - (43,215) (43,215)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 9,651 138,818 22,779 155,123 742,430 74,073 1,142,874
2021
========= ========= ========= ========= ========= ========= =========
1 The final dividend of 27.00p per share for the year ended 31 December
2021, declared on 8 March 2022 and paid on 19 May 2022; 1st interim dividend of
5.50p per share for the year ended 31 December 2022, declared on 6 May 2022 and
paid on 30 June 2022; 2nd interim dividend of 5.50p per share for the year
ended 31 December 2022, declared on 23 August 2022 and paid on 30 September
2022 and 3rd interim dividend of 5.50p per share for the year ended 31 December
2022, declared on 16 November 2022 and paid on 22 December 2022.
2 The final dividend of 8.30p per share for the year ended 31 December
2020, declared on 4 March 2021 and paid on 6 May 2021; 1st interim dividend of
4.50p per share for the year ended 31 December 2021, declared on 29 April 2021
and paid on 25 June 2021; 2nd interim dividend of 5.50p per share for the year
ended 31 December 2021, declared on 19 August 2021 and paid on 24 September
2021 and 3rd interim dividend of 5.50p per share for the year ended 31 December
2021, declared on 18 November 2021 and paid on 24 December 2021.
For information on the Company's distributable reserves please refer to note 10
below.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2022
Called Share Capital
up share premium redemption Special Capital Revenue
capital account reserve reserve reserves reserve Total
Company Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
For the year
ended 31 December
2022
At 31 December 9,651 138,818 22,779 155,123 748,107 68,396 1,142,874
2021
Total
comprehensive
income:
Net profit for - - - - 126,460 75,960 202,420
the year
Transactions with
owners, recorded
directly to
equity:
Ordinary shares 9,10 - 9,289 - 25,683 - - 34,972
reissued from
treasury
Share reissue 9,10 - - - (70) - - (70)
costs
Dividends paid1 7 - - - - - (80,911) (80,911)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 9,651 148,107 22,779 180,736 874,567 63,445 1,299,285
2022
========= ========= ========= ========= ========= ========= =========
For the year
ended 31 December
2021
At 31 December 9,651 127,155 22,779 103,992 634,547 32,701 930,825
2020
Total
comprehensive
income:
Net profit for - - - - 113,560 78,910 192,470
the year
Transactions with
owners, recorded
directly to
equity:
Ordinary shares - 11,663 - 51,651 - - 63,314
reissued from
treasury
Share reissue - - - (127) - - (127)
costs
Ordinary shares - - - (390) - - (390)
purchased into
treasury
Share purchase - - - (3) - - (3)
costs
Dividends paid2 7 - - - - - (43,215) (43,215)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 9,651 138,818 22,779 155,123 748,107 68,396 1,142,874
2021
========= ========= ========= ========= ========= ========= =========
1 The final dividend of 27.00p per share for the year ended 31 December
2021, declared on 8 March 2022 and paid on 19 May 2022; 1st interim dividend of
5.50p per share for the year ended 31 December 2022, declared on 6 May 2022 and
paid on 30 June 2022; 2nd interim dividend of 5.50p per share for the year
ended 31 December 2022, declared on 23 August 2022 and paid on 30 September
2022 and 3rd interim dividend of 5.50p per share for the year ended 31 December
2022, declared on 16 November 2022 and paid on 22 December 2022.
2 The final dividend of 8.30p per share for the year ended 31 December
2020, declared on 4 March 2021 and paid on 6 May 2021; 1st interim dividend of
4.50p per share for the year ended 31 December 2021, declared on 29 April 2021
and paid on 25 June 2021; 2nd interim dividend of 5.50p per share for the year
ended 31 December 2021, declared on 19 August 2021 and paid on 24 September
2021 and 3rd interim dividend of 5.50p per share for the year ended 31 December
2021, declared on 18 November 2021 and paid on 24 December 2021.
For information on the Company's distributable reserves please refer to note 10
below.
CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION AS AT 31
DECEMBER 2022
31 December 2022 31 December 2021
Group Company Group Company
Notes £'000 £'000 £'000 £'000
Non current assets
Investments held at fair value through 1,424,844 1,432,075 1,256,801 1,263,979
profit or loss
Current assets
Current tax asset 821 821 85 85
Other receivables 4,431 4,431 5,209 5,209
Cash collateral held with brokers 6,795 6,795 580 580
Cash and cash equivalents 29,492 23,317 26,332 20,222
--------------- --------------- --------------- ---------------
Total current assets 41,539 35,364 32,206 26,096
========= ========= ========= =========
Total assets 1,466,383 1,467,439 1,289,007 1,290,075
========= ========= ========= =========
Current liabilities
Current tax liability (373) (361) (427) (427)
Other payables (6,155) (7,223) (5,183) (6,251)
Derivative financial liabilities held at (1,227) (1,227) (667) (667)
fair value through profit or loss
Bank overdraft - - (356) (356)
Bank loans (158,783) (158,783) (138,867) (138,867)
--------------- --------------- --------------- ---------------
Total current liabilities (166,538) (167,594) (145,500) (146,568)
========= ========= ========= =========
Total assets less current liabilities 1,299,845 1,299,845 1,143,507 1,143,507
========= ========= ========= =========
Non current liabilities
Deferred taxation liability (560) (560) (633) (633)
--------------- --------------- --------------- ---------------
Net assets 1,299,285 1,299,285 1,142,874 1,142,874
========= ========= ========= =========
Equity attributable to equity holders
Called up share capital 9 9,651 9,651 9,651 9,651
Share premium account 10 148,107 148,107 138,818 138,818
Capital redemption reserve 10 22,779 22,779 22,779 22,779
Special reserve 10 180,736 180,736 155,123 155,123
Capital reserves:
At 1 January 742,430 748,107 628,870 634,547
Net profit for the year 126,407 126,460 113,560 113,560
--------------- --------------- --------------- ---------------
At 31 December 10 868,837 874,567 742,430 748,107
Revenue reserve:
At 1 January 74,073 68,396 38,378 32,701
Net profit for the year 76,013 75,960 78,910 78,910
Dividends paid (80,911) (80,911) (43,215) (43,215)
--------------- --------------- --------------- ---------------
At 31 December 10 69,175 63,445 74,073 68,396
Total equity 1,299,285 1,299,285 1,142,874 1,142,874
========= ========= ========= =========
Net asset value per ordinary share (pence) 8 688.35 688.35 622.21 622.21
========= ========= ========= =========
CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS FOR THE YEARED 31
DECEMBER 2022
31 December 2022 31 December 2021
Group Company Group Company
£'000 £'000 £'000 £'000
Operating activities
Net profit before taxation 205,686 205,686 196,590 196,590
Add back finance costs 4,702 4,702 1,491 1,491
Net profit on investments held at fair value through (152,937) (152,990) (122,374) (122,374)
profit or loss (including transaction costs)
Net loss on foreign exchange 17,645 17,645 1,696 1,696
Sales of investments held at fair value through 489,236 489,236 354,182 354,182
profit or loss
Purchases of investments held at fair value through (503,782) (503,782) (442,711) (442,711)
profit or loss
Decrease/(increase) in other receivables 13 13 (1,233) (1,233)
Increase in other payables 1,025 1,013 2,571 2,571
Decrease in amounts due from brokers 243 243 2,776 2,776
Decrease in amounts due to brokers - - (2,473) (2,473)
Net movement in cash collateral held with brokers (6,215) (6,215) 2,363 2,363
--------------- --------------- --------------- ---------------
Net cash inflow/(outflow) from operating activities 55,616 55,551 (7,122) (7,122)
before taxation
========= ========= ========= =========
Taxation paid (432) (432) (484) (484)
Taxation on investment income included within gross (3,210) (3,210) (3,303) (3,303)
income
--------------- --------------- --------------- ---------------
Net cash inflow/(outflow) from operating activities 51,974 51,909 (10,909) (10,909)
========= ========= ========= =========
Financing activities
Drawdown of loans 2,359 2,359 35,020 35,020
Interest paid (4,720) (4,720) (1,439) (1,439)
Shares purchased into treasury - - (390) (390)
Share purchase costs paid - - (3) (3)
Net proceeds from ordinary shares reissued from 34,902 34,902 63,187 63,187
treasury
Dividends paid (80,911) (80,911) (43,215) (43,215)
--------------- --------------- --------------- ---------------
Net cash (outflow)/inflow from financing activities (48,370) (48,370) 53,160 53,160
========= ========= ========= =========
Increase in cash and cash equivalents 3,604 3,539 42,251 42,251
Cash and cash equivalents at start of the year 25,976 19,866 (16,008) (22,118)
Effect of foreign exchange rate changes (88) (88) (267) (267)
--------------- --------------- --------------- ---------------
Cash and cash equivalents at end of year 29,492 23,317 25,976 19,866
========= ========= ========= =========
Comprised of:
Cash and cash equivalents 29,492 23,317 26,332 20,222
Bank overdraft - - (356) (356)
--------------- --------------- --------------- ---------------
29,492 23,317 25,976 19,866
========= ========= ========= =========
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2022
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 Company
was incorporated in England on 28 October 1993 and this is the 29th Annual
Report.
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 have been
applied consistently, other than where new policies have been adopted and are
set out below.
(a) Basis of preparation
On 31 December 2020, International Financial Reporting Standards (IFRS) as
adopted by the European Union at that date was brought into UK law and became
UK-adopted International Accounting Standards (IASs), with future changes being
subject to endorsement by the UK Endorsement Board and with the requirements of
the Companies Act 2006 as applicable to companies reporting under those
standards. The Company transitioned to IASs in its consolidated financial
statements with effect from 1 January 2021. There was no impact or changes in
accounting policies from the transition.
The Group and Company financial statements have been prepared under the
historic cost convention modified by the revaluation of certain financial
assets and financial liabilities held at fair value through profit or loss and
in accordance with IASs. The Company has taken advantage of the exemption
provided under Section 408 of the Companies Act 2006 not to publish its
individual Statement of Comprehensive Income 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) in October 2019 and updated in July 2022, is compatible with
IASs, the financial statements have been prepared in accordance with guidance
set out in the SORP.
Substantially all of the assets of the Group 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 for the period to 31 March 2024, being a period of at least twelve
months from the date of approval of the financial statements and therefore
consider the going concern assumption to be appropriate. The Directors have
reviewed compliance with the covenants associated with the bank overdraft
facility, loan facility, income and expense projections and the liquidity of
the investment portfolio in making their assessment.
The Directors have considered the impact of climate change on the value of the
investments included in the Financial Statements and have concluded that:
· there was no further impact of climate change to be considered as the
investments are valued based on market pricing as required by IFRS 13; and
· the risk is adequately captured in the assumptions and inputs used in
measurement of Level 3 assets, as noted in note 18 of the Financial Statements
in the Annual Report and Financial Statements.
None of the Group's other assets and liabilities were considered to be
potentially impacted by climate change.
