Final Results

BLACKROCK WORLD MINING TRUST plc ANNUAL RESULTS ANNOUNCEMENT for the year ended 31 December 2009 Performance to 31 December 2009 One year Five years Net asset value per share: - capital only +99.8% +170.7% - with income and 1/5 warrant reinvested** +103.0% +187.5% Ordinary share price: - capital only +117.8% +152.3% - with income and 1/5 warrant reinvested** +122.0% +170.4% HSBC Global Mining Index*: - capital only +79.6% +185.5% - with income reinvested +83.2% +216.2% * Adjusted for exchange rates relative to sterling. ** One warrant for every five ordinary shares. Sources: BlackRock and Datastream. MANAGEMENT REPORT Chairman's Statement Performance Following the sharp deterioration in the equity valuations of mining companies from May 2008 through to the end of November 2008, and subsequent corrections, it was most encouraging to see a significant recovery in mining shares in 2009 and the Company posting exceptionally strong positive returns. In the year ended 31 December 2009, the Company's net asset value ("NAV") grew by 103.0% and the share price by 122.0% (both percentages calculated in sterling terms with income reinvested). By comparison, the Company's benchmark index increased by 83.2%. Earnings and dividends The earnings per share for the year amounted to 4.90p compared to 5.64p for the previous year, representing a fall of 13.1%. This reflected a reduction in corporate dividend rates of mining companies during the economic slowdown. The Directors are proposing a final dividend of 4.75p per share compared with 5.50p for the previous year. The dividend is payable on 28 April 2010 to shareholders on the Company's register on 19 March 2010. Discount to net asset value The Board recognises the importance to investors of ensuring that any discount of the Company's share price to its underlying NAV is actively monitored. The shares currently trade at a 18.8% discount to NAV and, during the year and up to the date of this report, 556,800 shares were bought back and subsequently placed in treasury. It is very important that the Company retains the ability to repurchase shares and, accordingly, a resolution to renew the authority to buy back shares will be put to shareholders at the forthcoming Annual General Meeting. VAT As stated in my interim statement, HM Revenue & Customs ("HMRC") has repaid all of the irrecoverable VAT incurred by the Company for the periods from launch to 1996 and from 2001 onwards amounting to £3,559,000. The VAT recovered has been allocated 100% to revenue in accordance with the original allocation of the management fees. In addition to this principal amount, interest of £263,000 has already been received from HMRC and a final interest payment of £395,000 is due to be received shortly and has been accrued in the Company's NAV. Alternative Investment Fund Managers ("AIFM") Directive The European Commission's AIFM Directive is a controversial measure aimed at regulating alternative investment funds which, in its current form, will adversely affect all investment trusts, including the Company. The Association of Investment Companies ("AIC") recognises the far reaching implications of the draft AIFM Directive and is currently engaged with the European Union ("EU") to seek the development of rules which would allow the business model of the listed investment company sector to continue (albeit with additional regulatory obligations). BlackRock is also making representations to the EU to seek a final form of the AIFM Directive which will regulate companies such as this one in a more proportionate, fair and effective way. The Board actively supports the AIC's representations and will keep shareholders informed of any major developments concerning the AIFM Directive. Portfolio manager Graham Birch decided to retire from BlackRock at the end of his sabbatical in early 2010. He had managed the Company's portfolio since its launch in December 1993 until March 2009 and his extensive knowledge of the mining sector was invaluable to the Company. I would like to thank Graham on behalf of the Board for his contribution and long service to the Company and wish him all the best for the future. We are very pleased to announce that Evy Hambro has succeeded Graham as the Company's lead portfolio manager. Evy has taken full responsibility for the management of the Company's portfolio since Graham departed on sabbatical at the beginning of April 2009. His service with the Investment Manager dates back to 1994 and he became responsible for co-managing the Company alongside Graham in 2000. The Board is delighted that Evy will be continuing to run the portfolio, ably assisted by the BlackRock Natural Resources Team with its great depth of experience and resource. Outlook With China and the emerging markets continuing to support commodities demand we are hopeful that global growth will begin to gather some momentum in the year ahead. Demand growth and supply-side constraints should underpin commodity prices over the coming years and the prospects for equity returns are encouraging. Accordingly, our positive outlook on the sector remains unchanged. Key risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below. - Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objectives and monitoring the performance of the Investment Manager. An inappropriate strategy may lead to underperformance against the benchmark index. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and mandates an adequate spread of investments, in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the Company's investment policy. The Board also receives and reviews regular reports showing an analysis of the Company's performance against the HSBC Global Mining Index and other similar indices, including the performance of major companies in the sector. - Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company (including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests) may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. - Regulatory risk - The Company operates as an investment trust in accordance with section 842 of the Income and Corporation Taxes Act 1988. As such the Company is exempt from capital gains tax on the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of section 842 are not breached and the results are reported to the Board. - Operational risk - Like most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These are regularly tested and monitored and an internal control report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit & Management Engagement Committee twice a year. The custodian, (The Bank of New York Mellon (International) Ltd ("BNYM"), a subsidiary of The Bank of New York Mellon) and the Investment Manager also produce annual internal control reports which are reviewed by their respective auditors and give assurance regarding the effective operation of controls. - Resource risk - The quality of the investment management team employed by BlackRock Investment Management (UK) Limited is a crucial factor in delivering good performance and the loss by the management of key staff could affect investment returns. The Investment Manager has training and development programs in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff. - Financial risks - The Company's investment activities expose it to a variety of financial risks that include market price risk, foreign currency risk, interest rate risk and liquidity and credit risk. In addition, it should be noted that the location of the companies in which the Company invests and shares of companies in the mining sector can prove to be volatile and therefore present a greater degree of risk. Any unquoted investments in the Company's portfolio are also subject to additional liquidity risk. Related party transactions The Investment Manager is regarded as a related party and details of the investment management fees payable are set out in note 4. Statement of Directors' Responsibilities In accordance with Disclosure and Transparency Rule 4.1.12, the Directors confirm to the best of their knowledge and belief that: - the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and Group; and - the annual report includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties that it faces. For and on behalf of the Board of Directors A W Lea Chairman 19 February 2010 Investment Manager's Report Portfolio performance The first half of 2009 saw a significant recovery for mining shares after the turbulence of 2008. This upward