Final Results
BlackRock World Mining Trust plc
LEI: LNFFPBEUZJBOSR6PW155
Annual Report and Financial Statements 31 December 2023
Performance record
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| As at | As at |
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| Net assets (£’000)¹ | 1,160,051 | 1,299,285 |
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| Net asset value per ordinary share (NAV) (pence) | 606.78 | 688.35 |
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| Ordinary share price (mid-market) (pence) | 587.00 | 697.00 |
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| Reference index2 – net total return | 6,002.54 | 5,863.32 |
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| (Discount)/premium to net asset value3 | (3.3)% | 1.3% |
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| ======== | ======== |
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| For the | For the |
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| Performance (with dividends reinvested) |
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|
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| Net asset value per share3 | -6.2% | +17.7% |
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| Ordinary share price3 | -10.4% | +26.0% |
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| Reference index2 | +2.4% | +11.5% |
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| --------------- | --------------- |
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| Performance since inception (with dividends reinvested) |
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| Net asset value per share3 | +1,319.4% | +1,413.6% |
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| Ordinary share price3 | +1,365.9% | +1,535.8% |
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| Reference index2 | +1,005.2% | +979.6% |
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| ======== | ======== |
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| For the | For the |
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| Revenue |
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|
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| Net revenue profit after taxation (£’000) | 64,691 | 76,013 | -14.9 |
| Revenue return per ordinary share (pence)4 | 33.95 | 40.68 | -16.6 |
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| --------------- | --------------- | --------------- |
| Dividends per ordinary share (pence) |
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|
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| – 1st interim | 5.50 | 5.50 | – |
| – 2nd interim | 5.50 | 5.50 | – |
| – 3rd interim | 5.50 | 5.50 | – |
| – Final | 17.00 | 23.50 | -27.7 |
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| --------------- | --------------- | --------------- |
| Total dividends paid and payable | 33.50 | 40.00 | -16.3 |
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| ======== | ======== | ======== |
1 The change in net assets reflects portfolio movements, share reissues and dividends paid during the year.
2 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). With effect from 31 December 2019, the reference index changed to the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). Prior to 31 December 2019, the reference index was the EMIX Global Mining Index (net total return). The performance returns of the reference index since inception have been blended to reflect this change.
3 Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.
4 Further details are given in the Glossary in the Annual Report and Financial Statements.
Chairman’s Statement
Highlights
· NAV per share -6.2%1 (with dividends reinvested)
· Share price -10.4%1 (with dividends reinvested)
· Total dividends of 33.50p per share
Overview
After a solid year of performance in 2022, the last 12 months to 31 December 2023 have proved more difficult for the mining sector. The sector performed strongly at the start of the financial year with mined commodity prices up almost across the board, supported by the pace of China’s reopening following COVID-19 and expectations for a pick-up in demand. However, the mining sector soon pulled back as improvements in Chinese economic data were slower than had been hoped for and, as we progressed through the year, there were concerns about the demand outlook in major Western economies as well. Increased geopolitical tensions in the Middle East and expectations that higher interest rates would persist for longer than initially anticipated also contributed to a challenging time for the sector. As we entered the final part of the Company’s financial year, signs of moderating inflation and easing interest rate expectations led to positive market sentiment for both the mining sector and broader equity markets.
Performance
Over the twelve months to 31 December 2023, the Company’s net asset value per share (NAV) returned -6.2%1 and the share price returned -10.4%1. In comparison, over the same period, the Company’s reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return), returned +2.4%, the FTSE All-Share Index returned +7.9% and the UK Consumer Price Index increased by 4.0%.
Our portfolio managers provide a more detailed explanation on the Company’s performance and the factors that contributed to, or detracted from, performance during the year in their Investment Manager’s Report that follows. They also provide more insight into the positioning of the portfolio and their views on the outlook for the coming year.
Revenue return and dividends
The Company’s revenue return per share for the year amounted to 33.95p, a 16.6% decrease compared with the prior year revenue return per share of 40.68p. Lower commodity prices, higher all in costs and a weakening US Dollar (as many commodity company dividends are paid in US Dollars) contributed to the reduction in earnings, leading to lower returns for shareholders.
During the year, three quarterly interim dividends of 5.50p per share were paid on 5 May 2023, 6 October 2023 and 24 November 2023. The Board is proposing a final dividend payment of 17.00p per share for the year ended 31 December 2023. This, together with the quarterly interim dividends, makes a total of 33.50p per share (2022: 40.00p per share) representing a decrease of 16.3% on payments made in the previous financial year.
As in past years, all dividends are fully covered by income. In accordance with the Board’s stated policy, the total dividends represent substantially all of the year’s available income.
Subject to approval at the Annual General Meeting, the final dividend will be paid on 14 May 2024 to shareholders on the Company’s register on 22 March 2024, the ex-dividend date being 21 March 2024. It remains the Board’s intention to seek to distribute substantially all of the Company’s available income along similar lines in the future.
Gearing
The Company operates a flexible gearing policy which depends on prevailing market conditions. The Company may borrow up to 25% of the Group’s net assets. The maximum level of gearing used during the year was 14.6% and the level of gearing at 31 December 2023 was 11.9%. Average gearing over the year to 31 December 2023 was 11.9%. For the calculations, please see the Glossary in the Annual Report and Financial Statements.
Management of share rating
The Directors recognise the importance to investors that the market price of the Company’s shares should not trade at a significant premium or discount to the underlying NAV. Accordingly, in normal market conditions, the Board may use the Company’s share buyback authority or alternatively re-issue shares from treasury or issue new shares (at a premium to NAV) to ensure that the share price is broadly in line with the underlying NAV, if it is deemed to be in shareholders’ interests.
The Company’s shares started the year under review trading at a premium and I am pleased to report that during the year the Company reissued 2,430,000 ordinary shares from treasury for a total gross consideration of £15,658,000, at an average price of 644.37p per share and an average 1.4% premium to NAV. The Company did not buy back any shares and, since the year end, no further shares have been reissued. The discount at the year end was 3.3% and on 5 March 2024 (the latest date before approving this Annual Report) was 6.5%.
Resolutions to renew the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.
Board composition
As mentioned in the Half Yearly Financial Report, the Board was delighted to welcome Charles (Chip) Goodyear as a non-executive Director. I also advised at that time that I would be stepping down as Chairman following the forthcoming Annual General Meeting (AGM) and that Chip would succeed me as Chairman. It has been a privilege to be Chairman of the Company for the past five years. I would like to thank all shareholders for their support, as well as thanking my Board colleagues and the team at BlackRock for making my tenure as Chairman as rewarding and enjoyable as it has undoubtedly been. With Chip’s extensive experience of leading mining companies, I leave the Company in the capable hands of the Board and Investment Manager and wish it every success for the future.
The Board commenced a search to identify a new Director in early 2024, assisted by a third-party recruitment firm, Fletcher Jones. The successful candidate will be appointed as a Director following the conclusion of the AGM on 9 May 2024.
30th anniversary
In celebration of the Company’s 30th anniversary, the Board agreed to make an annual donation of US$15,000 over three years to the Julian Baring Scholarship Fund (the Fund). The Fund was established in 2000 in the name of the Company’s first fund manager, Julian Baring. The advisers to the Fund, with the support of the industry, endow annual scholarships for talented, but financially disadvantaged, students in Africa and South America to continue their studies and to pursue a career in the mining industry. The Fund has assisted more than 150 individuals since inception in mining related faculties.
Following Chip Goodyear’s appointment last August, he sought approval to waive his rights to compensation related to his role as a Director of the Company. This waiver was at his initiative and request. The Board discussed the matter and decided it was appropriate to donate annually to the Fund an amount equivalent to Chip’s Director’s fee, in addition to the US$15,000 discussed above. With our previous support at the time of the Company’s 25th anniversary, the Fund was able to broaden its reach from Africa to include South America. The Board receives regular updates from the Fund trustees about students past and present and their progress and Justin Baring, the chair of the Fund, will provide a brief introduction to shareholders at the forthcoming AGM.
Annual General Meeting arrangements
The Company’s AGM will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 9 May 2024 at 11.30 a.m. Details of the business of the meeting are set out in the Notice of Meeting on pages 156 to 159 in the Annual Report and Financial Statements. The Board very much looks forward to meeting shareholders and answering any questions you may have on the day.
For the benefit of shareholders who are unable to attend this year’s AGM in person, we have arranged for the proceedings to be viewed via a webinar. You can register to watch the AGM by scanning the QR Code inside the cover of the Annual Report or by visiting our website at www.blackrock.com/uk/brwm and clicking on the registration banner.
Please note that it is not possible to speak or vote at the AGM via this medium and joining the webinar does not constitute attendance at the AGM. Shareholders wishing to exercise their right to attend, speak and vote at the AGM should either attend in person or exercise their right to appoint a proxy to do so on their behalf.
Outlook
Higher interest rates and greater volatility have resulted in a high level of uncertainty for markets and a remarkable dispersion in commodity price returns during 2023. There has also been a challenging geopolitical backdrop with little end in sight for the conflicts in both Eastern Europe and the Middle East, as well as structural competition between US and China. The number of volatile situations worldwide is the highest in decades and 2024 is set to be the biggest election year, with more than half the world’s population voting.
However, against this backdrop, inflationary pressures are easing in the US and UK and inflation is expected to return towards target in 2024. Remaining COVID-19 pandemic era supply disruptions are also fading and the Chinese government has moved forward with a series of stimulus measures to turn round its ailing economy which should support commodity demand. The energy transition to a low carbon economy is also set to increase demand for materials in the supply chain for low carbon technologies, including copper, steel and lithium, which is a positive tailwind for selective parts of the mining sector.
DAVID CHEYNE
Chairman
7 March 2024
1 Alternative Performance Measures. All percentages calculated in Sterling terms with dividends reinvested. Further details of the calculation of performance with dividends reinvested are given in the Glossary in the Annual Report and Financial Statements.
Investment Manager’s Report
Overview
2023 was a year of huge swings in performance for the sector as a whole and markets more broadly. While 2022 as a year finished with strong gains across the sector but much of this came from the rally in the fourth quarter of 2022 on the expectation that the reopening of China, post its zero COVID-19 policy, would drive further growth in 2023. Sadly, this was not to be as momentum stalled as January ended due to the complex array of headwinds that drove moves in 2023. Financial factors such as interest rates and inflation, combined with lower-than-expected growth in China and geo-political events, created uncertainty amongst investors leading to a significant dispersion in returns.
Commodity price returns were similarly diverse across the suite. These ranged from iron ore prices massively exceeding estimates by failing to move lower, whilst lithium fell sharply finishing the year well below even the most cautious of forecasts. Copper prices, despite tight market conditions, did not react to large production downgrades and surprise disruptions. Precious metals also moved in different directions with gold moving higher, whilst the platinum group metals fell. Mining company share prices generally derated during the year as investors, fearful of China demand weakness, moved out of the sector into either higher yielding cash or to gain exposure to the “magnificent 7” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) opportunity. This left the sector trading on multi decade low multiples, presenting an opportunity for the Company.
However, overall the year was disappointing for the Company as a number of key holdings failed to generate returns for a variety of factors. Examples include: First Quantum Minerals where the Panama Government enforced the closure of the company’s largest asset due to a populist agenda; Chalice Mining set unrealistic project parameters; weakness in lithium prices impacted valuations of holdings in the Company, but the opposite for South Korean steel company POSCO with shares rerated on their exposure; and mid-sized copper growth holdings heavily derated during the year. The cumulative impact of this caused the Company’s NAV to underperform the reference index (MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return)) for only the second time in the last 9 years.
