Blackrock World Mining Trust NAV returned +6.7% in February, outperforming its reference index

BlackRock

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 value6.7%18.2%64.3%49.5%202.2%
Share price10.8%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 AnalysisTotal
Assets (%)
Sector AnalysisTotal
Assets (%)
Global64.6Diversified40.3
Australasia10.5Copper20.9
Latin America7.1Gold19.4
South Africa5.6Iron4.8
Canada3.8Platinum Group Metals3.2
Other Africa2.2Iron Ore2.8
United Kingdom2.0Nickel2.7
Indonesia1.7Steel2.2
United States1.5Industrial Minerals2.1
Russia0.9Materials1.6
Monaco0.7Zinc0.3
Net Current Liabilities-0.6Silver & Diamonds0.2
—–Aluminium0.1
100.0Net Current Liabilities-0.6
=====—–
100.0
=====

Ten largest investments

CompanyTotal Assets %
Vale:
    Equity6.1
    Debenture4.4
BHP8.7
Anglo American7.5
Rio Tinto6.9
Freeport-McMoRan6.1
Fortescue Metals Group4.3
Glencore4.3
Newmont Mining3.7
OZ Minerals:
    Royalty1.9
    Equity1.4
First Quantum Minerals 
    Equity1.8
    Royalty1.5
Asset AnalysisTotal Assets (%)
Equity94.9
Bonds3.5
Preferred Stock2.2
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

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BlackRock World Mining Trust plc

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