Final Results

BlackRock World Mining Trust plc Annual Results Announcement for the year ended 31 December 2014 Key points â€¢ Maintained final covered dividend at 14 pence per share payable on 8 May 2015 to shareholders on the Companyâ€™s register on 27 March 2015 (ex dividend date is 26 March 2015); â€¢ Reduced management fee which is now also on a tiered basis; â€¢ Additional guidelines for investments in royalties including enhanced restrictions on individual exposures and total exposure to a single operator; and â€¢ Change in portfolio management team â€“ appointment of Olivia Markham as co-manager. Financial Highlights Attributable to ordinary shareholders 31 December 2014 31 December 2013 Change % Assets Net assets (Â£'000) 624,674 885,346 -29.4 Net asset value per ordinary share 352.35p 499.39p -29.4 - with income reinvested -26.4 -------- -------- -------- Ordinary share price (mid-market) 310.35p 465.00p -33.3 - with income reinvested -30.4 -------- -------- -------- Euromoney Global Mining Index 405.41 466.03 -13.0 Discount to net asset value 11.9% 6.9% ======== ======== ======== For the year ended For the year ended 31 December 2014 31 December 2013 Change % Revenue Net revenue return after taxation (Â£'000) 37,452 39,633 -5.5 Revenue return per ordinary share 21.13p 22.36p -5.5 Dividend per ordinary share - Interim 7.00p 7.00p - - Final 14.00p 14.00p - -------- -------- -------- Total dividends paid and payable 21.00p 21.00p - -------- -------- -------- Chairman's statement Overview 2014 was a challenging year for the Company. Against a backdrop of slowing global growth, the Board had taken the decision in the previous year to allocate up to 20% of assets in unquoted investments including mining royalties, equities and bonds. The strategic rationale for investing in royalties was, and remains, attractive in that it allows the Company to participate in long term production revenues by providing financing at a time of global banking constraint. However, the Company's exposure to the London Mining Marampa royalty contract was impacted by two unforeseen factors: the rapid and substantial decline in iron ore pricing following a collapse in Chinese demand and the spread of Ebola in West Africa. Our subsequent decision to write down the value of our investment in London Mining was taken only after careful consideration with our advisers. The Board is fully aware of the resultant effect on shareholders and, on behalf of my fellow Directors, I should like to offer our most sincere regret. Our responsibility to your Company is one we take most seriously. Accordingly, we are working closely with BlackRock to ensure that the Company continues to employ, and refine on an ongoing basis, robust diligence and supervisory processes designed to minimise the risk of such issues arising in the future, so far as it is within the power of the Board and the Investment Manager to do so. In this way, we hope to continue to capture the very significant opportunities that we believe exist in this sector with appropriate diversification of risk. Although the commodity markets remain volatile, since the year end we have been encouraged by the cautious approach taken by a number of reporting companies. Capital expenditures have been reined in to sustain dividends and the Company remains well positioned to take advantage of an eventual recovery in sentiment through a broad exposure to world class producers. Performance Over the twelve months to 31 December 2014 performance was very disappointing, with the Company's net asset value (NAV) per share declining by 26.4% and the Company's share price declining by 30.4%. The Company's benchmark index, the Euromoney Global Mining Index, declined by 13.0% in the same period (all percentages calculated in sterling terms with income reinvested). Since the year end and up until the close of business on 17 March 2015, the Company's NAV has declined by 2.5% compared with a decline of 1.9% in the benchmark index. Revenue return and dividend The Company's revenue return per share for the year to 31 December 2014 amounted to 21.13p compared with 22.36p for the previous year, representing a decrease of 5.5%. The Board recommends the payment of a final dividend of 14.00p per share for the year ended 31 December 2014 (2013: 14.00p) which, together with the interim dividend of 7.00p per share (2013: 7.00p), makes a total dividend of 21.00p per share (2013: 21.00p). The final dividend is payable on 8 May 2015 to shareholders on the Company's register on 27 March 2015 (ex dividend date is 26 March 2015). Royalties and unquoted investments During the year, the Company's performance was negatively impacted by the write down to zero of the holding in both the London Mining Marampa royalty contract and convertible bond. In addition, the Board decided to hold the gold-linked preference shares in Banro Corporation at a 30% discount to the implied gold price and the corporate bond at a 25% discount to the last traded price, following the latter's financing delay which increased the likelihood of the company requiring alternative sources of funding. At the end of February 2015, following details of Banro's additional financing, the Board concluded that it was appropriate to reduce the discount on the gold-linked preference shares to 15% and the discount on the corporate bond to 10%. The discount at the year end is considered appropriate as the new financing details influencing the reduction of the discount in February were not in existence at 31 December 2014. Further information on these investments can be found in the Investment Manager's Report. Going forward, the Board has refined the guidelines associated with the Company's royalty strategy. In August 2013, shareholders voted to allow up to 20% of the Company's gross assets to be invested in unquoted investments including royalties (previously 10%). It is proposed to maintain the 20% maximum exposure to royalties but the royalty/unquoted portfolio should itself deliver diversification across operator, country and commodity. To this end, new investments into individual royalties/unquoted investments should not exceed circa 3% of gross assets at the time of investment. Total exposure to any single operator, including other issued securities such as debt and/or equity, where greater than 30% of that operator's revenues come from the mine over which the royalty lies, must also not be greater than 3% at the time of investment. In addition, the guidelines require that the Investment Manager must manage total exposure to a single operator, via reducing exposure to that operator's listed securities if they are also held in the portfolio, in a timely manner where royalties/unquoted investments are revalued upwards. In the jurisdictions where statutory royalties are possible (in countries where mineral rights are privately owned) these will be preferred and in respect of contractual royalties (a contractual obligation entered into by the operator and typically unsecured) the valuation must take into account the higher credit risk involved. Board approval will continue to be required for all royalty/unquoted investments. Discount The discount to net assets averaged 5.0% over the past year, ranging from a discount of 13.5% to a premium of 3.9% and ended the year at a discount of 11.9% (all measured on a cum income basis). The Company's discount has since widened to 13.3% as at the close of business on 17 March 2015. The Board recognises the importance to shareholders that the Company's shares should not trade at a significant discount to the underlying net asset value. In recent years, the Board has placed much greater emphasis on seeking to close the discount through generating additional demand for the shares by increasing dividend distributions and illustrating the sustainability of these distributions through diversification of income. Recent events, along with mining sector weakness, have clearly impacted this strategy; however dividends remain key to discount management although not at the expense of potential capital growth. The Board regularly reviews the use of the Company's share buy back powers. The existing authority to buy back up to 14.99% of the Company's issued share capital will expire at the conclusion of the 2015 Annual General Meeting and a resolution will be put to shareholders to renew the authority at that meeting. The Board I am pleased to report that Judith Mosely joined the Board on 19 August 2014 and is also a member of the Audit & Management Engagement Committee. Judith is Business Development Director for Rand Merchant Bank in London with responsibility for developing the bank's African business with international mining and metals companies. She also sits on the advisory board of Women in Mining and brings a wealth of mining and commercial experience. Portfolio Managers With effect from 30 April 2015, the Companyâ€™s investments will be co-managed by Evy Hambro and Olivia Markham. The present co-manager, Catherine Raw, has informed the Board she is to take up a corporate position within the mining sector and will be leaving BlackRock on 30 April. The Board would like to express its thanks to Catherine for her contribution on behalf of the Company since 2009. Olivia Markham joined BlackRockâ€™s Natural Resources team in 2011. She has 11 years of industry experience, having formerly been the head of European mining research at UBS, a mining analyst at Merrill Lynch in Sydney and a member of the Mergers & Acquisitions team at BHP Billiton in Melbourne. Investment Management Fee Following a review of the investment management fee, the Board has agreed with the Manager that the investment management fee (including administration and company secretarial services) will be amended as follows: With effect from 1 July 2015 the annual fee, chargeable on the gross assets under management, will be reduced from a flat fee of 130 bps to: â€¢ 120bps on the first Â£500 million of gross assets â€¢ 100bps on the next Â£500 million â€¢ 85bps on gross assets above Â£1 billion However, between 1 April 2015 and 30 June 2015 the annual fee, chargeable on the gross assets under management, will be further reduced to: â€¢ 110bps on the first Â£500 million of gross assets â€¢ 70bps on the next Â£500 million â€¢ 40bps on gross assets above Â£1 billion The Board intends to keep fee rates under review. In determining the appropriate rate, particular note will continue be taken of the Manager's performance relative to the benchmark and the views of shareholders, as well as more general trends in the marketplace. Julian Baring Scholarship fund The Julian Baring Scholarship Fund was created in the name of well-known fund manager, Julian Baring, in celebration of his two great passions - mining and Africa. The advisers to the Fund, with the support of the industry, endow annual scholarships for talented, but financially disadvantaged, African students to continue their studies and to pursue a career in the mining industry. The Fund has awarded scholarships to over forty individuals in mining related faculties at South African universities with which it is associated and has also set up joint ventures with several African-based mining companies which award scholarships to deserving individuals from those companies. During the year, the Company made a donation of Â£12,000 to the Julian Baring Scholarship Fund. It is hoped that with further support both in terms of funding and corporate partnerships, the Julian Baring Scholarship Fund will be able to make an even greater contribution to the skills and resources available to the mining industry. Annual General Meeting The Annual General Meeting of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 29 April 2015 at 11.30 a.m. Details of the business of the meeting are set out in the Notice of Meeting on pages 75 to 78 of the Annual Report and Financial Statements. The Portfolio Managers will make a presentation to shareholders on the Company's