BlackRock World Mining Trust plc (LON:BRWM) has announced its latest portfolio update.
All information is at 31 October 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 | Three | One | Three | Five | |
| Month | Months | Year | Years | Years | |
| Net asset value | 0.7% | 4.2% | 10.3% | 77.5% | 84.5% |
| Share price | 7.0% | 2.8% | 15.2% | 114.5% | 110.2% |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | -0.3% | 1.0% | 1.4% | 44.8% | 47.8% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream
At month end
| Net asset value (including income)1: | 606.74p |
| Net asset value (capital only): | 578.90p |
| 1 Includes net revenue of 27.84p | |
| Share price: | 609.00p |
| Premium to NAV2: | 0.4% |
| Total assets: | £1,331.1m |
| Net yield3: | 7.1% |
| Net gearing: | 9.8% |
| Ordinary shares in issue: | 188,753,036 |
| Ordinary shares held in Treasury: | 4,258,806 |
| Ongoing charges4: | 0.9% |
| Ongoing charges5: | 0.8% |
2 Discount to NAV including income.
3 Based on a third interim dividend of 5.50p per share declared on 18 November 2021, and a final dividend of 27.00p per share declared on 8 March 2022 in respect of the year ended 31 December 2021, and a first and second interim dividend of 5.50p per share declared on 6 May 2022 and 23 August 2022 respectively, in respect of year ending 31 December 2022.
4 The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 31 December 2021.
5 The Company’s ongoing charges are calculated as a percentage of average daily gross assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 31 December 2021.
Ten largest investments
| Company | Total Assets % |
| Glencore | 8.4 |
| BHP | 8.2 |
| Vale: | |
| Equity | 5.6 |
| Debenture | 2.5 |
| Anglo American | 5.5 |
| First Quantum Minerals: | |
| Equity | 2.3 |
| Bond | 1.9 |
| Rio Tinto | 3.7 |
| Freeport-McMoRan | 3.7 |
| Teck Resources | 3.3 |
| ArcelorMittal | 3.0 |
| OZ Minerals: | |
| Royalty | 1.6 |
| Equity | 1.1 |
| Asset Analysis | Total Assets (%) |
| Equity | 87.3 |
| Bonds | 4.2 |
| Preferred Stock | 3.0 |
| Net Current Assets | 5.5 |
| —– | |
| 100.0 | |
| ===== |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV rose by 0.7% in October, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned -0.3% (performance figures in GBP).
The Company posted positive returns during the month, albeit underperforming broader equity markets, with the MSCI ACWI TR Index rising by 2.8% (in GBP terms). This came despite deteriorating global economic growth data with, for example, manufacturing PMI statistics for Europe and the US showing steep declines.
In mining-related news, eyes focused on the world’s largest mined commodity consumer, China, which held its 5-yearly Communist Party Congress during the month. The Congress appeared to strengthen President Xi Jinping’s leadership position, but markets were disappointed by the lack of a meaningful update on China’s zero-Covid policy. This reduced optimism around a potential recovery in China’s property market which has struggled in recent months.
The mining sector reported Q3 production results during the month. We saw a continuation of the theme of production challenges, most notably in the copper industry. Mined commodity prices were generally weak and this combined with cost inflation has squeezed margins across the sector. Iron ore prices fell particularly hard, with the 62% fe. price down 16.5% to $82/tonne. This spot price still allows for healthy margins for the lower-cost producers but is now down to a level at which we should see some cost curve support.
Strategy and Outlook
Supply and demand in mined commodity markets is generally very tight today and prices look well-supported in our view. On the demand side, increased global infrastructure spending is supporting demand, whilst we expect the mining sector to play a critical role in the coming years in supplying materials required for lower-carbon technologies, like wind turbines, solar panels and electric vehicles. The Russia/Ukraine crisis puts greater focus on energy independence, particularly for Europe, and will further accelerate investment into renewable energy capacity build out in our view. On the supply side, 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.
Mining companies are generally in robust financial shape today with strong balance sheets and high levels of free cash flow being generated. Finally, we view mining equities as an effective way to hedge portfolios against persistent inflationary pressures.
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