For the year as a whole, the NAV of the Company was down by 6.2% with income reinvested and share price total return was -10.4% as the discount widened slightly over the year. This compares to the FTSE 100 rising by 7.7%, Consumer Price Index (CPI) up by 4.0% and the reference index up by 2.4% (all numbers based in Sterling terms). Despite this poor one-year performance the Company’s track record over three and five years remains firmly intact.
Seismic shifts
2023 arrived with a huge spread of expectations. How much further would interest rates rise? Would inflation be sticky or start to fade? Would companies be able to manage margins? These questions were then mixed in with slower growth, bank rescues (Silicon Valley Bank, First Republic and Credit Suisse), conflict in the Middle East and a far slower reopening trade in China. Given the above, it is amazing to have finished the year with such positive returns for equity markets (S&P 500 Index up 18.6% in Sterling terms) and without widespread recession across the world.
For the mining sector the fundamentals of the medium term have remained firmly in place. Energy transition related commodity demand growth remains robust. Sales of electric vehicles (EVs) broke new records in both total numbers and market share levels. Installation of renewable power infrastructure also broke records with huge amounts built during the year and an industry sales pipeline for future projects as full as can be expected.
On the supply side, copper production numbers both for 2023 and beyond look to be less than expected as mines have been unable to ramp-up on time or to expected levels. Capital expenditure for new projects continues to exceed expectations, making project development less likely. Metal inventories generally declined during the year leaving them at multi year lows, again keeping markets tight. Resource nationalism remains an ever-present threat with risks in many countries around the world and some mines have been forced to close, including Cobre de Panama. With supply looking increasingly price inelastic in the near to medium term there seems little room to manoeuvre should disruptions escalate in 2024.
Despite these supportive factors the sector was unable to generate enough momentum to create widespread investor interest and the alternative, such as money market deposits at 5%, captured much of the flow of savings. Mining shares significantly underperformed the broader markets as valuations moved to multi decade lows. This is in stark contrast to 2022 when the sector, alongside oil, was one of the best places to be exposed.
Merger and acquisition (M&A) activity was elevated versus recent years, but most was characterised by failing to complete. Lithium companies in Australia were the focus of deals during the year. Despite a number of suitors being able to announce terms the deals were eventually thwarted by domestic interest, for example Liontown and Azure. In Canada, Teck Resources (Teck) announced plans to separate into an energy metals company by divesting its metallurgical coal mines. Soon after being announced, Teck received a bid from Glencore for the whole company which was rebuffed by management. Eventually Teck announced a joint plan to sell the coal business to Glencore for cash.
In the United States (US), Newmont Corporation agreed terms to buy Newcrest Mining and this deal was completed in the final quarter of the year. Also, US Steel announced terms of a deal that could see it sold to Nippon Steel if the deal is approved by US regulators, the unions and of course shareholders.
ESG and the social license to operate
ESG (Environmental, Social and Governance) issues are highly relevant to the mining sector and we seek to understand the ESG risks and possible related opportunities facing companies and industries in the portfolio. As an extractive industry, the mining sector naturally faces a number of ESG challenges given its dependence on water, carbon emissions and geographical location of assets. However, we consider that the sector can provide critical infrastructure, taxes and employment to local communities, as well as materials essential to technological development, enabling the carbon transition through the production of the metals required for the technology underpinning that transition.
We consider ESG insights and data, including sustainability risks, within the total set of information in our research process and make a determination as to the materiality of such information as part of the investment process used to build and manage the portfolio. ESG insights are not the sole consideration when making investment decisions but, in most cases, the Company will not invest in companies which have high ESG risks (risks that affect a company’s financial position or operating performance) and which have no plans to address existing deficiencies or controversies in an appropriate way.
· We take a long-term approach, focused on engaging with portfolio company boards and executive leadership to understand the drivers of risk and financial value creation in companies’ business models, including material sustainability-related risks and opportunities, as appropriate.
· There will be cases where a serious event has occurred, for example an accident at mine site and, in that case, we will assess whether the relevant portfolio company is taking appropriate action to resolve matters before deciding what to do.
· There will be companies which have derated (the downward adjustment of multiples) as a result of an adverse ESG event or generally due to poor ESG practices where there may be opportunities to invest at a discounted price. However, the Company will only invest in these value-based opportunities if we are satisfied that there is real evidence that the relevant company’s culture has changed and that better operating practices have been put in place.
Given the activities that mining companies undertake, it is no surprise that there are always events that unfold during any calendar year. 2023 was a year where there were fewer events for the Company and this meant that engagement once again focused mainly on our holdings’ approach to the energy transition and how they plan to not only benefit from the opportunities, but also how they are planning to decarbonise their own operations.
During the year the main areas of focus were prior ESG issues relating to Vale and governance in relation to the board’s fiduciary responsibilities. Vale has continued to make further progress on its journey to raise its ESG profile following the tragic tailings related events from the last decade. The company paid US$55.9 million in March 2023 to settle charges related to misleading disclosures in relation to the Brumadinho dam. On the governance front, changes have been made to the board with new international independent directors being added. Vale also announced plans to separate its base metals division and raised capital to support this process. Analysts from BlackRock visited Brazil to review restoration work done around the tailings failures and engaged with local communities impacted by these initiatives. It was pleasing to see ESG ratings agencies reflect the work the company has done in improved rating scores.
General price weakness
Similar to last year, average prices were generally lower across the suite aside from gold and silver. This, however, hides the intra year volatility which was more elevated than in recent times. For example, the price of copper over the year was basically flat but this hides the fact that at one point it had fallen 17% from peak to trough. This pattern played out across the metals universe and, were it not for the year end rally, most would have finished 2023 well below levels seen at the start of the year.
Despite the overall negative tone to price moves, the standout performer was iron ore which over the year was up by 20.3%. Even more importantly, the average price was flat which might not sound like a win but with estimates forecasting it to decline sharply the impact on margins of it being flat was significant.
Commodity price moves
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| % Change average |
| Commodity |
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| Gold US$/ounce (oz) | 2,065 | 13.8% | 7.8% |
| Silver US$/oz | 24.25 | 2.1% | 7.3% |
| Platinum US$/oz | 1,006 | -2.4% | 0.6% |
| Palladium US$/oz | 1,119 | -37.0% | -36.4% |
| Copper US$/pound (lb) | 3.84 | 1.2% | -3.9% |
| Nickel US$/lb | 7.43 | -45.2% | -17.9% |
| Aluminium US$/lb | 1.06 | -0.2% | -16.6% |
| Zinc US$/lb | 1.2 | -12.1% | -23.9% |
| Lead US$/lb | 0.92 | -12.9% | -0.7% |
| Tin US$/lb | 11.42 | 1.7% | -17.3% |
| Baltic Freight Rate | 2,094 | 38.2% | -27.9% |
| West Texas Intermediate Oil (Cushing) US$/barrel | 71.9 | -10.4% | -18.2% |
| Iron Ore (China 62% fines) US$/tonne | 142 | 20.3% | -0.9% |
| Thermal Coal US$/tonne | 146.4 | -62.4% | -47.7% |
| Coking Coal US$/tonne | 323.8 | 9.9% | -19.1% |
| Lithium US$/lb | 108.7 | -43.2% | -32.9% |
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Sources: Datastream and Bloomberg, December 2023.
Income
As highlighted in last year’s report, income received by the Company has exceeded expectations for several years in a row. This has been driven by higher absolute pay out levels for ordinary dividends, a greater number of holdings in the portfolio paying dividends, improved capital discipline by companies and generally stronger balance sheets. Looking back, the peak seems to have been in 2021 with last year a close second.
This year has seen income fall due to lower commodity prices and higher all in costs reducing profitability, meaning less to return to shareholders. In addition, as highlighted in last year’s report, companies allocated more surplus cash to share buy backs which bodes well for the future but in the short term further reduced dividend payments. It is noticeable just how rapidly share counts have declined on the back of these buy backs. For example, the shares in issue for ArcelorMittal and Glencore have declined by 8% and 5% respectively with a combined total of US$2.9 billion used to buy the shares back.
Looking forward, we see no reason for companies not to honour their capital allocation plans and as such with commodity prices lower than in 2023 payments could in turn be below that of last year. However, at the time of writing, the commodity most important for dividends, iron ore, is well in excess of market forecasts meaning there is room for upgrades to dividend estimates.
The energy transition
As alluded to earlier, the energy transition continues to gather pace. EVs are taking market share away from combustion engine vehicles at levels well in excess of expectations. The roll out of renewable power projects and related infrastructure is happening far quicker than planned. This has, in part, been driven by a desire by European countries to diversify away from Russian supplied fossil fuels and the fact that with fossil fuel prices so high, renewable power is substantially more cost effective, not to mention helping countries/companies to meet their net zero commitments.
It is clear that we remain very close to the start of the energy transition cycle given the enormous scale of investment that is going to be needed over the coming decades. Looking at the data for renewable power, it is increasingly obvious how much more resource intensive it is. On top of this there will also be commodity demand from battery storage needs and the buildout of the hydrogen economy.
It is also essential for mining companies to embrace the need to decarbonise their own operations as future demand is likely to seek out supply from companies that do not just meet quality but also have green credentials. This move from “Brown to Green” presents a range of investment opportunities for the Company both in trying to reduce the heavy discount rates applied to carbon intensive production techniques, as well as new technologies that could solve some of the more damaging historical processes.
Base metals
It was a difficult year for the base metals with average prices down across the board as concerns around global growth, higher interest rates and China’s property sector saw significant destocking of metals which depressed prices. With prices moving lower and costs increasing (albeit at a slower rate than in 2022) margins for the producers also declined reducing cash generation and dividends. Encouragingly, as we approached the end of the year, expectations of US interest rate cuts and signs of demand stabilisation and stimulus in China buoyed prices.
Copper, our favoured base metal, finished the year flat as macro concerns offset improving fundamentals particularly on the supply side. Despite headwinds from China’s property market, China’s copper demand was healthy with apparent demand +12% year-on-year. China’s focus on “green” related investments in renewables, EVs and the grid, offset the drag on copper demand from the property sector.
The most interesting feature in the copper market this year has been the escalation in copper supply disruptions as we approached the end of the year. It was widely expected that 2024 would see notable supply growth as assets recovered post COVID-19 and new assets such as Anglo American’s Quelleveco mine and Teck’s Quebrada Blanca Phase 2 (QB2) project in Chile began ramping-up. However, we now expect copper concentrate supply to be lower in 2024 versus 2023.
The most impactful supply shock is the closure of First Quantum Minerals’ Cobre Panama mine, which is now on care and maintenance. Cobre Panama has capacity to produce about 400ktpa of copper and there is a high degree of uncertainty when this mine will be restarted. We have also seen meaningful production downgrades from Anglo American, which lowered its copper production guidance by 180-210kt in 2024; Southern Copper, Vale and Rio Tinto all lowered their copper supply forecast in 2024 and we see ramp-up risk for Teck QB2 in 2024. Given the low level of copper inventories, the lack of investment in new mine capacity and structural operating challenges for many copper mines, prices are poised to rebase higher once the demand outlook improves.
With the long-term fundamentals of the copper market remaining robust, in particular copper’s role in enabling the energy transition, we continue to remain positively exposed to copper producers within the Company. It was a mixed performance result among the companies with strong share price performance, including Foran Mining (0.9% of the portfolio). Foran Mining also delivered exciting exploration results at McIlvenna Bay and its Tesla Discovery site in Canada which has potential to increase production rates in the future. Lundin Mining (1.2% of the portfolio) also performed well, delivering improved operational performance and acquiring a 51% stake in the Casserone’s copper mine in Chile. Ivanhoe Mines (1.9% of the portfolio) continues to deliver as their Komoa-Kakula asset in the Democratic Republic of the Congo ramps-up and they also announced exciting exploration results at their earlier stage Western Forelands land package. The key disappointment during the year was the performance of First Quantum Minerals (1.5% of the portfolio) which saw its share price decline by approximately 60% as the government of Panama requested the closure of the Cobre Panama mine.
