BLACKROCK WORLD MINING TRUST plc
All information is at 31 July 2009 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value* (undiluted) 14.7% 19.7% -31.1% 10.3% 161.7%
Net asset value* (diluted) 14.7% 19.7% -30.4% 11.6% 155.2%
Share price* 11.9% 14.7% -28.6% 12.4% 143.9%
HSBC Global Mining Index 12.8% 19.9% -16.5% 33.3% 181.7%
Sources: BlackRock, HSBC Global Mining Index, Datastream
* Net asset value and share price performance includes the warrant reinvestment,
assuming the 2004 and 2006 bonus warrant entitlement per share was sold and the
proceeds reinvested on the first day of trading.
At month end
Net asset value Including Income Capital only
Undiluted/Diluted: 502.09p# 498.73p
# Includes net revenue of 3.36p
Share price: 430.00p
Discount to NAV**: 13.78%
Total assets***: £892.52m
Net yield: 1.28%
Gearing: Nil
Ordinary shares in issue##: 177,762,242
## Excluding 15,249,600 shares held in treasury.
** Discount to NAV based on capital only.
*** Includes current year revenue.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 44.3 Latin America 29.2
Base Metals 20.3 Global 20.1
Gold 13.1 South Africa 10.1
Platinum 7.7 Australasia 9.5
Silver/Diamonds 6.6 Other Africa 7.9
Industrial Minerals 6.4 Canada 7.0
Other 1.1 Indonesia 6.1
Net current assets 0.5 USA 4.1
India 3.6
Europe 1.0
Emerging Asia 0.9
Net current assets 0.5
----- -----
100.0 100.0
===== =====
Ten Largest Equity Investments (in alphabetical order)
Company
BHP Billiton
First Quantum Minerals
Fresnillo
Freeport McMoRan
Impala Platinum
Minas Buenaventura
Newcrest Mining
Rio Tinto
Teck Resources
Vale
Commenting on the markets, Evy Hambro, representing the Investment Manager
noted:
Performance
The month was a strong period for the mining market with most metals posting
sizeable gains. The main driver of this performance was increasingly positive
sentiment towards the sector as a result of better-than-expected second quarter
company earnings and above expectation US employment numbers. Claims that US
GDP showed signs of stabilisation in the second quarter and that the housing
market was recovering helped the view that the pace of US demand decline was
meaningfully slowing and that it may emerge from a recession before the end of
the year. US steel utilisation rates also showed signs of improvement, moving
up into the mid-fifties (%) range, having been in the mid-thirties (%) range at
their lows.
Chinese imports of copper, iron ore and coking coal all continued at high
levels during the month, pushing the spot prices of iron ore and coking coal to
levels significantly above benchmark prices (these metals are traded on annual
contracts in the most part). It was also worth noting that Chinese auto sales
were up around 63% in July (y-o-y) and US car sales came in at an annualised
rate of around 11.2mn for the month, which was above expectations. Indeed,
Goldman Sachs upgraded their estimate of 2009 Chinese GDP to 9.4% (from 8.3%),
a bullish estimate for the mining sector.
During the month, we visited some copper, platinum, uranium and coal assets in
Southern Africa. The general tone was positive but afforded us some interesting
insights. Companies seem willing to undertake capital projects again but they
are often in a small form to that which they had originally planned. Financing
concerns are easing but it remains very hard to arrange financing unless the
company has other operating assets or have a world class project. Companies
also continue to struggle to deliver projects on time and on budget.
Looking to the portfolio, our positions in companies such as First Quantum and
Teck Resources were amongst the strongest contributors to performance over the
course of the month, as they benefited from the rising copper and coking coal
prices. Our holdings in gold miners were amongst the detractors to relative
performance as the gold price was generally flat over the course of the month
whilst other metals rallied on the back of improving sentiment.
Portfolio Activity
We continue to exercise caution in the portfolio as we are wary of a pull back
following the recent rally. We have retained our exposure to the major
diversified mining companies and bulk commodity producers which we believe will
be less affected by any potential change in market sentiment. We slightly
increased our exposure to selected copper producers.
Strategy/Outlook
In recent weeks, we have seen a powerful rally in the mining market as
sentiment has turned around; however, we remain cautious whilst underlying
fundamentals remain uncertain. We may also see some weakness in commodity
markets as we move through the northern hemisphere summer, typically a weak
period for these markets. We would view this as a buying opportunity going into
what we expect to be a strong fourth quarter but for the moment we are building
our positions in the stronger diversified miners over and above the more
leveraged pure plays.
The longer term picture remains broadly the same. Our expectation is China will
have the most influence over the demand picture for commodities and given its
commodity-intensive stimulus package and the broader industrialisation story we
expect China to lead the way. With respect to supply, the premature closure of
ageing mines we have seen over the last six months, combined with the cutting
of expenditure on future growth projects means that when demand does begin to
grow, supply will be unable to respond fast enough and thus we believe the
seeds of the next commodities cycle have been sown.
Latest information is available by typing www.blackrock.co.uk/its on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV
terminal).
17 August 2009