BLACKROCK WORLD MINING TRUST plc
All information is at 31 October 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) -0.7% 14.9% 85.6% 19.3% 163.3%
Net asset value* (diluted) -0.7% 14.9% 84.9% 21.8% 162.5%
Share price* -3.2% 11.4% 92.9% 14.2% 158.3%
HSBC Global Mining Index -1.6% 10.9% 80.1% 43.4% 179.9%
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: 576.82p# 571.94p
# Includes net revenue of 4.88p
Share price: 479.00p
Discount to NAV**: 16.2%
Total assets***: £1,025.37m
Net yield: 1.15%
Gearing: Nil
Ordinary shares in issue: 177,762,242
Ordinary shares held in Treasury: 15,249,600
** Discount to NAV based on capital only.
*** Includes current year revenue.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 44.5 Latin America 31.2
Base Metals 19.5 Global 18.4
Gold 14.0 Australasia 10.5
Silver/Diamonds 6.9 South Africa 9.4
Platinum 6.7 Other Africa 7.5
Industrial Minerals 5.7 Canada 6.9
Other 0.9 Indonesia 4.3
Net current assets 1.8 USA 4.0
India 3.7
Emerging Asia 1.3
Europe 1.0
Net current assets 1.8
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100.0 100.0
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Ten Largest Equity Investments (in alphabetical order)
Company
BHP Billiton
First Quantum Minerals
Freeport McMoRan
Fresnillo
Impala Platinum
Minas Buenaventura
Newcrest Mining
Rio Tinto
Teck Resources
Vale
Commenting on the markets, Evy Hambro, representing the Investment Manager
noted:
Performance
Metals and minerals rallied throughout October on stronger Chinese and US
economic data, record iron ore imports into China and as investors looked to
hedge inflation risks. Against this background, copper gained 7.1% and
aluminium gained 2.8% (LME). Precious metals in particular continued to feel
support from financial interest and gold finished 4.4% up as the prospect of
inflation continued to concern investors.
US GDP numbers for the third quarter showed a 3.5% expansion of the economy,
beating expectations of 3.3%. However, investors remain concerned around the
weak housing and consumer numbers, which were reflective of fears that
persistently high US unemployment has hurt consumer sentiment. Chinese third
quarter GDP was also released during the month and came in at 8.9%. Despite
concerns around the accuracy of this number, there were plenty of positive data
points for mining investors, with large rises in spending on material heavy
projects reported. Total fixed asset investment was up 33.4% (with rail up 87%
and roads up 51%), in part driven by the $586 bn stimulus package that has been
enacted in the country.
Copper was also given a boost during the month as BHP Billiton announced that
Olympic Dam, a copper mine in Australia, is expected to continue running at 25
per cent. of ore-haulage capacity (following an incident involving a runaway
skip in its Clark shaft) until full output resumes in the first quarter of next
year. The incident is expected to result in the loss of around 70,000 tonnes of
copper and 1,500 tonnes of uranium production.
Gold continued to dominate headlines during the month, pushing through $1,000/
oz and ending the month at $1,046/ oz as investors continued to fret about the
US Dollar and inflation. In early November, gold pushed above $1,100/ oz
following the announcement that the IMF had sold 200 tonnes of gold to the
Reserve Bank of India. The country now becomes the tenth largest holder of the
metal and the fourth largest holder in the developing world (behind China,
Russia and Taiwan). Even with this purchase, India's gold represents less than
10% of its total reserves. Earlier this year the IMF had earmarked sales of 403
tonnes of gold, which were to be part of the CBGA (Central Bank Gold
Agreement). The announcement was a surprise to the market, which had postulated
that China could be a potential buyer, and fuelled speculation that other
central banks with large US Dollar exposure may diversify into hard assets such
as gold. Indeed, Sri Lanka also subsequently admitted to making gold purchases
in the past six months.
Company results for the third quarter were announced during the month and were
generally more positive than previous quarters, with most companies reporting a
more optimistic outlook. For example Rio Tinto, the world's second largest
miner, announced a 12% increase in iron ore output over the third quarter,
increased its forecast output of iron ore for the year to between 210 million
and 215 million tonnes (or 5% to 7.5%) and stated that although they remain
cautious, they are seeing signs of a recovery in their key markets. However,
Newcrest Mining (Australia's largest gold-copper producer) reported
disappointing third quarter production numbers, with production down 5%
quarter-on-quarter, largely due to a slower ramp-up at Hidden Valley.
Nevertheless, guidance for the full-year remained unchanged and the longer term
outlook for the company is very strong. Newcrest has exploration success,
development expertise and cash margins that are amongst the best in the gold
industry.
There continues to be significant acquisition activity in the sector as cash
rich companies seek out growth opportunities at attractive pricing levels.
During October, BHP Billiton Ltd launched a $189 million takeover bid for
prospector United Minerals Corp. This company is a strong target for BHP as it
is located in Pilbara, West Australia which is rich in iron ore deposits and
close to existing BHP assets and a rail line. In the precious metals sector,
Barrick Gold announced that it has purchased 70% of the El Morro project in
Chile from Xstrata. El Morro is a large copper-gold deposit in the high Andes
and is relatively close (70km) to one of Barrick's existing operations.
Elsewhere, Randgold Resources reported that it has concluded the acquisition of
Moto Goldmines. Randgold now has a strong growth profile going forward, with
four new mines starting up.
Strategy/Outlook
The mining sector is facing a significantly better outlook than it was at the
start of 2009. Commodity prices have rallied as the financial crisis has eased
and, although financial distress in the sector has diminished, there remain
many companies that have projects that are unlikely to be developed in the
short term, if ever. Across the industry, the appetite for taking on
development risk is quite a long way from returning and those projects that are
being developed have had their scale revised markedly lower to reduce the
financial and development risk. The shutdown of existing capacity over the last
12 months and the cancellation and scaling back of new supply means many
commodities are constrained on the supply side. When we see demand recover, as
we are possibly already starting to see the early signs of, the supply side's
recent lack of investment should provide support for commodity prices.
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).
12 November 2009