BlackRock World Mining Trust plc (LON:BRWM) has today provided the following portfolio update.
Performance at month end with net income reinvested
| One | Three | One | Three | Five | ||
| Month | Months | Year | Years | Years | ||
| Net asset value | 18.1% | -8.1% | -5.2% | 8.3% | 31.5% | |
| Share price | 17.0% | -7.6% | -5.5% | 11.4% | 35.5% | |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | 18.5% | -6.9% | -5.7% | 6.8% | 27.4% | |
| EMIX Global Mining Index (Net)* | 19.9% | -4.1% | 1.5% | 24.2% | 43.6% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, EMIX Global Mining Index, Datastream
| At month end | ||
| Net asset value including income1: | 363.13p | |
| Net asset value capital only: | 356.52p | |
| 1 Includes net revenue of 6.61p | ||
| Share price: | 316.00p | |
| Discount to NAV2: | 13.0% | |
| Total assets: | £725.6m | |
| Net yield3: | 7.0% | |
| Net gearing: | 9.9% | |
| Ordinary shares in issue: | 173,605,020 | |
| Ordinary shares held in treasury: | 19,406,822 | |
| Ongoing charges4: | 0.9% |
2 Discount to NAV including income.
3 Based on a quarterly interim dividend of 4.00p per share declared on 30 April 2020 in respect of the year ending 31 December 2020 and two quarterly interim dividends of 4.00p per share declared on 20 August 2019 and 14 November 2019 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.
| Sector | % Total | Country Analysis | % Total | |||||||||
| Assets | Assets | |||||||||||
| Diversified | 32.0 | Global | 62.2 | |||||||||
| Gold | 30.9 | Latin America | 8.4 | |||||||||
| Copper | 16.8 | Australasia | 7.1 | |||||||||
| Silver & Diamonds | 4.9 | Canada | 6.3 | |||||||||
| Nickel | 3.6 | United Kingdom | 4.6 | |||||||||
| Industrial Minerals | 3.4 | South Africa | 3.0 | |||||||||
| Platinum Group Metals | 2.1 | Russia | 1.5 | |||||||||
| Iron Ore | 1.6 | Other Africa | 1.1 | |||||||||
| Aluminium | 0.1 | Indonesia | 0.8 | |||||||||
| Zinc | 0.1 | USA | 0.4 | |||||||||
| Current Assets | 4.5 | Argentina | 0.1 | |||||||||
| —– | Current Assets | 4.5 | ||||||||||
| 100.0 | —– | |||||||||||
| ===== | 100.0 | |||||||||||
| ===== | ||||||||||||
| The Largest Investments | ||||
| Company | % Total Assets | |||
| Rio Tinto | 8.5 | |||
| BHP | 8.0 | |||
| Barrick Gold | 7.4 | |||
| Newmont Mining | 7.3 | |||
| Vale: | ||||
| Equity | 3.9 | |||
| Debenture | 2.9 | |||
| Anglo American | 5.1 | |||
| Wheaton Precious Metals | 4.3 | |||
| OZ Minerals Brazil: | ||||
| Royalty | 2.6 | |||
| Equity | 1.3 | |||
| Franco-Nevada | 3.6 | |||
| Freeport-McMoRan Copper & Gold | 3.5 |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV increased by 18.1% in April, marginally underperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned +18.5%. (Figures in GBP)
Global equity markets started to recover in April, as a rebound in oil prices, encouraging early signs of COVID-19 treatment trials and expectations of further government stimulus, helped to recover some of the losses experienced in February and March. For reference, the MSCI All Country World Index rose by 10.6%.
China’s National Development and Reform Commission announced a step-up in infrastructure spending in the country to boost economic growth post COVID-19, which improved sentiment towards mining. Most mined commodities’ prices rose over the month, with copper, nickel and gold prices up by 4.5%, 6.0% and 5.8% respectively. The iron ore (62% fe) price was flat over the month, albeit at a healthy level of $85/tonne, having held up well this year.
April was a spectacular month for gold equities in which they exhibited a high beta to the rise in the gold price. This reflected a ‘catch-up’ market move, in our view, after they had lagged the gold price through Q1 2020. Sentiment around equities in general improved in April on the back of coordinated central bank action. The gold price finished the month at $1,705/oz., the highest level since December 2012.
Strategy and Outlook
We see an attractive valuation opportunity in mining today. Mining companies have sold off in recent weeks in anticipation of a lower level of global economic growth in 2020. Global stimulus measures on infrastructure and carbon transition are likely to be commodity intensive.
The balance sheets of mining companies continue to be in strong shape and companies remain focused on capital discipline. Mining companies are therefore well positioned to continue to generate robust free cash flow and return capital to shareholders through dividends and buybacks. In a low-income environment this could be a catalyst for a rerating.
We expect most mined commodity prices to finish 2020 higher than the lows they have reached over the last few weeks. On the commodity demand side, we do not anticipate a hard-landing type event in China and we have been encouraged by stimulus measures beginning to feed through into improvements in some economic data points. On the commodity supply side, supply is tight in most mined commodity markets and, given the cuts in mining sector spending since 2012 (down ~66%), we expect it to remain so.
All data points are in USD terms unless stated otherwise.
18 May 2020
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