trend continued during the second half of 2009. For the year to 31 December 2009, the Company's net asset value ("NAV") and share price rose by 103.0% and 122.0% respectively (both percentages calculated in sterling terms with income and warrant proceeds reinvested). In "capital" only terms the NAV rose by 99.8% and the share price by 117.8%. These figures compare with the HSBC Global Mining Index, in sterling terms, which rose by 79.6% (capital only) and 83.2% (total return). Mining share overview The year end rally in 2008 was in hindsight a sign that 2009 was set to be a year of recovery for mining shares after the collapse in valuations from May through to November 2008. From the low of 2008 to the end of 2009, the Company's NAV has risen 165.4% and yet is still some 32.4% below the peak reached in May 2008. It is hard to understand that valuations for real assets such as mines could be so volatile and trade so far below replacement cost. Throughout the year, the Company followed a strategy based upon cautious optimism about the potential for commodities demand to recover. Whilst confident in our long term view of strong commodity demand from emerging markets coupled with, in some cases, severe supply-side constraints, we recognised the need for heightened caution given the continued vulnerable state of the global economy and the potential for further negative shocks. When demand collapsed in the second half of 2008, we took the view that this was more a liquidity event driven by the credit crisis rather than a fundamental change in the consumption patterns of the last few years. As such we started the year fully invested in the expectation that share prices would rebound. However, the Company's gearing was not utilised immediately as this would have reduced our flexibility to participate in corporate refinancings or other such attractive opportunities. During the first half of the year, metals demand rebounded from the lows seen only a few months earlier. China led the way with record imports of copper, iron ore and coking coal taking advantage of the spare capacity created by the absence of developed world consumption. Early into this stage some commentators feared that this demand might be artificial and driven solely by strategic reserve purchases, but this was quickly dismissed as end consumption data supported the import statistics. The recovery trend continued into the second half of the year with China breaking monthly import records for both base metals and bulk commodities. As the year drew to a close the earlier concerns about sustainability of demand from China had eased, market commentators began to focus on improving western world economic data and investors looked to increase their exposure to the sector. How different the final quarter of 2009 was to the equivalent period only twelve months before. On the supply side, the mining companies exercised considerable discipline in response to the challenging commodity price and financing conditions they were facing. As demand collapsed, most mining companies delayed further investment into new capacity on top of closing existing capacity. The rapid and aggressive production cuts allowed the de-stocking process to happen far quicker than most investors expected, further supporting commodity price recovery. One of the more positive outcomes of the financial crisis for the Company has been the opportunity to take part in financings of high quality companies on very attractive terms. Whilst banks resumed lending money again, they did so on a reduced scale and with much more stringent terms. This has meant that companies within our sector have had to find other methods of refinancing to strengthen their balance sheets. The Company has been the beneficiary; the gearing facility was used to underwrite equity placements by some of our existing holdings and we built up a portfolio of resource corporate debt. This is mainly comprised of convertible bonds, giving us potential equity upside, a fixed percentage coupon well above the Company's cost of debt and downside protection should the global economy double dip. In an environment where many companies in the sector have cancelled or cut their dividends, this has provided an alternative source of income for the Company. As at the end of December 2009, the Company's aggregate corporate debt position had a running yield on the current investment value of 4.9%; this is despite the majority of positions trading at a significant premium to par as share prices have moved above conversion prices. Selected corporate refinancing activities during 2009 Company Date Security type Amount raised Rio Tinto July '09 Equity / US$12,350m / Corporate debt US$3,500m Xstrata March '09 Equity US$5,800m Teck Resources May '09 Corporate debt / US$4,225m / Equity US$1,500m Barrick Gold September '09 Equity US$3,500m BHP Billiton April '09 Corporate debt US$3,000m Anglo American April '09 / Convertible bond / US$1,700m / September '09 Corporate debt €750m Glencore December '09 Convertible bond US$2,200m Vedanta June '09 Convertible bond US$1,250m Sources: Bloomberg and company reports. Our largest and most recent convertible bond position is in Glencore Finance AG, a leading, diversified natural resources group with activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. It has a 35% stake in Xstrata, as well as a number of equity stakes in other commodities producers. We believe the convertible has the potential to provide the Company with an attractive entry point into Glencore were it to list in the future, whilst providing the Company with a good return if it were to remain private. Obtaining exposure to Glencore is also not possible other than by investing in this security as the company is owned solely by the employees. This position makes up 5.1% of the Company's portfolio. In summary the mining sector has recouped some, but far from all, of the losses endured during the "100 day" sell off in 2008. As demand recovered commodity prices rebounded acting as a catalyst for investor confidence. This in turn reopened the banking system allowing trade to flow again. Investor risk appetite has now returned and despite far from normal demand conditions the fear of mining sector bankruptcy has eased away. We remain cautious given the uncertainties around the potential withdrawal of fiscal stimulus plans but are confident that even if demand for commodities is materially lower than short term expectations, the sector is sufficiently well financed to survive another demand shock. Selected commodity price changes during 2009 % change over % change Price 12 months to average 31 December 2009 31 December 2009 2009 vs. 2008 Gold (US$/troy oz) 1,096 27.1 11.6 Platinum (US$/troy oz) 1,461 62.7 -23.4 Nickel (US$/tonne) 18,477 70.8 -30.4 Copper (US$/tonne) 7,345 153.2 -25.7 Aluminium (US$/tonne) 2,207 51.8 -35.0 Zinc (US$/tonne) 2,569 129.4 -11.5 Lead (US$/tonne) 2,392 152.2 -17.4 Uranium (US$/lb) 44.5 -16.0 -25.4 Potash (US$/tonne) 445 -42.6 -18.5 Iron Ore - lump (US$/dmtu) 112 -44.5 -* Coking Coal - hard (US$/tonne) 128 -57.3 -* Thermal coal (US$/tonne) 69 -46.9 -* * Priced on annual benchmarks. Sources: Datastream and Bloomberg. Gold and precious commodities 2009 was a year of celebration for most long term gold bulls, the Company included. The price broke through critical resistance around US$1,000oz setting a new high of US$1,215oz in early December. In addition, the gold price was the only metal price to average higher this year than last. Finally, gold shares also started to perform well, having lagged the gold price during the last few years. Investment demand has been key with jewellery demand still weak following the slowdown in the global economy. Investors have been attracted to gold as protection against a weakening US dollar, protection against the potential future impact of governments' quantitative easing policies on inflation and as a safe haven asset that offers significant diversification benefits. Central Bank activity has also taken centre stage. In April, China announced that it had increased its gold reserves by over 400t to 1,054t, a 61% increase in its holding. This was followed shortly by a new European Central Bank Gold Agreement in which the annual sales cap was reduced from 500t to 400t and is inclusive of any IMF gold sales. In November, India announced that it had purchased 200t of gold from the IMF which came as a surprise to the market who had expected China to be the likely buyer