performance and the outlook for the year ahead. Outlook Growing concerns over a slowdown in the Eurozone and emerging economies, a strong US dollar and a well-supplied oil market have contributed to a weakening of many commodity prices since the summer of 2014. This does not paint a particularly optimistic outlook for 2015, especially as commodity markets are likely to remain volatile, with continued concerns over emerging market growth, inflated inventory levels and a buoyant US dollar creating headwinds. It is hoped that the second half of the year may see an improvement, as capital expenditure reductions made in prior years take effect on the rate of supply growth and concerns over commodity demand growth abate. With mining company management continuing to deliver operationally and with a focus on capital discipline and improved returns to shareholders, absent a further deterioration in the global macroeconomic environment, these factors should be supportive of valuations. A W Lea Chairman 19 March 2015 Strategic report The Directors present the Strategic Report of the Company for the year ended 31 December 2014. Principal activity The Company carries on business as an investment trust. Its principal activity is portfolio investment and that of its subsidiary, BlackRock World Mining Investment Company Limited (the Group), is investment dealing. Objective The Company's objective is to maximise total returns to shareholders through a worldwide portfolio of mining and metal securities. The Board recognises the importance of dividends to shareholders in achieving that objective, in addition to capital returns. Strategy, Business Model and Investment Policy In order to achieve its objective, it is intended that the Group will normally be fully invested, which means at least 90% of the gross assets of the Company and its subsidiary will be invested in stocks, shares, royalties and physical metals. However, if such investments are deemed to be overvalued, or if the Investment Manager finds it difficult to identify attractively priced opportunities for investment, then up to 25% of the portfolio may be held in cash or cash equivalents. The Company's investment policy is to provide a diversified investment in mining and metal securities worldwide. While the policy is to invest principally in quoted securities, the Company's investment policy includes investing in unquoted investments. Risk is spread by investing in a number of holdings, many of which themselves are diversified companies. The Group may occasionally utilise derivative instruments such as options, futures and contracts for difference, if it is deemed that these will, at a particular time or for a particular period, enhance the performance of the Group in the pursuit of its objective. The Company is permitted to enter into stock lending arrangements. As agreed at a General Meeting on 21 August 2013, the Group may invest in any single holding of quoted or unquoted investments that would represent up to 20% of gross assets at the time of acquisition. Although investments are principally in companies listed on recognised stock exchanges, the Company may invest up to 20% of the Group's gross assets in investments other than quoted securities. Such investments include unquoted equities or bonds, royalties, physical metals and derivatives. In order to afford the Company the flexibility of obtaining exposure to metal and mining related royalties, it is possible that, in order to diversify risk, all or part of such exposure may be obtained directly or indirectly through a holding company, a fund or another investment or special purpose vehicle, which may be quoted or unquoted. The Board will seek the prior approval of shareholders to any unquoted investment in a single company, fund or special purpose vehicle or any single royalty which represents more than 10% of the Group's assets at the time of acquisition. As noted in the Chairman's Statement, the Board has now asked the Investment Manager to operate within tighter limits than those previously agreed in respect of unquoted investments, including royalties. It is proposed to maintain the 20% maximum exposure but there will be sizing for individual royalties/unquoted investments, diversification of the royalty portfolio and management of exposure to a single operator. Further details of the refinements are detailed on page 4 of the Annual Report and Financial Statements. As at 31 December 2014, five investments were held at Directors' valuation (including one unquoted investment in the Banro gold-linked preference shares). Unquoted investments can prove to be more risky than listed investments. The investment in the Banro gold-linked preference shares, Banro Corporate 10% note, Ivanhoe Mines, Romarco Minerals and Mountain Province Diamond are held at Directors' valuation. In addition, while the Company may hold shares in other listed investment companies (including investment trusts) the Company will not invest more than 15% of the Group's gross assets in other UK listed investment companies. The Group's financial statements are maintained in sterling. Although many investments are denominated and quoted in currencies other than sterling, the Board does not intend to employ a hedging strategy against fluctuations in exchange rates. The Investment Manager believes that tactical use of gearing can add value from time to time. This gearing is typically in the form of an overdraft or short term loan facility, which can be repaid at any time or matched by cash. The level and benefit of gearing is discussed and agreed with the Board regularly. The Company may borrow up to 25% of the Group's net assets. The maximum level of gearing used during the year was 14.8% and, at the financial reporting date, net gearing (calculated as borrowings less cash as a percentage of net assets) stood at 11.7% of shareholders' funds (2013: 9.6%). For further details on borrowings refer to note 14 on page 55 of the Annual Report and Financial Statements. No material change will be made to the investment policy without shareholder approval. Portfolio analysis Information regarding the Company's investment exposures is contained within the ten largest investments, the investments listing, and portfolio analysis. Further information regarding investment risk and activity throughout the year can be found in the Investment Manager's Report. Continuation of the Company As agreed by shareholders in 1998, an ordinary resolution for the continuation of the Company is proposed at each Annual General Meeting. The Directors recommend that shareholders vote in support of the Company's continuation. Performance In the year to 31 December 2014, the Company's net asset value per share declined by 26.4% compared with a decline in the Euromoney Global Mining Index of 13.0%. The Company's share price declined by 30.4% over the same period. (All figures calculated in sterling terms with income reinvested.) Results and dividends The results for the Company are set out in the Consolidated Statement of Comprehensive Income. The total loss for the year, after taxation, was Â£223,442,000 (2013: loss of Â£293,167,000) of which Â£37,452,000 (2013: Â£39,633,000) is revenue profit. It is the Board's intention to distribute the maximum dividend possible in terms of earnings each year. The Directors recommend the payment of a final dividend as set out in the Chairman's Statement. Dividend payments for the year ended 31 December 2014 (including the interim dividend) amount to Â£37,230,000 (2013: Â£37,230,000). Key performance indicators The Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time and which are comparable to those reported by other investment trusts are as follows. 2014 2013 Net asset value per share 352.35p 499.39p Share price 310.35p 465.00p Discount to net asset value 11.9% 6.9% Revenue earnings per share 21.13p 22.36p Ongoing charges* 1.4% 1.4% -------- -------- * Ongoing charges represent the management fee and all other operating expenses, excluding finance costs and taxation, as a % of average shareholders' funds. The Board monitors the above KPIs on a regular basis. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company's relative performance of the various components such as asset allocation and stock selection. Discount Details of the Company's share price discount to NAV are given in the Chairman's Statement. Principal 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 for monitoring the performance of the Investment Manager and implementation of the strategy. 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 Euromoney Global Mining Index and other similar indices, including the performance of major companies in the sector. Past performance is not necessarily a guide to future performance and the value of an investment in the Company and the income from it can fluctuate as the value of the underlying investments fluctuate. - Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio and investment activity. Any change in the tax treatment of the income 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 income forecasts and considers the level of income at each meeting. - Market risk - Market risk arises from volatility in the prices of the Company's investments. It represents the potential loss the Company might suffer through realising investments in the face of negative market movements. Changes in general economic and market conditions, such as interest rates, rates of inflation, industry conditions, tax laws, political events and trends can also substantially and adversely affect the securities and, as a consequence, the Company's prospects and share price. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. - Financial risk - The Company's investment activities expose it to a variety of financial risks which include market risk, currency risk, interest rate risk, market price risk, liquidity risk and credit risk. Further details are disclosed in note 18 on pages 57 to 68 of the Annual Report and Financial Statements, together with a summary of the policies for managing these risks. - Regulatory risk - The Company operates as an investment trust in accordance with the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from 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, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board at each meeting. Following authorisation under the Alternative Investment Fund Managers' Directive (AIFMD) the Company and its appointed Alternative Investment Fund Manager (AIFM or Manager) are subject to the risks that the requirements of the Directive are not correctly complied with. The Board and the Manager also monitor changes in government policy and legislation which may have an impact on the Company. - Operational risk - In common with 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 Manager, BNY Mellon Trust & Depositary (UK) Limited (the Depositary) and the Bank of New York Mellon (International) Limited (the administrator), who maintain the Company's accounting records. The security 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 have been regularly tested and monitored which is evidenced through their Service Organisation Control (SOC 1) Reports which are reported on by their service auditors and give assurance regarding the design and effective operation of controls. The Board also considers business continuity arrangements for the Company's key service providers. - Resource risk - The quality of the investment management team employed by the Investment Manager 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 programmes in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff. - Gearing risk - The Company has the power to borrow money (gearing) and does so when the Investment Manager is confident that market conditions and opportunities exist to enhance investment returns. However, if the investments fall in value, any borrowings will magnify the extent of this loss. All borrowings require