BlackRock World Mining Trust plc (LON:BRWM) has announced its portfolio update.
All information is at 31 December 2020 and unaudited.
For more information on this 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 | 10.8% | 18.0% | 31.0% | 36.2% | 225.4% |
| Share price | 15.2% | 31.2% | 46.7% | 56.3% | 289.5% |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | 9.3% | 15.0% | 20.6% | 22.8% | 186.2% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream
At month end
| Net asset value (including income)1: | 533.61p |
| Net asset value (capital only): | 525.20p |
| 1 Includes net revenue of 8.41p | |
| Share price: | 522.00p |
| Discount to NAV2: | 2.2% |
| Total assets: | 1,028.5m |
| 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 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 | 37.3 | |
| Australasia | 9.5 | Gold | 25.8 | |
| Latin America | 7.2 | Copper | 19.1 | |
| South Africa | 5.3 | Iron | 3.3 | |
| Canada | 5.2 | Platinum Group Metals | 3.3 | |
| United Kingdom | 2.4 | Iron Ore | 2.8 | |
| Other Africa | 1.6 | Nickel | 2.6 | |
| Indonesia | 1.5 | Steel | 2.5 | |
| United States | 1.4 | Industrial Minerals | 1.9 | |
| Russia | 1.1 | Materials | 0.9 | |
| Net Current Liabilities | -0.1 | Silver & Diamonds | 0.3 | |
| —– | Zinc | 0.3 | ||
| 100.0 | Net Current Liabilities | -0.1 | ||
| ===== | —– | |||
| 100.0 | ||||
| ===== |
| Ten largest investments | |
| Company | Total Assets % |
| Vale: | |
| Equity | 6.8 |
| Debenture | 4.2 |
| BHP | 7.7 |
| Rio Tinto | 7.5 |
| Anglo American | 7.2 |
| Freeport-McMoRan Copper & Gold | 5.2 |
| Newmont Mining | 4.5 |
| Barrick Gold | 4.2 |
| Wheaton Precious Metals | 3.3 |
| OZ Minerals: | |
| Royalty | 1.7 |
| Equity | 1.3 |
| First Quantum Minerals: | |
| Equity | 1.2 |
| Debt | 1.6 |
| Asset Analysis | Total Assets (%) |
| Equity | 94.3 |
| Bonds | 3.4 |
| Preferred Stock | 2.5 |
| Option | -0.1 |
| Net Current Liabilities | -0.1 |
| —– | |
| 100.0 | |
| ===== |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV returned +10.8% in December, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned +9.3% (Figures in GBP).
Despite renewed lockdowns across Europe and in parts of Asia, global equity markets continued to ride a wave of optimism following the announcement of progress in a COVID-19 vaccine, albeit at a slower rate than in November. For reference, the MSCI AC World Index increased by 4.5%. Cyclical stocks were buoyed by the news that the US government signed into law a $900 billion pandemic relief bill that included enhanced unemployment benefits and direct cash payments. A long-awaited post-Brexit trade deal between the UK and the EU was finally struck on Christmas Eve but investors’ spirits were dampened by the emergence of a new, highly transmissible coronavirus variant that is spreading across Europe and the rest of the world. Global economic activity data also remained strong, with global manufacturing PMIs coming in at 53.8.
Against this macroeconomic backdrop, the mined commodities performed well almost across the board, supporting the mining sector’s outperformance of broader equity markets. Iron ore was the standout performer, with the iron ore 62% fe. price rising by 22.4% to an 8-year high of $161/tonne. Early in the month, Vale downgraded its 2021 iron ore production guidance to 315-335 million tonnes versus consensus of circa 350 million tonnes, indicating continued tightness in that market. Gold also performed well, its price rising by 7.0% over the month, supported by declines in real interest rates and US dollar weakness.
Within the Company, gearing contributed positively during a rising market. This was partly offset by negative stock selection within the copper sub-sector.
Strategy and Outlook
The rebound in global economic activity remains robust, whilst COVID-19 vaccine developments provide greater certainty around growth. Mined commodity prices have performed well and we expect them to be well supported at these levels. Overall, mined commodity supply has been impacted by COVID-19-related disruptions and inventories are low relative to history for most commodities.
Longer term, we expect commodity supply to be constrained by the underinvestment of recent years and continued capital discipline. Meanwhile, commodity demand should continue to be buoyed by increased global infrastructure spend as governments seek to kick-start their economies. Longer term, we also expect the transition to a lower carbon global economy to support demand for certain mined commodities.
Turning to the miners, balance sheets are in strong shape, whilst earnings and dividends are rising. Meanwhile, we see strong arguments for inflation exceeding current expectations and, historically, the mining sector has performed well on an absolute basis and relative to broader equity markets during periods of rising inflation. We maintain a quality bias in the portfolio with a focus on companies with stronger balance sheets and lower costs.
All data points are in USD terms unless stated otherwise.
20 January 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