The Group's financial statements are presented in sterling, which is 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.
Relevant International Accounting Standards that have yet to be adopted:
IFRS 17 - Insurance contracts (effective 1 January 2023). This standard
replaces IFRS 4, which currently permits a wide range of accounting practices
in accounting for insurance contracts. IFRS 17 will fundamentally change the
accounting by all entities that issue insurance contracts and investment
contracts with discretionary participation features.
This standard is unlikely to have any impact on the Company as it has no
insurance contracts.
IAS 12 - Deferred tax related to assets and liabilities arising from a single
transaction (effective 1 January 2023). The International Accounting Standards
Board (IASB) has amended IAS 12 Income Taxes to require companies to recognise
deferred tax on particular transactions that, on initial recognition, give rise
to equal amounts of taxable and deductible temporary differences. According to
the amended guidance, a temporary difference that arises on initial recognition
of an asset or liability is not subject to the initial recognition exemption if
that transaction gave rise to equal amounts of taxable and deductible temporary
differences. These amendments might have a significant impact on the
preparation of financial statements by companies that have substantial balances
of right-of-use assets, lease liabilities, decommissioning, restoration and
similar liabilities. The impact for those affected would be the recognition of
additional deferred tax assets and liabilities.
The amendment of this standard is unlikely to have any significant impact on
the Group.
None of the standards that have been issued, but are not yet effective, are
expected to have a material impact on the Company.
(b) Basis of consolidation
The Group's financial statements are made up to 31 December each year and
consolidate the financial statements of the Company and its wholly owned
subsidiary, which is registered and operates in England and Wales, BlackRock
World Mining Investment Company Limited (together 'the Group'). The subsidiary
company is not considered an investment entity. In the financial statements of
the Parent Company, the investment in the subsidiary company is held at fair
value.
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 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 Consolidated Statement of Comprehensive Income between items of a
revenue and a capital nature has been presented alongside the Consolidated
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 year end are treated as revenue for the year.
Provision is made for any dividends and interest income 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 deposit
interest is 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 account of the Consolidated
Statement of Comprehensive Income unless the option has been written for the
maintenance and enhancement of the Group's investment portfolio and represents
an incidental part of a larger capital transaction, in which case any premia
arising are allocated to the capital account of the Consolidated Statement of
Comprehensive Income.
Royalty income from contractual rights is measured at the fair value of the
consideration received or receivable where the Investment Manager can reliably
estimate the amount, pursuant to the terms of the agreement. Royalty income
from contractual rights received comprises 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 net profit 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 net profit on investments held at fair value
through profit or loss.
Where the Group has elected to receive its dividends in the form of additional
shares rather than in cash, the cash equivalent of the dividend is recognised
as income. Any excess in the value of the shares received over the amount of
the cash dividend is recognised in capital.
Underwriting commission receivable is taken into account on an accruals basis.
(f) Expenses
All expenses, including finance costs, are accounted for on an accruals basis.
Expenses have been charged wholly to the revenue account of the Consolidated
Statement of Comprehensive Income, except as follows:
· expenses which are incidental to the acquisition or sale of an
investment are charged to the capital account of the Consolidated Statement of
Comprehensive Income. Details of transaction costs on the purchases and sales
of investments are disclosed within note 10 to the financial statements in the
Annual Report and Financial Statements;
· expenses are treated as capital where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated;
and
· the investment management fee and finance costs have been allocated
75% to the capital account and 25% to the revenue account of the Consolidated
Statement of Comprehensive Income in line with the Board's expectations of the
long-term split of returns, in the form of capital gains and income,
respectively, from the investment portfolio.
(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 year.
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 accounts, 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
In accordance with IFRS 9, the Group classifies its investments at initial
recognition as held at fair value through profit or loss and are managed and
evaluated on a fair value basis in accordance with its investment strategy and
business model.
All investments, including contractual rights, are measured initially and
subsequently 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 are
initially measured at fair value excluding transaction costs. Sales of
investments are recognised at the trade date of the disposal.
The fair value of the financial investments is based on their quoted bid price
at the financial reporting date, without deduction for the estimated future
selling costs. This policy applies to all current and non-current asset
investments held by the Group.
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 IASs, the investment in the subsidiary in the Company's Statement of
Financial Position is fair valued which is deemed to be the net asset value of
the subsidiary.
Changes in the 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 'Net profit on investments held at fair value
through profit or loss'. Also included within the heading are transaction costs
in relation to the purchase or sale of investments.
For all financial instruments not traded in an active market, the fair value is
determined by using various valuation techniques. Valuation techniques include
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 where possible). See note 2(q) below.
(i) Options
Options are held at fair value through profit or loss based on the bid/offer
prices of the options written to which the Group is exposed. The value of the
option is subsequently marked-to-market to reflect the fair value through
profit or loss of the option based on traded prices. Where the premium is taken
to the revenue account, 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 exercised, the gain or loss is accounted for as a
capital gain or loss. Any cost on closing out an option is transferred to the
revenue account along with any remaining unamortised premium.
(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 on an amortised cost basis.
(k) Dividends payable
Under IASs, 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 recognised in the financial statements
unless they have been paid.
Dividends payable to equity shareholders are recognised in the Consolidated and
Parent Company Statements of Changes in Equity.
(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
and non-monetary assets held at fair value 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 profit/(loss) 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, bank overdrafts 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. Bank overdrafts are shown separately on the
Consolidated and Parent Company Statements of Financial Position.