The aluminium price finished the year flat compared with 2022. However, this masks the 17% decline in average prices year-on-year. Aluminium prices have declined significantly over the last two years as energy prices have fallen which is the largest cost component of producing aluminium. China’s demand for aluminium has been strongly boosted by its solar rollout, but so too has its production levels which has left the Chinese market largely balanced. Demand ex-China declined by circa 1% in 2023 largely due to inventory de-stocking with limited new supply coming into the market ex-China. Longer term we see upside to aluminium prices as carbon costs begin to be incorporated into prices. The demand for “green” or “low-carbon” aluminium continues to grow with these products sold at a premium to traditional London Metals Exchange grade aluminium. The Company’s largest exposure to aluminium is via Hydro (2.6% of the portfolio) which is one of the lowest-carbon producers of aluminium by virtue of its access to hydro power in Norway. Hydro continues to pursue its strategy of growing its low-carbon product mix via recycling and investing into renewable energy, with the company announcing an investment into its renewable energy company Hydro Rein by Macquarie Asset Management which acquired a 49.9% stake for US$332 million during the year.
The nickel market was particularly challenging in 2023 with the nickel price finishing the year down 45% and average prices declining 18% year-on-year. Significant growth in Indonesian nickel supply has structurally changed the nickel market in recent years and with nickel pig iron (NPI) producers rapidly growing production and adapting their facilities to allow the production of nickel matte and other intermediary products. This allows them to sell into the market for class 1 battery grade nickel which is expected to see increasing demand alongside the growth in EVs. A key question for the nickel market is whether or not we see differential pricing for nickel based on the carbon intensity of production which is significant for many of the Indonesian producers given their reliance on thermal coal. The Company has two pure play exposures to nickel – the first Nickel Industries (0.5% of the portfolio) today a NPI producer which is transitioning towards LME grade nickel production which will improve earnings and margins. The second investment was done via a “PIPE” deal in 2022 into Lifezone Metals which has traded as a public company since the end of June 2023. Lifezone Metals, in conjunction with BHP, owns the Kabanga project in Tanzania which is one of the world’s largest undeveloped nickel sulphide deposits.
Bulks and steel
The iron ore market was an area of strength in 2023 with the price finishing 20% higher and average prices flat year-on-year. Given the depressed outlook for China’s property sector, the broad expectation from commodity analysts was for prices to decline in 2023 alongside falling steel production in China. The iron ore market benefited from better-than-expected Chinese steel production in 2023, rising blast furnace production at the expense of lower scrap-fed electric arc furnace production and higher steel exports from China which were up 40% year-on-year. With steel margins in China under pressure, the premium for higher grade material declined. However, we remain positive on the outlook for higher grade iron ore longer term, particularly as the steel industry looks to reduce its carbon intensity.
The iron ore market remains highly concentrated with the four largest producers accounting for circa 70% of the seaborne market. We have seen the industry remain disciplined from a supply perspective with limited supply growth from the major producers, despite strong cash generation from their existing iron ore assets. We expect this to remain the case over the next few years as producers continue to focus on value over volume and decarbonising their operations.
The Company’s exposure to iron ore is primarily via the diversified majors BHP, Vale and Rio Tinto. These companies tend to generate strong margins and free cash flow from the iron ore businesses which underpins the attractive dividend yield they trade on. Given better than expected iron ore prices in 2023, we see scope for dividends from the iron ore producers to surprise to the upside. In addition, the Company has exposure to two pure play high grade iron ore producers, Champion Iron and Labrador Iron. Champion Iron is ramping-up its Bloom Lake operation in Canada and targeting the production of high grade (69% Fe) iron ore which is a key component of low carbon steel production.
During 2023 we saw notable differences in the performance of steel margins and equity prices for each of the key steel producing regions. The US has remained an area of strength in the global steel market, supported by higher infrastructure and re-shoring investment, alongside supply discipline from the producers. In Europe, steel prices and margins have been under pressure as industrial production in areas such as Germany have remained depressed and higher Chinese exports have weakened prices. Steel margins in China have remained around breakeven levels for much of the year, with steel prices largely tracking moves in its key cost inputs iron ore and coking coal. Our expectation was for steel production in China to moderate in the second half of 2023 in line with the government’s target of reducing steel production year-on-year. However, this did not eventuate supporting iron ore prices.
From an equity perspective, the Asian (ex-China) steel producers outperformed in 2023, a detraction from relative performance for the Company given its lack of exposure. Korean listed POSCO performed strongly in 2023 on the announcement of its battery material plans, with Japanese listed Nippon Steel also performing well with renewed interest in Japanese listed equities. The Company’s exposure to steel is focused on companies with a track record of capital returns through share buybacks and dividends, as well as disciplined growth and an industry leading approach to decarbonisation. Our preference in the Company is to have exposure to low carbon producers such as the US Electric Arc Furnace producers Nucor and Steel Dynamics, or to be invested in those producers which might be carbon intensive today but have credible plans to decarbonise their production as is the case with Arcelor Mittal.
Stronger than expected steel demand and rising blast furnace utilisation also benefited coking coal prices which averaged US$295.5/tonne during the year. China’s coking coal imports remained healthy with domestic supply impacted by accidents and rising safety inspections. India, the world’s fastest growing steel market, continued to increase its imports of coking coal and is set to increase its coking coal demand by circa 50Mt by the end of the decade, equivalent in size to Japan’s coking coal demand today. Combined with limited supply growth we expect a “stronger for longer” price environment over the medium term to persist. During the year we saw M&A in the space with Glencore acquiring a 77% interest in Teck’s coking coal business for US$6.9 billion with the deal expected to complete in Q3 of 2024. BHP sold its Blackwater and Daunia coking coal mines in Queensland to Whitehaven for a cash consideration of up to US$4.1 billion. The Company’s exposure to metallurgical coal remains in the two leading producers, BHP and Teck Resources, which have been able to generate very strong levels of free cash flow from their coking coal businesses to support returns to shareholders in recent years.
After record-high thermal coal prices in 2022 following the European energy crisis, prices declined meaningfully in 2023 but finished modestly above market expectations. China has dominated coal demand growth in 2023 with thermal power generation higher in 2023, with both coal imports and domestic coal production in China higher year-on-year. This higher level of demand was largely met by rising Indonesian coal exports, along with higher Australian supply which has been hampered in recent years by heavy rainfall. We have seen less supply disruption in Australia during 2023 which has helped stabilise demand.
The Company’s thermal coal exposure is via our 8.3% position in Glencore which has used elevated thermal coal prices in recent years to deleverage the business and buyback shares. During the year, Glencore made a proposal to Teck to merge their two businesses and subsequently demerger the combined coal business to create two separate companies – a metals business and a coal business. This proposal was not accepted by the Teck board and instead they chose to sell their coking coal business which Glencore acquired. Glencore has indicated that it will separate coal from the rest of the business over time. As a reminder, the Company has no exposure to pure play thermal coal producers.
Precious metals
Precious metals were an area of strength during 2023 with the gold price up by 14% and the average price 8% higher year-on-year. The gold price benefited from elevated geopolitical issues during the year, strong central bank purchases and as we approached the end of the year and the expectation of Federal Reserve interest rate cuts which would see real yields fall. Central bank net purchases of gold in 2023 of 1,037 tonnes almost matched the 2022 record, falling just 45 tonnes short. Central bank purchases have been dominated by China which continues to build gold reserves.
Another interesting feature of the gold market in recent years has been the disconnect between the gold price and real yields. Historically, gold has performed well in an environment of low real yields, as gold is a non-yielding asset. Conversely, in an environment of rising real yields, the attractiveness of other “safe haven” assets such as cash and government bonds improves, which typically acts as a headwind to gold. Rising physical demand for gold from central banks alongside elevated geopolitical risk partly explains the strong performance of gold despite elevated real yields in 2023. As we approached the end of 2023 and the market began to price in rate cuts, we did see the gold price rally, more in line with the traditional correlation between gold and rates.
The silver price has modestly underperformed gold when looking at average prices during 2023 versus the same period last year. Industrial demand for silver was strong during 2023 with solar installations globally exceeding expectations. With silver inventories declining over the last two years and supply challenges in the world’s largest producer of silver, Mexico, the physical market for silver is set to tighten further particularly if solar installations continue to supply to the upside.
The Company has increased its exposure to gold producers during the year given the improved gold price outlook. However, we have maintained our strategy of focusing on high quality producers which have an attractive operating margin and solid production profile and resource base. Typically, gold royalty companies offer a higher quality and lower risk exposure to gold as they do not face operating and capital cost inflation. Disappointingly, Franco-Nevada’s (1.4% of the portfolio) exposure to First Quantum Minerals’ Cobre Panama mine which was placed into care and maintenance towards the end of the year saw the shares finish the year down by 19% in US Dollar terms. 2023 marked another year of consolidation in the gold industry with Newmont Corporation (3.6% of the portfolio) successfully acquiring Australian listed Newcrest Mining to create the world’s largest gold producer.
Energy transition metals
Battery electric vehicles (BEVs) sales continued to grow in 2023, with estimates that sales would reach over 14 million battery electric vehicle units. This growth has been mainly driven by China, where BEV sales totalled 8.8 million units, +38% year-on-year according to the China Passenger Car Association. Globally, competition has resulted in EV price declines supporting volumes. However, this has cost profitability and led to weakening investor sentiment as some large equipment manufacturers, particularly in the US, have slowed investment plans as they prioritise returns.
Legislation continued to evolve and of particular note was the US looking to exclude Foreign Entity of Concern (FEOC) owned companies from qualifying for EV incentives under the Inflation Reduction Act. Beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured by an FEOC and beginning in 2025 an eligible clean vehicle may not contain any critical minerals that were extracted, processed or recycled by a FEOC. This is disruptive as it will exclude many Chinese companies from the US supply chain.
The Company has exposure to the raw materials that go into EV batteries and the e-motor. Lithium is a critical component of an EV battery and, although demand for lithium has been strong this year, prices have been weak falling by 43% as the sector saw both destocking and increased supply. The Company’s holdings in lithium producers such as Albemarle and SQM cost performance. The holding in Sigma Lithium was an exception, up a modest 6.6% over the year. The company started producing lithium concentrate from its Brazilian project during the year, as well as announcing a Strategic Review was underway.
A critical component of the electric car is also the e-motor, which most commonly uses a Praseodymium-Neodymium (NdPr) magnet, an alloy of two rare earth elements (REEs). REEs are commonly mined and processed in China and have been deemed of strategic importance by both Europe and the US. The Company has exposure to REEs through Lynas Rare Earths (Lynas), a REE miner and processor crucially based in Malaysia and Australia. In 2023 Lynas equity fell by 13.4% during a period of weaker Rare Earth Mineral pricing. This year the company successful commissioned their cracking and leaching plant in Australia, as well as progressing their US plant securing a site in Texas.
2023 saw a rapid rise in interest around uranium cumulating at the 28th United Nations Climate Change Conference (COP28), which recognised the key role of nuclear energy in reaching Net Zero with a declaration to triple nuclear energy capacity by 2050. The uranium price rose sharply during the year with the Ux Consulting weekly spot price up by 82.3%. The Company’s holding in uranium producer Cameco rose by 81% in the year, benefiting from rising prices. They also completed an acquisition of 49% of Westinghouse, a nuclear reactor technology original equipment manufacturer and service provider, further integrating them into the nuclear power supply chain.
