BlackRock World Mining Trust plc (LON:BRWM) has announced its latest portfolio update.
All information is at 28 February 2022 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 | 15.2% | 23.9% | 32.2% | 101.9% | 116.6% |
| Share price | 15.6% | 36.3% | 29.1% | 140.4% | 160.1% |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | 12.4% | 17.6% | 25.7% | 70.4% | 75.0% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream
At month end
| Net asset value (including income)1: | 722.93p |
| Net asset value (capital only): | 690.73p |
| 1 Includes net revenue of 32.20p | |
| Share price: | 728.00p |
| Premium to NAV2: | 0.7% |
| Total assets: | £1,493.8m |
| Net yield3: | 5.8% |
| Net gearing: | 11.5% |
| Ordinary shares in issue: | 184,181,116 |
| Ordinary shares held in Treasury: | 8,830,726 |
| Ongoing charges4: | 0.9% |
2 Discount to NAV including income.
3 Based on a first interim dividend of 4.50p per share declared on 29 April 2021, a second and third interim dividend of 5.50p per share declared on 19 August 2021 and 18 November 2021 respectively, and a final dividend of 27.00p per share declared on 8 March 2022, all in respect of the year ended 31 December 2021.
4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2021.
| Country Analysis | Total Assets (%) |
| Global | 72.5 |
| Latin America | 6.9 |
| Australasia | 5.1 |
| United States | 4.5 |
| Canada | 3.3 |
| Other Africa | 3.2 |
| South Africa | 1.7 |
| Indonesia | 1.4 |
| Russia | 0.6 |
| United Kingdom | 0.2 |
| Net Current Assets | 0.6 |
| —– | |
| 100 | |
| ===== | |
| Sector Analysis | Total Assets (%) |
| Diversified | 40.5 |
| Copper | 21.6 |
| Gold | 13.9 |
| Steel | 8.3 |
| Industrial Minerals | 4 |
| Aluminium | 3.4 |
| Iron Ore | 3.2 |
| Platinum Group Metals | 2.9 |
| Nickel | 1.4 |
| Zinc | 0.2 |
| Net Current Assets | 0.6 |
| —– | |
| 100 | |
| ===== |
Ten largest investments
| Company | Total Assets (%) |
| Vale: | |
| Equity | 5.9 |
| Debenture | 3.1 |
| Anglo American | 7.9 |
| Glencore | 7.6 |
| BHP | 7.6 |
| Freeport-McMoRan | 5.9 |
| ArcelorMittal | 5.1 |
| Rio Tinto | 4.1 |
| Teck Resources | 3.8 |
| First Quantum Minerals: | |
| Equity | 2.8 |
| Bond | 0.8 |
| Newmont Mining | 3.1 |
| Asset Analysis | Total Assets (%) |
| Equity | 93.3 |
| Preferred Stock | 3.1 |
| Bonds | 2.9 |
| Warrants | 0.1 |
| Net Current Assets | 0.6 |
| —– | |
| 100.0 | |
| ===== |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV returned +15.2% in February, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned +12.4% (Performance figures in GBP).
February was a difficult month for equity markets, as concerns around Russia’s invasion of Ukraine dominated headlines. At the beginning of the month, investors were focused on central bank interest rate hikes and the potential impact this may have on growth. However, in the second half of the month, attention was refocused on the conflict in Ukraine. Russia is a significant exporter of commodities, particularly oil and gas, leading to Brent oil and European natural gas prices rising during the month. These higher energy prices could fuel higher or more persistent inflation.
Against this backdrop, the iron ore (62% fe.) price came under pressure, returning -5.7% as the physical market remains relatively weak. Performance across the other mined commodities was positive with aluminium, copper, nickel and palladium prices rising by +11.1%, +3.6%, +8.0% and +2.6% respectively. Against an uncertain macroeconomic backdrop, gold bullion also rose, with the precious metal returning +6.0% in February.
On 4 March 2022 the Company’s Board announced that on 28 February 2022 BlackRock had suspended the purchase of all Russian securities in its active and index portfolios and that as at the close of 3 March, 0.12% of the Company’s net assets (with a value of £1.74m) was in securities of companies whose principal activities were in Russia.
Strategy and Outlook
We believe the outlook for mined commodity prices remains robust, whilst mining shares offer attractive value. Recovering global economic growth, accommodative monetary policy, rising government spending and increased focused on green capital investment all point towards strong demand. Meanwhile, supply is constrained following years of capital discipline from the producers and we are seeing no signs that this is set to change.
We are encouraged by what we are hearing from management teams in terms of maintaining their focus on capital discipline. Longer term, ill-discipline remains a risk but, regardless, increases in capital expenditure would take some time to feed through into new supply given the time-lags associated with mining projects. We are also seeing inflationary data increase and commodities have traditionally been a core way for investors to both protect themselves from this but also benefit from such trends.
We believe the best risk-adjusted opportunity within the Company today is in the shares of mining companies that are in robust financial positions with strong balance sheets and high levels of free cash flow. Mining companies are continuing to return capital to shareholders through dividends and buybacks.
All data points are in USD terms unless stated otherwise.
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
