BlackRock World Mng Portfolio Update
October 15 2015 - 11:48AM
UK Regulatory
TIDMBRWM
BLACKROCK WORLD MINING TRUST plc
All information is at 30 September 2015 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -9.6% -27.2% -45.8% -61.1% -65.1%
Share price -6.5% -26.3% -48.2% -58.3% -59.9%
Euromoney Global Mining Index -8.9% -25.3% -39.5% -54.0% -61.0%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income*: 222.70p
Net asset value capital only: 214.01p
*Includes net revenue of 8.69p
Share price: 205.75p
Discount to NAV**: 7.6%
Total assets: GBP469.9m
Net yield***: 10.2%
Net gearing: 18.5%
Ordinary shares in issue: 177,287,242
Ordinary shares held in treasury: 15,724,600
Ongoing charges****: 1.4%
** Discount to NAV including income.
*** Based on an interim dividend of 7.00p in respect of the year ending
31 December 2015 and a final dividend of 14.00p in respect of the year ended 31
December 2014.
**** Calculated as a percentage of average net assets and using expenses,
excluding finance costs for the year ended 31 December 2014.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 41.9 Global 48.6
Base Metals 20.4 Latin America 16.3
Gold 14.7 Australasia 9.3
Silver & Diamonds 11.2 Other Africa 8.0
Industrial Minerals 4.5 Canada 7.1
Other 3.9 Emerging Europe 5.5
Energy Minerals 1.9 South Africa 2.2
Aluminium 0.6 China 1.9
Zinc 0.4 Indonesia 0.6
Net current assets 0.5 Net current assets 0.5
----- -----
100.0 100.0
===== =====
Ten Largest Investments
% Total
Company Assets
BHP Billiton 13.9
Rio Tinto 12.7
First Quantum Minerals 6.6
Lundin Mining 5.1
Norilsk Nickel 5.0
Cerro Verde 3.7
Glencore 3.5
Fresnillo 3.5
Avanco Resources 3.3
Iluka Resources 2.7
Commenting on the markets, Evy Hambro and Olivia Markham, representing the
Investment Manager noted:
Performance
Continued concerns over the strength of the Chinese economy led to another
challenging and volatile month for the mining sector. China's September
Manufacturing PMI came in at 47.2, which was down from 47.3 in August and
represented the lowest reading since March 2009. Meanwhile, data for August
showed that fixed-asset investment in China had increased at its slowest
pace in 15 years. These data points worsened sentiment towards the mining
sector which, as measured by the Euromoney Global Mining Index, fell below
the lowest levels seen during the depths of the Global Financial Crisis.
During the month, there continued to be a disconnect between the moves in
mining shares and the moves in underlying commodity prices. For example,
copper equities continued to sell off aggressively, evidenced by the
Euromoney Global Mining Copper Index falling -12.0%, whilst the physical
copper price finished the month up +0.6%.
Diversified miner Glencore dominated the headlines during the month. On
7 September, the company announced plans to reduce its debt by $10bn
through an equity issuance, suspension of its 2015 final dividend and 2016
interim dividend and through a number of other measures. Later in the
month, increased concerns about the company's debt level caused its share
price to fall -29.7% in just one day (28 September). However, over the
remaining two days of the month the market's concerns over immediate
liquidity dissipated and the company's share price bounced back, recovering
almost all of that one day fall - an example of the extreme volatility seen
in mining shares during September. Having reduced our exposure to Glencore
throughout 2015, we added to our position through participating in the
company's placement on 16 September. In our view, the measures announced by
Glencore represent a positive step towards strengthening its balance sheet
and this is necessary in the current commodity price environment.
Gold equities outperformed the broader mining space over the month as they
were less impacted by worsening sentiment towards China and as they
benefited from the gold price holding up better than most mined
commodities. Our overweight positions in a number of high quality, mid-cap
gold producers contributed positively to the Company's relative
performance.
All data points in USD terms
Strategy and Outlook
Good company strategy has been outweighed by weakening commodity demand and
falling commodity prices in the past year. Looking ahead, the outlook for
commodity prices remains subdued, given expectations of further US dollar
strength and a modest demand outlook. This pressure will continue to force
tough decisions and mining companies are likely to remain in austerity
mode. Recent commodity price falls suggest further cuts to analyst earnings
will be required. As the year progresses, we would expect an acceleration
of closures of high-cost capacity in oversupplied markets. This bodes well
for the longer term and limits the industry's ability to respond to the
next upturn in demand which will ultimately see prices go higher.
While the sector continues to face headwinds, it is important to remember
that we are another year further into the underinvestment phase and closer
to the deficit markets that we foresee. We expect an inflection point to be
reached once price (and consequently return) expectations start to recover
as a result of the supply curtailment, which should accelerate with the
current commodity price weakness.
15 October 2015
ENDS
Latest information is available by typing www.brwmplc.co.uk on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal). 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
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October 15, 2015 11:48 ET (15:48 GMT)
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