BlackRock World Mining Trust plc (LON:BRWM) has announced its latest portfolio update.
All information is at 28 February 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 | 6.7% | 18.2% | 64.3% | 49.5% | 202.2% |
| Share price | 10.8% | 29.6% | 97.7% | 77.2% | 294.5% |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | 5.6% | 12.6% | 45.4% | 27.8% | 154.6% |
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream
At month end
| Net asset value (including income)1: | 569.14p |
| Net asset value (capital only): | 559.65p |
| 1 Includes net revenue of 9.49p | |
| Share price: | 587.00p |
| Premium to NAV2: | 3.1% |
| Total assets: | £1,136.1m |
| Net yield3: | 3.7% |
| Net gearing: | 14.2% |
| Ordinary shares in issue: | 175,870,814 |
| Ordinary shares held in Treasury: | 17,141,028 |
| Ongoing charges4: | 0.9% |
2 Premium 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 2020.
| Country Analysis | Total Assets (%) | Sector Analysis | Total Assets (%) | |
| Global | 64.6 | Diversified | 40.3 | |
| Australasia | 10.5 | Copper | 20.9 | |
| Latin America | 7.1 | Gold | 19.4 | |
| South Africa | 5.6 | Iron | 4.8 | |
| Canada | 3.8 | Platinum Group Metals | 3.2 | |
| Other Africa | 2.2 | Iron Ore | 2.8 | |
| United Kingdom | 2.0 | Nickel | 2.7 | |
| Indonesia | 1.7 | Steel | 2.2 | |
| United States | 1.5 | Industrial Minerals | 2.1 | |
| Russia | 0.9 | Materials | 1.6 | |
| Monaco | 0.7 | Zinc | 0.3 | |
| Net Current Liabilities | -0.6 | Silver & Diamonds | 0.2 | |
| —– | Aluminium | 0.1 | ||
| 100.0 | Net Current Liabilities | -0.6 | ||
| ===== | —– | |||
| 100.0 | ||||
| ===== |
Ten largest investments
| Company | Total Assets % |
| Vale: | |
| Equity | 6.1 |
| Debenture | 4.4 |
| BHP | 8.7 |
| Anglo American | 7.5 |
| Rio Tinto | 6.9 |
| Freeport-McMoRan | 6.1 |
| Fortescue Metals Group | 4.3 |
| Glencore | 4.3 |
| Newmont Mining | 3.7 |
| OZ Minerals: | |
| Royalty | 1.9 |
| Equity | 1.4 |
| First Quantum Minerals | |
| Equity | 1.8 |
| Royalty | 1.5 |
| Asset Analysis | Total Assets (%) |
| Equity | 94.9 |
| Bonds | 3.5 |
| Preferred Stock | 2.2 |
| Net Current Liabilities | -0.6 |
| —– | |
| 100.0 | |
| ===== |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV returned +6.7% in February, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned +5.6% (Figures in GBP).
February was a strong month for the mining sector in absolute terms and relative to broader equity markets, with the MSCI ACWI TR Index up just 2.3%. Industrial metals performed particularly well, with copper and iron ore (62% fe.) prices up by 16.2% and 10.0% respectively (for reference, this took the copper price to the highest level since August 2011). Industrial metal prices were supported by robust demand from China, as the country came out of its New Year holiday period, and by demand from Europe and the US exceeding expectations.
On the precious metals side, gold underperformed the other mined commodities, falling by 7.0% as rising interest rate expectations and redemptions from physically-backed gold ETFs put pressure on its price.
Turning to the companies, the mining sector entered its full year 2020 financial reporting season and, in general, earnings met or exceeded expectations and signs of cost inflation were limited. Meanwhile, we also saw a number of dividend increases and given the run up in commodity prices, 2021 looks set to be a record year for mining dividends.
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 kick-starting 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.
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
23 March 2021