of the 403t the IMF had proposed selling. It is likely that 2009 will prove to have been a year of net purchasing for Central Banks globally - a huge shift in strategic direction and one that should be very supportive to the gold price. On the corporate front there was considerable news. Finally, after years of pressure from shareholders, the new CEO at Barrick was able to persuade the old guard to close the hedge book. Barrick is the last of the major producers to remove painful hedge positions initiated over two decades earlier when the gold price was significantly lower than today. Whilst hedging itself is not necessarily a bad thing, the effect of rising costs and poorer than expected growth delivery by the industry has meant that even without a rising gold price the "hedging experience" would have been an extremely negative one for investors. Other activity centred on assets changing hands between companies as they positioned themselves for the higher price environment. Examples include AngloGold Ashanti which sold its share of the Boddington mine to Newmont allowing them to use the proceeds to continue unwinding their hedge book and share the purchase of Moto Gold Mines with Randgold Resources; Eldorado completed the purchase of Sino Gold, the Australian listed Chinese gold miner; and Barrick and Goldcorp are competing for the El Morro copper-gold project in Chile. As a whole, gold companies made up 12.0% of the portfolio with our largest gold holding still Buenaventura. Key new positions are in IAMGOLD (1.2% of the portfolio), Newmont Mining (1.0% - both in the equity and also through a convertible bond), G Resources (0.4%) and Randgold Resources (0.2%). G Resources is a new gold company that was created when it purchased OZ Mineral's Martabe gold project in Indonesia. The Martabe mine is scheduled to commence production early next year and, if recent exploration success continues, we are optimistic of a significant extension to the mine's life. The platinum price outperformed gold rising 62.7% in US dollar terms but despite this our investments were a significant drag on performance during the first half of the year. Around three quarters of the world's platinum is produced in South Africa, and in Rand terms the platinum price only rose 29.6% due to the appreciation of the Rand against the US dollar. In addition, the producers were impacted by rising power costs, union demands for significant wage increases and a higher level of work stoppages related to safety issues. The availability of finance for new platinum projects has been hampered not only by the aforementioned factors but also by the financial crisis. This has resulted in significant delays to many projects that had been expected to enter production this year and next. Taking all of this into account, we think 2010 is likely to be a much better year for the platinum holdings as production remains constrained and automotive manufacturing seems to be showing tentative signs of recovery. Current platinum holdings include Impala Platinum (4.7% of the portfolio), Anglo Platinum (1.6%), Aquarius Platinum (1.1% - both the equity and the convertible) and Platmin Mining (0.2%). During the year we accepted a bid for our holding in Ridge Mining from Aquarius Platinum and used the proceeds to add to our platinum exposure. Silver investments benefited from a 57.5% increase in the silver price, in US dollar terms. Fresnillo, the largest silver position at 3.1%, closed the year up a massive 244% as it not only recovered from an oversold position at the end of 2008 but also delivered on its production and profit guidance. Rough diamond prices recovered over the year but still remain depressed as demand recovery from the US, the world's largest diamond market, remains subdued. Our exposure to diamonds is focused on three companies; Gem Diamonds (0.6%), Harry Winston Diamond (0.5%) and Lucara Diamond (0.1%). Lucara is a new position following the purchase by the company of the AK6 kimberlite in Botswana from DeBeers. Base metals Base metals were key beneficiaries of Chinese restocking, helped along by China's State Reserve Bureau's strategic purchases of copper, zinc and aluminium in the early part of the year and thereafter end user demand. For much of the year, the market to and froed about whether or not Chinese demand was sustainable and whether it was the result of real end-user demand or speculation. It was most likely a bit of both, but with a commodity intensive stimulus package, strong GDP growth and prices well below what they had been the year before, China took advantage of lower prices by importing record quantities of many commodities, particularly copper. In the latter half of 2009, despite rising base metal inventories, prices have continued to edge higher. This is generally thought to have been the result of financial players returning to the commodities space "playing" the global recovery story or increasing exposure to real assets as protection against possible inflation. In the case of aluminium, it is rumoured clever financial manoeuvring by some key participants in the aluminium market has meant some of the metal reported in exchange inventories is in fact tied up under contracts and not available to the spot market. Copper arguably has the best supply and demand fundamentals of the base metals. As the core "infrastructure" metal, demand from industrialising and urbanising emerging markets is strong and likely to remain so over the coming years, but there is a lack of significant supply side growth. These drivers are key to the large exposure to copper producers in the Company. At the year end, the Company had 16.1% of the portfolio exposed to copper producers compared with 8.2% at the end of 2008. The largest position is in First Quantum Minerals (4.2% of the portfolio - both equity and convertible) which rose an incredible 377.8% over the year. This company had a roller-coaster year, with the confiscation of its Kolwezi project by the government of the Democratic Republic of Congo and the acquisition of the Ravensthorpe nickel mine from BHP Billiton. Whilst it is our expectation they will get Kolwezi back at some stage, this move into nickel appears to be part of a strategy to diversify away from Africa which illustrates that even those companies that have been successful in growing production in sub-Saharan Africa are nervous of the risks associated with operating in those countries. Another holding exposed to this part of the world is Katanga Mining. The company has been through an exhaustive restructuring and we hope that with the benefit of a robust copper price the company will be able to unlock the value from their copper projects without any additional capital from investors. Other key contributors to the return from copper exposure were Freeport McMoRan (+201.9%), Cerro Verde (+143.6%) and Antofagasta (+149.7%). Aluminium was the worst performing base metal, up "only" 51.8% in US dollar terms. In early 2009, the industry sharply cut production as the aluminium price fell well below the marginal cost of production. It is estimated that around 18% of the world's production was off-line in March 2009. However, as prices rose over the second half of the year, production swiftly came back on and by November around half of the curtailed capacity had been restarted. Given the potential excess supply, whether through the restarting of production or through metal released from inventories, we are relatively cautious on aluminium and had only 2.5% of the portfolio exposed to aluminium producers (4.5% at the end of 2008). Zinc and nickel also enjoyed a recovery in 2009 with the zinc price up 129.4% and the nickel price up 70.8% in US dollar terms. Both commodities look to be in surplus in the near term, although zinc fundamentals do look a little more interesting on a three to five year horizon. The Company's zinc exposure is now predominantly in Nyrstar (0.9%), a smelting company that was created through the merger of Umicore and Zinifex's smelting businesses in 2007. A change in corporate strategy has meant that the company is now seeking to move upstream to secure concentrate supply to their smelters. At the year end, exposure to pure nickel producers has been reduced to less than 1% of the Company's assets following the sale of the holding in Eramet. However, the Company has considerable exposure to nickel through its holdings in diversified mining companies. Energy commodities The uranium price has been less