the approval of the Board and gearing levels are reviewed regularly by the Board and Investment Manager. Future prospects The Board's main focus is to maximise total returns over the longer term. The future performance of the Company is much dependent upon the success of the investment strategy and, to a large degree, on the performance of financial markets. The outlook for the Company in the next twelve months is discussed in both the Chairman's Statement and the Investment Manager's Report. Social, community and human rights issues As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Company believes that it is in shareholders' interests to consider environmental, social and governance factors, and human rights issues, when selecting and retaining investments. Details of the Company's policy on socially responsible investment are set out on pages 31 and 32 of the Annual Report and Financial Statements. Directors, gender representation and employees The Directors of the Company on 31 December 2014 are set out in the governance structure and Directors' biographies on page 20 of the Annual Report and Financial Statements. The Board consists of six male Directors and one female Director. The Company does not have any employees. The information set out on pages 10 to 19 of the Annual Report and Financial Statements, including the Investment Manager's Report, forms part of this Strategic Report. The Strategic Report was approved by the Board at its meeting on 19 March 2015. By order of the Board BlackRock Investment Management (UK) Limited Company Secretary 19 March 2015 Transactions with the AIFM and the Investment Manager BlackRock Investment Management (UK) Limited (BIM (UK)) provided management and administration services to the Company under a contract which was terminated with effect from 2 July 2014. BlackRock Fund Managers Limited (BFM) was appointed as the Company's AIFM with effect from 2 July 2014. BFM has (with the Company's consent) delegated certain portfolio and risk management services, and other ancillary services, to BIM (UK). The transactions and relationship details are set out in the Directors' report on page 21 of the Annual Report and Financial Statements. The investment management fee due to BIM (UK) and BFM for the year ended 31 December 2014 amounted to Â£10,493,000 (2013: Â£12,656,000). At the year end, Â£2,061,000 (2013: Â£20,752,000) was outstanding in respect of the management fee. The management fee was until 1 July 2014 payable to BIM (UK) and thereafter to BFM. In addition to the above services, with effect from 1 November 2013, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 31 December 2014 amounted to Â£256,000 excluding VAT (2013: Â£43,000). Marketing fees of Â£299,000 (2013: Â£43,000) were outstanding at 31 December 2014. Related party transactions The Board consists of seven non-executive Directors all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 October 2013 the Chairman receives an annual fee of Â£45,000, the Chairman of the Audit & Management Engagement Committee and Senior Independent Director receives an annual fee of Â£37,500, and each other Director receives an annual fee of Â£30,000. All seven members of the Board hold shares in the Company. Mr Lea holds 12,000 ordinary shares, Mr Barby 25,000 ordinary shares, Mr Buchan 29,000 ordinary shares, Mr Cheyne 24,000 ordinary shares, Mr Cockerill 18,136 ordinary shares, Mr Edey 7,000 ordinary shares and Ms Mosely 7,400 ordinary shares. The amount of Directors fees outstanding at 31 December 2014 was Â£19,375 (2013: Â£16,875). Statement of directors' responsibilities in respect of the Annual Report and Financial Statements The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the financial statements under IFRS as adopted by the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: - present fairly the financial position, financial performance and cash flows of the Company; - select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently; - present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; - make judgements and estimates that are reasonable and prudent; - state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; - provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, Directors' Report, the Directors' Remuneration Report, the Corporate Governance Statement and the Report of the Audit & Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company's corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors at the date of this report, whose names are listed on page 20 of the Annual Report and Financial Statements, confirm to the best of their knowledge that: - the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and - the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The 2012 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit & Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit & Management Engagement Committee's Report on pages 33to 35 of the Annual Report and Financial Statements. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 December 2014, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. For and on behalf of the Board A W Lea Chairman 19 March 2015 Investment manager's report Portfolio performance 2014 was a further year of negative returns for mining shares. The sector has now underperformed broader markets for four consecutive years, the first time this has happened since the Company was formed. Despite positive steps taken by mining companies to reduce costs and curtail excessive capital investment, share prices fell on the back of underlying commodity price falls, especially in the second half of the year. The year was a reversal of 2013 which saw share prices perform well in the second half after a poor start. This year all of the gains made in the first half were more than offset by falls in the second half. For the calendar year 2014, the Company's net asset value (NAV) and share price fell by 26.4% and 30.4% respectively, in sterling terms with income reinvested. In capital only terms, the NAV fell by 29.4% and the share price by 33.3%. By comparison, in sterling terms, the Euromoney Global Mining Index fell by 15.6% (capital only) and 13.0% (with income reinvested). The underperformance was almost entirely driven by the Company's exposure to iron ore and, in particular, the extremely disappointing failure of the royalty investment in the Marampa iron ore mine. There is further detail on this investment in the unquoted section of this report. Mining sector overview After the changes put in place in 2013, the mining sector started the year with strong momentum behind it. The capital discipline plans initiated by the new management teams bolstered hopes for further gains in the sector after the recovery in share prices in the second half of 2013. Company results for 2013 were mostly ahead of expectations and the prospect of increased returns boosted share prices early on in the year. From the low in July 2013 to the high in July 2014 the sector was up 20.4% (in sterling terms) and, as noted, this was driven by the belief that the 'self-help' strategies put in place by mining companies would realise value for shareholders. However, as the summer ended, commodity prices started to fall and it was not long before falling prices for iron ore, nickel and copper started to put pressure on companies to defer the capital management plans announced at the start of the year. Nowhere was this impact felt more severely than when BHP Billiton failed to meet shareholder expectations for a share buyback in August. In the final quarter of the year, as the US ended its Quantitative Easing programme, the negative momentum intensified. The price of oil collapsed so severely that it spilt over into the base metal suite taking prices of most metals down with it. The scale and rapidity of the fall in oil took the market by surprise and, when OPEC decided not to intervene, the fall accelerated to levels not seen since 2009. Commodity demand held up better than the price falls implied. The US economy continued to beat growth expectations and, with the bears on China yet again disappointed not to see a collapse in domestic activity, demand for metals remained reasonably buoyant (although at annual growth levels well below the peaks seen in the prior decade). Although Europe started the year showing early signs of economic recovery, these had faltered by the second half leaving European metals demand generally weak for the year as a whole. The problem for metal prices was not so much on the demand side but from the growth in supply. Despite capital investment now falling, commodities markets have been saddled with the weight of new supply finally arriving from capacity that has been under construction for the last five years. The wave of additional material overwhelmed prices during the year and caused them to reset to lower levels, impacting long-established cost curves. With input costs also falling, such as the oil price and weaker producer currencies, investors started to reassess where the new cost curves for metals and minerals production would be. This resulted in further downward pressure on metal prices especially during the last quarter. In such an environment it is no surprise that M&A activity was subdued during the year. Most companies prioritised the repayment of debt and dividends rather than venturing above the parapet to look at M&A. However, a number of asset sales were concluded and this saw mid-size producers able to grow their production base as majors sold non-core assets. The exception to this was the sale of the Las Bambas mine by Glencore to China MinMetals for US$7 billion. This transaction had been expected by the market and, with the benefit of hindsight, it looks like a positive deal for Glencore. Another strategy back in fashion is for larger companies to 'spinout' non-core assets to their existing shareholders on a pro rata basis. This was first mentioned by BHP Billiton with the creation of 'South 32' which will hold their aluminium, manganese and sub scale base metal assets. The company expects to conclude this during the first half of 2015. Vale is also considering a similar process for their entire base metals division which should see it listed separately during the third quarter of 2015. Gold shares performed better in 2014, in contrast to 2013 when they were adversely impacted by a fall in the gold price. The gold price was range bound during the year as central bank buying and jewellery demand acted to provide a floor, outweighing the much lower rate of gold ETF liquidation. As a result, gold company share prices were driven more by their own fundamentals and this led to huge dispersion in performance within the sector. The larger ex-growth companies with weak balance sheets performed poorly, whilst the mid-size companies with fully financed growth outperformed. The Company was well positioned to take advantage of this, leading to strong relative performance in this sub sector of mining. Base metals In 2014 the performance of base metals was mixed. The best performer was nickel, which managed to hold on to part of the gains made in the first half of the year on the back of the curtailment of exports from Indonesia. Prices rallied strongly in the first few months of the year, but once these stronger price levels encouraged other producers to lift production (the Philippines in particular), nickel soon gave back its stellar gains made earlier in the year. Nickel company share prices followed the moves in the underlying price and some had given back all of the gains by the year end. However, those that were fortunate to see their domestic currencies weaken versus the US dollar, namely Australian and Russian based producers, fared better. For the Company, the holding in the Russian company Norilsk was a source of both good performance and substantial income despite the political turmoil surrounding Crimea and Ukraine. Zinc and aluminium prices also closed the year