BlackRock World Mining Trust plc (LON:BRWM) have provided a portfolio update.
All information is at 31 March 2020 and unaudited.
The information contained in this release was correct as at 31 March 2020. Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at
www.londonstockexchange.com/exchange/news/market-news/market-news-home.htm
Performance at month end with net income reinvested
| One | Three | One | Three | Five | ||
| Month | Months | Year | Years | Years | ||
| Net asset value | -13.6% | -26.6% | -22.4% | -12.6% | 19.4% | |
| Share price | -11.7% | -26.4% | -20.5% | -7.6% | 24.4% | |
| MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* | -13.4% | -26.1% | -22.5% | -15.1% | 13.9% | |
| EMIX Global Mining Index (Net)* | -11.8% | -24.4% | -18.0% | -2.5% | 27.7% |
*(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: | 307.48p | |
| Net asset value capital only: | 301.62p | |
| 1 Includes net revenue of 5.86p | ||
| Share price: | 270.00p | |
| Discount to NAV2: | 12.2% | |
| Total assets: | £630.7m | |
| Net yield3: | 8.2% | |
| Net gearing: | 12.6% | |
| 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 three quarterly interim dividends of 4.00p per share declared on 20 August 2019, 2 May 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 | 39.0 | Global | 64.9 | ||
| Gold | 26.2 | Latin America | 8.2 | ||
| Copper | 15.5 | Australasia | 6.4 | ||
| Silver & Diamonds | 4.7 | Canada | 5.1 | ||
| Nickel | 3.6 | United Kingdom | 4.7 | ||
| Industrial Minerals | 3.5 | South Africa | 2.1 | ||
| Platinum Group Metals | 1.5 | Russia | 1.4 | ||
| Iron Ore | 1.1 | Other Africa | 1.0 | ||
| Aluminium | 0.1 | Indonesia | 0.8 | ||
| Zinc | 0.1 | USA | 0.6 | ||
| Current assets | 4.7 | Argentina | 0.1 | ||
| Current assets | 4.7 | ||||
| —– | —– | ||||
| 100.0 | 100.0 | ||||
| ===== | ===== |
The Largest Investments
| Company Assets | % Total |
| Rio Tinto | 11.6 |
| BHP | 8.6 |
| Vale: | |
| Equity | 4.6 |
| Debenture | 3.6 |
| Anglo American | 6.8 |
| Newmont Mining | 6.5 |
| Barrick Gold | 6.2 |
| OZ Minerals Brazil: | |
| Royalty | 3 |
| Equity | 1.1 |
| Wheaton Precious Metals | 3.8 |
| First Quantum Minerals | 3.3 |
| Franco-Nevada | 3.2 |
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV decreased by 13.6% in March, marginally underperforming its reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net return), which returned -13.4%. (Figures in GBP)
Global equity markets continued to fall during the month, as a number of countries entered lockdown in an effort to contain the spread of the coronavirus. For reference, the MSCI World Index fell 13.2%. The shutdowns associated with the coronavirus will have a material negative impact on demand and supply of mined commodities. However, mining companies are benefiting from currency moves and the fall in oil prices, which has been beneficial for cost savings. In addition, going into this crisis, the mining sector was one of the least levered sectors, therefore the outlook for dividends relative to other sectors remains relatively bright.
Mined commodity prices continued to come under pressure, with zinc, aluminium and copper returning -5.7%, -11.0% and -12.1% respectively. Iron ore posted moderate negative returns, with its price falling by 0.6% in March. Elsewhere, the gold price was up by 1.6% on the month, reaffirming its safe haven status in times of market volatility. Similar to last month, gold equities lagged the gold price, as it seems that gold equities have been sold given their strong gains over 2019 to cover losses elsewhere. However, whilst liquidity and other factors are impacting markets in unusual ways, gold companies are well placed to weather this period and are making strong profits at current gold prices. Therefore, we see this dislocation between the gold equities and gold price as temporary and not related to fundamentals.
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. We expect any economic stimulus measures from China to disproportionately benefit the mined commodity sector.
The mining sector is generating close to record free cash flow, whilst balance sheets are in strong shape and companies remain focused on capital discipline. Our base case remains that we have positive global economic growth for the next 12-18 months, albeit at a slower rate than was expected this time last year. Barring an economic recession, we expect the mining sector to re-rate into a post coronavirus economic recovery, as the miners continue to generate robust free cash flow and return capital to shareholders through dividends and buybacks.
We expect most mined commodity prices to be stable to rising through 2020. 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.
BlackRock World Mining Trust plc aims to provide a diversified investment in mining and metal assets worldwide, actively managed with the objective of maximising total returns. While the policy is to invest principally in quoted securities, the Company’s investment policy includes investing in royalties derived from the production of metals and minerals as well as physical metals. Up to 10% of gross assets may be held in physical metals and up to 20% may be invested in unquoted investments.