Royalty and unquoted investments
During the year the Company evaluated several new private investment deals but in the end declined to participate for a variety of reasons. As mentioned in previous reports, the focus of the unquoted investments is to aim to generate both capital growth and income to deliver the superior total return goal for the portfolio.
We continue to actively look for opportunities to grow royalty exposure given it is a key differentiator of the Company and an effective mechanism to lock-in long-term income which further diversifies the Company’s revenues.
2023 saw several of the recently listed shares deliver further progress at their projects. Bravo Mining reported excellent drilling results, an updated resource for their Luanga project and completed a financing which covers them for the next couple of years. Ivanhoe Electric reported strong drill results and completed a significant capital raise during the period.
As at the end of 2023, the unquoted investments in the portfolio amounted to 6.7% of the portfolio and consist of the BHP Brazil Royalty, the Vale Debentures, Jetti Resources and MCC Mining. These, and any future investments, will be managed in line with the guidelines set by the Board as outlined to shareholders in the Strategic Report of this Annual Report.
BHP Brazil Royalty Contract (1.4% of the portfolio)
In July 2014 the Company signed a binding royalty agreement with Avanco Minerals (Avanco). The Company provided US$12 million in return for a Net Smelter Return royalty payments (net revenue after deductions for freight, smelter and refining charges) comprising 2% on copper, 25% on gold and 2% on all other metals produced from mines built on Avanco’s Antas North and Pedra Branca licences. In addition, there is a flat 2% royalty over all metals produced from any other discoveries within Avanco’s licence area as at the time of the agreement.
In 2018 we were delighted to report that Avanco Minerals was acquired by OZ Minerals, an Australian based copper and gold producer for A$418 million. We were equally pleased to report that in early 2023 OZ Minerals was acquired by BHP, the world’s largest mining company and which now operates the assets underlying the royalty. Since our initial US$12 million investment was made, we have received US$27.4 million in royalty payments with the royalty achieving full payback on the initial investment in 3½ years. As at the end of December 2023, the royalty was valued at £18.4 million (1.4% of the portfolio) which equates to a 329.6% cash return on the initial US$12 million invested.
In August, the Pedra Branca mine experienced a geotechnical event which suspended operations in line with BHP’s global safety standards. The mine recommenced operations in October and is targeting normal production levels in early 2024. This has reduced 2023 production levels and associated royalty payments, but it is not expected to impact overall reserves and resources or long-term production rates. BHP has implemented changes to the mine design and mining method, along with additional monitoring systems to reduce the risk of future events.
Vale debentures (2.8% of the portfolio)
At the beginning of 2019 the Company completed a significant transaction to increase its holding in Vale debentures. The debentures consist of a 1.8% net revenue royalty over Vale’s Northern System and Southeastern System iron ore assets in Brazil, as well as a 1.25% royalty over the Sossego copper mine. The iron ore assets are world class given their grade, cost position, infrastructure and resource life which is well in excess of 50 years.
Dividend payments are expected to grow once royalty payments commence on the Southeastern System in 2025 and volumes from S11D and Serra Norte improve. At Vale’s Capital Markets Day in December, the company outlined 50Mt of iron ore growth to 2026 of which S11D is the largest component and an improved quality mix which the royalty will benefit from.
The debentures offer a yield in excess of 10% based on the 1H-2023 annualised dividend. This is an attractive yield for a royalty investment, with this value opportunity recognised by other listed royalty producers, Franco-Nevada and Sandstorm Gold Royalties, which have both acquired stakes in the debentures in 2021.
Whilst the Vale debentures are a royalty, they are also a listed security on the Brazilian National Debentures System. As we have highlighted in previous reports, shareholders should be aware that historically there has been a low level of liquidity in the debentures and price volatility is to be expected, although this is improving following the sell-down in April 2021.
Jetti Resources (2.1% of the portfolio)
In early 2022, the Company made an investment into mining technology company Jetti Resources (Jetti) which has developed a new catalyst that improves copper recovery from primary copper sulphides (specifically copper contained in chalcopyrite which is often uneconomic) under conventional leach conditions. Jetti is currently trialling their technology across a number of mines where they will look to integrate their catalyst into existing heap leach SX-EW mines to improve recoveries at a low capital cost. The technology has been demonstrated to work at scale at Capstone’s Pinto Valley copper mine, as well as Freeport-McMoRan’s Bagdad and El Abra operations. If Jetti’s technology continues to work at scale, we see valuation upside with Jetti sharing in the economics of additional copper volumes recovered through the application of their catalyst.
During the second half of 2022 we were pleased to report that Jetti completed its Series D financing to raise US$100 million at a substantially higher valuation than when our investment was made at the beginning of 2022. This sees the company fully financed to execute on their expected growth plans in the years ahead.
MCC Mining (0.4% of the portfolio)
MCC Mining is a private company exploring for copper in Columbia. It is undertaking early-stage greenfield exploration and has strong geological potential to host multiple world class porphyry deposits. Shareholders include other mid- to large-cap copper miners, which is another indication of the strategic value of the company. Following new regulations in Colombia which allowed for the exploration drilling in the forestry reserve, the company commenced drilling at its Comita and Pantanos deposits in 2023. Initial drilling results were very encouraging, which confirmed two porphyry deposits at Comita and Pantanos. The valuation of the Company is based on the US$170.7 million equity value implied by the April 2022 equity raise. The focus for the company is to continue exploration into 2024.
Derivatives activity
The Company from time to time enters into derivatives contracts, mostly involving the sale of “puts” and “calls”. These are taken to revenue and are subject to strict Board guidelines which limit their magnitude to an aggregate 10% of the portfolio. In 2023 income generated from options was £6.0 million, in line with contributions from prior periods. During the year implied volatility was generally lower than in prior years making the opportunity set less attractive. In addition, the cost of the trades had to be looked at in the context of higher interest rates, given that the borrowing capacity is generally used for such transactions. Despite these, enough opportunities were found to generate revenues almost in line with previous years without having to take too much risk. At the end of the year the Company had 0.1% of the net assets exposed to derivatives and the average exposure to derivatives during the year was less than 5% of net assets.
Gearing
At 31 December 2023, the Company had £149.8 million of net debt, with a gearing level of 11.9%. The debt is held principally in US Dollar rolling short-term loans and managed against the value of the debt securities and the high yielding royalty positions in the Company. As in recent years, the Company sought to maximise the use of gearing against the equity holdings rather than debt securities. This was driven by the risk adjusted relative value available in shares where dividend yields were mostly in excess of the coupons being paid on the bonds. Since the companies also have strong balance sheets, it was opportune to gear up the equity portfolio of the Company since we were not adding debt to holdings that were already heavily leveraged themselves. However, in 2023 the debt came with a higher cost and this meant absolute gearing was kept below that of prior years to minimise the interest cost.
Outlook
The dominant story for 2023 was that of interest rates versus inflation. The transition to higher rates was far from smooth as short-term expectations gyrated markets creating a bumpy ride for investors. However, it now looks likely that inflationary pressures have more than peaked and there is an increasing consensus that rates are not moving higher. It is worth remembering that the post global financial crisis and Covid period of zero rates are an outlier versus history and as such the new norm should be anchored around current levels rather than a return to such extreme lows.
At the time of writing it appears we are seeing a change in China’s demand for commodities, with investment into renewable infrastructure, manufacturing and EV’s growing significantly, against more traditional areas of commodity demand such as property declining. Energy transition spending globally continues to drive commodities demand growth and with supply growth across a number of commodities increasingly constrained markets look set to tighten further over the next few years which bodes well for prices.
For mining companies whose balance sheets remain strong and management teams are anchored to disciplined capital allocation frameworks, the challenge will be balancing the desire to invest either for decarbonisation or growth, versus returning capital to shareholders. Given the high level of capital intensity attached to building new capacity, those with the flexibility to repurchase shares should take advantage of the current low equity valuations given that it generally remains cheaper to buy existing capacity than to build it.
In summary, the near term as always remains volatile, but with medium-term demand and supply fundamentals strong, the Company is well positioned to capture returns from this imbalance. In the meantime dividend payments, whilst lower than the peak of a few years ago, remain competitive with alternatives such as bonds and cash meaning shareholders are paid to wait for the positive outlook to be reflected in share prices.
EVY HAMBRO AND OLIVIA MARKHAM
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
7 March 2024
Ten largest investments
Together, the ten largest investments represented 54.8% of total investments of the Company’s portfolio as at 31 December 2023 (2022: 54.3%).
1 ► BHP1,2 (2022: 1st)
Diversified mining group
Market value: £130,674,000
Share of investments: 10.1% comprising equity of 8.7% and Mining Royalty of 1.4% (2022: 9.5%)
The world’s largest diversified mining group by market capitalisation. The group is an important global player in a number of commodities including iron ore, copper, thermal and metallurgical coal, manganese, nickel, silver and diamonds.
2 ► Vale2,3,4 (2022: 2nd)
Diversified mining group
Market value: £124,601,000
Share of investments: 9.6% comprising equity of 6.9%, debentures of 2.8% and option of (0.1)% (2022: 9.1%)
One of the largest mining groups in the world, with operations in 30 countries. Vale is the world’s largest producer of iron ore and iron ore pellets and the world’s largest producer of nickel. The group also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver and cobalt.
3 ► Glencore (2022: 3rd)
Diversified mining group
Market value: £108,173,000
Share of investments: 8.3% (2022: 7.7%)
One of the world’s largest globally diversified natural resources groups. The group’s operations include approximately 150 mining and metallurgical sites and oil production assets. Glencore’s mined commodity exposure includes copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, thermal coal, iron ore, gold and silver.
4 ▲ Rio Tinto (2022: 5th)
Diversified mining group
Market value: £94,600,000
Share of investments: 7.3% (2022: 4.5%)
One of the world’s leading mining groups. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products.
5 ▲ Freeport-McMoRan (2022: 8th)
Copper producer
Market value: £65,125,000
Share of investments: 5.0% (2022: 4.0%)
A global mining group which operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum.
6 ▲ Newmont Corporation4 (2022: 18th)
Gold producer
Market value: £44,450,000
Share of investments: 3.6% (2022: 1.9%)
Following the acquisition of Goldcorp in the first half of 2019, Newmont Corporation is the world’s largest gold producer by market capitalisation. The group has gold and copper operations on five continents, with active gold mines in Nevada, Australia, Ghana, Peru and Suriname.
7 ▲ Barrick Gold (2022: 13th)
Gold producer
Market value: £41,299,000
Share of investments: 3.2% (2022: 2.3%)
Barrick Gold is the second largest gold producer by market capitalisation and has operations and projects in 15 countries across the world. In 2019 the group successfully established a joint venture with Newmont across their Nevada assets to maximize the synergies across both sets of assets.
8 ▲ Wheaton Precious Metals (2022: 14th)
Gold producer
Market value: £38,795,000
Share of investments: 3.0% (2022: 2.3%)
Wheaton Precious Metals is one of the world’s largest precious metals streaming companies, offering investors cost predictability, direct leverage to increasing precious metals prices and a high-quality asset base consisting of 18 operating mines and 26 development assets.