(n) Bank borrowings
Bank overdrafts and loans are recorded at the net 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) Offsetting
Financial assets and financial liabilities are offset and the net amount
reported in the Consolidated and Parent Company 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.
(p) Share repurchases and share reissues
Shares repurchased and subsequently cancelled - share capital is reduced by the
nominal value of the shares repurchased and the capital redemption reserve is
correspondingly increased in accordance with Section 733 of the Companies Act
2006. The full cost of the repurchase is charged to the special reserve.
Shares repurchased and held in treasury - the full cost of the repurchase is
charged to the special reserve.
Where treasury shares are subsequently reissued:
- amounts received to the extent of the repurchase price are credited to
the special reserve and capital reserves based on a weighted average basis of
amounts utilised from these reserves on repurchases; and
- any surplus received in excess of the repurchase price is taken to the
share premium account.
Where new shares are issued, amounts received to the extent of any surplus
received in excess of the par value are taken to the share premium account.
Share issue costs are charged to the share premium account. Costs on share
reissues are charged to the special reserve and capital reserves.
(q) 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 Consolidated and Parent Company 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 OZ Minerals 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
Consolidated and Parent Company 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 fair value of the investment in equity shares of Jetti Resources
and MCC Mining were assessed by an independent valuer with a recognised and
relevant professional qualification.
The valuation is carried out based on market approach using earnings multiple
and price of recent transactions. Changes in assumptions about these factors
could affect the reported fair value of financial instruments in the
Consolidated and Parent Company 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.
(c) The investment in the subsidiary company was 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(d) in the Annual
Report and Financial Statements.
3. Income
2022 2021
£'000 £'000
Investment income:
UK dividends 17,536 25,681
UK special dividends 2,167 5,507
Overseas dividends 45,094 36,624
Overseas special dividends 3,808 1,250
Income from contractual rights (OZ Minerals Royalty) 3,096 2,562
Income from Vale debentures 3,863 6,971
Income from fixed income investments 2,523 1,963
--------------- ---------------
Total investment income 78,087 80,558
========= =========
Other income:
Option premium income 7,297 7,065
Deposit interest 513 -
Broker interest received 18 -
Stock lending income 81 53
--------------- ---------------
7,909 7,118
========= =========
Total income 85,996 87,676
========= =========
During the year, the Group received option premium income in cash totalling £
7,541,000 (2021: £6,745,000) for writing put and covered call options for the
purposes of revenue generation.
Option premium income is amortised evenly over the life of the option contract
and, accordingly, during the year, option premiums of £7,297,000 (2021: £
7,065,000) were amortised to revenue.
At 31 December 2022, there were three open positions (2021: two) with an
associated liability of £1,227,000 (2021: £667,000).
Dividends and interest received in cash during the year amounted to £68,630,000
and £5,918,000 (2021: £68,199,000 and £5,186,000).
Special dividends of £811,000 have been recognised in capital during the year
(2021: £nil).
4. Investment management fee
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 2,615 8,031 10,646 2,252 6,978 9,230
--------------- --------------- --------------- --------------- --------------- ---------------
Total 2,615 8,031 10,646 2,252 6,978 9,230
========= ========= ========= ========= ========= =========
The investment management fee (which includes all services provided by
BlackRock) is 0.8% of the Company's gross assets (subject to certain
adjustments). During the year, £9,848,000 (2021: £8,537,000) of the investment
management fee was generated from net assets and £798,000 (2021: £693,000) from
the gearing effect on gross assets due to the quarter-on- quarter increase in
the NAV per share for the year as set out below:
Cum income Quarterly Gearing
NAV per share increase/ effect
Quarter end (pence) (decrease) on
% management
fees (£'000)
31 December 2021 622.21 - -
31 March 2022 769.58 +23.7 267
30 June 2022 584.86 -24.0 -
30 September 2022 602.56 +3.0 294
31 December 2022 688.35 +14.2 237
========= ========= =========
Cum income Quarterly Gearing
NAV per share increase/ effect
Quarter end (pence) (decrease) on
% management
fees (£'000)
31 December 2020 536.34 - -
31 March 2021 566.62 +5.6 243
30 June 2021 616.20 +8.8 224
30 September 2021 554.49 -10.0 -
31 December 2021 622.21 +12.2 226
========= ========= =========
The daily average of the net assets under management during the year ended 31
December 2022 was £1,232,043,000 (2021: £1,085,438,000).
The fee is allocated 25% to the revenue account and 75% to the capital account
of the Consolidated Statement of Comprehensive Income.
There is no additional fee for company secretarial and administration services.
5. Other operating expenses
2022 2021
£'000 £'000
Allocated to revenue:
Custody fee 101 103
Auditors' remuneration:
- audit services 51 41
- non-audit services1 9 9
Registrar's fee 86 91
Directors' emoluments2 197 176
AIC fees 21 21
Broker fees 24 25
Depositary fees 116 101
FCA fee 30 24
Directors' insurance 23 19
Marketing fees 132 140
Stock exchange fees 37 26
Legal and professional fees 35 52
Bank facility fees3 97 73
Printing and postage fees 47 37
Write back of prior year expenses4 (55) -
Other administrative costs 86 96
--------------- ---------------
1,037 1,034
========= =========
Allocated to capital:
Transaction charges5 28 9
--------------- ---------------
1,065 1,043
========= =========
2022 2021
The Company's ongoing charges6, calculated as a percentage of average 0.95% 0.95%
daily net assets and using the management fee and all other operating
expenses, excluding finance costs, direct transaction costs,
transaction charges, VAT recovered, taxation, prior year expenses
written back and certain non-recurring items were:
The Company's ongoing charges6, calculated as a percentage of average 0.84% 0.84%
daily gross assets and using the management fee and all other
operating expenses, excluding finance costs, direct transaction costs,
transaction charges, VAT recovered, taxation, prior year expenses
written back and certain non-recurring items were:
======== ========
= =
1 Fees paid to the auditor for non-audit services of £8,925 excluding VAT
(2021: £8,500) relate to the review of the Condensed Half Yearly Financial
Report.