volatile than other commodities during and following the financial crisis. This is predominantly due to the small spot market and a lower level of speculative involvement. Uranium prices drifted down over the year to close down 16.0%. The long term fundamentals for uranium still appear compelling, as increased demand is likely to be driven by the government-led move to diversify into "clean" energies and the potential for a supply shortfall. In the near term, however, strong supply growth from Kazakhstan and a weak global economy have meant the short term drivers are less clear. The Company's only exposure to pure uranium companies at the end of December 2009 was UEX (0.5%). Thermal coal prices were victim to the fall in demand caused by the significant slowdown in the global economy. Contract prices were settled down 46% in the early part of 2009. However, with accelerated growth from China and other emerging markets, the coal market in the Pacific Basin began to tighten and spot coal prices have moved higher as a result. At the time of writing, news has been released that Xstrata have settled thermal coal prices at US$85t with one Japanese customer, up 21% compared to the 2009 benchmark price. This is better than market forecasts and bodes well for thermal coal producers in 2010. Over the year, the Company sold its holding in Bumi Resources following concerns over the company's corporate governance. Exposure to thermal coal is through large holdings in the diversified mining companies that are themselves some of the largest coal miners in the world. Diversified mining companies and industrial commodities As the largest consumer of bulk commodities in the world, China's strong economic growth and robust steel demand had a positive influence on iron ore and coking coal prices in 2009. As benchmark prices settled down 44% for iron ore in the first half of 2009, following the slowdown in the global economy, China imported record tonnages as they took advantage of lower prices to substitute lower quality domestic supplies for higher quality Australian and Brazilian ore. With a lack of demand from the western world, Chinese demand grew to well over half of the sea-borne iron ore market. Spot prices closed 2009 over 80% higher than the benchmark set in May as the western world began to recover, demand from China continued at near record levels, and export tariffs were imposed on Indian iron ore. This is very encouraging for 2010 benchmark settlements. Exposure to iron ore is for the most part achieved from holdings in the large diversified mining companies. However, the Company has a direct investment in the emerging Australian producer Atlas Iron and prior to the year end we invested in a private iron ore development company, Jumelles. The company owns an iron ore exploration project in the Democratic Republic of Congo which is being joint-ventured with Xstrata via an earn-in agreement. Jumelles plans to list in London later this year following the results of a pre-feasibility study. Coking coal demand from China was also strong as Chinese production of steel continued to grow, reaching a rate of 600 million tonnes per annum by the end of 2009. The demand for imported coking coal was supported further by the closure of a number of mines due to safety issues in the Shanxi province, the main coking coal producing region in China. The transition by China to become a large importer of coking coal means that supply deficits are highly likely in the coming years, as the supply side appears to be constrained in its ability to bring on new supply. This bodes well for further price recovery especially for the higher quality products out of Australia. The Company's exposure to coking coal is predominantly through the diversified mining companies, particularly Teck Resources (5.1% of the portfolio) and some smaller purer play companies, such as Aquila Resources (0.6%) and Coal of Africa (0.1%). China's influence has been increasingly felt in the mining industry in 2009. Not only is it now the largest customer, but it is also the marginal buyer of assets in the sector. The most well reported example was the potential deal between Rio Tinto and Chinalco, from which Rio eventually walked away. However, there have been a number of other smaller successful acquisitions such as the purchases by China Investment Corporation of 17.2% of Teck Resources, one of the world's largest coking coal producers, and 15% in Noble Group, a leading commodities trader. The major diversified miners continued to make life interesting in 2009. Rio Tinto has probably had the most "interesting" year, entering 2009 with a heavy debt burden and the real risk of default, but leaving it with a healthy balance sheet following a rights issue and the sale of some non-core assets. There is also the prospect of an iron ore joint venture with BHP Billiton that has the potential to release at least US$10 billion in synergies, an agreement with the Mongolian government that makes the go-ahead of the world class Oyu Tolgoi copper deposit more likely, and a new chairman. Perhaps the main negative would be a rather soured relationship with the Chinese as Rio Tinto walked away from a proposed deal with Chinalco which possibly contributed to four employees being arrested in China on charges of industrial espionage. BHP Billiton had a relatively quiet year. It did achieve its main aim of merging their iron assets with Rio Tinto; however, given their strong balance sheet and the distress the industry was in during the first quarter of 2009, one could argue they did not take full advantage of their relative balance sheet strength. The speed at which the industry recovered was clearly a surprise to management, as it was to most market commentators. We watch with interest to see how the company will put its growing cash balance to work. Xstrata on the other hand has been extremely busy. Following a rescue rights issue and a US$2 billion asset deal with Glencore for the Prodeco coal mine, the company then proposed a merger with Anglo American. The terms of the deal were rejected as inadequate but Anglo shareholders should be thanking Xstrata for triggering change within the company. Anglo now has a new Chairman, they have or are seeking to divest non core assets and there seems to be an improved approach to capital reinvestment. Xstrata can revisit the deal later this year and it will be interesting to see if Anglo shareholders believe management has done enough to keep the company independent. Vale was also caught up in the eye of the financial crisis not because of their balance sheet, which was supported by an earlier equity placing, but by key customers not performing on iron ore supply contracts. This forced Vale to redirect sales into China that would otherwise have gone into Europe and this impacted contract negotiations for 2009. Since the early part of the year, Vale seems to have settled with customers and volumes to Europe are now recovering to more normalised levels. Vale was also active during the financial crisis whilst others stood on the side lines. The company managed to pick up additional iron ore production in Brazil and expand into the potash business, when they purchased assets sold by Rio Tinto as part of their debt reduction plan. Outside of the major diversified mining groups, the Company held exposure to a number of mid size companies such as Vedanta and African Rainbow Minerals. These companies had similar share price performances during the year, as they recovered from the financial crisis, but of the two only African Rainbow Minerals was able to get by without a large refinancing to keep the banks at bay. Derivatives activity The Company sometimes holds positions in derivatives contracts with virtually all the activity focused on selling either puts or calls in order to increase or decrease position sizes. These derivative positions, which are small in comparison with the size of the Group, usually have the effect of obliging us to buy or sell stock or futures at levels we believe are attractive. During 2009, we focused on writing short dated calls in order to reduce some of our larger positions. The premia generated by such option writing enables us to maximise the potential exit price from a position. At the end of 2009 we had no derivatives positions in the portfolio. Gearing At 31 December, the Company had gearing amounting to £42.0 million. This has been drawn down against the higher yielding mining company corporate