Blackrock World Mining Trust PLC — Net Asset Value 2015

Feb 16, 2015

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BLACKROCK WORLD MINING TRUST PLC - Portfolio Update

PR Newswire

London, February 16

BLACKROCK WORLD MINING TRUST plcAll information is at 31 January 2015 and unaudited.Performance at month end with net income reinvested One Three One Three Five Month Months Year Years YearsNet asset value -3.0% -10.2% -26.7% -54.3% -37.3%Share price -3.1% -13.8% -33.1% -52.2% -33.1%Euromoney Global Mining Index 0.0% -5.7% -11.5% -42.6% -29.9%(Total return)Sources: BlackRock, Euromoney Global Mining Index, DatastreamAt month endNet asset value including income*: 342.96pNet asset value capital only: 328.30p*Includes net revenue of 14.66pShare price: 300.80pDiscount to NAV**: 12.3%Total assets: £716.8mNet yield***: 7.0%Net gearing: 10.0%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 ended31 December 2013 and interim dividend of 7.00p per share in respect of theyear ended 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 39.9 Global 48.8Base Metals 19.5 Latin America 12.4Gold 13.0 Other Africa 7.8Silver & Diamonds 8.2 Australasia 6.9Other 3.9 South Africa 4.4Industrial Minerals 3.7 Canada 4.3Energy Minerals 3.1 China 3.1Aluminium 1.3 Emerging Europe 3.0Platinum 0.4 USA 2.2Zinc 0.3 Indonesia 0.4Net current assets 6.7 Net current assets 6.7 ----- ----- 100.0 100.0 ===== =====Ten Largest Investments % Total AssetsCompanyBHP Billiton 10.9Rio Tinto 10.2First Quantum Minerals 7.0Glencore 6.8Lundin Mining 3.9Fresnillo 3.4Sociedad Minera Cerro Verde 3.3China Shenhua Energy 3.1MMC Norilsk Nickel 2.8Vale 2.8Commenting on the markets, Evy Hambro, representing the Investment Managernoted:PerformanceThe mining sector continued to trend lower over the month, with a 13.0% fall inthe copper price leading the sector's weakness. Having been relativelyresilient over the fourth quarter of 2014, on 14 January the copper priceplunged by more than 8.0% during Asian trading hours. A combination of theWorld Bank cutting its 2015 global economic growth estimate, heightened concernaround defaults of commodity-backed loans and heavy selling pressure in thefutures market led to the copper price sliding to its lowest level since June2009. In our view, the move was driven more by speculation than underlyingfundamentals. The other base metals were relatively flat over the period withaluminium and nickel prices rising by 1.6% and 0.2% respectively and the zincprice declining by 2.2%.Soft economic data reports continued to emerge from China, including ChineseManufacturing PMI falling below 50 for the first time since September 2012.This contributed to further weakness among the bulk commodities, with iron ore(62% Fe) down by 13.3% over the month. The market is now waiting until afterthe Chinese New Year for a better understanding of the strength of commoditydemand in 2015.In contrast, the precious metals were strong performers, with gold and silverprices up by 7.3% and 9.3% respectively. Gold saw increased demand as a'safe-haven' asset on the back of European economic weakness, Greek electionconcerns and volatility in global equity markets. The Swiss National Banksurprised the market by reducing interest rates and removing the euro cap onthe Swiss franc. This development sent shockwaves through currency markets andinvestors sought refuge in gold as an alternative currency.Over the course of the month, a number of companies released Q4 productionresults ahead of their financial results. In general, operational deliverycontinues to be strong, illustrating the increased focus of management onproductivity and efficiency. In addition, there were indications of potentialfurther capital expenditure reductions from the sector. A good example of thiswas BHP Billiton, where the market had become increasingly concerned over thesustainability of their dividend. These concerns centred around the impact ofthe decline in the oil price on the cash flow generation of their US onshoreoil and gas business. The company announced a 40% reduction in their rig countimplying lower ongoing capital expenditure versus previous guidance. With therelease of the financial results during February and March, we expect to getmore clarity from mining companies on future spending.The Company has significant exposure to copper producers; specifically tocompanies that are growing high quality production into what we believe will bea stronger copper price environment from 2016 onwards. These stocks sawsignificant share price falls as a result of the downward move in the copperprice. On the other hand, the strong US dollar gold price performance wasgenerally positive for the Company's gold holdings, which were furthersupported by the tailwind that weaker local currencies will have on their USdollar denominated cost base. The one exception to this was Eldorado Gold, theCanadian listed gold producer with assets in Turkey, Greece and China. Weaker2015 production guidance than expected, as well as the deferral by one year ofthe expansion at their flagship Turkish mine in order to conserve cash, weretaken negatively by the market. In addition, towards the end of the month,negative comments from the incoming Syriza government in Greece towards thecompany's Skouries mine development worsened investor sentiment to the stockand the share price suffered as a result.Strategy / OutlookWe view the upcoming reporting season as a crucial moment for the sector. Ifthe majors are able to maintain current dividends then the significant yieldpremium at which the sector trades relative to the market implies there isdownside support to share prices and it could lead to a re-rating of the sector,just as in early 2014.While the mining sector has underperformed the market for the past four years,it is important to remember that the sector is cyclical and some classic signsof a cyclical bottom are emerging. The lack of reinvestment in growth will seethe sector well positioned for the next upturn in prices once demand growthstabilises and supply deficits emerge.For longer-term investors we are seeing some interesting valuationopportunities emerge in a number of the high quality producers. As commoditymarkets continue to rebalance over the course of 2015, we expect a gradualrecovery in share prices. The road is likely to be volatile, leading us tofavour the high quality producers. However, given our expectation of tightermarkets in certain commodities we have maintained, and are selectively addingto, our exposure in favoured growth plays.All data in USD terms unless otherwise stated.16 February 2015ENDSLatest 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.