9 ▲ Hydro (2022: 15th)
Aluminium producer
Market value: £34,264,000
Share of investments: 2.6% (2022: 2.1%)
Hydro is a Norwegian aluminium and renewable energy company, headquartered in Oslo. It is one of the largest aluminium companies worldwide. It has operations in some 50 countries around the world. The company is present throughout the aluminium value chain, from energy to bauxite mining and alumina refining, primary aluminium, aluminium extrusions and aluminium recycling.
10 ▼ Teck Resources (2022: 9th)
Diversified mining group
Market value: £30,282,000
Share of investments: 2.3% (2022: 3.6%)
A diversified mining group headquartered in Canada. The company is engaged in mining and mineral development with operations and projects in Canada, the US, Chile and Peru. The group has exposure to copper, zinc, metallurgical coal and energy.
1 Includes mining royalty contract.
2 Includes investments held at Directors’ valuation.
3 Includes fixed income securities.
4 Includes options.
All percentages reflect the value of the holding as a percentage of total investments. For this purpose, where more than one class of securities is held, these have been aggregated.
Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at 31 December 2022.
Investments as at 31 December 2023
|
| Main | Market |
|
|
| Diversified |
|
|
|
|
| Vale | Global | 88,855 | } | 9.6 |
| Vale Debentures*#^ | Global | 36,516 | ||
| Vale Call Option Jan 24 BRL15.5 | Global | (770) | ||
| BHP | Global | 112,240 |
| 8.7 |
| Glencore | Global | 108,173 |
| 8.3 |
| Rio Tinto | Global | 94,600 |
| 7.3 |
| Teck Resources | Global | 30,282 |
| 2.3 |
| Anglo American | Global | 24,081 | } | 1.9 |
| Anglo American Put Option 19/01/24 GBP£18.00 | Global | (99) | ||
| Trident | Global | 3,708 |
| 0.3 |
|
|
| --------------- |
| --------------- |
|
|
| 497,586 |
| 38.4 |
|
|
| ========= |
| ========= |
| Copper |
|
|
|
|
| Freeport-McMoRan | Global | 65,125 |
| 5.0 |
| Ivanhoe Electric | United States | 27,443 |
| 2.1 |
| Jetti Resources# | Global | 27,204 |
| 2.1 |
| Ivanhoe Mines | Other Africa | 24,627 |
| 1.9 |
| Sociedad Minera Cerro Verde | Latin America | 20,142 |
| 1.6 |
| First Quantum Minerals* | Global | 19,942 |
| 1.5 |
| BHP Brazil Royalty#~ | Latin America | 18,316 |
| 1.4 |
| Lundin Mining | Global | 15,672 |
| 1.2 |
| Develop Global | Australasia | 14,145 |
| 1.1 |
| Foran Mining | Canada | 11,225 |
| 0.9 |
| CSA Cobar Mine | Australasia | 8,739 |
| 0.7 |
| Ero Copper | Latin America | 6,890 |
| 0.6 |
| MCC Mining# | Latin America | 5,491 |
| 0.4 |
| Solaris Resources | Latin America | 5,473 |
| 0.4 |
| Filo Mining | Latin America | 3,528 |
| 0.3 |
| Aurubis | Global | 3,219 |
| 0.3 |
| Antofagasta | Latin America | 2,627 |
| 0.2 |
| MTAL Founders Shares | Australasia | 611 |
| 0.1 |
| Metals Acquisition | Australasia | 339 |
| – |
|
|
| --------------- |
| --------------- |
|
|
| 280,758 |
| 21.8 |
|
|
| ========= |
| ========= |
| Gold |
|
|
|
|
| Newmont Corporation | Global | 44,982 | } | 3.6 |
| Newmont Corporation Call Option 19/01/24 US$41.50 | Global | (532) | ||
| Barrick Gold | Global | 41,299 |
| 3.2 |
| Wheaton Precious Metals | Global | 38,795 |
| 3.0 |
| Agnico Eagle Mines | Canada | 20,729 |
| 1.6 |
| Franco-Nevada | Global | 18,661 |
| 1.4 |
| Northern Star Resources | Australasia | 14,040 |
| 1.1 |
| Endeavour Mining | Other Africa | 9,090 |
| 0.7 |
| Allied Gold* | Other Africa | 7,770 |
| 0.6 |
| Polymetal International | Russia | – |
| – |
| Polyus | Russia | – |
| – |
|
|
| --------------- |
| --------------- |
|
|
| 194,834 |
| 15.2 |
|
|
| ========= |
| ========= |
| Steel |
|
|
|
|
| Steel Dynamics | United States | 28,799 |
| 2.2 |
| Nucor | United States | 27,629 |
| 2.1 |
| ArcelorMittal | Global | 23,207 |
| 1.8 |
| Stelco Holdings | Canada | 8,172 |
| 0.6 |
| SSAB | Global | 7,977 |
| 0.6 |
|
|
| --------------- |
| --------------- |
|
|
| 95,784 |
| 7.3 |
|
|
| ========= |
| ========= |
| Industrial Minerals |
|
|
|
|
| Sigma Lithium | Latin America | 17,100 |
| 1.3 |
| Mineral Resources | Australasia | 16,266 |
| 1.3 |
| Albemarle | Global | 10,963 |
| 0.8 |
| Iluka Resources | Australasia | 9,280 |
| 0.7 |
| Lynas Rare Earths | Australasia | 8,825 |
| 0.7 |
| Sheffield Resources | Australasia | 6,951 |
| 0.5 |
| Chalice Mining | Australasia | 2,297 |
| 0.2 |
|
|
| --------------- |
| --------------- |
|
|
| 71,682 |
| 5.5 |
|
|
| ========= |
| ========= |
| Aluminium |
|
|
|
|
| Hydro | Global | 34,264 |
| 2.6 |
| Alcoa | Global | 9,019 |
| 0.7 |
|
|
| --------------- |
| --------------- |
|
|
| 43,283 |
| 3.3 |
|
|
| ========= |
| ========= |
| Iron Ore |
|
|
|
|
| Champion Iron | Canada | 14,425 |
| 1.1 |
| Labrador Iron | Canada | 13,301 |
| 1.0 |
| Deterra Royalties | Australasia | 5,672 |
| 0.4 |
| Equatorial Resources | Other Africa | 201 |
| – |
|
|
| --------------- |
| --------------- |
|
|
| 33,599 |
| 2.5 |
|
|
| ========= |
| ========= |
| Uranium |
|
|
|
|
| Cameco | Canada | 30,264 |
| 2.3 |
|
|
| --------------- |
| --------------- |
|
|
| 30,264 |
| 2.3 |
|
|
| ========= |
| ========= |
| Platinum Group Metals |
|
|
|
|
| Bravo Mining | Latin America | 15,945 |
| 1.2 |
| Northam Platinum | Global | 2,610 |
| 0.2 |
| Impala Platinum | South Africa | 1,598 |
| 0.1 |
| Sibanye Stillwater | South Africa | 1,029 |
| 0.1 |
|
|
| --------------- |
| --------------- |
|
|
| 21,182 |
| 1.6 |
|
|
| ========= |
| ========= |
| Mining Services |
|
|
|
|
| Woodside Energy Group | Australasia | 7,209 |
| 0.5 |
| Epiroc | Global | 6,421 |
| 0.5 |
|
|
| --------------- |
| --------------- |
|
|
| 13,630 |
| 1.0 |
|
|
| ========= |
| ========= |
| Nickel |
|
|
|
|
| Lifezone Metals | Global | 7,091 |
| 0.5 |
| Nickel Industries | Indonesia | 5,923 |
| 0.5 |
| Bindura Nickel | Global | 28 |
| – |
|
|
| --------------- |
| --------------- |
|
|
| 13,042 |
| 1.0 |
|
|
| ========= |
| ========= |
| Zinc |
|
|
|
|
| Titan Mining | United States | 1,375 |
| 0.1 |
|
|
| --------------- |
| --------------- |
|
|
| 1,375 |
| 0.1 |
|
|
| ========= |
| ========= |
| Comprising: |
| 1,297,019 |
| 100.0 |
|
|
| ========= |
| ========= |
| – Investments |
| 1,298,420 |
| 100.1 |
| – Options |
| (1,401) |
| (0.1) |
|
|
| --------------- |
| --------------- |
|
|
| 1,297,019 |
| 100.0 |
|
|
| ========= |
| ========= |
* Includes fixed income securities.
# Includes investments held at Directors’ valuation.
~ Mining royalty contract.
^ The investment in the Vale debentures is illiquid and has been valued using secondary market pricing information provided by the Brazilian Financial and Capital Markets Association (ANBIMA).
All investments are in equity shares unless otherwise stated.
The total number of investments as at 31 December 2023 (including options classified as liabilities on the balance sheet) was 69 (31 December 2022: 68).
As at 31 December 2023 the Company did not hold any equity interests in companies comprising more than 3% of a company’s share capital.
Commodity Exposure1
|
| 2023 portfolio | 2022 portfolio# | 2023 reference index* |
| Diversified | 38.4% | 40.0% | 35.6% |
| Copper | 21.8% | 22.0% | 9.9% |
| Gold | 15.2% | 13.0% | 21.0% |
| Steel | 7.3% | 8.1% | 20.7% |
| Industrial Minerals | 5.5% | 6.5% | 1.8% |
| Aluminium | 3.3% | 3.3% | 2.8% |
| Iron Ore | 2.5% | 3.1% | 5.0% |
| Uranium | 2.3% | 0.4% | 0.0% |
| Platinum Group Metals | 1.6% | 2.0% | 1.4% |
| Mining Services | 1.0% | 0.4% | 0.0% |
| Nickel | 1.0% | 0.8% | 0.0% |
| Zinc | 0.1% | 0.1% | 0.4% |
| Other& | 0.0% | 0.3% | 1.4% |
1 Based on index classifications.
# Represents exposure at 31 December 2022.
* MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
& Represents a very small exposure.
Geographic Exposure1
|
| 2023 |
| Global | 67.4% |
| Canada | 7.5% |
| Latin America | 7.4% |
| Australasia | 7.3% |
| Other2 | 7.0% |
| Other Africa (ex South Africa) | 3.2% |
| South Africa | 0.2% |
|
| 2022 |
| Global | 69.2% |
| Australasia | 9.0% |
| Latin America | 7.5% |
| Other3 | 7.1% |
| Canada | 4.1% |
| Other Africa (ex South Africa) | 2.4% |
| South Africa | 0.7% |
1 Based on the principal commodity exposure and place of operation of each investment.
2 Consists of Indonesia and United States.
3 Consists of Indonesia, Russia, United Kingdom and United States.
Strategic Report
The Directors present the Strategic Report of BlackRock World Mining Trust plc for the year ended 31 December 2023. The aim of the Strategic Report is to provide shareholders with the information to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders.
The Chairman’s Statement together with the Investment Manager’s Report form part of this Strategic Report. The Strategic Report was approved by the Board at its meeting on 7 March 2024.
Principal activities
The Company carries on business as an investment trust and has a premium listing on the London Stock Exchange. Its principal activity is portfolio investment and that of its subsidiary, BlackRock World Mining Investment Company Limited (together the Group), is investment dealing. The Company was incorporated in England on 28 October 1993 and this is the thirtieth Annual Report.
Investment trusts are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading investment risk.
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
Strategy
The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long-term success of the Company and is its governing body. There is a clear division of responsibility between the Board and BlackRock Fund Managers Limited (the Manager). Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance and appointing and monitoring of the performance of service providers, including the Manager.
Business model
The Company’s business model follows that of an externally managed investment trust. Therefore, the Company does not have any employees and outsources its activities to third party service providers including the Manager who is the principal service provider. In accordance with the Alternative Investment Fund Managers’ Directive (AIFMD), as implemented, retained and onshored in the UK, the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited is the Company’s Alternative Investment Fund Manager.