2 Details of the Directors' emoluments can be found in the Directors'
Remuneration Report in the Annual Report and Financial Statements. The Company
has no employees.
3 There is a 4 basis point facility fee chargeable on the full loan
facility whether drawn or undrawn.
4 Relates to Directors' expenses, miscellaneous fees, legal fees and
professional services fees written back during the year (2021: no accruals
written back).
5 For the year ended 31 December 2022, expenses of £28,000 (2021: £9,000)
were charged to the capital account of the Consolidated Statement of
Comprehensive Income. These include transaction costs charged by the custodian
on sale and purchase trades.
6 Alternative Performance Measures, see Glossary in the Annual Report and
Financial Statements.
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest payable - bank loans 1,177 3,505 4,682 365 1,097 1,462
Interest payable - bank overdraft 5 15 20 9 20 29
--------------- --------------- --------------- --------------- --------------- ---------------
Total 1,182 3,520 4,702 374 1,117 1,491
========= ========= ========= ========= ========= =========
7. Dividends
Dividends paid on equity shares:
2022 2021
Record date Payment date £'000 £'000
Final dividend of 27.00p per share 18 March 19 May 2022 49,898 14,782
for the year ended 31 December 2021 2022
(2020: 8.30p)
1st interim dividend of 5.50p per 27 May 2022 30 June 2022 10,251 8,224
share for the year ended 31 December
2022 (2021: 4.50p)
2nd interim dividend of 5.50p per 2 September 30 September 10,381 10,106
share for the year ended 31 December 2022 2022
2022 (2021: 5.50p)
3rd interim dividend of 5.50p per 25 November 22 December 10,381 10,103
share for the year ended 31 December 2022 2022
2022 (2021: 5.50p)
--------------- ---------------
80,911 43,215
========= =========
The total dividends payable in respect of the year ended 31 December 2022 which
form the basis of Section 1158 of the Corporation Tax Act 2010 and Section 833
of the Companies Act 2006, and the amounts declared, meet the relevant
requirements as set out in this legislation.
Dividends paid, or declared on equity shares:
2022 2021
£'000 £'000
1st quarterly interim dividend of 5.50p per share for the year ended 10,251 8,224
31 December 2022 (2021: 4.50p)
2nd quarterly interim dividend of 5.50p per share for the year ended 10,381 10,106
31 December 2022 (2021: 5.50p)
3rd quarterly interim dividend of 5.50p per share for the year ended 10,381 10,103
31 December 2022 (2021: 5.50p)
Final dividend of 23.50p per share for the year ended 31 December 2022 44,392 49,898
(2021: final dividend 27.00p)1
--------------- ---------------
75,405 78,331
========= =========
1 Based on 188,903,036 ordinary shares in issue on 2 March 2023.
8. Consolidated earnings and net asset value per ordinary share
Total revenue, capital earnings and net asset value per ordinary share are
shown below and have been calculated using the following:
2022 2021
Net revenue profit attributable to ordinary shareholders (£'000) 76,013 78,910
Net capital profit attributable to ordinary shareholders (£'000) 126,407 113,560
--------------- ---------------
Total profit attributable to ordinary shareholders (£'000) 202,420 192,470
========= =========
Equity shareholders' funds (£'000) 1,299,285 1,142,874
The weighted average number of ordinary shares in issue during the 186,868,187 181,037,188
year on which the earnings per ordinary share was calculated was:
The actual number of ordinary shares in issue at the year end on which 188,753,036 183,681,116
the net asset value per ordinary share was calculated was:
Earnings per ordinary share
Revenue earnings per share (pence) - basic and diluted 40.68 43.59
Capital earnings per share (pence) - basic and diluted 67.64 62.73
--------------- ---------------
Total earnings per share (pence) - basic and diluted 108.32 106.32
========= =========
As at As at
31 31
December December
2022 2021
Net asset value per ordinary share (pence) 688.35 622.21
Ordinary share price (pence) 697.00 589.00
========= =========
There were no dilutive securities at the year end.
9. Called up share capital
Ordinary shares
in issue Treasury shares Nominal
number number Total shares value
number £'000
Allotted, called up and fully paid share capital
comprised:
Ordinary shares of 5p each
At 31 December 2021 183,681,116 9,330,726 193,011,842 9,651
Ordinary shares reissued from treasury 5,071,920 (5,071,920) - -
---------------- ---------------- ---------------- ----------------
At 31 December 2022 188,753,036 4,258,806 193,011,842 9,651
========== ========== ========== ==========
During the year ended 31 December 2022 the Company:
- did not buy back shares into treasury (2021: 69,698 shares bought back
for a net consideration after costs of £393,000);
- reissued 5,071,920 shares (2021: 10,200,000 shares) from treasury for a
net consideration after costs of £34,902,000 (2021: £63,187,000).
Since the year end and up to 2 March 2023, the Company has reissued 150,000
ordinary shares from treasury for a total consideration net of costs of £
1,084,000.