debt portfolio. Gearing, which can be drawn down or repaid at any time, is used in the portfolio to take tactical advantage of market volatility and opportunities. Outlook and Strategy for 2010 After the strong recovery in both metal prices and equity valuations in 2009, it is easy to conclude that 2010 will be a less exciting year. However, we would argue that the lows were more a reaction to the state of the banking sector rather than a change in the long term drivers of commodities demand. In fact much of the share price recovery can be ascribed to valuations moving back to levels that reflect the true cost of replacing assets. In addition, with commodity prices at higher levels than most management teams expected, cash generation will be in excess of many companies' requirements. We expect this to result in further M&A activity as companies look to reinvest this into existing projects rather than build new capacity when demand has not fully recovered. China and other emerging markets should continue to positively support commodities demand given their higher rate of forecast economic growth. In fact it would not surprise us if their governments were to take action to prevent overheating. We are generally optimistic over a continued OECD recovery, but the potential for negative shocks to the sustainability of this recovery is still an area of concern, as this could have a significant influence on potential restocking of metals inventories by manufacturers which still remain at historical lows. At the time of writing, the Company has built up significant exposure to producers of iron ore, coking coal, thermal coal, copper and platinum. We expect producers of these commodities to benefit from strong pricing and hope they are able to turn this into healthy earnings momentum. Gold prices remain well supported by the limited supply growth and the scope for reduced Central Bank disposals. We also have great hopes for the new investments in Glencore and Jumelles. The future of these investments should become clearer during the year and we hope that shareholders recognise their potential within the Company. Evy Hambro & Catherine Raw BlackRock Investment Management (UK) Limited 19 February 2010 Ten Largest Investments - 31 December 2009 Set out below is a brief description by the Investment Manager of the Company's ten largest investments Vale - (formerly known as CVRD) 10.8% (2008: 15.6%) is the world's largest producer of iron ore. Based in Brazil, the company also has significant interests in other commodities such as nickel, aluminium, copper, gold and coal. In addition, Vale owns and operates transport infrastructure. The company made a "transformational" acquisition in 2006 by purchasing Inco for cash. This considerably broadened the company's asset mix and made it a formidable competitor in the global mining industry. More recently, they have ventured into the fertiliser sector acquiring assets from Rio Tinto. Rio Tinto - 9.1% (2008: 5.9%) is the world's third largest mining company. The company has interests over a broad range of metals and minerals including iron ore, aluminium, copper, coal, industrial minerals, gold and uranium. In October 2007, Rio Tinto acquired Alcan making it the world's largest bauxite and aluminium producer, but also significantly increasing its debt burden. During much of 2008 the company was the subject of a bid by its major rival BHP Billiton. However, in November 2008, with financial markets in crisis, commodity prices collapsing and onerous conditions required for EU approval for the deal, BHP Billiton withdrew. Rio Tinto was left severely indebted and, at the start of 2009, looked unable to fulfil its debt obligations. In February 2009, the company announced a deal with Chinalco, the Chinese state aluminium company, worth US$19.5 billion through a combination of convertible debt and the sale of stakes in core assets. Shareholder outcry over the lack of pre-emption rights, the departure of the company's chairman and an improvement in financial and commodity market conditions meant Rio Tinto walked away from the Chinalco deal, instead raising money through a US$3.5 billion bond issue, a US$15.2 billion rights issue and a 50:50 iron ore joint venture with BHP Billiton. Along with non-core asset sales, Rio Tinto has ended 2009 with a much healthier balance sheet. BHP Billiton - 7.3% (2008: 14.0%) is the world's largest diversified natural resource company, formed in 2001 from the merger of BHP and Billiton. The company is an important global player in a number of commodities including iron ore, copper, coal, manganese, aluminium, diamonds and uranium. In addition, the company is the only sizeable holding in the portfolio with significant oil and gas assets. BHP Billiton approached Rio Tinto in November 2007 about a potential merger but was rebuffed. It subsequently launched a hostile bid in February 2008 but withdrew this offer in November 2008 following sharp falls in commodity prices and a worsening economic climate. As a result of being in an offer period for most of 2008, BHP accrued a significant amount of cash on its balance sheet leaving it in an incredibly strong position going into 2009 relative to its peers. In June 2009, BHP Billiton and Rio Tinto announced that they had agreed to a 50:50 iron ore joint venture in exchange for an "equalisation" payment by BHP to Rio Tinto. Teck Resources(formerly known as Teck Cominco) - 5.1% (2008: 1.6%) is a Canadian diversified miner that is a leader in the production of metallurgical coal and zinc, as well as a significant producer of copper. In September 2008 the company acquired Fording Coal Trust, which owned a 60% non-operating interest in Teck's metallurgical coal operations. The cash portion of the deal was primarily funded by a US$9.8 billion bridge and term loan facility. The subsequent global financial crisis and deterioration in the global economy meant Teck Resources started 2009 unable to refinance or pay-down this relatively short term debt. However, through the sale of its gold and other non-core assets, the renegotiation and extension of the bridge and term loan facility, a bond issuance worth US$4.3 billion, and a private placement of 17.2% of the company to China Investment Corporation, Teck Resources has managed to strengthen its balance sheet sufficiently enough to allay market concerns. Glencore - 5.1% (2008: nil) is a leading, privately owned, diversified natural resources group with activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. It provides financing, logistics, marketing and purchasing services to producers and consumers of commodities. These activities are supported by investments in industrial assets operating in Glencore's core commodity areas. The company has been operating for thirty five years and is one of the world's largest privately held companies (as measured by revenues). Minas Buenaventura - 5.0% (2008: 7.5%) is South America's premier precious metals company. Its main asset is a 43.65% stake in the Yanacocha gold mine in Peru, which it jointly owns with Newmont Mining. The company also operates seven mines in Peru, has a controlling interest in zinc miner Minera El Brocal, and an 18.5% interest in copper miner Cerro Verde. Impala Platinum - 4.7% (2008: 6.1%) is the world's second largest producer of platinum group metals, with mining and refining operations in South Africa. The company also owns a number of substantial assets in Zimbabwe. Impala restructured in 2006, converting the Bafokeng tribe's royalty into an equity stake. In April 2008, the company exited from its position in Aquarius Platinum at a significant premium to its initial investment. In October 2008, Impala announced a friendly takeover bid for Northam Platinum and Mvelaphanda Resources; however following a sharp decline in platinum prices and a worsening economic climate, Impala walked away. First Quantum Minerals - 4.2% (2008: 1.4%) is an integrated copper producer, focused on the copper-cobalt belt in Zambia and the Democratic Republic of Congo ("DRC"), but also with an operation in Mauritania and a polymetallic exploration project in Finland. It has proved itself to be adept at doing business in challenging political and operating environments, avoiding many of the pitfalls that have tripped up competitors in the central African region. In 2009, the company carried out a US$345 million equity financing and issued US$500 million in convertible bonds to fund the development of its Kolwezi