The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited (the Investment Manager). The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.
The Company delegates fund accounting services to the Manager, which in turn sub-delegates these services to The Bank of New York Mellon (International) Limited (BNYM). Other service providers include the Depositary (also BNYM) and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with the Manager and the Depositary and more details of the arrangements in place governing custody services are set out in the Directors’ Report.
Investment policy
The Company’s investment policy is to provide a diversified investment in mining and metal securities worldwide actively managed with the objective of maximising total returns. While the policy is to invest principally in quoted securities, the Company’s investment policy includes investing in royalties derived from the production of metals and minerals as well as physical metals. Up to 10% of gross assets may be held in physical metals.
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 Manager finds it difficult to identify attractively priced opportunities for investment, then up to 25% of the Group’s assets may be held in cash or cash equivalents. Risk is spread by investing in a number of holdings, many of which themselves are diversified businesses.
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 objectives. The Company is also permitted to enter into stock lending arrangements.
As approved by shareholders in 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 royalties, equities or bonds. 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.
In March 2015 the Board refined the guidelines associated with the Company’s royalty strategy and 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, at the time of investment, manage total exposure to a single operator, via reducing exposure to 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.
While the Company may hold shares in other listed investment companies (including investment trusts), the Board has agreed that the Company will not invest more than 15% of the Group’s gross assets in other UK listed investment companies. In order to comply with the current Listing Rules, the Company will also not invest more than 10% of its gross asset value in other listed closed-ended investment funds which themselves may invest more than 15% of their gross assets in other listed closed-ended investment funds. This restriction does not form part of the Company’s investment policy.
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.
No material change will be made to the investment policy without shareholder approval.
Gearing
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 14.6% and, at the financial reporting date, net gearing (calculated as borrowings less cash and cash equivalents as a percentage of net assets) stood at 11.9% of shareholders’ funds (2022: 9.6%). For further details on borrowings refer to note 14 in the Financial Statements and the Alternative Performance Measure in the Glossary in the Annual Report and Financial Statements.
Portfolio analysis
Information regarding the Company’s investment exposures is contained within Section 2 (Portfolio) of the Annual Report and Financial Statements, with information on the ten largest investments, the investments listed and portfolio analysis above. Further information regarding investment risk and activity throughout the year can be found in the Investment Manager’s Report.
As at 31 December 2023, the Level 3 unquoted investments (see note 18 in the Financial Statements) in the BHP Brazil Royalty Contract and preferred shares and equity shares of Jetti Resources and MCC Mining were held at Directors’ valuation, representing a total of £51,129,000 (US$65,178,000) (2022: £56,891,000 (US$67,269,000)). Unquoted investments can prove to be more risky than listed investments.
Continuation vote
As agreed by shareholders in 1998, an ordinary resolution for the continuation of the Company is proposed at each Annual General Meeting. The Directors remain confident on the value available in the mining sector and therefore recommend that shareholders vote in support of the Company’s continuation.
Performance
Details of the Company’s performance for the year are given in the Chairman’s Statement. The Investment Manager’s Report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.
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 £78,985,000 (2022: profit of £202,420,000) of which £64,691,000 (2022: £76,013,000) is revenue profit.
It is the Board’s intention to distribute substantially all of the Company’s available income. The Directors recommend the payment of a final dividend as set out in the Chairman’s Statement. Dividend payments/payable for the year ended 31 December 2023 amounted to £64,016,000 (2022: £75,405,000).
Future prospects
The Board’s main focus is to maximise total returns over the longer term through investment in mining and metal assets. The outlook for the Company is discussed in both the Chairman’s Statement and the Investment Manager’s Report.
Social, community and human rights issues
As an investment trust, the Company has no direct social or community responsibilities or impact on the environment and the Company has not adopted an ESG investment strategy or exclusionary screens. However, the Directors believe that it is important and in shareholders’ interests to consider human rights issues and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s approach to ESG and the Manager’s approach to ESG integration are also set out in the Annual Report and Financial Statements.
Modern Slavery Act
As an investment vehicle, the Company does not provide goods or services in the normal course of business and does not have customers. The Investment Manager considers modern slavery as part of supply chains and labour management within the investment process. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Directors, gender representation and employees
The Directors of the Company on 31 December 2023 are set out in the Directors’ Biographies in the Annual Report and Financial Statements. The Board consists of three male Directors and two female Directors. The Company’s policy on diversity is set out in the Annual Report and Financial Statements. The Company does not have any executive employees.
Key performance indicators
At each Board meeting, 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 other investment trusts are set out below. As indicated in the footnote to the table, some of these KPIs fall within the definition of ‘Alternative Performance Measures’ under guidance issued by the European Securities and Markets Authority (ESMA) and additional information explaining how these are calculated is set out in the Glossary in the Annual Report and Financial Statements. Additionally, the Board regularly reviews the performance of the portfolio, as well as the net asset value and share price of the Company and compares this against various companies and indices. Information on the Company’s performance is given in the Chairman’s Statement.
|
| Year ended | Year ended |
| Net asset value total return1,2 | -6.2% | 17.7% |
| Share price total return1,2 | -10.4% | 26.0% |
| (Discount)/premium to net asset value2 | (3.3)% | 1.3% |
| Revenue earnings per share | 33.95p | 40.68p |
| Total dividends per share | 33.50p | 40.00p |
| Ongoing charges2, 3 | 0.91% | 0.95% |
| Ongoing charges on gross assets2, 4 | 0.81% | 0.84% |
|
| ========= | ========= |
1 This measures the Company’s NAV and share price total return, which assumes dividends paid by the Company have been reinvested.
2 Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.
3 Ongoing charges represent the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items, as a % of average daily net assets.
4 Ongoing charges based on gross assets represent the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items, as a % of average daily gross assets. Gross assets are calculated based on net assets during the year before the deduction of the bank overdraft and loans. Ongoing charges based on gross assets are considered to be an appropriate performance measure as management fees are payable on gross assets (subject to certain adjustments and deductions).
Principal risks
The Company is exposed to a variety of risks and uncertainties. As required by the 2018 UK Corporate Governance Code (the UK Code), the Board has put in place a robust ongoing process to identify, assess and monitor the principal risks and emerging risks facing the Company including those that would threaten its business model. A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of the assessment.
The risk register, its method of preparation and the operation of key controls in BlackRock’s and third-party service providers’ systems of internal control, are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive understanding of BlackRock’s and other third party service providers’ risk management processes and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit Committee chairs of the BlackRock investment trusts setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit Committee also periodically receives and reviews internal control reports from BlackRock and the Company’s service providers.
The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic gave rise to unprecedented challenges for businesses across the globe. Additionally, the risk that unforeseen or unprecedented events including (but not limited to) heightened geo-political tensions such as the war in Ukraine and the conflict in the Middle East, high inflation and the current cost of living crisis has had a significant impact on global markets. The Board has taken into consideration the risks posed to the Company by these events and incorporated these into the Company’s risk register. The threat of climate change has also reinforced the importance of more sustainable practices and environmental responsibility for investee companies.
Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. They were also considered as part of the annual evaluation process. Additionally, the Manager considers emerging risks in numerous forums and the BlackRock Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company through the annual risk survey will be communicated to the Board.
The Board will continue to assess these risks on an ongoing basis. In relation to the UK Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period.
The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out in the following table.
Market
Principal 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 currency exchange rates, 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.
Market risk includes the potential impact of events which are outside the Company’s control, including (but not limited to) heightened geo-political tensions and military conflict, a global pandemic and high inflation.
Companies operating in the sectors in which the Company invests may be impacted by new legislation governing climate change and environmental issues, which may have a negative impact on their valuation and share price.
Mitigation/Control
The Board considers the diversification of the portfolio, 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.
The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced as a consequence of the COVID-19 pandemic and the war in Ukraine and conflict in the Middle East. Unlike open-ended counterparts, closed-end funds are not obliged to sell-down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility and market stress, the ability of a closed-end fund structure to remain invested for the long term enables the Investment Manager to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.
The Investment Manager seeks to understand the Environmental, Social and Governance (ESG) risks and opportunities facing companies and industries in the portfolio. The Company has not adopted an ESG investment strategy and does not exclude investment in stocks based on ESG criteria, but the Investment Manager considers ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio. Further information on BlackRock’s approach to ESG integration can be found in the Annual Report and Financial Statements.
Investment performance
Principal risk
The returns achieved are reliant primarily upon the performance of the portfolio.
The Board is responsible for:
· deciding the investment strategy to fulfil the Company’s objective; and
· monitoring the performance of the Investment Manager and the implementation of the investment strategy.
An inappropriate investment strategy may lead to:
· underperformance compared to the reference index;
· a reduction or permanent loss of capital; and
· dissatisfied shareholders and reputational damage.
The Board is also cognisant of the long-term risk to performance from inadequate attention to ESG issues and in particular the impact of climate change.
Mitigation/Control
To manage this risk the Board:
· regularly reviews the Company’s investment mandate and long-term strategy;
· has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on;
· receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing, and the rationale for the composition of the investment portfolio;
· oversees the maintenance of 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 investment policy; and
· receives and reviews regular reports showing an analysis of the Company’s performance against other indices, including the performance of major companies in the sector.
ESG analysis is integrated into the Investment Manager’s investment process as set out in the Annual Report and Financial Statements. This is monitored by the Board. As the world works toward a transition to a low-carbon economy, the Investment Manager is interested in hearing from companies about their strategies and plans for responding to the challenges and capturing the opportunities that this transition creates. When companies consider climate-related risks, it is likely they will also assess their impact and dependence on natural capital.
Operational
Principal risk
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties and is dependent on the control systems of the Manager, the Depositary and Fund Accountant which maintain the Company’s assets, dealing procedures and accounting records.
The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. There is a risk that a major disaster, such as floods, fire, a global pandemic, or terrorist activity, renders the Company’s service providers unable to conduct business at normal operating effectiveness.
Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records (including cyber security risk) could prevent the accurate reporting and monitoring of the Company’s financial position.
Mitigation/Control
Due diligence is undertaken before contracts are entered into with third-party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.
The Board reviews on a regular basis an assessment of the fraud risks that the Company could potentially be exposed to and also a summary of the controls put in place by the Manager, Depositary, Custodian, Fund Accountant and Registrar specifically to mitigate these risks.
Most third-party service providers produce Service Organisation Control (SOC 1) reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit Committee for review. The Committee would seek further representations from service providers if not satisfied with the effectiveness of their control environment.
The Company’s financial instruments held in custody are subject to a strict liability regime and, in the event of a loss of such financial instruments, the Depositary must return financial assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.
The Board reviews the overall performance of the Manager, Investment Manager and all other third-party service providers on a regular basis and compliance with the Investment Management Agreement annually.
The Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review of the Company’s risk register.
Legal and regulatory compliance
Principal risk
The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from corporation tax on capital gains tax on the profits realised from the sale of its investments.
Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event, the investment returns of the Company may be adversely affected.
A serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.
Amongst other relevant laws, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive as implemented, retained and onshored in the UK (AIFMD), the UK Listing Rules, Disclosure Guidance and Transparency Rules and the Market Abuse Regulation (as retained and onshored in the UK).
Mitigation/Control
The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting.
Compliance with the accounting rules affecting investment trusts is also carefully and regularly monitored.
The Company Secretary, Manager and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations. The Board and the Manager also monitor changes in government policy and legislation which may have an impact on the Company.
The Company’s Investment Manager at all times complies with the sanctions administered by the UK Office of Financial Sanctions Implementation, the United States Treasury’s Office of Foreign Assets Control, the United Nations, European Union member states and any other applicable regimes.