10. Reserves
Capital
reserve
Capital arising on
reserve revaluation
Share Capital arising on of
premium redemption Special investments investments Revenue
account reserve reserve sold held reserve
Group £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2021 138,818 22,779 155,123 345,594 396,836 74,073
Movement during the year:
Total comprehensive income:
Net profit for the year - - - 82,729 43,678 76,013
Transactions with owners, recorded
directly to equity:
Ordinary shares reissued from 9,289 - 25,683 - - -
treasury
Share reissue costs - - (70) - - -
Dividends paid - - - - - (80,911)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 2022 148,107 22,779 180,736 428,323 440,514 69,175
========= ========= ========= ========= ========= =========
Distributable reserves
Capital
reserve
Capital arising on
reserve revaluation
Share Capital arising on of
premium redemption Special investments investments Revenue
account reserve reserve sold held reserve
Company £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2021 138,818 22,779 155,123 344,093 404,014 68,396
Movement during the year:
Total comprehensive income:
Net profit for the year - - - 82,729 43,731 75,960
Transactions with owners, recorded
directly to equity:
Ordinary shares reissued from 9,289 - 25,683 - - -
treasury
Share reissue costs - - (70) - - -
Dividends paid - - - - - (80,911)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 2022 148,107 22,779 180,736 426,822 447,745 63,445
========= ========= ========= ========= ========= =========
Capital
reserve
Capital arising on
reserve revaluation
Share Capital arising on of
premium redemption Special investments investments Revenue
account reserve reserve sold held reserve
Group £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 127,155 22,779 103,992 277,389 351,481 38,378
Movement during the year:
Total comprehensive income:
Net profit for the year - - - 68,205 45,355 78,910
Transactions with owners, recorded
directly to equity:
Ordinary shares reissued from 11,663 - 51,651 - - -
treasury
Share reissue costs - - (127) - - -
Ordinary shares purchased into - - (390) - - -
treasury
Share purchase costs - - (3) - - -
Dividends paid - - - - - (43,215)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 2021 138,818 22,779 155,123 345,594 396,836 74,073
========= ========= ========= ========= ========= =========
Distributable reserves
Capital
reserve
Capital arising on
reserve revaluation
Share Capital arising on of
premium redemption Special investments investments Revenue
account reserve reserve sold held reserve
Company £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 127,155 22,779 103,992 275,888 358,659 32,701
Movement during the year:
Total comprehensive income:
Net profit for the year - - - 68,205 45,355 78,910
Transactions with owners, recorded
directly to equity:
Ordinary shares reissued from 11,663 - 51,651 - - -
treasury
Share reissue costs - - (127) - - -
Ordinary shares purchased into - - (390) - - -
treasury
Share purchase costs - - (3) - - -
Dividends paid - - - - - (43,215)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 2021 138,818 22,779 155,123 344,093 404,014 68,396
========= ========= ========= ========= ========= =========
Pursuant to a resolution of the Company passed at an Extraordinary General
Meeting on 13 January 1998 and following the Company's application to the Court
for cancellation of its share premium account, the Court approval was received
on 27 January 1999 and £157,633,000 was transferred from the share premium
account to a special reserve which is a distributable reserve.
The share premium and capital redemption reserve are not distributable profits
under the Companies Act 2006. In accordance with ICAEW Technical Release 02/
17BL on Guidance on Realised and Distributable Profits under the Companies Act
2006, the special reserve and capital reserves of the Parent Company may be
used as distributable reserves for all purposes and, in particular, the
repurchase by the Parent Company of its ordinary shares and for payments as
dividends. In accordance with the Company's Articles of Association, the
special reserve, capital reserves and the revenue reserve may be distributed by
way of dividend. The Parent Company's capital gains of £874,567,000 (2021:
capital gain of £748,107,000) comprise a gain on capital reserve arising on
investments sold of £426,822,000 (2021: gain of £344,093,000), a gain on
capital reserve arising on revaluation of listed investments of £409,037,000
(2021: gain of £387,997,000) revaluation gains on unquoted investments of £
31,477,000 (2021: £8,839,000) and a revaluation gain on the investment in the
subsidiary of £7,231,000 (2021: gain of £7,178,000). The capital reserve
arising on the revaluation of listed investments of £391,896,000 (2021: £
387,997,000) is subject to fair value movements and may not be readily
realisable at short notice; as such it may not be entirely distributable. The
investments are subject to financial risks, as such capital reserves (arising
on investments sold) and the revenue reserve may not be entirely distributable
if a loss occurred during the realisation of these investments. The reserves of
the subsidiary company are not distributable until distributed as a dividend to
the Parent Company.
11. Valuation of financial instruments
Financial assets and financial liabilities are either carried in the
Consolidated and Parent Company Statements of Financial Position at their fair
value (investment and derivatives) or at amortised cost (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 2(h) to the Financial
Statements above.
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.
The fair value hierarchy has the following levels:
Level 1 - Quoted market price for identical instruments in active markets
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.
The Group does not adjust the quoted price for these instruments.
Level 2 - Valuation techniques using observable inputs
This category includes instruments valued using 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.
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 Group.
Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument's valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. 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.
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. 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
requires judgement, considering factors specific to the asset or liability. The
determination of what constitutes 'observable' inputs requires significant
judgement by the Investment Manager.
Valuation process and techniques for Level 3 valuations
(a) OZ Minerals Royalty
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 a
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 it was indicative of 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 Investment Manager and
reviewed by the Pricing Committee of the Manager. On a quarterly basis the
Investment Manager 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 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.