higher as their respective markets shifted from surplus to deficit. Both metals seemed to have turned the corner, especially when compared to other commodities which, as previously mentioned, are still suffering from oversupply. The Company had minimal direct exposure to aluminium for most of the year but, in the second half, initiated a position in Alumina Limited on the back of better prices and a weaker local currency. In zinc, the main exposure during the year was a futures contract which performed well and profits were taken during the second half of the year. Zinc equity exposure was limited to smaller holdings such as Nyrstar (0.2% of the portfolio) and indirect exposure via Lundin Mining (4.6% of the portfolio), Hudbay Minerals (2.3% of the portfolio), Boliden (1.5% of the portfolio), Volcan (0.1% of the portfolio) and Sociedad Minera El Brocal (0.1% of the portfolio). With the closure of the large Century mine in Australia scheduled for the second half of 2015, the prospects for zinc continue to look positive. Selected commodity price changes during 2014 % change Price % change average 31 December 2014 over 12 months 2014 vs. 2013 Nickel (US$/lb) 6.84 +9.0 +12.4 Zinc (US$/lb) 0.98 +5.6 +13.1 Aluminium (US$/lb) 0.83 +4.0 +1.1 Uranium (US$/lb) 35.5 +2.9 -13.6 Gold (US$/oz) 1,186.3 -1.8 -10.4 Platinum (US$/oz) 1,206 -11.1 -6.9 Tin (US$/lb) 8.81 -13.0 -1.8 Copper (US$/lb) 2.89 -13.7 -6.4 Lead (US$/lb) 0.84 -15.9 -2.1 Hard Coking Coal (US$/tonne) 111 -16.5 -23.0 Silver (US$/oz) 15.75 -19.2 -15.9 Thermal Coal (US$/tonne) 64.8 -24.9 -16.7 Iron Ore - fines 62% Fe China Import (US$/tonne) 68 -48.9 -26.2 Baltic Freight Rate Index (US$) 782 -65.7 -9.1 ======== ======== ======== Sources: Datastream and Bloomberg. Copper was once again the largest single base metals exposure within the Company. The rationale for this positive view again played out during the year as expectations of a large surplus were not accurate and copper once more averaged over US$3/lb for the year (the 5th consecutive year of greater than US$3/lb prices). Sadly, despite the market data being supportive for the price, copper equities generally moved lower due to fears of a surplus in 2015, as well as company specific events. Freeport-McMoRan, the Company's second largest copper equity exposure at 4.0%, did not manage to deliver on its debt reduction plans as problems in Indonesia and lower oil prices reduced cash flow, thereby limiting the company's ability to pay down debt. First Quantum Minerals (8.6% of the portfolio, including both debt and equity exposure) struggled with changes to tax rates in Zambia and delays to the ramp-up of new capacity. The mid cap companies, such as Hudbay, Lundin and Nevsun Resources (2.0% of the portfolio), all helped performance during the year but it was not sufficient to offset the relative underperformance from the larger holdings. Gold and precious metals Following the sharp decline in the price in 2013, gold was comparatively range-bound in 2014, down 1.8% for the year (in US dollar terms). Throughout the year gold was buffeted by a number of macro factors including the end of Quantitative Easing in the US, a structurally stronger US dollar, the conflict in Ukraine, the rise of ISIS in Northern Iraq and the collapse in oil prices in the second half of the year. The net result was that gold ended the year almost where it started. The size of the physical gold market fell by 6% year-on-year for the first three quarters of 2014 versus the same period in 2013. Financial investor participation in the physical market was limited and conviction levels were generally low. Gold's 'tourist' investors, who got involved during the heady days of the bull market of 2010 and 2011, have almost completely exited the market, meaning changes in gold holdings in physically-backed ETFs have had a limited influence on the gold price over the course of the year. Instead, the more established markets of China and India, as well as Central Banks, provided vital support for the gold price during the sharp sell-offs in the gold futures market in the second and fourth quarters. After a relatively weak first half for Asian gold demand year-on-year, the third quarter witnessed accelerating demand out of China and India and the market was positively surprised when India eased restrictions on gold imports in November. Central Bank demand was much stronger in 2014 than the market had expected, with Russia and the Former Soviet countries responsible for cumulative central bank purchases for the first three quarters of the year which exceeded those in the equivalent period of 2013. The Swiss referendum on its Central Bank gold holdings also helped to emphasise that gold is still very much perceived as a core reserve currency by the public, which in turn helped to improve market sentiment towards the yellow metal in the fourth quarter. Gold equities, as measured by the FTSE Gold Mines Index, fell by 9.9% (in sterling terms). As discussed earlier, there was a significant dispersion in returns across the gold producers; for example, of the two largest gold companies, RandGold Resources (1.6% of the portfolio) was up by 15.6%, whereas Barrick (not held in the portfolio) ended the year down by 34.8% in sterling terms. The companies that performed best were those with stronger balance sheets, lower costs and organic growth, a good example of which was RandGold Resources. Royalty companies, which are not exposed to underlying cost inflation, also delivered strong performance and the Company's best performing gold holding was Franco-Nevada (1.2% of the portfolio), up by 28.8% (in sterling terms). Silver underperformed its more valuable cousin for the second year in a row, falling by 19.2% in US dollar terms. The bulk of the Company's silver exposure is through its holding in Fresnillo (3.0% of the portfolio) and its parent company, Industrias Penoles (1.6% of the portfolio). In September, Fresnillo announced its intention to purchase Newmont's 44% stake in the Penmont joint venture, taking Fresnillo's ownership of three high quality gold mines, plus two advanced exploration projects, to 100%. This could see the majority of Fresnillo's revenues coming from gold production once the deal completes. Of the other precious metals, platinum ended the year down 11.1%, wiping out the gains achieved in the first half of the year. Palladium fared better, holding on to most of its gains in the first half to end the year up 13.3% in US dollar terms. The Company has minimal exposure to platinum producers and exited its position in the platinum ETF in the second half of the year. The Company has significant exposure indirectly to palladium through its exposure to Norilsk Nickel (3.4% of the portfolio), the world's largest palladium producer. Diamond exposure in the portfolio increased year-on-year with additions to holdings in Petra Diamonds and Mountain Province Diamonds. Total exposure to the diamond sector ended the year at over 3% of the portfolio. Rough diamond prices performed well in 2014, driven by good demand growth from the US and a shortage of high quality diamonds. Energy commodities There was no respite for energy commodities in 2014 with the year-on-year average price for metallurgical coal down by 23.0%, thermal coal down by 24.9% and uranium down by 13.6%. The main reason for prices falling yet again was the muted supply side response. Producers either opted to increase production in order to lower unit costs or chose to deliver into sales contracts at prices set before the falls. This meant that supply falls did not come through fast enough to arrest the price declines. The Company was significantly underweight to US and Australian producers of coal during the year and, as such, this was a source of positive relative returns. The Company's only large coal holding was that of China Shenhua Energy. This holding was initiated during the latter stages of 2013 and added to throughout the year under review. The shares fared much better than both other coal companies and the whole mining sector due to the company's decision to diversify its business downstream into power generation rather than just mining coal. The Company had no direct exposure to uranium. Looking forward, the prospects do not look promising. The collapse in the price of oil and a weakened Australian dollar have lowered costs, keeping marginal producers operating for longer than expected. In addition, China's reduced coal imports dampened demand expectations. In uranium, reports that China has taken advantage of the low prices to build up a strategic inventory will also push out the need for purchases as and when they finally commission their new generation of nuclear reactors. Unquoted/illiquid investments Marampa royalty contract (0.0% of the portfolio) In July 2012, the Company purchased a 2% revenue-related royalty contract calculated on iron ore sales from London Mining plc's Marampa mine in Sierra Leone. This royalty contract was with a subsidiary of London Mining plc whose sole asset was the Marampa mine. It was a contractual royalty, rather than a statutory royalty, which is attached directly to the mining licence area. In Sierra Leone mineral rights are not privately owned but leased from the government by the operator; as such, it is not possible for the owner of the mine to attach a royalty directly to the mine area. Within the royalty contract, there were anti-dilution clauses and other protections that ensured that in the case of the sale of all or part of the asset by London Mining plc, the royalty would remain whole. However, there was no security over the mine itself, this having already been part of the bank debt facility, which meant in the event of default the Company became an unsecured creditor. The Marampa mine started production in the second half of 2011 and shipped its first concentrate in January 2012. For the full year 2012, sales totalled 1.3 million wet metric tonnes (wmt), increasing in 2013 by 186% to 3.7 million wmt. However, in 2014, a combination of a slower than expected ramp-up of the second plant, a fall of over 40% in the iron ore price and the outbreak of Ebola in Sierra Leone, meant that by October London Mining plc could no longer meet its financial obligations. A member of the BlackRock Natural Resources Team revisited the Marampa mine in May 2014 following first quarter results, which indicated that the ramp-up of production was slower than market expectations. The improvements that had been put in place, and the further planned modifications, indicated that the company's full year production target was, as at the time of the site visit, still achievable. However, following the release of London Mining's interim financial results in August 2014, it was clear that the financial situation of London Mining plc had deteriorated owing to a slower ramp-up impacting both revenues and costs, compounded by the fall in the iron ore price. In addition, the company highlighted the increased risk on operations associated with the outbreak of Ebola in Sierra Leone. The Board of the Company wrote down the holding value of the Marampa royalty contract by 30% based on the Investment Manager's adjusted production assumptions and the increased discount rate applied to future cash flows. At the interim results of London Mining plc, they indicated that they were in the midst of a strategic partner search that would provide them with the necessary funds to allow them to not only maintain production but also to fund further expansion. On 22 September 2014, the company announced that they were in a dispute with Glencore regarding a cash prepayment which accelerated the decline in the company's financial position and made the need for external funding more urgent. On 29 September, in an update to the market, the company maintained that strategic partner discussions were ongoing but indicated that this would lead to significant equity dilution at the plc level. However, on 8 October, London