BlackRock World Mining Trust plc (LON:BRWM) has announced its latest portfolio update.
All information is at 31 January 2021 and unaudited.
For more information on the Blackrock World Mining Trust and how to access the opportunities presented by mining, please visit www.blackrock.com/uk/brwm
Performance at month end with net income reinvested
| One Month | Three Months | One Year | Three Years | Five Years | |
| Net asset value | -0.1% | 19.9% | 38.7% | 38.2% | 246.0% |
| Share price | 1.5% | 33.7% | 59.8% | 58.8% | 318.6% |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | -2.5% | 13.9% | 25.0% | 18.9% | 193.1% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream.
At month end
| Net asset value (including income)1: | 533.20p |
| Net asset value (capital only): | 524.34p |
| 1 Includes net revenue of 8.86p | |
| Share price: | 530.00p |
| Discount to NAV2: | 0.6% |
| Total assets: | £1,047.3m |
| Net yield3: | 4.2% |
| Net gearing: | 12.6% |
| Ordinary shares in issue: | 173,550,814 |
| Ordinary shares held in Treasury: | 19,461,028 |
| Ongoing charges4: | 1.0% |
2 Discount to NAV including income.
3 Based on three quarterly interim dividends of 4.00p per share declared on 12 November, 19 August and 30 April 2020 in respect of the year ended 31 December 2020 and a final dividend of 10.00p per share announced on 27 February 2020 in respect of the year ended 31 December 2019.
4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2019.
| Country Analysis | Total Assets (%) | Sector Analysis | Total Assets (%) | |
| Global | 64.9 | Diversified | 38.9 | |
| Australasia | 9.2 | Gold | 24.7 | |
| Latin America | 7.2 | Copper | 18.5 | |
| South Africa | 5.5 | Platinum Group Metals | 3.1 | |
| Canada | 4.9 | Iron | 3.0 | |
| United Kingdom | 2.3 | Nickel | 2.9 | |
| Indonesia | 1.7 | Iron Ore | 2.7 | |
| Other Africa | 1.5 | Steel | 2.3 | |
| United States | 1.3 | Industrial Minerals | 2.0 | |
| Russia | 1.0 | Materials | 0.8 | |
| Net Current Assets | 0.5 | Silver & Diamonds | 0.3 | |
| —– | Zinc | 0.2 | ||
| 100.0 | Aluminium | 0.1 | ||
| ===== | Net Current Assets | 0.5 | ||
| —– | ||||
| 100.0 | ||||
| ===== |
Ten largest investments | |
| Company | Total Assets % |
| Vale: | |
| Equity | 6.5 |
| Debenture | 4.9 |
| BHP | 8.0 |
| Anglo American | 7.1 |
| Rio Tinto | 6.2 |
| Freeport-McMoRan | 5.3 |
| Newmont Mining | 4.4 |
| Barrick Gold | 4.0 |
| Glencore | 4.0 |
| OZ Minerals: | |
| Royalty | 2.1 |
| Equity | 1.3 |
| Wheaton Precious Metals | 3.2 |
| Asset Analysis | Total Assets (%) |
| Equity | 93.5 |
| Bonds | 3.8 |
| Preferred Stock | 2.3 |
| Option | -0.1 |
| Net Current Assets | 0.5 |
| —– | |
| 100.0 | |
| ===== |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV returned -0.1% in January, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned -2.5% (Figures in GBP).
Despite much of the world remaining in a state of lockdown due to the coronavirus pandemic, the year started with a flavour of optimism in global equity markets as investors focused on the potential for a vaccine-driven economic restart. This narrative was somewhat derailed towards the end of the month as it became clear that there was divergence in the vaccine rollout in different countries. Against this backdrop, the MSCI AC World Index fell by 0.6%.
January was a mixed month for the mining sector, having started the period strongly before pulling back. US 10-year treasury yields rose over the month, contributing to US dollar strength which acted as a headwind for commodities. Meanwhile, tougher COVID-19 related restrictions in China stoked concern around economic activity in the country and, in turn, its commodity demand.
Mined commodity performance was varied, with iron ore (62% fe) and gold prices down by 0.9% and 2.1% respectively but the copper price up by 1.5%. Turning to the companies, 2020 production results were announced during the month and, in general, they were in line with expectations, with relatively limited COVID-19 related disruptions. Investors are now looking ahead to the February earnings reporting season in which we are expecting to see strong financial results and continued focus on returning capital to shareholders.
Strategy and Outlook
We are optimistic on COVID-19 vaccine rollouts supporting global economic growth and, in turn, commodity demand. Meanwhile, our analysis shows that the mining sector has performed particularly strongly during periods with significant increases in inflation expectations, which we believe we could see this year.
Increased fiscal stimulus globally aimed at kickstarting economies in the COVID-19 crisis is being geared towards infrastructure spending which should support mined commodity demand. Meanwhile, we see the mining sector playing a crucial role in supplying the materials required for low carbon technologies e.g. wind turbines and solar panels.
Capital expenditure has been slashed by the miners since the peak in 2013 which is constraining new commodity supply and supporting prices. Whilst capital expenditure has risen since 2016, it is still a long way below the peak and we are encouraged by rhetoric from management teams around continued capital discipline.
Mining companies have focused on paying down debt in recent years and balance sheets are exceptionally strong today as a result. Given ongoing discipline, capital is being returned to shareholders in the form of dividends and buybacks. Meanwhile, we see potential for dividend upside given that prices for mined commodities have surprised to the upside e.g. iron ore.
All data points are in USD terms unless stated otherwise.
23 February 2021
For more information on the Blackrock World Mining Trust and how to access the opportunities presented by mining, please visit www.blackrock.com/uk/brwm