(b) Jetti Resources and MCC Mining equity shares
The fair value of the investment equity shares of Jetti Resources and MCC
Mining were assessed by an independent valuer with a recognised and relevant
professional qualification. The valuation is carried out based on market
approach using earnings multiple and price of recent transactions. Changes in
assumptions about these factors could affect the reported fair value of
financial instruments in the Consolidated and Parent Company 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 a sensitivity analysis.
Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value
hierarchy.
Financial assets/(liabilities) at fair value through Level 1 Level 2 Level 3 Total
profit or loss at £'000 £'000 £'000 £'000
31 December 2022 - Group
Assets:
Equity investments 1,250,984 9 35,692 1,286,685
Fixed income securities 68,894 48,066 - 116,960
Investment in contractual rights - - 21,199 21,199
--------------- --------------- --------------- ---------------
Total assets 1,319,878 48,075 56,891 1,424,844
========= ========= ========= =========
Liabilities:
Derivative financial instruments - written options - (1,227) - (1,227)
--------------- --------------- --------------- ---------------
Total 1,319,878 46,848 56,891 1,423,617
========= ========= ========= =========
Financial assets/(liabilities) at fair value through Level 1 Level 2 Level 3 Total
profit or loss at £'000 £'000 £'000 £'000
31 December 2021 - Group
Assets:
Equity investments 1,114,430 8,955 1,846 1,125,231
Fixed income securities 59,108 40,895 13,405 113,408
Investment in contractual rights - - 18,162 18,162
--------------- --------------- --------------- ---------------
Total assets 1,173,538 49,850 33,413 1,256,801
========= ========= ========= =========
Liabilities:
Derivative financial instruments - written options - (667) - (667)
--------------- --------------- --------------- ---------------
Total 1,173,538 49,183 33,413 1,256,134
========= ========= ========= =========
Financial assets/(liabilities) at fair value through Level 1 Level 2 Level 3 Total
profit or loss at £'000 £'000 £'000 £'000
31 December 2022 - Company
Assets:
Equity investments 1,250,984 9 42,923 1,293,916
Fixed income securities 68,894 48,066 - 116,960
Investment in contractual rights - - 21,199 21,199
--------------- --------------- --------------- ---------------
Total assets 1,319,878 48,075 64,122 1,432,075
========= ========= ========= =========
Liabilities:
Derivative financial instruments - written options - (1,227) - (1,227)
--------------- --------------- --------------- ---------------
Total 1,319,878 46,848 64,122 1,430,848
========= ========= ========= =========
Financial assets/(liabilities) at fair value through Level 1 Level 2 Level 3 Total
profit or loss at £'000 £'000 £'000 £'000
31 December 2021 - Company
Assets:
Equity investments 1,114,430 8,955 9,024 1,132,409
Fixed income securities 59,108 40,895 13,405 113,408
Investment in contractual rights - - 18,162 18,162
--------------- --------------- --------------- ---------------
Total assets 1,173,538 49,850 40,591 1,263,979
========= ========= ========= =========
Liabilities:
Derivative financial instruments - written options - (667) - (667)
--------------- --------------- --------------- ---------------
Total 1,173,538 49,183 40,591 1,263,312
========= ========= ========= =========
A reconciliation of fair value measurement in Level 3 is set out below.
2022 2021
Level 3 Financial assets at fair value through profit or loss at 31 £'000 £'000
December - Group
Opening fair value 33,413 19,753
Return of capital - royalty (267) (267)
Additions at cost 20,106 14,390
Transfer of equities from Level 1 to Level 3 2 -
Conversion of equity and transfer to Level 1 (2,546) -
Conversion of convertible bond to equity and transfer to Level 2 (10,160) -
Transfer of equities and convertible bonds to Level 2 (19,305) -
Total profit or loss included in net profit on investments in the
Consolidated Statement of Comprehensive Income:
- assets transferred to Level 1 during the period 169 -
- assets transferred to Level 2 during the period 14,212 -
- assets held at the end of the period 21,267 (463)
--------------- ---------------
Closing balance 56,891 33,413
========= =========
2022 2021
Level 3 Financial assets at fair value through profit or loss at 31 £'000 £'000
December - Company
Opening fair value 40,591 26,931
Return of capital - royalty (267) (267)
Additions at cost 20,106 14,390
Transfer of equities from Level 1 to Level 3 2 -
Conversion of equity and transfer to Level 1 (2,546) -
Conversion of convertible bond to equity and transfer to Level 2 (10,160) -
Transfer of equities and convertible bonds to Level 2 (19,305) -
Total profit or loss included in net profit on investments in the
Consolidated Statement of Comprehensive Income:
- assets transferred to Level 1 during the period 169 -
- assets transferred to Level 2 during the period 14,212 -
- assets held at the end of the period 21,320 (463)
--------------- ---------------
Closing balance 64,122 40,591
========= =========
The Level 3 valuation process and techniques used are explained in the
accounting policies in note 2(h) above. A more detailed description of the
techniques is found in the Annual Report and Financial Statements under
'Valuation process and techniques'.
The Level 3 investments as at 31 December 2022 in the table below relate to the
OZ Minerals Brazil Royalty, convertible bonds and equity shares of Jetti
Resources, MCC Mining and Lifezone SPAC PIPE. In accordance with IFRS 13, these
investments were categorised as Level 3.
In arriving at the fair value of the OZ Minerals Brazil Royalty, the key inputs
are the underlying commodity prices and illiquidity discount. In arriving at
the fair value of Jetti Resources and MCC Mining securities, the key inputs are
shown below.