mine in the DRC. In September 2009, the 65% complete Kolwezi mine was confiscated by the DRC government and negotiations are ongoing with the company and the government over its return. In December 2009, the company acquired the Ravensthorpe nickel mine from BHP Billiton for US$340 million, significantly less than BHP Billiton had spent to develop the operation. Fresnillo - 3.1% (2008: 2.0%) is the world's largest primary silver producer and Mexico's second largest gold producer. The company has three producing operations and a portfolio of high quality development and exploration projects. Industrias Penoles, one of Mexico's leading mining companies, owns 77% of the company; the remainder is publicly listed on the London Stock Exchange. Freeport McMoRan - 2.9% (2008: 1.9%) is one of the largest copper producers in the world. It has a large portfolio of assets including the Grasberg mining complex in Indonesia, the world's largest copper and gold mine. In 2007, the company merged with Phelps Dodge, an Americas-focused copper and molybdenum miner. In February 2009, the company raised US$725 million through an equity issue thereby dispelling market fears over its ability to service and pay down debt. All percentages reflect the value of the holding as a percentage of total investments. Percentages in brackets represent the value of the holding as at 31 December 2008. Investments 31 December 2009 Main Market geographical value % of exposure £'000 investments Diversified Vale Brazil 132,230 10.8 Rio Tinto* Global 110,816 9.1 BHP Billiton Global 89,775 7.3 Teck Resources* Canada 62,058 5.1 Glencore*# Global 61,925 5.1 African Rainbow Minerals South Africa 28,945 2.4 Vedanta India 25,309 2.1 Xstrata Global 22,420 1.8 Sterlite Industries India 19,745 1.6 Anglo American Global 15,081 1.2 Eurasian Natural Resources Kazakhstan 4,575 0.4 Grafton Resources# Global 363 0.0 ------- ---- 573,242 46.9 ------- ---- Copper First Quantum Minerals Zambia 50,874 4.2 Freeport McMoRan Indonesia 35,524 2.9 Soc Min Cerro Verde Peru 24,676 2.0 Equinox Minerals Zambia 23,864 2.0 Antofagasta Chile 23,808 1.9 OZ Minerals Australia 23,230 1.9 Kazakhmys Kazakhstan 10,624 0.9 Katanga Mining DRC 2,899 0.2 Southern Peru Copper Peru 602 0.1 ------- ---- 196,101 16.1 ------- ---- Gold Minas Buenaventura Peru 61,330 5.0 Newcrest Mining Australia 32,868 2.7 IAMGOLD Canada 14,593 1.2 Newmont Mining USA 11,810 1.0 Lihir Gold Australia 10,960 0.9 G Resources Indonesia 4,574 0.4 Randgold Resources Africa 3,047 0.2 RTZ Zimbabwe Zimbabwe 2,874 0.2 Gold Fields South Africa 2,652 0.2 Minera IRL Peru 2,249 0.2 AngloGold Ashanti South Africa 256 0.0 ------- ---- 147,213 12.0 ------- ---- Platinum Impala Platinum South Africa 57,588 4.7 Anglo Platinum South Africa 19,880 1.6 Aquarius Platinum South Africa 12,917 1.1 Platmin Mining South Africa 2,160 0.2 ------ --- 92,545 7.6 ------ --- Silver & Diamonds Fresnillo Mexico 37,620 3.1 Industrias Penoles Mexico 26,562 2.2 Gem Diamonds Lesotho 7,295 0.6 Harry Winston Diamond Canada 5,866 0.5 Lucara Diamond Botswana 1,683 0.1 ------ --- 79,026 6.5 ------ --- Coal Peabody Energy USA 20,960 1.7 Aquila Resources Australia 6,739 0.6 Coal & Allied Industries Australia 6,335 0.5 Australian Energy# Australia 2,980 0.2 Coal of Africa South Africa 1,493 0.1 ------ --- 38,507 3.1 ------ --- Aluminium Alumina Australia 15,329 1.3 Alcoa USA 14,974 1.2 ------ --- 30,303 2.5 ------ --- Zinc Nyrstar Belgium 10,777 0.9 Soc Min El Brocal Peru 1,970 0.2 ------ --- 12,747 1.1 ------ --- Other Iluka Resources Australia 17,894 1.5 Minsur Peru 13,684 1.1 UEX Canada 6,688 0.5 Jumelles# Republic of Congo 5,573 0.5 Potash Corp of Saskatchewan Canada 3,370 0.3 Atlas Iron Australia 2,446 0.2 London Mining Global 753 0.1 Kenmare Resources Mozambique 660 0.0 Noventa Mozambique 495 0.0 Bindura Nickel Zimbabwe 487 0.0 ------ --- 52,050 4.2 --------- ----- Portfolio 1,221,734 100.0 ========= ===== * Includes fixed interest securities. # Investment held at Directors' valuation. All investments are in ordinary shares unless otherwise stated. The total number of investments held at 31 December 2009 was 60 (31 December 2008: 50). Portfolio Analysis 31 December 2009 Commodity Exposure* BlackRock World Mining Trust plc HSBC Global Mining Index 2009 2008 2009 % % % Zinc 1.1 0.6 0.5 Aluminium 2.5 4.5 3.2 Coal 3.1 3.3 7.3 Silver & Diamonds 6.5 7.6 2.3 Platinum 7.6 9.5 3.5 Gold 12.0 12.1 19.4 Copper 16.1 8.2 6.9 Diversified 46.9 44.1 52.4 Other 4.2 10.1 4.5 Geographical Exposure* 2009 2008 % % Latin America 27 35 Global 24 21 Other 16*** 9** South Africa 10 13 Australia 10 8 Canada 8 5 USA 4 8 Europe 1 1 * Based on the principal commodity exposure and place of operation of each investment. ** Consists of India, Indonesia, Kazakhstan, Laos, Lesotho, Mozambique and Zambia. *** Consists of Africa, Botswana, Republic of Congo, DRC, India, Indonesia, Kazakhstan, Lesotho, Mozambique, Zambia and Zimbabwe. CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2009 Notes 2009 2008 2009 2008 2009 2008 Revenue Revenue Capital Capital Total Total £'000 £'000 £'000 £'000 £'000 £'000 Income from investments held at fair value through profit or loss 3 16,397 30,295 - - 16,397 30,295 Interest on prior years' VAT 3 658 - - - 658 - Other income 3 1,110 (2,867) - - 1,110 (2,867) --------- --------- ------------ ------------ --------- --------- Total revenue 18,165 27,428 - - 18,165 27,428 --------- --------- ------------ ------------ --------- --------- Gains/(losses) on investments held at fair value through profit or loss - - 589,000 (776,959) 589,000 (776,959) Realised (losses)/gains on foreign exchange - - (579) 269 (579) 269 --------- --------- ------------ ------------ ------------ ------------ 18,165 27,428 588,421 (776,690) 606,586 (749,262) --------- --------- ------------ ------------ ------------ ------------ Expenses Investment management fees 4 (11,864) (13,969) - - (11,864) (13,969) VAT recovered from prior years 4 3,559 - - - 3,559 - Other expenses 5 (680) (1,269) - - (680) (1,269) ---------- ---------- ------------ ------------ ---------- ---------- Total operating expenses (8,985) (15,238) - - (8,985) (15,238) ---------- ---------- ------------ ------------ ---------- ---------- Profit/(loss) before finance costs and taxation 9,180 12,190 588,421 (776,690) 597,601 (764,500) Finance costs 6 (23) (976) - - (23) (976) --------- --------- ------------ ------------ ------------ ------------ Profit/(loss) before taxation 9,157 11,214 588,421 (776,690) 597,578 (765,476) Taxation (443) (1,383) - - (443) (1,383) --------- --------- ------------ ------------ ------------ ------------ Profit/(loss) for the year 8,714 9,831 588,421 (776,690) 597,135 (766,859) ------- ------- ------------ ------------ ------------ ------------ Earnings/(loss) per ordinary share - diluted and undiluted 8 4.90p 5.64p 330.94p (445.65p) 335.84p (440.01p) ===== ===== ======= ======= ======= ======= The total column of this statement represents the Consolidated Income Statement, prepared in accordance with International Financial Reporting Standards ("IFRS"). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). The Group had no recognised gains or losses other than those disclosed in the Income Statement and the Statements of Changes in Equity. All items in the above statement derive from continuing operations and no operations were acquired or discontinued during the year. All income is attributable to the equity holders of BlackRock World Mining Trust plc. There were no minority interests. STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2009 Ordinary Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Group £'000 £'000 £'000 £'000 £'000 £'000 £'000 For year ended 31 December 2008 At 31 December 2007 8,607 28,452 122,457 22,779 1,057,877 27,948 1,268,120 Net (loss)/profit for the year after taxation - - - - (776,690) 9,831 (766,859) Exercise of warrants 1,044 98,695 - - - - 99,739 Shares purchased during the year* - - (1,399) - - - (1,399) Dividend paid# - - - - - (4,731) (4,731) Special dividend paid# - - - - - (3,943) (3,943) -------- --------- ---------- --------- ---------- --------- ------------ At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927 -------- --------- ---------- --------- ---------- --------- ------------ For year ended 31 December 2009 At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927 Net profit for the year after taxation - - - - 588,421 8,714 597,135 Exercise of warrants - 8 - - - - 8 Shares purchased during the