Blackrock World Mining Trust PLC — Net Asset Value 2014

Dec 11, 2014

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BLACKROCK WORLD MINING TRUST PLC - Enhanced Monthly Announcement including holdings update

PR Newswire

London, December 11

BLACKROCK WORLD MINING TRUST plcAll information is at 30 November 2014 and unaudited.Performance at month end with net income reinvested One Three One Three Five Month Months Year Years YearsNet asset value -1.0% -22.9% -19.9% -45.2% -33.9%Share price -0.3% -26.3% -19.5% -38.2% -25.3%Euromoney Global Mining Index -0.5% -15.1% -8.0% -36.5% -30.6%(Total return)Sources: BlackRock, Euromoney Global Mining Index, DatastreamAt month endNet asset value including income*: 378.35pNet asset value capital only: 365.60p*Includes net revenue of 12.75pShare price: 348.00pDiscount to NAV**: 8.0%Total assets: £776.5mNet yield***: 6.0%Net gearing: 12.0%Ordinary shares in issue: 177,287,242Ordinary shares held in treasury: 15,724,600Ongoing charges****: 1.4%** Discount to NAV including income.*** Based on final dividend of 14.00p per share in respect of the year ended 31December 2013 and interim dividend of 7.00p per share in respect of the yearending 31 December 2014.**** Calculated as a percentage of average net assets and using expenses,excluding finance costs for the year ended 31 December 2013.Sector % Total Country Analysis % Total Assets AssetsDiversified 39.3 Global 52.6Base Metals 25.8 Latin America 12.0Gold 10.8 Other Africa 7.9Silver & Diamonds 7.6 Australasia 7.0Industrial Minerals 5.2 Canada 4.7Other 4.0 South Africa 4.3Energy Minerals 2.8 Emerging Europe 3.8Aluminium 0.7 China 2.8Platinum 0.4 USA 1.4Zinc 0.2 Indonesia 0.3Net current assets 3.2 Net current assets 3.2 ----- ----- 100.0 100.0 ===== =====Ten Largest Investments % Total AssetsCompanyRio Tinto 9.6First Quantum Minerals 8.9BHP Billiton 8.5GlencoreXstrata 8.3Freeport-McMoRan 5.5Lundin Mining 4.1MMC Norilsk Nickel 3.7Sociedad Minera Cerro Verde 3.3Vale 3.2China Shenhua Energy 2.8Commenting on the markets and the portfolio, Evy Hambro and Catherine Raw,representing the Investment Manager noted:PerformanceSoft Chinese economic data weighed on the sector during the month. Money supplyand credit growth in October fell short of expectations, as did the HSBC flashPMI which fell to 50.0 from 50.4 for the previous month. The recent lacklustredata from the world's second largest economy prompted a policy response: thePeople's Bank of China cut their deposit rate by 40bps to 5.6%. It was notenough, however, to push the sector into positive territory for the month.Mining commodities also had a challenging month. Copper, zinc and aluminiumdeclined by -5.2%, -4.4% and -1.3% respectively. Nickel was the bright spotamong the base metals, appreciating 3.2%. Iron ore continued to be the laggard,declining -11% to a fraction below $70/tonne (commodities price source: ThomsonReuters Datastream).The medium term outlook for copper attracted some positive attention, however,with the announcement from BHP Billiton (8.5% of total assets) that they areexpecting significant ore grade decline at their Escondida asset in the comingyears. Escondida is the world's largest copper mine and is expected to produce~880kt of copper concentrate in 2014. Following the announcement, the market isadjusting its expectations for 2015 and 2016 production meaningfully lower.Rio Tinto (9.6% of total assets) held their Capital Markets Day and echoed thecommitments to increasing shareholder returns that BHP Billiton made at theirequivalent in October. Rio will be cutting capex further (below $8.5bn from$9bn estimated) and has deferred a $1bn investment in an iron ore project,paving the way for higher cash returns.Norilsk Nickel, (3.7% of total assets), confirmed the payment of their interimspecial dividend. This equates to a distribution of approximately $2.78bnbased on the Rouble exchange rate as of 31 October 2014. This unexpecteddistribution was welcomed by the market.Banro Corporation announced on 4 November 2014 that they had secured $41m offinancing through the forward sale of 40,500 ounces to Gold Holding Ltd.Subsequent uncertainty over the timing of the closure of this transaction,coupled with a balance sheet update provided in their Q3 results released on 11November, meant as at the end November 2014 the Company held the Banrogold-linked preference shares at a 30% discount to the implied gold price usedin the valuation of these preference shares.Post month end, the Board has noted the lack of recent trading activity andongoing financing uncertainty in Banro Corp 10% Note (March 2017), in which theCompany is invested. The Board has concluded, based on a recommendation fromBlackRock's pricing committee, that it is appropriate to value the Company'sinvestment in the Banro Corp 10% Note at a 25% discount to its last tradedprice (on 21 November 2014). This gives a valuation for the Company'sinvestment in the Banro Corp 10% Note of £6.45m (previous valuation £9.09m), animpact to the NAV of approximately 1.49 pence. As at 10 December 2014, thetotal exposure to Banro Corporation sits at 2.88% of the NAV, of which thecorporate bond represents 1.03% and the gold-linked preference share represents1.85% of total assets.As referred to above, iron ore prices continued to decline over the month whichnegatively impacted the Company's exposure to pure iron ore producers. AfricanMinerals (0.1% of total assets via African Mineral's corporate bond) announcedthat it was in dispute with its partner, Shandong Iron and Steel Group,regarding the release of previously agreed funding. African Minerals' shareswere suspended on 20th November owing to this financing uncertainty and on 1stDecember the company announced that they had put the Tonkolili mine on care andmaintenance to preserve cash.Strategy/OutlookDecember to date has continued to be a challenging market environment for themining sector, weighed down by further weakness in metals prices.The mining sector has significantly lagged the general equity market in recentyears. However, a number of the downside risks for this sector have reduced(albeit not disappeared). The industry has made good progress in refocusing itsstrategy: operating costs have been aggressively targeted and investment inprojects reassessed.Recent commodity price moves are likely to abate some of the expectedimprovement in free cash flow within the sector and prompt earnings downgradesin the near term. However, many commodities are trading close to or below theirmarginal cost of production, implying that price downside should be limited inthe absence of a collapse in demand.All data in USD terms unless otherwise stated.11 December 2014ENDSLatest information is available by typing www.brwmplc.co.uk on the internet,"BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICVterminal). Neither the contents of the Manager's website nor the contents ofany website accessible from hyperlinks on the Manager's website (or any otherwebsite) is incorporated into, or forms part of, this announcement.