The Level 3 valuation process and techniques used by the Company are explained
in the accounting policies in notes 2(h) and 2(q) above and a detailed
explanation of the techniques is also available in the Annual Report and
Financial Statements under 'Valuation process and techniques'.
Quantitative information of significant unobservable inputs - Level 3 - Group
and Company
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 2022 and 31
December 2021 are as shown below.
As at Range of
31 December weighted Reasonable
2022 Valuation Unobservable average possible Impact
Description £'000 technique input inputs shift¹ +/- on
fair
value
Discounted
rate-
weighted
Discounted average cost
OZ Minerals Brazil 21,199 cash flows of capital 5.0% - 1.0% £1.0m
Royalty 8.0%
US$1,400-
Average US$1,600
gold prices per ounce 10.0% £1.5m
US$7,209-
Average US$8,510
copper per tonne 10.0% £1.0m
prices
Market Earnings
Jetti Resources 29,873 approach multiple 5.93x 5.0% £0.6m
Price of
Market recent
MCC Mining 5,819 approach transaction 5.0% £0.3m
Lifezone commitment (see -
Note 14)
Listing
suspended
- valued
at nominal
Polyus - US$0.01
---------------
Total 56,891
=========
1 The sensitivity analysis refers to a percentage amount added or deducted
from the input and the effect this has on the fair value.
As at Range of
31 December weighted Reasonable
2021 Valuation Unobservable average possible Impact
Description £'000 technique input inputs shift¹ +/- on
fair
value
Discounted
rate-
weighted
Discounted average cost
OZ Minerals Brazil 18,162 cash flows of capital 5.0% - 1.0% £1.0m
Royalty 8.0%
US$1,400-
Average US$1,600
gold prices per ounce 10.0% £1.5m
US$7,209-
Average US$8,510
copper per tonne 10.0% £1.0m
prices
Market
approach
and
scenario
Invanhoe Electric and analysis Asset
I-Pulse securities 15,251 for multiple 0.75x - 25.0% £0.5m
convertible 1.25x
notes
---------------
Total 33,413
=========
1 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.
For exchange listed equity investments, the quoted price is the bid price.
Substantially, all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any business risks,
including climate change risk, in accordance with the fair value related
requirements of the Company's financial reporting framework.
12. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months'
notice. BFM has (with the Group's consent) delegated certain portfolio and risk
management services, and other ancillary services to BlackRock Investment
Management (UK) Limited (BIM (UK)). Further details of the investment
management contract are disclosed in the Directors' Report in the Annual Report
and Financial Statements.
The investment management fee due for the year ended 31 December 2022 amounted
to £10,646,000 (2021: £9,230,000). At the year end, £5,443,000 was outstanding
in respect of the management fee (2021: £4,587,000).
In addition to the above services, BIM (UK) has provided the Group with
marketing services. The total fees paid or payable for these services for the
year ended 31 December 2022 amounted to £132,000 excluding VAT (2021: £
140,000). Marketing fees of £62,000 were outstanding as at 31 December 2022
(2021: £55,000).
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
13. Related party disclosure
Directors' emoluments
At the date of this report, the Board consists of five non-executive Directors,
all of whom are considered to be independent of the Manager by the Board.
Disclosures of the Directors' interests in the ordinary shares of the Company
and fees and expenses payable to the Directors are set out in the Directors'
Remuneration Report in the Annual Report and Financial Statements. As at 31
December 2022, £16,000 (2021: £14,375) was outstanding in respect of Directors'
fees.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of BlackRock
Inc. (Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more than 20%
of the voting shares in issue in the Company and are as a result, considered to
be related parties to the Company (Significant Investors).
As at 31 December 2022
Total % of shares held by Number of Significant
Total % of shares held by Significant Investors who
Related Investors who are not are not affiliates of
BlackRock Funds affiliates of BlackRock Group or
BlackRock Group or BlackRock, BlackRock, Inc.
Inc.
2.27 n/a n/a
As at 31 December 2021
Total % of shares held by Number of Significant Investors
Total % of shares held by Significant who
Related Investors who are not are not affiliates of BlackRock
BlackRock Funds affiliates of Group or
BlackRock Group or BlackRock, Inc.
BlackRock, Inc.
1.77 n/a n/a
14. Capital commitment
There was one capital commitment at 31 December 2022 (2021: nil). This was a
US$10,000,000 commitment in relation to the SPAC PIPE commitment for investment
in Lifezone SPAC.
15. 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 2022 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 2022 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 2021, 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.
16. 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.
17. Annual General Meeting
The Annual General Meeting of the Company will be held at 12 Throgmorton
Avenue, London EC2N 2DL on Tuesday, 18 April 2023 at 11.30 a.m.
ENDS
The Annual Report and Financial Statements will also be available on the
BlackRock website at www.blackrock.com/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:
Melissa Gallagher, Managing Director, Closed End Funds, BlackRock Investment
Management (UK) Limited - Tel: 020 7743 3000
Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited - Tel:
020 7743 3000
Emma Phillips, Media & Communications, BlackRock Investment Management (UK)
Limited - Tel: 020 7743 2922
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3616
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
2 March 2023
12 Throgmorton Avenue
London EC2N 2DL
END
(END) Dow Jones Newswires
March 02, 2023 12:09 ET (17:09 GMT)
Blackrock World Mining (LSE:BRWM)
Historical Stock Chart
From Aug 2024 to Sep 2024
Blackrock World Mining (LSE:BRWM)
Historical Stock Chart
From Sep 2023 to Sep 2024