Mining plc announced they foresaw "little or no value" in the equity of the company and that existing lenders would not provide further short term funding. Following the 8 October announcement, the Board concluded that the most prudent approach was to value the Company's holdings in the London Mining Marampa royalty contract and its holding in London Mining's convertible bond at nil and to recognise income on the royalty contract and the convertible bond only to the extent that it had already been received. On 16 October 2014, London Mining plc was placed into administration owing to the failure of the company to secure further funding either from their existing lenders or from a new strategic investor. The Marampa mine was subsequently sold by the administrator and the company's equity and convertible bond were delisted. As at the date of writing, London Mining plc remains in administration; the Company has submitted its claim as an unsecured creditor and the administrator is working to realise any residual value from the company's remaining assets on behalf of its creditors. Banro gold-linked preference shares (1.6% of the portfolio) and Banro Corporate 10% note (1.0% of the portfolio) In April 2013, the Company purchased US$30 million gold-linked preference shares from Banro Corporation to help fund the development of its second gold mine, Namoya. The gold-linked preference shares provide exposure to the gold price, as well as to volume growth, with the principal moving in line with the gold price and the dividend ranging between 10-15% depending on Banro's overall level of production. In late July 2014, Banro reported that, during the commissioning of their Namoya mine, it had become evident that the plant was not able to process the higher than expected fines content of the ore and modifications were required to meet the designed throughput rate. The company engaged an independent technical consultant to help evaluate options for optimisation of the plant, as well as appointing financial advisers to assist in assessing the company's consequent financial requirements. On 18 August, Banro announced they had secured funding to cover the short term capital programme at Namoya, as well as to reduce accounts payable and for general working capital purposes. In addition, it announced the signing of a memorandum of understanding with Gold Holding Ltd for a US$41 million gold forward sale over the Twangiza production and a US$80 million gold streaming transaction over the Namoya mine for a total of US$121 million of new capital. On 4 November, a definitive agreement was subsequently signed over the first US$41 million with the expectation that the deal would close in a few weeks. Towards late November the deal had still not closed and the uncertainty over the timing of the closure of this transaction, coupled with a balance sheet update provided in the Banro's Q3 results released on 11 November, meant the Board concluded it was appropriate to hold the Banro gold-linked preference shares at a 30% discount to the implied gold price used in the valuation of the preference shares. In December the Board noted the lack of recent trading activity in Banro's 10% Note (March 2017) and, coupled with the ongoing financing uncertainty, concluded it was prudent to value the Company's investment in the Banro Corporate 10% note at a 25% discount to its last traded price on 21 November 2014. On 5 January 2015, after the financial year end, Banro confirmed that the transaction with Gold Holding Ltd had been delayed and, as a result, the company was progressing with alternative funding solutions and focusing on careful cash management. As part of the company's cash management, Banro elected to accrue the fourth quarter 2014 dividends on the company's gold-linked preference shares. On 27 February 2015, Banro announced details of a US$100 million financing which included the forward sale of 44,496 ounces of gold from their Twangiza operation deliverable over the next three years and a life-of mine gold streaming transaction relating to their Namoya mine. Banro advised that the use of proceeds from this financing included the payment of the upcoming interest due on the company's Corporate 10% note and payment of the accrued dividends on the company's gold-linked preference shares. Following Banro's news release and on a recommendation from BlackRock's Pricing Committee, the Board concluded that it would be appropriate to reduce the discount on the gold-linked preference shares to 15% and the discount on the Corporate 10% note to 10%. As at 2 March 2015, the Company's total exposure to Banro Corporation stood at 3.3% of the portfolio, of which the gold-linked preference shares represent 2.2% and the 10% Corporate note represents 1.1%. Avanco Resources royalty contract (0.0% of the unquoted/illiquid portfolio and 1.1% of the listed portfolio) In October 2013, the Company signed a non-binding memorandum of understanding with Avanco Resources for a contractual royalty covering its exploration licenses within the world-class mineral district of Carajas in Brazil. A binding royalty agreement was subsequently signed in July 2014 in which the Company will provide US$12 million in return for Net Smelter Return (net revenue after deductions for freight, smelter and refining charges) royalty payments comprising 2% on copper, 25% on gold and 2% on all other metals that will be produced from their Antas North and Pedra Branca (Stage 1 and Stage 2) licenses. In addition, there will be a flat 2% royalty over all metals produced from any other discoveries within Avanco's licence area as at the time of the agreement. The purchase of the royalty is conditional on the publication of a Joint Ore Reserves Committee (JORC) compliant reserve statement, the receipt of a mining license for Stage 1, and on the company securing debt financing. As at the time of writing, the company had fulfilled the first two conditions; it received its mining licence on 11 September 2014 and published a JORC compliant reserve statement on 14 September which was ahead of BlackRock's initial assumptions and extended the mine life of Stage 1 to over 9 years versus our assumption of 7 years. The company is progressing with debt financing discussions having agreed terms for a US$58 million secured debt facility with Banco Votorantim. The drawdown of the Company's US$12 million is conditional on this debt being in place and, as such, is not yet a holding in the portfolio. Fixed income securities The Company continues to have a significant part of the portfolio allocated to fixed income securities. As at the end of 2014, it had 10.5% of the portfolio in such securities. First Quantum debt made up the largest exposure to a single issuer at 4.8% of the Company's portfolio. 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 Company, usually have the effect of obliging us to buy or sell stock or futures at levels we believe are attractive. During 2014, we again primarily focused on writing short dated calls to generate premium income. The income generated by such option writing enables us to maximise the potential exit price from a position if the option is exercised. In addition to writing calls, we also took advantage of volatility in the market to occasionally write puts as well. Both strategies worked well during the year and income from option writing increased again year-on-year. The bulk of the option deals were done in the second half following the increase in volatility which made the trades more worthwhile. At the end of 2014, the Company had two put options and one call option in the portfolio. The put options expired worthless in January and the covered call option expired in February. Gearing At 31 December 2014, the Company had debt net of group cash amounting to Â£73.3 million (2013: Â£85.4 million), representing gearing of 11.7% (2013: 9.6%). For the most part, this gearing has been drawn down against the higher yielding mining company corporate bonds and is predominantly denominated in the same currency as the bonds. 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, as well as enhance overall returns during the medium to long term. Outlook and strategy for 2015 Last year we had expected an improving world economy to support commodity demand, and in turn, commodity prices. Sadly, supply growth managed to overwhelm demand and resulted in many commodity prices falling sharply. This year we are faced with a more sombre tone to the demand outlook but, thanks to continued under-investment, the industry is edging towards a time when metals markets will move into deficit. At the same time, mining companies are doing more to improve returns for shareholders. The under-investment in new capacity bodes well for all stakeholders in the sector and, most importantly, for the Company and the companies in which we invest. In the near term, recent falls in metal prices might take some of the momentum out of expectations for increased dividends, but if we can look past this towards the end of the decade then we see a far more supportive market. Evy Hambro and Catherine Raw BlackRock Investment Management (UK) Limited 19 March 2015 Ten Largest Investments 31 December 2014 Set out below is a brief description by the Investment Manager of the Company's ten largest investments. BHP Billiton - 10.8% (2013: 10.6%) is the world's largest mining company by market cap. The company is an important global player in a number of commodities including iron ore, copper, coal, manganese, aluminium, diamonds and uranium. The company is the only sizeable holding in the portfolio with significant oil and gas assets. The market was disappointed in the second half of 2014 by an anticipated share buyback that failed to materialise. In addition, the sharp fall in the oil price significantly impacted future cash flow expectations for the company towards the end of the year. In their production results in January 2015, the company indicated a reduction in rig count which should translate into lower capital expenditure for the rest of the financial year compared to the original forecast. Rio Tinto - 10.8% (2013: 11.9%) is the world's second largest mining company by market cap. It has interests over a broad range of metals and minerals including iron ore, aluminium, copper, coal, industrial minerals, gold and uranium. The company is midway through expanding its world class Pilbara iron operations to 360mtpa. With falling capital expenditure, growing volumes and declining operating costs, Rio Tinto generates strong free cash flows even in the face of lower iron ore prices. First Quantum Minerals* - 8.6% (2013: 7.8%) is an integrated copper producer whose principal operating assets are in Zambia, but also with nickel assets in Australia and Finland. In April 2013, the company completed its C$5.1 billion offer for Inmet, a copper producer whose major development project was the Cobre Panama mine in Panama. First Quantum is in the midst of a significant expansion of the business comprising of six major projects. The change in fiscal regime in Zambia from profit-related taxation to a royalty system has led to significant uncertainty regarding the impact this will have on mining companies' cash flows that operate in the country, compounded by the death of the President in October 2014. Presidential elections in Zambia were held in January 2015. In addition, the Company holds corporate bonds issued by First Quantum. The company refinanced bonds originally issued by Inmet to fund the development of Cobre Panama in February 2014. The bonds have coupons of 6.75% and 7% respectively. Glencore - 8.4% (2013: 9.9%) is the world's third largest mining company by market cap. It has activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. In addition, the company provides financing, logistics, marketing and purchasing services to producers and consumers of commodities. In May 2013, Glencore merged with Xstrata. In April 2014, the company