year* - - (1,480) - - - (1,480) Dividend paid# - - - - - (9,777) (9,777) -------- --------- ---------- --------- ---------- --------- ------------ At 31 December 2009 9,651 127,155 119,578 22,779 869,608 28,042 1,176,813 -------- --------- ---------- --------- ---------- --------- ------------ Company For year ended 31 December 2008 At 31 December 2007 8,607 28,452 122,457 22,779 1,070,592 15,233 1,268,120 Net (loss)/profit for the year after taxation - - - - (779,217) 12,358 (766,859) Exercise of warrants 1,044 98,695 - - - - 99,739 Shares purchased during the year* - - (1,399) - - - (1,399) Dividend paid# - - - - - (4,731) (4,731) Special dividend paid# - - - - - (3,943) (3,943) -------- --------- ---------- --------- ---------- --------- ------------ At 31 December 2008 9,651 127,147 121,058 22,779 291,375 18,917 590,927 -------- --------- ---------- --------- ---------- --------- ------------ For year ended 31 December 2009 At 31 December 2008 9,651 127,147 121,058 22,779 291,375 18,917 590,927 Net profit for the year after taxation - - - - 588,749 8,386 597,135 Exercise of warrants - 8 - - - - 8 Shares purchased during the year* - - (1,480) - - - (1,480) Dividend paid# - - - - - (9,777) (9,777) -------- --------- ---------- --------- ---------- --------- ------------ At 31 December 2009 9,651 127,155 119,578 22,779 880,124 17,526 1,176,813 -------- --------- ---------- --------- ---------- --------- ------------ * Held in treasury. # See note 7. BALANCE SHEETS as at 31 December 2009 2009 2008 ------------------------------------------------------- Group Company Group Company Notes £'000 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 1,221,734 1,233,750 581,698 593,386 --------- --------- ------- ------- Current assets Investments - - 280 - Other receivables 1,259 1,187 14,801 14,454 --------- --------- ------- ------- 1,259 1,187 15,081 14,454 --------- --------- ------- ------- Total assets 1,222,993 1,234,937 596,779 607,840 --------- --------- ------- ------- Current liabilities Other payables (4,230) (5,535) (2,706) (3,522) Bank loans and bank overdrafts (41,950) (52,589) (3,104) (13,349) ------- ------- ------ ------- (46,180) (58,124) (5,810) (16,871) ------- ------- ------ ------- Total assets less current liabilities 1,176,813 1,176,813 590,969 590,969 Non current liabilities Deferred tax - - (42) (42) --------- --------- ------- ------- Net assets 1,176,813 1,176,813 590,927 590,927 ========= ========= ======= ======= Equity attributable to equity holders Ordinary share capital 9 9,651 9,651 9,651 9,651 Share premium account 127,155 127,155 127,147 127,147 Special reserve 119,578 119,578 121,058 121,058 Capital redemption reserve 22,779 22,779 22,779 22,779 Capital reserves 869,608 880,124 281,187 291,375 Revenue reserve 28,042 17,526 29,105 18,917 --------- --------- ------- ------- Total equity 1,176,813 1,176,813 590,927 590,927 ========= ========= ======= ======= Net asset value per ordinary share 10 662.02p 662.02p 331.39p 331.39p ======== ======== ======== ======== CASH FLOW STATEMENTS for the year ended 31 December 2009 2009 2008 -------------------------------------------- Group Company Group Company £'000 £'000 £'000 £'000 Operating activities Profit/(loss) before taxation 597,578 597,450 (765,476) (764,467) Add back interest paid 23 23 976 976 (Gains)/losses on investments held at fair value through profit or loss (589,000) (589,328) 776,959 779,486 Net losses/(gains) on foreign exchange 579 579 (269) (269) Net movement on current asset investments by subsidiaries 316 - 1,373 - Sales of investments held at fair value through profit or loss 225,437 225,437 317,377 317,377 Purchases of investments held at fair value through profit or loss (276,473) (276,473) (409,320) (409,320) (Increase)/decrease in other receivables (626) (644) 1,332 1,339 Decrease/(increase) in amounts due from brokers 13,911 13,911 (13,911) (13,911) Increase/(decrease) in other payables 2,003 2,363 (2,225) (2,225) Dealing (profits)/losses (36) - 3,855 - ------- ------- ------- ------- Net cash outflow from operating activities before interest and taxation (26,288) (26,682) (89,329) (91,014) ------- ------- ------- ------- Interest paid (23) (23) (976) (976) Tax paid (222) (222) (609) (456) Tax on overseas income (485) (485) (1,588) (1,109) ------- ------- ------- ------- Net cash outflow from operating activities (27,018) (27,412) (92,502) (93,555) ------- ------- ------- ------- Financing activities Purchase of ordinary shares (1,480) (1,480) (1,393) (1,393) Exercise of warrants 8 8 99,739 99,739 Drawdown of loan 24,151 24,151 - - Dividend paid (9,777) (9,777) (8,674) (8,674) ------- ------- ------- ------- Net cash inflow from financing activities 12,902 12,902 89,672 89,672 ------- ------- ------- ------- Decrease in cash and cash equivalents (14,116) (14,510) (2,830) (3,883) Cash and cash equivalents at start of the year (3,104) (13,349) (543) (9,735) Effect of foreign exchange rate changes (579) (579) 269 269 ------- ------- ------ ------- Cash and cash equivalents at end of the year (17,799) (28,438) (3,104) (13,349) ======= ======= ====== ======= NOTES TO THE ANNUAL RESULTS ANNOUNCEMENT 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988 ("ICTA"). The principal activity of the subsidiary, BlackRock World Mining Investment Company Limited, is investment dealing. The other subsidiary, BlackRock Gold Limited, is no longer trading. 2. Accounting policies The principal accounting policies adopted by the Group and the Company are set out below. (a) Basis of preparation The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes. The Group's financial statements are presented in sterling, which is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated. Insofar as the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies ("AIC"), revised in January 2009 is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP. (b) Basis of consolidation The Group financial statements consolidate the financial statements of the Company and its wholly owned trading subsidiary, BlackRock World Mining Investment Company Limited, which are registered and operate in England and Wales. (c) Presentation of the Consolidated Income Statement In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Income Statement between items of a revenue and a capital nature has been presented alongside the Consolidated Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. (d) Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business being investment business. (e) Income Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Interest income and expenses are accounted for on an accruals basis. Option premium income is recognised as revenue and included in the revenue column of the Consolidated Income Statement unless the option has been written for the maintenance and enhancement of the Company's investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital column of the Consolidated Income Statement. (f) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been treated as revenue except as follows: - expenses which are incidental to the acquisition of an investment are included within the cost of the investment. - expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. (g) Taxation Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. (h) Investments held at fair value through profit or loss The Company's investments are classified as held at fair value through profit or loss in accordance with IAS 39 - Financial Instruments: Recognition and Measurement and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sale of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value which will be regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid price at the balance sheet date, without deduction for the estimated selling costs. Unquoted investments are valued by the Directors at fair value based on recommendations from BlackRock's Pricing Committee and International Private Equity and Venture Capital Association Guidelines. This policy applies to non current asset investments held by the Group. In order to improve the disclosure of how companies measure the fair value of their financial investments, the disclosure requirements in IFRS 7 have been extended to include a fair value hierarchy. The fair value hierarchy consists of the following three levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability Level 3 - inputs for the asset or liability that are not based on observable market data Under IFRS, the investments in the trading subsidiary are fair valued which is deemed to be the sum of the balance sheet values. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Income Statement as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. (i) Other receivables and payables Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value. (j) Dividends payable Final dividends are only recognised after they have been approved by shareholders. Special dividends are recognised when paid to shareholders. (k) Foreign currency translation Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rate ruling on the balance sheet date. Foreign exchange differences arising on translation are recognised in the Consolidated Income Statement. (l) Cash and cash equivalents Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. (m) Bank borrowings Bank overdrafts and loans are recorded as the proceeds received. Finance charges, including any premia payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Consolidated Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 3. Income 2009 2008 £'000 £'000 Investment income: UK listed dividends 4,041 6,101 Overseas listed dividends 10,003 19,969 Overseas listed special dividends 762 4,225 Fixed interest 1,591 - ------ ------ 16,397 30,295 ------ ------ Other operating income: Deposit interest 61 653 Dealing profits/(losses) 36 (3,855) Underwriting commission 1,013 117 Stock lending income - 218 ------ ------ 1,110 (2,867) ------ ------ Interest on prior years' VAT 658 - ------ ------ Total income 18,165 27,428 ====== ====== Total income comprises: Dividends 14,806 30,295 Deposit interest 61 653 Interest on prior years' VAT 658 - Fixed interest 1,591 - Other income 1,049 (3,520) ------ ------ 18,165 27,428 ====== ====== Dealing profits/(losses) are presented after deducting transaction costs incurred on the purchase and sale of investments. No securities were held out on loan by the Group during the year. The maximum aggregate value of securities on loan at any one time during the year ended 31 December 2009 was nil (2008: £46,788,428). Option premium income of £6.8 million was received by the Company for the year ended 31 December 2009. As all of the related options were written for portfolio maintenance purposes, all of this premium income has been allocated to capital. For the year ended 31 December 2008, option premiums of £15.8 million were generated and allocated to capital. 4. Management fees 2009 2008 £'000 £'000 Investment management fees 11,864 13,762 VAT on management fees - 207 ------ ------ 11,864 13,969 VAT recovered from prior years (3,559) - ------ ------ 8,305 13,969 ===== ====== The investment management fee is levied quarterly, based on the value of the gross assets on the last day of each quarter. All management fees are charged to revenue. Following the outcome of the JPMorgan Claverhouse case, management fees are now exempt from VAT. 5. Other expenses 2009 2008 £'000 £'000 Custody fee 256 389 Administration fee - 484 Auditors' remuneration: - audit services 22 21 - other audit services* 5 5 Registrar's fee 78 93 Directors' remuneration** 99 99 Other administrative costs 220 178 ---- ----- 680 1,269 ==== ===== The Company's total expense ratio, calculated as a percentage of average net assets and using expenses, excluding interest costs and VAT written back, was: 1.4% 1.2% ===== ===== *Other audit services relate to the review of the half yearly financial statements. **The emoluments of the Chairman, who was also the highest paid Director, were £25,000 (2008: £25,000). 6. Finance costs 2009 2008 £'000 £'000 Interest on bank loans 3 147 Interest on bank overdrafts 20 829 ---- ---- 23 976 === === 7. Dividends Under IFRS, final dividends are not recognised until they are approved by shareholders, and special and interim dividends are not recognised until they are paid. They are also debited directly to reserves. Amounts recognised as distributable to ordinary shareholders for the year to 31 December were as follows: 2009 2008 £'000 £'000 Final ordinary dividend in respect of the year ended 31 December 2007 of 3.00p, approved by shareholders on 10 April 2008 - 4,731 Special dividend in respect of the year ended 31 December 2007 of 2.50p, paid on 17 April 2008 - 3,943 Final ordinary dividend in respect of the year ended 31 December 2008 of 5.50p, approved by shareholders on 23 April 2009 9,777 - ----- ----- 9,777 8,674 ===== ===== The total dividends payable for the year which form the basis of section 842 of the Income and Corporation Taxes Act 1988 are set out below: 2009 2008 £'000 £'000 Dividends on equity shares: Proposed final ordinary dividend of 4.75p (2008: 5.50p) 8,444 9,777 ------- ------- 8,444 9,777 ------- ------- 8. Consolidated return and net asset value per ordinary share 2009 2008 Net revenue attributable to ordinary shareholders (£'000) 8,714 9,831 Net capital return attributable to ordinary shareholders (£'000) 588,421 (776,690) ------- -------- Total earnings attributable to ordinary shareholders (£'000) 597,135 (766,859) ------- -------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was: 177,805,471 174,283,731 Undiluted and diluted Revenue return per share 4.90p 5.64p Capital return per share 330.94p (445.65p) ------- -------- Total earnings per share 335.84p (440.01p) ======= ======== There was no dilution to the returns for the year ended 31 December 2009, as there were no warrants outstanding at the year end. 9. Share capital Ordinary Treasury shares shares number number Total (nominal) (nominal) shares £'000 Authorised share capital comprised: Ordinary shares of 5p each 750,000,000 - 750,000,000 37,500 ----------------------------------------------------------------------------------- Allotted, issued and fully paid: At 1 January 2009 178,317,729 14,692,800 193,010,529 9,651 Shares transferred into treasury (556,800) 556,800 - - Ordinary shares issued as a result of warrants exercised 1,313 - 1,313 - ----------- ---------- ----------- ----- At 31 December 2009 177,762,242 15,249,600 193,011,842 9,651 =========== ========== =========== ===== During the year, 556,800 ordinary shares (2008: 250,000) were repurchased at a cost of £1,480,000 (2008: £1,399,000) and were held in treasury at 31 December 2009. On 27 February 2009, 1,313 warrants were exercised for a total consideration of £8,000. At the year end there were no warrants outstanding. 10. Net asset value per ordinary share 2009 2008 Net assets attributable to ordinary shareholders (£'000) 1,176,813 590,927 The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated, was: 177,762,242 178,317,729 Number of shares in issue for net asset value 177,762,242 187,265,334 Net asset value per ordinary share 662.02p 331.39p Share price 550.00p 252.50p Warrant price n/a 2.50p At 31 December 2009, the 15,249,600 shares held in treasury were not dilutive, as the share price was below the net asset value. 11. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The annual report and financial statements for the year ended 31 December 2009 will be filed with the Registrar of Companies after the Annual General Meeting. The figures set out above have been reported upon by the Auditor, whose report for the year ended 31 December 2009 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The comparative figures are extracts from the audited financial statements of BlackRock World Mining Trust plc and its subsidiaries for the year ended 31 December 2008, which have been filed with the Registrar of Companies. The report of the Auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act. 12. Annual Report Copies of the annual report will be sent to members by no later than 1 March 2010 and will be available from the registered office, c/o The Company Secretary, BlackRock World Mining Trust plc, 33 King William Street, London EC4R 9AS. This report will also be available on BlackRock Investment Management's website at www.blackrock.co.uk. 13. Annual General Meeting The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Wednesday, 21 April 2010 at 11.30 a.m. For further information, please contact: Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited - Tel: 020 7743 2178 Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited - Tel: 020 7743 4511 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited - Tel: 020 7743 2922 OR William Clutterbuck, The Maitland Consultancy - Tel: 020 7379 5151 19 February 2010 33 King William Street London EC4R 9AS

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