BlackRock World Mining Trust Plc - Portfolio Update
March 14 2018 - 7:03AM
PR Newswire (US)
BLACKROCK WORLD
MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155) |
|
All information is at
28 February 2018 and unaudited. |
|
|
|
Performance at month
end with net income reinvested |
|
|
|
|
One |
Three |
One |
Three |
Five |
|
|
Month |
Months |
Year |
Years |
Years |
|
Net asset value |
-1.3% |
8.1% |
9.6% |
43.8% |
-14.8% |
|
Share price |
-0.8% |
6.1% |
13.7% |
51.3% |
-9.4% |
|
Euromoney Global Mining
Index |
-1.8% |
9.1% |
9.1% |
36.8% |
-2.7% |
|
(Total return) |
|
|
|
|
|
|
Sources: BlackRock,
Euromoney Global Mining Index, Datastream |
|
|
|
At month end |
|
|
|
|
|
Net asset value
including income1: |
442.50p |
|
Net asset value capital
only: |
435.12p |
|
1 Includes
net revenue of 7.38p |
|
|
|
|
|
Share price: |
394.50p |
|
Discount to
NAV2: |
10.8% |
|
Total assets: |
£902.2m |
|
Net
yield3: |
4.0% |
|
Net gearing: |
15.9% |
|
|
|
|
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 4 May 2017, 10 August 2017 and 10 November 2017
and a final quarterly 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 |
50.4 |
|
Global |
64.3 |
Copper |
20.6 |
|
Latin America |
11.5 |
Gold |
13.8 |
|
Australasia |
10.2 |
Silver & Diamonds |
6.9 |
|
Other Africa |
6.2 |
Industrial Minerals |
6.7 |
|
Canada |
5.1 |
Zinc |
1.5 |
|
USA |
1.0 |
Aluminium |
0.3 |
|
India |
0.6 |
Iron Ore |
0.1 |
|
South Africa |
0.6 |
Net current liabilities |
-0.3 |
|
Russia |
0.4 |
|
----- |
|
Kazakhstan |
0.4 |
|
100.0 |
|
Net current
liabilities |
-0.3 |
|
===== |
|
|
----- |
|
|
|
|
100.0 |
|
|
|
|
===== |
|
|
|
|
|
Ten Largest Investments |
|
|
|
|
Company |
%
Total
Assets |
|
Rio Tinto |
10.7 |
|
Glencore |
8.6 |
|
BHP Billiton |
8.4 |
|
Vale |
8.0 |
|
First Quantum
Minerals |
7.8 |
|
Teck Resources |
6.1 |
|
Sociedad Minera Cerro
Verde |
3.7 |
|
Newmont Mining |
2.9 |
|
South32 |
2.6 |
|
Lundin Mining |
2.5 |
|
Commenting on the markets, Evy
Hambro and Olivia Markham, representing the Investment Manager
noted: |
|
Performance |
|
The Company’s NAV decreased by 1.3%
in February, outperforming its benchmark, the Euromoney Global
Mining Index, which decreased by 1.8%. |
|
The mining sector performed strongly
from December to mid-January, but suffered some weakness during
February. Wider market volatility contributed to this weakness
following expectations that the US Federal Reserve may increase
interest rates further given positive economic data in the form of
jobs and wage growth. US CPI inflation data was also stronger than
expected pushing yields on US government bonds higher. |
|
Mining companies have enjoyed a
strong reporting season where we have been encouraged to see
management teams consistently concentrate on balance sheet repair,
with little new capital expenditure announced, and returning cash
to shareholders through dividends and buybacks being a key focus.
Whilst companies have noted modest cost inflation, partly linked to
the stronger oil prices, profit margins remain strong with
commodity prices also increasing. The US announced a review of the
impact from steel and aluminium imports with recommendations for
new import tariffs to be implemented of 25% on steel and 10% on
aluminium. The US imports approximately 30% of its steel
consumption and 90% of its aluminium consumption. We see relatively
limited impact on iron ore as the majority of US steel production
uses recycled steel. In the base metals space, zinc and copper
prices fell by 3.3% and 2.6% respectively, whilst nickel rose by
1.4%. Gold and silver prices fell 1.7% and 4.6% respectively whilst
in bulk commodities the iron ore and coking coal prices rose
10%. |
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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
significant valuation discount to broader equity markets.
Meanwhile, the miners are trading on very attractive cash flow
multiples with Glencore, BHP Billiton and Rio Tinto all currently
trading at forward free cash flow yields of around 10% for example.
For the mined commodities, in most cases, we believe they look
reasonably fairly priced and so our base case is that they remain
relatively range-bound at current levels which sees healthy
profitability for the sector. 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 neutral
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. |
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All data points are in US dollar
terms unless stated otherwise. |
|
14 March 2018 |
|
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. |
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