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Blackrock World Mining Trust NAV returned 8.3%, outperforming its reference index

BlackRock World Mining Trust plc (LON:BRWM) has announced its portfolio update.

All information is at 30 November 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 MonthThree MonthsOne YearThree YearsFive Years
Net asset value8.3%5.7%26.7%36.8%186.9%
Share price14.3%13.1%39.7%45.2%212.6%
MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)*6.8%4.0%17.2%23.1%156.5%

* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream

At month end

Net asset value (including income)1:481.64p
Net asset value (capital only):474.95p
1 Includes net revenue of 6.69p
Share price:453.00p
Discount to NAV2:6.0%
Total assets:925.8m
Net yield3:4.9%
Net gearing:13.6%
Ordinary shares in issue:173,550,814
Ordinary shares held in Treasury:19,461,028
Ongoing charges4:0.9%

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 ending 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 AnalysisTotal
Assets (%)
Sector AnalysisTotal
Assets (%)
Global66.6Diversified35.6
Australasia9.5Gold28.5
Latin America7.8Copper21.2
South Africa4.8Iron2.9
Canada4.1Platinum Group Metals2.9
United Kingdom2.4Nickel2.5
Other Africa1.6Steel2.3
United States1.5Industrial Minerals1.8
Indonesia1.4Iron Ore1.6
Russia1.2Materials1.0
Net Current Liabilities-0.9Silver & Diamonds0.3
—–Zinc0.3
Net Current Liabilities-0.9
100.0—–
=====100.0
=====
Ten largest investments
CompanyTotal Assets %
Vale:
    Equity6.7
    Debenture3.9
Rio Tinto7.3
Anglo American7.3
BHP7.2
Freeport-McMoRan Copper & Gold5.3
Newmont Mining5.0
Barrick Gold4.8
OZ Minerals:
    Royalty1.9
    Equity1.8
First Quantum Minerals:
    Equity1.8
    Debt1.9
Wheaton Precious Metals3.5
Asset AnalysisTotal Assets (%)
Equity94.8
Bonds3.9
Preferred Stock2.3
Option-0.1
Net Current Liabilities-0.9
—–
100.0
=====

Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:

Performance

The Company’s NAV returned 8.3% in November, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned 6.8% (Figures in GBP).

Despite renewed lockdowns across Europe and in parts of Asia, global equity markets performed strongly during November, following the announcement of progress in a COVID-19 vaccine. This positive sentiment led to one of the strongest months on record for equities. For reference the MSCI AC World Index increased by 12.2%.  Economic data also evidenced continued strength in global activity with, for example, global manufacturing PMIs at 53.7, the highest level since early 2018.

Most mined commodities performed well with copper and iron ore (62% fe.) prices rising by 12.9% and 11.0% respectively.  For reference, copper prices are now at the highest level since February 2013.  Gold bucked the trend, however, its price falling by 5.7% as improved investor sentiment dampened demand for ‘safe-haven’ assets.

Within the Company, outperformance was mainly driven by sub-sector allocation.  Whilst our underweight to the steel sub-sector detracted, this was more than offset by a positive impact from our overweight to the copper and diversified sub-sectors.  At the stock-level, our position in Vale was the top performer as the stock benefited from investor rotation into Brazilian-listed stocks and iron ore price strength.

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 also 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.

21 December 2020

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