Financial
Principal risk
The Company’s investment activities expose it to a variety of financial risks which include market risk, counterparty credit risk, liquidity risk and the valuation of financial instruments.
Mitigation/Control
Details of these risks are disclosed in note 18 to the Financial Statements, together with a summary of the policies for managing these risks.
In the view of the Board, there have not been any changes to the fundamental nature of these risks and these principal risks and uncertainties are equally applicable for the current financial year.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve months referred to by the ‘Going Concern’ guidelines. The Company is an investment trust with the objective of providing an attractive level of income return together with capital appreciation over the long term.
The Directors expect the Company to continue for the foreseeable future and have therefore conducted this review for a period up to the Annual General Meeting in 2027. The Directors assess viability over a rolling three-year period as they believe it best balances the Company’s long-term objective, its financial flexibility and scope, with the difficulty in forecasting economic conditions which could affect both the Company and its shareholders. The Company also undertakes a continuation vote every year with the next one taking place at the forthcoming Annual General Meeting.
In making an assessment on the viability of the Company, the Board has considered the following:
· the impact of a significant fall in commodity markets on the value of the Company’s investment portfolio;
· the ongoing relevance of the Company’s investment objective, business model and investment policy in the prevailing market;
· the principal and emerging risks and uncertainties, as set out above, and their potential impact;
· the level of ongoing demand for the Company’s shares;
· the Company’s share price discount/premium to NAV;
· the liquidity of the Company’s portfolio; and
· the level of income generated by the Company and future income and expenditure forecasts.
The Directors have concluded that there is a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the period of their assessment based on the following considerations:
· the Investment Manager’s compliance with the investment objective and policy, its investment strategy and asset allocation;
· the portfolio is liquid and mainly comprises readily realisable assets which continue to offer a range of investment opportunities for shareholders as part of a balanced investment portfolio;
· the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of service for the foreseeable future;
· the effectiveness of business continuity plans in place for the Company and its key service providers;
· the ongoing processes for monitoring operating costs and income which are considered to be reasonable in comparison to the Company’s total assets;
· the Board’s discount management policy; and
· the Company is a closed-end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions.
In addition, the Board’s assessment of the Company’s ability to operate in the foreseeable future is included in the Going Concern Statement which can be found in the Directors’ Report in the Annual Report and Financial Statements.
Section 172 statement: Promoting the success of the Company
The Companies (Miscellaneous Reporting) Regulations 2018 require directors of large companies to explain more fully how they have discharged their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This includes the likely consequences of their decisions in the longer term and how they have taken wider stakeholders’ needs into account.
The disclosure that follows covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions. The Board considers the main stakeholders in the Company to be the Manager, Investment Manager and the shareholders. In addition to this, the Board considers investee companies and key service providers of the Company to be stakeholders; the latter comprise the Company’s Depositary, Registrar, Fund Accountants and Brokers.
Stakeholders
Shareholders
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objective in maximising total returns to shareholders through a worldwide portfolio of mining and metal securities.
Manager and Investment Manager
The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to deliver successfully its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.
Other key service providers
In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the Financial Conduct Authority (FCA) and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisers for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board considers the Company’s Depositary, Registrar, Fund Accountants and Brokers to be stakeholders. The Board maintains regular contact with its key external service providers and receives regular reporting from them through the Board and Committee meetings, as well as outside of the regular meeting cycle.
Investee companies
Portfolio holdings are ultimately shareholders’ assets and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship activities and receives regular feedback from the Manager in respect of meetings with the management of investee companies.
A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and how Directors have acted upon this to promote the long-term success of the Company are set out in the table below.
Area of Engagement
Investment mandate and objective
Issue
The Board is committed to promoting the role and success of the Company in delivering on its investment mandate to shareholders over the long term.
The Board also has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.
Engagement
The Board worked closely with the Investment Manager throughout the year in further developing investment strategy and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of shareholders and future investors. In addition the Company continues to seek out new unquoted investments which could add long-term value.
Impact
The portfolio activities undertaken by the Investment Manager can be found in their Report. The Investment Manager continues to actively look for opportunities to grow royalty exposure given it is a key differentiator of the Company and an effective mechanism to lock-in long-term income which further diversifies the Company’s revenues.
Details regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement and in this Strategic Report.
Responsible investing
Issue
More than ever, the importance of good governance and sustainability practices are key factors in making investment decisions. Climate change is becoming a defining factor in companies’ long-term prospects across the investment spectrum with significant and lasting implications for economic growth and prosperity. The mining industries in which the Company’s investment universe operate are facing ethical and sustainability issues that cannot be ignored by asset managers and investment companies alike.
Engagement
The Board works closely with the Investment Manager to review regularly and challenge the Company’s performance, investment policy and strategy to seek to ensure that the Company’s investment objective continues to be met in an effective and responsible way in the interests of shareholders and future investors. The Company has not adopted an ESG investment strategy and does not exclude investment in stocks based on ESG criteria, but the Board believes that responsible investment and sustainability are integral to the longer-term delivery of the Company’s success.
The Investment Manager’s approach to the consideration of ESG factors in respect of the Company’s portfolio, as well as the Investment Manager’s engagement with investee companies to encourage sound corporate governance practices, are kept under review by the Board. The Board also expects to be informed by the Investment Manager of any sensitive voting issues involving the Company’s investments.
The Investment Manager reports to the Board in respect of its approach to ESG integration; a summary of BlackRock’s approach to ESG integration is set out in the Annual Report and Financial Statements. The Investment Manager’s approach to engagement with investee companies and voting guidelines is summarised in the Annual Report and Financial Statements and further detail is available on the BlackRock website.
Impact
The Board and the Investment Manager believe there is likely to be a positive correlation between strong ESG practices and investment performance over time. This is especially important in mining given the long investment cycle and the impact of ESG practices on the ability of a mining company to maintain its social licence to operate. ESG is one of the many factors that we look at and site visits to companies’ operations provide valuable insights into their ESG practices. The Investment Manager has continued to engage with investee companies.
In 2020 BlackRock exited its active public debt and equity investment in businesses generating greater than 25% of their revenue from thermal coal production due to the heightened risks associated with their economic activity. During the year under review, the Company has had no exposure to companies whose principal activity is the extraction of thermal coal.
Within the parameters of the Company’s existing investment policy, the Investment Manager is continuing to look for opportunities to deploy capital in growth investments that should benefit from the energy transition. It is likely that this area will become a more significant part of the portfolio.
Shareholders
Issue
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy.
Engagement
The Board is committed to maintaining open channels of communication and to engage with shareholders. The Company welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders will have the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Investment Manager will also provide a presentation on the Company’s performance and the outlook for the mining sector.
The Annual Report and Half Yearly Financial Report are available on the BlackRock website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the website at www.blackrock.com/uk/brwm. The Company’s website and marketing initiatives are geared to providing a breadth and depth of informative and engaging content.
The Board also works closely with the Manager to develop the Company’s marketing strategy with the aim of ensuring effective communication with shareholders.
Unlike trading companies, one-to-one shareholder meetings normally take the form of a meeting with the Investment Manager as opposed to members of the Board. The Company’s willingness to enter into discussions with institutional shareholders is also demonstrated by the programmes of institutional presentations by the Investment Manager. Additionally, the Investment Manager regularly presents at professional and private investor events to help explain and promote the Company’s strategy.
If shareholders wish to raise issues or concerns with the Board, they are welcome to do so at any time. The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given in the Annual Report and Financial Statements.
Impact
The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable.
Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s broker and Kepler, marketing consultants, on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager.
The portfolio management team attended a number of professional investor meetings (many by video conference) and held discussions with a number of wealth management desks and offices in respect of the Company during the year under review.
Portfolio holdings are ultimately shareholders’ assets and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship activities and receives regular feedback from the Investment Manager in respect of meetings with the management of portfolio companies.
Management of share rating
Issue
The Board recognises the importance to shareholders that the market price of the Company’s shares should not trade at either a significant discount or premium to their prevailing NAV. The Board believes this may be achieved by the use of share buyback powers and the issue of shares.
Engagement
The Board monitors the Company’s share rating on an ongoing basis and receives regular updates from the Manager and the Company’s Brokers regarding the level of discount/premium. The Board believes that the best way of maintaining the share rating at an optimal level over the long term is to create demand for the shares in the secondary market. To this end, the Investment Manager is devoting considerable effort to broadening the awareness of the Company, particularly to wealth managers and to the wider retail market.
In addition, the Board has worked closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with existing shareholders and to attract new shareholders to the Company in order to improve liquidity in the Company’s shares and to sustain the share rating of the Company.
Impact
The Board continues to monitor the Company’s premium/discount to NAV and will look to issue or buy back shares if it is deemed to be in the interests of shareholders as a whole. The Company participates in a focused investment trust sales and marketing initiative operated by the Manager on behalf of the investment trusts under its management. Further details are set out in the Annual Report and Financial Statements.
During the financial year the Company reissued 2,430,000 shares from treasury. As at 5 March 2024 the Company’s shares were trading at a discount of 6.5% to the cum income NAV.
Service levels of third-party providers
Issue
The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service, including the Investment Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries; and the Company’s Brokers in respect of the provision of advice and acting as a market maker for the Company’s shares.
Engagement
The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources.
The Board performs an annual review of the service levels of all third-party service providers and concludes on their suitability to continue in their role. The Board receives regular updates from the AIFM, Depositary, Registrar and Brokers on an ongoing basis.
The Board has also worked closely with the Manager to gain comfort that relevant business continuity plans are operating effectively for all of the Company’s key service providers.
Impact
All performance evaluations were performed on a timely basis and the Board concluded that all third-party service providers, including the Manager and Investment Manager, were operating effectively and providing a good level of service.
The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Accountant, Registrar and Printer and is confident that arrangements are in place to ensure a good level of service will continue to be provided.
Board composition
Issue
The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the UK Code, including guidance on tenure and the composition of the Board’s committees.
Engagement
The Board has engaged the services of an external search consultant, Fletcher Jones, to identify potential candidates to replace Mr Cheyne who retires as a Director and Chairman following the forthcoming Annual General Meeting. The Nomination Committee has agreed the selection criteria and the method of selection, recruitment and appointment.
All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions of the 2023 evaluation process are given in the Annual Report and Financial Statements). All Directors stand for re-election by shareholders annually.
Shareholders may attend the Annual General Meeting and raise any queries in respect of Board composition or individual Directors in person or may contact the Company Secretary or the Chairman using the details provided with any issues.
Impact
As at the date of this report, the Board was comprised of three men and two women. Under the AIC Code the tenure of a director who is elevated to Chairman may be extended by three years. The Board decided that this extension should apply to Mr Cheyne’s tenure which was therefore extended until the Annual General Meeting in May 2024. Mr Cheyne will not be seeking re-election at the forthcoming Annual General Meeting. During the year, the Directors identified Mr Goodyear as a suitable replacement to fill the vacancy following Mr Edey’s retirement and he will succeed Mr Cheyne as Chairman. Following the recruitment process, the successful candidate will be appointed as a Director following the Annual General Meeting being held on 9 May 2024. Details of each Director’s contribution to the success and promotion of the Company are set out in the Directors’ Report and details of the Directors’ biographies in the Annual Report and Financial Statements.
The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in the year under review. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2023 Annual General Meeting are given on the Manager’s website at www.blackrock.com/uk/brwm.