announced the sale of the Las Bambas copper mine for US$5.85 billion plus capital costs incurred in the year to date. In the same month, they announced the purchase of Caracal Energy Inc for US$1.35 billion, the majority owner of West African oil assets in which Glencore already owned a 25% stake. Lundin Mining* - 4.6% (2013: 0.9%) is a base metals producer with operations in Chile, Europe and the US. In addition, it holds a 24% minority stake in the Tenke copper-cobalt mine in the DRC. In July 2013, Lundin purchased the Eagle nickel/copper mine from Rio Tinto for US$375 million. In October 2014, the company announced that it had agreed to purchase Freeport-McMoRan's 80% interest in the Candaleria copper mine in Chile for US$1.8 billion. To fund this purchase the company raised US$674 million in equity and issued US$1 billion of senior secured notes. The Company holds both the equity and the 7.875% senior secured notes due 2022. Freeport-McMoRan Copper & Gold - 4.0% (2013: 6.5%) is one of the world's largest copper producers. It is also a major producer of gold and molybdenum from mines in North and South America, as well as Indonesia and the DRC. Its Grasberg mine in Indonesia contains the world's largest recoverable copper and gold reserves. In June 2013, the company completed the acquisition of Plains Exploration & Production and McMoRan Exploration giving it significant US oil and gas exposure. The company's Grasberg copper-gold mine was negatively impacted by the Indonesia ban on concentrate exports in the first half of the year. Exports recommenced in the second half of the year following Freeport's commitment to support new smelting capacity in Indonesia. Weak oil and copper prices in the second half of the year meant the company has been unable to reduce the debt taken on in the acquisition of the oil assets and the company had guided to write-downs associated with these oil and gas assets in their upcoming financial results. Cerro Verde - 3.6% (2013: 2.5%) is a copper and molybdenum operation in Peru operated by Freeport-McMoRan Copper & Gold where they maintain a 53.6% ownership in the company. During the first quarter of 2013, construction activities commenced on the US$4.4 billion large-scale expansion of the asset to triple production at the concentrator facilities and provide an incremental 600mlbs of copper and 15mlbs of molybdenum from 2016. Norilsk Nickel - 3.4% (2013: 0.6%) is the world's largest nickel and palladium producer also with significant platinum and copper production. It is a Russian company whose core assets are located in northern Siberia, within the Arctic Circle. In 2014, the company has benefited from a combination of stronger nickel and palladium prices (in US dollar terms), as well as a significant weakening in the Russian rouble, which together have significantly increased cash flow generation year-on-year. The company also embarked on an asset divestment programme selling its African operations in October to BCL Ltd for US$337 million, as well as a number of its smaller Australian assets. China Shenhua Energy - 3.2% (2013: 0.2%) is a Hong Kong and Shanghai listed coal-based integrated energy company with exposure to coal mining, power generation, coal chemicals and transport. It has the largest coal reserves and is the largest coal supplier in China. Whilst exposed to Chinese domestic coal prices, increasingly the company's earnings are driven by its down-stream businesses. Vale - 3.2% (2013: 4.1%) 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, acquiring Canadian nickel miner Inco, which considerably broadened the company's asset mix away from just iron ore. In its capital markets day in December 2014, the company announced that it is considering an IPO of its base metals division, potentially in the second half of 2015. * Includes fixed interest securities. 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 2013. Together, the ten largest investments represent 60.6% of total investments (31 December 2013: 64.7%). Investments 31 December 2014 Main Market % geographical value of exposure Â£'000 investments Diversified BHP Billiton Global 74,979 10.8 Rio Tinto Global 74,975 10.8 Glencore Global 58,246 8.4 Lundin Mining* Global 32,257 4.6 Norilsk Nickel Russia 23,528 3.4 Vale Global 22,360 3.2 Hudbay Minerals* Canada 16,173 2.3 Boliden Sweden 10,282 1.5 Teck Resources Global 9,642 1.4 Teck Resources Call Option 20/02/15 Global (152) - African Rainbow Minerals South Africa 5,428 0.8 Anglo American Global 2,881 0.4 -------- -------- 330,599 47.6 -------- -------- Copper First Quantum Minerals* Global 59,688 8.6 Freeport-McMoRan Copper & Gold Global 27,704 4.0 Cerro Verde Peru 24,889 3.6 Nevsun Resources Eritrea 13,762 2.0 Avanco Resources Brazil 7,618 1.1 Antofagasta Chile 6,956 1.0 Southern Copper Peru 6,436 1.0 OZ Minerals Australia 5,081 0.7 Cobre Del Mayo - 10.75% 15/11/18 Mexico 2,950 0.4 Katanga Mining DRC 2,180 0.3 Reservoir Minerals Serbia 1,631 0.2 Ivanhoe Mines# DRC 848 0.1 -------- -------- 159,743 23.0 -------- -------- Gold Banro*+# DRC 17,864 2.6 Randgold Resources Mali 11,104 1.6 Northern Star Resources Australia 10,132 1.5 Gold Fields South Africa 9,152 1.3 Eldorado Gold Global 8,600 1.2 Franco-Nevada Global 8,548 1.2 Newcrest Mining Australia 5,957 0.9 Shanta Gold convertible Tanzania 2,950 0.4 Minas Buenaventura Peru 2,820 0.4 G-Resources Indonesia 2,490 0.4 Romarco Minerals# USA 2,020 0.3 Metals X Australia 1,246 0.2 Sirius Resources Australia 866 0.1 Stratex International Turkey 611 0.1 Cordoba Minerals Colombia 108 - -------- -------- 84,468 12.2 -------- -------- Silver & Diamonds Fresnillo Mexico 21,038 3.0 Industrias Penoles Mexico 11,221 1.6 Petra Diamonds South Africa 6,759 1.0 Dominion Diamond Canada 5,748 0.9 Mountain Province Diamonds# Canada 3,741 0.5 Lucara Diamond Botswana 3,393 0.5 Tahoe Resources Guatemala 2,894 0.4 Sierra Metals Peru 1,505 0.2 Volcan Peru 973 0.1 -------- -------- 57,272 8.2 -------- -------- Coal China Shenhua Energy People's Republic of China 22,676 3.2 -------- -------- 22,676 3.2 -------- -------- Industrial Minerals Iluka Resources Australia 13,561 1.9 Kenmare Resources Mozambique 781 0.1 Mosaic Put Option 17/01/15 USA (46) - Potash Put Option 17/01/15 Canada (86) - -------- -------- 14,210 2.0 -------- -------- Iron Ore Kumba Iron Ore South Africa 6,650 0.9 IRC Russia 721 0.1 Equatorial Resources Republic of Congo 378 0.1 -------- -------- 7,749 1.1 -------- -------- Aluminium Alumina Australia 4,228 0.6 Century Aluminium USA 2,502 0.4 -------- -------- 6,730 1.0 -------- -------- Platinum Platinum Group Metals South Africa 2,705 0.4 -------- -------- 2,705 0.4 -------- -------- Other Canadian Oil Sands Canada 5,742 0.8 Western Areas Australia 1,297 0.2 Nyrstar Global 1,244 0.2 Sociedad Minera El Brocal Peru 473 0.1 Bindura Nickel Zimbabwe 129 - -------- -------- 8,885 1.3 -------- -------- Portfolio 695,037 100.0 ======== ======== * Includes fixed interest investments. # Investments held at Directors' valuation. + Includes Banro gold-linked preference shares. All investments are in equity shares unless otherwise stated. The total number of investments as at 31 December 2014 (including options classified as liabilities on the balance sheet) was 64 (31 December 2013: 71). As at 31 December 2014, the Company held equity interests in six companies comprising more than 3% of a company's share capital as detailed in note 10 of the Annual Report and Financial Statements. Portfolio analysis 31 December 2014 Commodity Exposure* BlackRock World BlackRock World Euromoney Global Mining Trust plc Mining Trust plc Mining Index 2014 2013 2014 Platinum 0.4% 1.9% 1.6% Aluminium 1.0% 0.0% 2.8% Iron Ore 1.1% 12.5% 0.0% Industrial Minerals 2.0% 3.3% 0.8% Coal/Energy Minerals 3.2% 0.2% 6.9% Silver & Diamonds 8.2% 6.4% 3.7% Gold 12.2% 7.2% 16.4% Copper/Base Metals 23.0% 23.7% 11.6% Diversified 47.6% 41.7% 54.2% Other 1.3% 3.1% 2.0% Geographical Exposure* 2014 2013 Global 54.8% 57.4% Latin America 12.5% 12.4% Other 9.3% *** 2.2% ** Africa (ex SA) 7.7% 18.1% Australia 6.1% 3.2% Canada 4.5% 2.5% South Africa 4.4% 4.1% USA 0.7% 0.1% * Based on the principal commodity exposure and place of operation of each investment. ** Consists of Guatemala, Indonesia, Papua New Guinea, People's Republic of China and Russia. *** Consists of Guatemala, Indonesia, People's Republic of China, Russia, Serbia, Sweden and Turkey. Consolidated Statement of Comprehensive Income for the year ended 31 December 2014 Revenue Revenue Capital Capital Total Total 2014 2013 2014 2013 2014 2013 Notes Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Income from investments held at fair value through profit or loss 3 37,051 42,865 - - 37,051 42,865 Other income 3 9,244 5,937 - - 9,244 5,937 -------- -------- -------- -------- -------- -------- Total revenue 46,295 48,802 - - 46,295 48,802 -------- -------- -------- -------- -------- -------- Losses on investments held at fair value through profit or loss - - (248,160) (324,228) (248,160) (324,228) Realised losses on foreign exchange - - (5,163) (718) (5,163) (718) -------- -------- -------- -------- -------- -------- - - (253,323) (324,946) (207,028) (276,144) -------- -------- -------- -------- -------- -------- Expenses Investment management fees 4 (2,623) (3,164) (7,870) (9,492) (10,493) (12,656) Other operating expenses 5 (1,030) (975) (15) - (1,045) (975) -------- -------- -------- -------- -------- -------- Total operating expenses (3,653) (4,139) (7,885) (9,492) (11,538) (13,631) -------- -------- -------- -------- -------- -------- Net profit/(loss) before finance costs and taxation 42,642 44,663 (261,208) (334,438) (218,566) (289,775) -------- -------- -------- -------- -------- -------- Finance costs 6 (407) (391) (1,223) (1,175) (1,630) (1,566) -------- -------- -------- -------- -------- -------- Net profit/(loss) on ordinary activities before taxation 42,235 44,272 (262,431) (335,613) (220,196) (291,341) -------- -------- -------- -------- -------- -------- Taxation (4,783) (4,639) 1,537 2,813 (3,246) (1,826) -------- -------- -------- -------- -------- -------- Net profit/(loss) for the year 37,452 39,633 (260,894) (332,800) (223,442) (293,167) -------- -------- -------- -------- -------- -------- Earnings/(loss) per ordinary share 8 21.13p 22.36p (147.16p) (187.72p) (126.03p) (165.36p) ======== ======== ======== ======== ======== ======== The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. 