BLACKROCK WORLD MINING TRUST PLC
BLACKROCK WORLD MINING TRUST plc
All information is at 31 December 2015 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -2.3% -4.4% -35.5% -64.2% -73.5%
Share price -7.5% -12.0% -37.0% -63.8% -72.8%
Euromoney Global Mining Index -2.1% -7.0% -36.9% -58.3% -70.3%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income*: 212.81p
Net asset value capital only: 201.36p
*Includes net revenue of 11.45p
Share price: 181.00p
Discount to NAV**: 14.9%
Total assets: £438.0m
Net yield***: 11.6%
Net gearing: 12.9%
Ordinary shares in issue: 177,287,242
Ordinary shares held in treasury: 15,724,600
Ongoing charges****: 1.4%
** Discount to NAV including income.
*** Based on an interim dividend of 7.00p in respect of the year ended
31 December 2015 and a final dividend of 14.00p in respect of the year ended 31
December 2014.
**** Calculated as a percentage of average net assets and using expenses,
excluding finance costs for the year ended 31 December 2014.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 36.6
Base Metals 18.3 Global 45.1
Gold 16.9 Latin America 16.2
Silver & Diamonds 12.9 Australasia 9.7
Industrial Minerals 6.8 Other Africa 8.8
Other 4.5 Canada 8.5
Copper 0.5 Emerging Europe 5.3
Aluminium 0.5 South Africa 3.0
Zinc 0.2 Indonesia 0.6
Net current assets 2.8 Net current assets 2.8
----- -----
100.0 100.0
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Ten Largest Investments
% Total
Company Assets
BHP Billiton 11.0
Rio Tinto 10.4
First Quantum Minerals 6.5
Lundin Mining 5.1
Norilsk Nickel 4.8
Fresnillo 4.4
Glencore 3.7
Cerro Verde 3.7
Hudbay Minerals 2.7
PotashCorp 2.7
Commenting on the markets, Evy Hambro and Olivia Markham, representing the
Investment Manager noted:
Performance
Despite some relative strength following the long-awaited announcement of
the US rate rise at the end of the year, the mining sector fared worse than
many other equity sectors in December as the Company's benchmark finished
the period down -3.7% versus a -1.8% fall in the MSCI World Index. Mined
commodities posted some positive performance with copper, zinc and
aluminium up +2.3%, +3.1% and +2.3% respectively; however, at the end of
the year, most mined commodities were trading well below marginal cost and
a significant proportion of overall mined production was in loss-making
territory.
Anglo American suffered dramatic selling during the month as it announced a
restructuring programme in an attempt to address its struggling balance
sheet. The company plans to raise US$4 billion from asset sales, pare its
business down to three divisions from six and has suspended dividends until
the end of 2016. In addition, the company, which is the world's fifth
biggest global miner by market value, said it planned to reduce its
workforce to just 50,000 from 135,000 at the time of the announcement. In
the portfolio, our underweight to Anglo American was the largest
contributor to relative performance in December.
The Company's underweight to Japanese conglomerate Sumitomo Metal Mining
detracted from relative performance as the company displayed comparative
strength due to its downstream export business. The Company's overweight
position in Potash Corp detracted from performance over the month. The
stock came under pressure owing to continued potash price weakness, as well
as increased concerns over the company's dividend sustainability.
Within the Company's unquoted investments, Banro Corporation, where the
Company has exposure to gold-linked preference shares, announced that they
have signed a US$98.75m financing agreement with a Chinese investment fund,
Resource FinanceWorks. The deal is subject to regulatory approval with the
company targeting financial close in January 2016. The funds will be used
to secure remaining coupon payments on the senior secured notes, repay bank
loans and accrued preferred share dividends, as well as expanding crushing
capacity at the Twangiza mine.
All data points in USD terms.
Strategy and Outlook
As we look towards 2016, it is shaping up to be another tough year for the
natural resources sector. Commodity markets remain oversupplied and prices
for certain commodities will need to remain at current levels, or move
lower, to see loss making production leave the market. In light of this,
dividends will remain under pressure for the sector and we would expect to
see companies further reduce capital spending and operating costs to
maintain their balance sheets.
Since the peak of the mining cycle in 2011, the industry has responded to
lower commodity prices via cost cutting, capital expenditure reductions,
asset sales and restructuring. We are now at the point where companies
need to curtail loss making production to reduce commodity surplus balances
in the market. The rapid reduction in costs, combined with low interest
rates and available balance sheet liquidity (including debt and equity),
has meant that the industry has not been forced to make the tough decisions
to shut down loss making assets. There is evidence that this environment
is now changing with interest rates rising and some companies under
considerable balance sheet stress. As we enter 2016, the industry will be
forced to respond and we would expect to see an acceleration in production
cuts which should be supportive for commodity prices.
14 January 2015
ENDS
Latest information is available by typing www.brwmplc.co.uk on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal). Neither the contents of the Manager's website nor the
contents of any website accessible from hyperlinks on the Manager's website
(or any other website) is incorporated into, or forms part of, this
announcement.
BLACKROCK WORLD MINING : Portfolio Update
January 14, 2016 at 09:26 am EST
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