BlackRock World Mng Portfolio Update

 
TIDMBRWM 
 
BLACKROCK WORLD MINING TRUST plc  (LEI - LNFFPBEUZJBOSR6PW155) 
 
All information is at 31 August 2018 and unaudited. 
 
Performance at month end with net income reinvested 
 
                                        One        Three       One     Three       Five 
 
                                      Month       Months      Year     Years      Years 
 
Net asset value                       -9.8%       -11.1%     -5.4%     88.6%       0.2% 
 
Share price                           -6.7%       -10.4%     -4.1%     90.6%      -0.7% 
 
EMIX Global Mining Index (Gross)      -8.4%        -9.3%     -5.9%     84.2%      14.6% 
 
EMIX Global Mining Index (Net)*       -8.4%        -9.4%     -6.4%     81.6%      11.6% 
 
(Total return) 
 
Sources: BlackRock, EMIX Global Mining Index, Datastream 
 
* The Company's performance benchmark (the EMIX Global Mining Total Return 
Index) may be calculated on either a Gross or a Net return basis.  Net return 
(NR) indices calculate the reinvestment of dividends net of withholding taxes 
using the tax rates applicable to non-resident institutional investors, and 
hence give a lower total return than indices where calculations are on a Gross 
basis.  As the Company is subject to the same withholding tax rates for the 
countries in which it invests, the NR basis is felt to be the most accurate, 
appropriate, consistent and fair comparison for the Company.  Historically the 
benchmark data for the Company has always been stated on a Gross basis, and 
therefore for transparency both sets of benchmark data are provided in the 
table above.  Going forward it is the Board's intention to monitor the 
Company's performance with reference to the NR version of the benchmark. 
 
At month end 
 
Net asset value including income1:                                              403.83p 
 
Net asset value capital only:                                                   396.81p 
 
1 Includes net revenue of 7.02p 
 
Share price:                                                                    357.50p 
 
Discount to NAV2:                                                                 11.5% 
 
Total assets:                                                                   GBP827.5m 
 
Net yield3:                                                                        4.4% 
 
Net gearing:                                                                      16.5% 
 
Ordinary shares in issue:                                                   176,455,242 
 
Ordinary shares held in treasury:                                            16,556,600 
 
Ongoing charges4:                                                                 1.00% 
 
2 Discount to NAV including income. 
3 Based on quarterly interim dividends of 3.00p per share declared on 25 April 
2018 and 16 August 2018 in respect of the year ending 31 December 2018 and a 
quarterly interim dividend of 3.00p per share declared on 10 November 2017 and 
a final dividend of 6.60p per share in respect of the year ended 31 December 
2017. 
4 Calculated as a percentage of average net assets and using expenses, 
excluding finance costs, for the year ended 31 December 2017. 
 
Sector                          % Total      Country Analysis                    % Total 
 
                                 Assets                                           Assets 
 
Diversified                        47.8      Global                                 61.4 
 
Copper                             21.1      Latin America                          11.0 
 
Gold                               13.7      Australasia                            10.7 
 
Silver & Diamonds                   7.7      Canada                                  6.9 
 
Industrial Minerals                 7.1      Other Africa                            6.4 
 
Steel                               1.0      USA                                     1.4 
 
Zinc                                0.9      South Africa                            0.6 
 
Nickel                              0.5      Kazakhstan                              0.5 
 
Aluminium                           0.4      Indonesia                               0.5 
 
Iron Ore                            0.1      Russia                                  0.4 
 
Current Liabilities                -0.3      Peru                                    0.3 
 
                                  -----      Argentina                               0.1 
 
                                  100.0      Mexico                                  0.1 
 
                                  =====      Current Liabilities                    -0.3 
 
                                                                                   ----- 
 
                                                                                   100.0 
 
                                                                                   ===== 
 
Ten Largest Investments 
 
Company                                       % Total Assets 
 
BHP                                                     10.5 
 
Rio Tinto                                                9.3 
 
Vale                                                     9.0 
 
Glencore                                                 8.0 
 
First Quantum Minerals                                   7.0 
 
Teck Resources                                           5.2 
 
Sociedad Minera Cerro Verde                              3.3 
 
Mountain Province Diamonds                               3.0 
 
Lundin Mining                                            2.7 
 
Avanco Resources - royalty                               2.5 
 
Commenting on the markets, Evy Hambro and Olivia Markham, representing the 
Investment Manager noted: 
 
The Company's NAV decreased by 9.8% in August, underperforming its 
benchmark, the EMIX Global Mining Index (net return), which declined by 
8.4%. 
 
At a macroeconomic level, continued noise around trade wars, weakening data 
out of China and Emerging Market volatility, weighed on the commodity 
complex generally. During the month, the US announced sanctions on Turkey, 
with the country experiencing currency weakness and accelerating inflation 
levels. This weakness rippled through global currency markets, spilling 
into other emerging markets, including Argentina and Brazil. 
 
Mined commodity prices were impacted largely on the back of continued US 
dollar strength, reiterating that the inverse relationship between metals 
and the US dollar remains true. However, the commodity price movements 
seemed to be disproportionate given that we are in an environment of very 
few supply additions and physical markets remained reasonably tight. 
Within the base metals, copper, nickel and zinc prices fell by 5.0%, 8.8% 
and 8.0% respectively. For the precious metals, gold, silver and platinum 
prices declined by 2.0%, 6.7% and 4.7% respectively. The fact that gold 
declined during the month points to the movements also being very dollar 
related, as mining and precious metals both selling off does not signal a 
true risk-off trade. (Commodity price returns in USD) 
 
Within the Company's portfolio, our higher beta names underperformed in a 
downmarket, with our position in First Quantum being amongst the largest 
detractors from relative performance in August. In addition, despite Iluka 
Resources reporting a 47% increase in Zircon pricing compared to the first 
half of 2017, the company announced unexpected cost increases at its rutile 
project in Sierra Leone. As a result, the share price came under pressure, 
with our position in the company detracting from relative performance. 
 
Strategy and Outlook 
 
After two strong years, investors that have not been exposed to mining may 
now be questioning if they have missed the opportunity. We are, however, 
still a long way below the peak in 2011 and the sector continues to trade 
at a valuation discount to broader equity markets. Meanwhile, free cash 
flow in the sector is close to the highest it has ever been. That said, we 
believe most mined commodities look reasonably fairly priced and so our 
base case is that they remain range-bound at current levels. Crucially, 
however, mining equities are still pricing in commodity prices well below 
current spot prices and, as such, we are constructive on the shares but 
fairly neutral on the commodities themselves. Many still distrust the 
miners, expecting them to make the same mistakes of the past in terms of 
poor capital discipline. Our view though is that the pain of the recent 
down-cycle is still too fresh in the minds of management teams for this to 
become a widespread issue in the near-term. We have begun to see moderate 
increases in sustaining capex announced but we believe for the most part 
these have been necessary increases rather than indicative of a widespread 
return to poor capital discipline. 
 
All data points are in GBP terms unless stated otherwise. 
 
19 September 2018 
 
Latest information is available by typing www.blackrock.co.uk/brwm on the 
internet. Neither the contents of the Manager's website nor the contents of 
any website accessible from hyperlinks on the Manager's website (or any 
other website) is incorporated into, or forms part of, this announcement. 
 
 
 
END 
 

(END) Dow Jones Newswires

September 19, 2018 11:23 ET (15:23 GMT)