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. The net loss of the Company for the year was Â£223,442,000 (2013: Â£293,167,000). The Group does not have any other comprehensive income. The net profit/(loss) for the year disclosed above represents the Group's comprehensive income/ (loss). Statements of Changes in Equity for the year ended 31 December 2014 Ordinary Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Group Note Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the year ended 31 December 2014 At 31 December 2013 9,651 127,155 116,471 22,779 558,791 50,499 885,346 Total comprehensive income: Net (loss)/profit for the year - - - - (260,894) 37,452 (223,442) Transactions with owners, recorded directly to equity: Dividends paid 7 - - - - - (37,230) (37,230) -------- -------- -------- -------- -------- -------- -------- At 31 December 2014 9,651 127,155 116,471 22,779 297,897 50,721 624,674 ======== ======== ======== ======== ======== ======== ======== For the year ended 31 December 2013 At 31 December 2012 9,651 127,155 116,471 22,779 891,591 48,096 1,215,743 Total comprehensive income: Net (loss)/profit for the year - - - - (332,800) 39,633 (293,167) Transactions with owners, recorded directly to equity: Dividends paid 7 - - - - - (37,230) (37,230) -------- -------- -------- -------- -------- -------- -------- At 31 December 2013 9,651 127,155 116,471 22,779 558,791 50,499 885,346 ======== ======== ======== ======== ======== ======== ======== Ordinary Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Company Note Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the year ended 31 December 2014 At 31 December 2013 9,651 127,155 116,471 22,779 569,705 39,585 885,346 Total comprehensive income: Net (loss)/profit for the year - - - - (260,359) 36,917 (223,442) Transactions with owners, recorded directly to equity: Dividends paid 7 - - - - - (37,230) (37,230) -------- -------- -------- -------- -------- -------- -------- At 31 December 2014 9,651 127,155 116,471 22,779 309,346 39,272 624,674 ======== ======== ======== ======== ======== ======== ======== For the year ended 31 December 2013 At 31 December 2012 9,651 127,155 116,471 22,779 902,497 37,190 1,215,743 Total comprehensive income: Net (loss)/profit for the year - - - - (332,792) 39,625 (293,167) Transactions with owners, recorded directly to equity: Dividends paid 7 - - - - - (37,230) (37,230) -------- -------- -------- -------- -------- -------- -------- At 31 December 2013 9,651 127,155 116,471 22,779 569,705 39,585 885,346 -------- -------- -------- -------- -------- -------- -------- Statements of Financial Position as at 31 December 2014 2014 2014 2013 2013 Group Company Group Company Note Â£'000 Â£'000 Â£'000 Â£'000 Non current assets Investments designated as held at fair value through profit or loss 695,322 708,271 986,122 998,536 Deferred tax asset 449 449 1,795 1,795 -------- -------- -------- -------- 695,771 708,720 987,917 1,000,331 -------- -------- -------- -------- Current assets Cash and cash equivalents 31,054 19,825 15,261 3,981 Collateral pledged for written option contracts 1,684 1,620 1,292 1,292 Other receivables 6,002 5,332 6,293 6,293 -------- -------- -------- -------- 38,740 26,777 22,846 11,566 -------- -------- -------- -------- Total assets 734,511 735,497 1,010,763 1,011,897 -------- -------- -------- -------- Current liabilities Other payables (3,494) (4,480) (22,949) (24,083) Derivative financial instruments - written options (285) (285) (276) (276) Bank loans and bank overdraft (106,047) (106,047) (101,915) (101,915) -------- -------- -------- -------- (109,826) (110,812) (125,140) (126,274) -------- -------- -------- -------- Total assets less current liabilities 624,685 624,685 885,623 885,623 -------- -------- -------- -------- Non current liabilities Deferred tax liabilities (11) (11) (277) (277) -------- -------- -------- -------- Net assets 624,674 624,674 885,346 885,346 ======== ======== ======== ======== Equity attributable to equity holders Ordinary share capital 9,651 9,651 9,651 9,651 Share premium account 127,155 127,155 127,155 127,155 Special reserve 116,471 116,471 116,471 116,471 Capital redemption reserve 22,779 22,779 22,779 22,779 Capital reserves 297,897 309,346 558,791 569,705 Revenue reserve 50,721 39,272 50,499 39,585 -------- -------- -------- -------- Total equity 624,674 624,674 885,346 885,346 ======== ======== ======== ======== Net asset value per ordinary share 8 352.35p 352.35p 499.39p 499.39p ======== ======== ======== ======== Cash Flow Statements for the year ended 31 December 2014 2014 2014 2013 2013 Group Company Group Company Â£'000 Â£'000 Â£'000 Â£'000 Operating activities Loss before taxation (220,196) (220,343) (291,341) (291,344) Add back interest paid 1,630 1,630 1,566 1,566 Losses on investments held at fair value through profit or loss including transaction costs 248,160 247,625 324,228 324,220 Net losses on foreign exchange 5,163 5,163 718 718 Sales of investments held at fair value through profit or loss 336,903 336,903 317,195 317,195 Purchases of investments held at fair value through profit or loss (294,254) (294,254) (309,159) (309,159) Increase in other receivables (2,495) (1,825) (94) (94) Decrease/(increase) in amounts due from brokers 2,787 2,787 (2,610) (2,610) Cash collateral paid to counterparties (392) (328) (124) (124) Decrease in amounts due to brokers (1,346) (1,346) (11,125) (11,125) (Decrease)/increase in other payables (18,462) (18,466) 12,399 12,399 -------- -------- -------- -------- Net cash inflow from operating activities before interest and taxation 57,498 57,546 41,653 41,642 -------- -------- -------- -------- Interest paid (1,630) (1,630) (1,566) (1,566) Taxation paid (236) (233) - - Taxation on overseas income (1,578) (1,578) (1,226) (1,226) -------- -------- -------- -------- Net cash inflow from operating activities before financing activities 54,054 54,105 38,861 38,850 -------- -------- -------- -------- Financing activities (Repayment)/drawdown of loan (693) (693) 168 168 Dividends paid (37,230) (37,230) (37,230) (37,230) -------- -------- -------- -------- Net cash outflow from financing activities (37,923) (37,923) (37,062) (37,062) -------- -------- -------- -------- Increase in cash and cash equivalents 16,131 16,182 1,799 1,788 -------- -------- -------- -------- Effect of foreign exchange rate changes (338) (338) 137 137 -------- -------- -------- -------- Change in cash and cash equivalents 15,793 15,844 1,936 1,925 Cash and cash equivalents at start of the year 15,261 3,981 13,325 2,056 -------- -------- -------- -------- Cash and cash equivalents at end of year 31,054 19,825 15,261 3,981 ======== ======== ======== ======== Comprised of: Cash 31,054 19,825 15,261 3,981 -------- -------- -------- -------- 31,054 19,825 15,261 3,981 ======== ======== ======== ======== Notes to the Financial Statements 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. 2. Accounting policies The principal accounting policies adopted by the Group and 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. These comprise standards and interpretations of the International Accounting Standards and Standard Interpretations Committee as approved by the International Accounting Standards Committee that remain in effect, to the extent that IFRS have been adopted by the European Union. 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. All of the Group's operations are of a continuing nature. Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital 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 the guidance set out in the SORP. The AIC SORP was revised and reissued in November 2014 (effective 1 January 2015) and where compatible with IFRS will be applied to financial statements in subsequent reporting periods. 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 (Â£'000) except where otherwise indicated. New standards, amendments to standards and interpretations effective for annual periods beginning after 1 January 2014 that have been adopted by the Group in preparing these financial statements are: IFRS 10 - Consolidated Financial Statements Investment Entities amendments (effective 1 January 2014) establish a single control model that applies to all entities including special purpose entities. The changes introduced by the Investment Entities amendments require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent. The Directors, having assessed the criteria, believe the Parent Company meets the criteria to be an investment entity under IFRS 10 and that this accounting treatment reflects the Company's activities as an investment trust. Therefore any investments in subsidiaries may be carried at fair value through profit and loss in accordance IAS 39. However, the principal activity of the subsidiary, BlackRock World Mining Investment Company Limited (which is controlled by the Company), is investment dealing activities and therefore this entity is considered to provide investment related services to the Company and is required to be consolidated under the Investment Entities amendment. IFRS 11 - Joint Arrangements removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. The Group does not have any joint arrangements and therefore the provisions of these amendments did not have any impact on the Group. IFRS 12 - Disclosure of Involvement with Other Entities requires additional disclosures that relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. The amendments to IFRS 12 introduce new disclosure requirements related to interests in subsidiaries which have been set out in note 11 of the Annual Report and Financial Statements; however, these amendments have not had any impact on the financial position or results of operations of the Group. A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2015 and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Group and Parent Company. IFRS 9 - Financial Instruments (2014) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement, the revised standard is principles based depending on the business model and nature of cash flows. Under this approach, instruments are measured at either amortised cost or fair value, though the standard retains the fair value option allowing designation of debt instruments at initial recognition to be measured at fair value. The standard is effective from 1 January 2018 with earlier application permitted but has not yet been endorsed by the European Commission. The Group does not plan to early adopt this standard and expects the eventual impact to be insignificant for its current investment portfolio, which is substantially comprised of quoted investments. IFRS 14 - Regulatory Deferral Accounts (effective 1 January 2016) allows first time IFRS adopters to continue to account for 'regulatory deferral account balances' in accordance with previous GAAP. As the Company has already adopted IFRS, the provisions of this standard are not applicable. IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2017) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures. Given the nature of the Company's revenue streams from financial instruments, the provisions of this standard are not expected to be applicable. (b) Basis of consolidation The consolidated financial statements are made up to 31 December each year and incorporate the financial statements of the Company and its wholly-owned subsidiary, BlackRock World Mining Investment Company Limited. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated. (c) Presentation of the Consolidated Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. (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 recognised on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the period end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each particular case. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest income is recognised on an accruals basis. Royalty income from contractual rights is measured at the fair value of the consideration received or receivable where the Investment Manager can reliably estimate the amount, pursuant to the terms of the agreement. Royalty income from contractual rights received comprise of a return of income and a return of capital based on the underlying cost of the contract and, accordingly, the return of income element is taken to the revenue account and the return of capital element is taken to the capital account. These amounts are disclosed in the Consolidated Statement of Comprehensive Income within income from investments and gains/losses on investments held at fair value through profit or loss, respectively. The useful life of the contractual rights will be determined by reference to the contractual arrangements, the planned mine life on commencement of mining and the underlying cost of the contractual rights will be revalued on a systematic basis using the units of production method over the life of the contractual rights which is estimated using available estimated proved and probable reserves specifically associated with the mine. The Investment Manager relies on public disclosures for information on proven and probable reserves from the operators of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of contractual rights and iron ore reserves. These are disclosed in the Consolidated Statement of Comprehensive Income within gains/losses on investments held at fair value through profit or loss. Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue column of the Consolidated Statement of Comprehensive Income 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 premium arising are allocated to the capital column of the Consolidated Statement of Comprehensive Income. When an option is closed out or exercised the gain or loss is accounted for as capital. (f) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows: - expenses which are incidental to the acquisition of an investment are charged to the capital column of the Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed in note 10 on page 54 of the Annual Report and Financial Statements; - the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio; - 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 financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay less taxation in the future have occurred at the financial reporting date. This is subject to deferred taxation 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 taxation 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, including contractual rights, 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, including contractual rights, are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Ths sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. Contractual rights are recognised on the completion date, where a purchase of the rights is under a contract and is initially measured at fair value excluding transaction costs. The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. For all financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed by the Board to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible). Gains and losses arising from changes in fair value of investments and on disposal of investments are recognised directly in the Consolidated Statement of Comprehensive Income. The gains and losses from changes in fair value of contractual rights are taken to the Consolidated Statement of Comprehensive Income and arise as a result of the revaluation of the underlying cost of the contractual rights, changes in commodity prices and changes in estimates of proven and probable reserves specifically associated with the mine. Under IFRS, the investment in the subsidiary is fair valued which is deemed to be the net asset value of the subsidiary. 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 Statement of Comprehensive Income 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. Financial assets and financial liabilities are offset and the net amount reported in the Statements of Financial Position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. (i) Other receivables and other 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 Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid. Dividends payable to equity shareholders are recognised in the Statements of Changes in Equity when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend, and have become a liability of the Group. (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 financial reporting date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. (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 Statement of Comprehensive Income 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. (n) Derivatives Derivatives are held at fair value based on the bid/offer prices of the options written to which the Group is exposed. The value of the option is subsequently marked to market to reflect the fair value of the option based on traded prices. Where the premium is taken to revenue, an appropriate amount is shown as capital return such that the total return reflects the overall change in the fair value of the option. When an option is closed out or exercised the gain or loss is accounted for as a capital gain or loss. (o) Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Fair value of financial instruments When the fair values of financial assets and financial liabilities recorded in the Statements of Financial Position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of valuation models. The fair value of contractual rights is assessed by an independent valuer with a recognised and relevant professional qualification. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The estimates include considerations of production profiles, commodity prices, cash flows and discount rates. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the Statements of Financial Position and the level where the instruments are disclosed in the fair value hierarchy. To assess the significance of a particular input to the entire measurement, the external valuer performs sensitivity analysis. The key assumptions used to determine the fair value of the contractual rights and sensitivity analyses are provided in note 18 of the Annual Report and Financial Statements. 3. Income 2014 2013 Â£'000 Â£'000 Investment income: UK listed dividends 8,911 10,870 Overseas listed dividends 16,651 15,209 Special dividends 3,602 4,130 Income from contractual rights 485 2,984 Fixed interest income 7,402 9,672 -------- -------- 37,051 42,865 -------- -------- Other income: Option premiums 8,007 5,440 Deposit interest 26 22 Profit on futures 670 - Underwriting commission and other income 541 475 -------- -------- 9,244 5,937 -------- -------- Total income 46,295 48,802 ======== ======== Total income comprises: Dividends 29,164 30,209 Deposit interest 26 22 Option premiums 8,007 5,440 Income from contractual rights 485 2,984 Fixed interest income 7,402 9,672 Profit on futures 670 - Other income 541 475 -------- -------- 46,295 48,802 ======== ======== The Company considers the treatment of premium arising on option transactions on a case-by-case basis. During the year ended 31 December 2014, the option premium income of Â£8,247,000 (2013: Â£5,521,000) received by the Company was from options written for income purposes of which Â£8,007,000 (2013: Â£5,440,000) has been credited to the revenue column of the Consolidated Statement of Comprehensive Income and is recognised evenly over the life of the option contract. 4. Management fee 2014 2013 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment management fee 2,623 7,870 10,493 3,164 9,492 12,656 ===== ===== ====== ===== ===== ====== Until 31 March 2015, the investment management fee was levied quarterly at a rate of 1.3% per annum, based on the value of gross assets on the last day of each quarter. With effect from 1 July 2015 the annual management fee will be as follows: â€¢ 120bps on the first Â£500 million of gross assets â€¢ 100bps on the next Â£500 million â€¢ 85bps on gross assets above Â£1 billion However, between 1 April 2015 and 30 June 2015, the annual fee will be further reduced to: â€¢ 110bps on the first Â£500 million of gross assets â€¢ 70bps on the next Â£500 million â€¢ 40bps on gross assets above Â£1 billion 75% of investment management fees are allocated to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income. 5. Other expenses 2014 2013 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Custody fee 109 - 109 183 - 183 Auditor's remuneration: - audit services 28 - 28 28 - 28 - other assurance services* 6 - 6 6 - 6 Registrar's fee 72 - 72 98 - 98 Directors' emoluments** 225 - 225 138 - 138 Marketing fees 256 - 256 43 - 43 Other administrative costs 334 15 349 479 - 479 -------- -------- -------- -------- -------- -------- 1,030 15 1,045 975 - 975 -------- -------- -------- -------- -------- -------- 2014 2013 The Company's ongoing charges, calculated as a percentage of average net assets and using expenses, excluding finance costs and taxation were: 1.4% 1.4% -------- -------- * Fees paid to the auditor for other assurance services of Â£6,250 excluding VAT (2013: Â£6,000) relate to the review of the half yearly financial statements. ** Details of the Director's emoluments are given in the Directors' Remuneration Report on page 27 of the Annual Report and Financial Statements. The emoluments of the Chairman, who was also the highest paid Director, were Â£45,000 (2013: Â£33,750). 6. Finance costs 2014 2013 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Interest on bank loans 405 1,218 1,623 390 1,172 1,562 Interest on bank overdrafts 2 5 7 1 3 4 -------- -------- -------- -------- -------- -------- Total 407 1,223 1,630 391 1,175 1,566 ======== ======== ======== ======== ======== ======== 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: 2014 2013 Â£'000 Â£'000 Interim ordinary dividend in respect of the year ended 31 December 2014 of 7.00p per share, declared on 14 August 2014 12,410 12,410 Final ordinary dividend in respect of the year ended 31 December 2013 of 14.00p per share, approved by shareholders on 8 May 2014 24,820 24,820 -------- -------- 37,230 37,230 ======== ======== The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in this legislation. 2014 2013 Â£'000 Â£'000 Dividends paid or proposed on equity shares: Interim ordinary dividend paid of 7.00p (2013: 7.00p) 12,410 12,410 Proposed final ordinary dividend of 14.00p per share (2013: 14.00p)* 24,820 24,820 -------- -------- 37,230 37,230 -------- -------- * Based on 177,287,242 (2013: 177,287,242) ordinary shares. 8. Consolidated earnings and net asset value per ordinary share Revenue and capital returns per share and net asset value per share are shown below and have been calculated using the following: 2014 2013 Net revenue profit attributable to ordinary shareholders (Â£'000) 37,452 39,633 Net capital loss attributable to ordinary shareholders (Â£'000) (260,894) (332,800) -------- -------- Total loss attributable to ordinary shareholders (Â£'000) (223,442) (293,167) ======== ======== Total equity attributable to ordinary shareholders (Â£'000) 624,674 885,346 ======== ======== The weighted average number of ordinary shares in issue during the year, on which the return per ordinary share was calculated was: 177,287,242 177,287,242 The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was: 177,287,242 177,287,242 ----------- ----------- Revenue earnings per share 21.13p 22.36p Capital loss per share (147.16p) (187.72p) -------- -------- Total loss per share (126.03p) (165.36p) -------- -------- Net asset value per share 352.35p 499.39p Share price 310.35p 465.00p ======== ======== 9. Share capital Ordinary Treasury shares shares number number Total (nominal) (nominal) shares Â£'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each At 1 January 2014 177,287,242 15,724,600 193,011,842 9,651 ---------- --------- ---------- ----- At 31 December 2014 177,287,242 15,724,600 193,011,842 9,651 ========== ======== ========== ===== During the year, no shares (2013: nil) were repurchased. 10. Contingent liabilities There were no contingent liabilities at 31 December 2014 (2013: nil). 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 2014 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 2014 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 subsidiary for the year ended 31 December 2013, 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 2006. 12. Annual Report and Financial Statements Copies of the Annual Report and Financial Statements will be published shortly and will be available from the registered office, c/o The Company Secretary, BlackRock World Mining Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 13. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 29 April 2015 at 11.30 a.m. ENDS The Annual Report and Financial Statements will also be available on the BlackRock website at www.blackrock.co.uk/brwm. Neither the contents of the website nor the contents of any website accessible from hyperlinks on the website (or any other website) is incorporated into, or forms part of, this announcement. For further information, please contact: Jonathan Ruck Keene, Head of Closed End Funds Group, 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 & Communications, BlackRock Investment Management (UK) Limited - Tel: 020 7743 2922 19 March 2015 12 Throgmorton Avenue London EC2N 2DL

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BlackRock World Mining Trust (BRWM)

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