Environmental, Social and Governance issues and approach
The Board’s approach
Environmental, Social and Governance (ESG) issues can present both opportunities and threats to long-term investment performance. The Company’s investment universe comprises sectors that are undergoing significant structural change and are likely to be highly impacted by increasing regulation as a result of climate change and other social and governance factors. Your Board is committed to ensuring that we have appointed an Investment Manager that integrates ESG considerations into its investment process and has the skill to navigate the structural transition that the Company’s investment universe is undergoing. The Board believes effective engagement with company management is, in most cases, the most effective way of driving meaningful change in the behaviour of investee company management. While the Company does not have an ESG or impact focused investment strategy or apply exclusionary screens, as in most cases the Company will not invest in companies which have high ESG risks and no plans to address existing deficiencies. Where the Board is not satisfied that an investee company is taking steps to address matters of an ESG nature, it may discuss with the Investment Manager how this situation might be resolved, including potentially by a full disposal of shares.
ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe, and does not mean that an ESG or impact focused investment strategy or any exclusionary screens have been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks. More information on BlackRock’s global approach to ESG integration, as well as activity specific to the BlackRock World Mining Trust plc portfolio, is set out below.
The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation (SFDR) and the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities. The Investment Manager has access to a range of data sources, including principal adverse indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs, the Company does not commit to considering PAIs in driving the selection of its investments. Additional information on ESG integration, sustainability risk and SFDR is set out in the AIFMD Fund Disclosures available on the Company’s website.
BlackRock’s approach to ESG integration
BlackRock believes that sustainability risk, including climate risk are investment risks. As a fiduciary, we manage material risks and opportunities that could impact portfolios. Sustainability can be a driver of investment risks and opportunities and we incorporate them in our firm wide processes when they are material. This in turn (in BlackRock’s view) is likely to drive a significant reallocation of capital away from traditional carbon-intensive industries over the next decade. BlackRock believes that carbon-intensive companies will play an integral role in unlocking the full potential of the energy transition, and to do this, they must be prepared to adapt, innovate and pivot their strategies towards a low carbon economy.
As part of BlackRock’s structured investment process, ESG risks and opportunities (including sustainability/climate risk) are considered within the portfolio management team’s fundamental analysis of companies and industries and the Company’s portfolio managers work closely with the BIS team to assess the governance quality of companies and understand any potential issues, risks or opportunities.
As part of their approach to ESG integration, the portfolio managers use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio. In particular, portfolio managers now have access to 1,200 key ESG performance indicators in Aladdin (BlackRock’s proprietary trading system) from third-party data providers. BlackRock’s internal sustainability research framework scoring is also available alongside third-party ESG scores in core portfolio management tools. BlackRock’s analysts’ sector expertise and local market knowledge allows it to engage with companies through direct interaction with management teams and conducting site visits. BIS engages with company leadership to understand how they are identifying and managing material business risks and opportunities, including sustainability related risks and the potential impacts these may have on long-term financial performance. BIS and the portfolio management team’s understanding of material sustainability risks and opportunities is further supported by BlackRock’s Sustainable and Transition Solutions (STS) function. STS looks to advance ESG research and integration, active engagement and the development of sustainable investment solutions across the firm.
BlackRock World Mining Trust plc – BlackRock Investment Stewardship engagement with portfolio companies for the year ended 31 December 2023
Given the Board’s belief in the importance of engagement and communication with portfolio companies, they receive regular updates from the Investment Manager in respect of activity undertaken for the year under review. The Investment Manager engages with company management teams and undertakes company meetings to identify the best management teams with the ability to create value for shareholders over the long term. In addition, BlackRock also has a separate BlackRock Investment Stewardship (BIS) team. Investment stewardship is one of the ways in which BlackRock fulfils its fiduciary responsibilities as an asset manager to its clients. BIS serves as a link between them and the companies BlackRock invests in. BIS engages with investee companies to build its understanding of these companies’ approach to addressing material business risks and opportunities. Additional information is set out in the table and charts in the Annual Report and Financial Statements, as well as the key engagement themes for the meetings held in respect of the Company’s portfolio holdings.
|
| Year ended |
| Number of engagements held | 48 |
| Number of companies met | 22 |
| % of equity investments covered | 33 |
| Shareholder meetings voted at | 60 |
| Number of proposals voted on | 651 |
| Number of votes against management | 39 |
| % of total items voted represented by votes against management | 6.0 |
|
| ========= |
Sources: BlackRock, Institutional Shareholder Services.
Investment stewardship
Consistent with BlackRock’s fiduciary duty as an asset manager, BIS seeks to support investee companies in their efforts to deliver long-term financial value on behalf of their clients. These clients include public and private pension plans, governments, insurance companies, endowments, universities, charities and, ultimately, individual investors, among others. BIS serves as a link between BlackRock’s clients and the companies they invest in. Clients depend on BlackRock to help them meet their investment goals; the business and governance decisions that companies make may have a direct impact on BlackRock’s clients’ long-term investment outcomes and financial well being.
From BlackRock’s perspective, business relevant sustainability issues can contribute to a company’s long-term financial performance, and thus further incorporating these considerations into the investment research, portfolio construction, and stewardship process can enhance long-term risk adjusted returns. The Company’s Investment Manager works closely with BIS to assess the governance quality of companies and business practices, and better understand any potential issues, risks or opportunities. The Investment Manager uses this information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio.
Global principles
The BIS Global Principles, regional voting guidelines, and engagement priorities (collectively, the ‘BIS policies’) set out the core elements of corporate governance that guide BIS’ efforts globally and within each regional market, including when engaging with companies and voting at shareholder meetings when authorised to do so on behalf of clients. Each year, BIS reviews its policies and updates them as necessary to reflect changes in market standards and regulations, insights gained over the year through third-party and its own research, and feedback from clients and companies.
Regional proxy voting guidelines
BIS’ regional voting guidelines are intended to help clients and companies understand its thinking on key governance matters. They are the benchmark against which it assesses a company’s approach to corporate governance and the items on the agenda to be voted on at a shareholder meeting. BIS applies its guidelines pragmatically, taking into account a company’s unique circumstances where relevant. BlackRock informs voting decisions through research and engages as necessary. BIS reviews its voting guidelines annually and updates them as necessary to reflect changes in market standards, evolving governance practices and insights gained from engagement over the prior year. BIS’ market-specific voting guidelines are available on its website at www.blackrock.com/corporate/about-us/investment-stewardship#stewardship-policies.
BlackRock is committed to transparency in terms of disclosure on its stewardship activities on behalf of clients. The BIS policies help BlackRock’s clients understand its work to advance their interests as long-term investors in public companies. Additionally, BIS publishes both annual and quarterly reports detailing its stewardship activities, as well as vote bulletins that describe its rationale for certain votes at high profile shareholder meetings.
BlackRock’s reporting and disclosures
In terms of its own reporting, BlackRock believes that the Sustainability Accounting Standards Board provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the Task Force on Climate-related Financial Disclosures (TCFD) provides a valuable framework. BlackRock recognises that reporting to these standards requires significant time, analysis, and effort. BlackRock’s 2022 TCFD report can be found at www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/tcfd-report-2022-blkinc.pdf.
BY ORDER OF THE BOARD
CAROLINE DRISCOLL
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary
7 March 2024
RELATED PARTY TRANSACTIONS
At the date of this report, the Board consists of five non-executive Directors, all of whom are considered to be independent of the Manager by the Board. Following the conclusion of the Annual General Meeting on 9 May 2024, the Board will consist of five non-executive Directors. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £52,500, the Chairman of the Audit Committee receives an annual fee of £43,750, and each other Director receives an annual fee of £35,000. The Senior Independent Director receives an additional fee of £3,500. All five members of the Board hold shares in the Company. Mr Cheyne holds 35,000 ordinary shares, Mr Goodyear holds 60,000 ordinary shares, Ms Lewis holds 5,362 ordinary shares, Ms Mosely holds 7,400 ordinary shares and Mr Venkatakrishnan holds 2,000 ordinary shares. As at 31 December 2023, £17,000 (2022: £16,000) was outstanding in respect of Directors’ fees.
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 in accordance with UK-adopted International Accounting Standards (IAS).
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 Group and Company and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to:
· present fairly the financial position, financial performance and cash flows of the Group and 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 UK-adopted IAS, subject to any material departures disclosed and explained in the financial statements;
· provide additional disclosures when compliance with the specific requirements in accordance with UK-adopted IAS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s and 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 Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and 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 Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance 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, confirm to the best of their knowledge that:
· the financial statements, which have been prepared in accordance with UK-adopted IAS, give a true and fair view of the assets, liabilities, financial position and net return of the Group and 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 Group and Company, together with a description of the principal risks and uncertainties that it faces.
The 2018 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 Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s Report in 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 2023, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s and Company’s position, performance, business model and strategy.
FOR AND ON BEHALF OF THE BOARD
DAVID CHEYNE
Chairman
7 March 2024
Consolidated Statement of Comprehensive Income for the year ended 31 December 2023
|
|
| 2023 | 2022 | ||||
|
|
| Revenue | Capital | Total | Revenue | Capital | Total |
| Income from investments held at fair value through profit or loss | 3 | 68,317 | 630 | 68,947 | 78,087 | 811 | 78,898 |
| Other income | 3 | 6,827 | – | 6,827 | 7,909 | – | 7,909 |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Total revenue |
| 75,144 | 630 | 75,774 | 85,996 | 811 | 86,807 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Net (loss)/profit on investments and options held at fair value through profit or loss |
| – | (140,576) | (140,576) | – | 152,937 | 152,937 |
| Net profit/(loss) on foreign exchange |
| – | 9,018 | 9,018 | – | (17,645) | (17,645) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Total |
| 75,144 | (130,928) | (55,784) | 85,996 | 136,103 | 222,099 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Expenses |
|
|
|
|
|
|
|
| Investment management fee | 4 | (2,374) | (7,317) | (9,691) | (2,615) | (8,031) | (10,646) |
| Other operating expenses | 5 | (1,278) | (15) | (1,293) | (1,037) | (28) | (1,065) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Total operating expenses |
| (3,652) | (7,332) | (10,984) | (3,652) | (8,059) | (11,711) |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Net profit/(loss) on ordinary activities before finance costs and taxation |
| 71,492 | (138,260) | (66,768) | 82,344 | 128,044 | 210,388 |
| Finance costs | 6 | (2,375) | (7,166) | (9,541) | (1,182) | (3,520) | (4,702) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Net profit/(loss) on ordinary activities before taxation |
| 69,117 | (145,426) | (76,309) | 81,162 | 124,524 | 205,686 |
| Taxation (charge)/credit |
| (4,426) | 1,750 | (2,676) | (5,149) | 1,883 | (3,266) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Net profit/(loss) on ordinary activities after taxation |
| 64,691 | (143,676) | (78,985) | 76,013 | 126,407 | 202,420 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= |
| Earnings/(loss) per ordinary share (pence) – basic and diluted | 8 | 33.95 | (75.40) | (41.45) | 40.68 | 67.64 | 108.32 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= |
The total columns of this statement represent the Group’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards (IAS). The supplementary revenue and capital accounts 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 the Group.
The Group does not have any other comprehensive income/(loss) (2022: £nil). The net profit/(loss) for the year disclosed above represents the Group’s total comprehensive income.
Consolidated Statement of Changes in Equity for the year ended 31 December 2023
|
|
| Called | Share | Capital |
|
|
|
|
| For the year ended 31 December 2023 |
|
|
|
|
|
|
|
|
| At 31 December 2022 |
| 9,651 | 148,107 | 22,779 | 180,736 | 868,837 | 69,175 | 1,299,285 |
| Total comprehensive (loss)/income: |
|
|
|
|
|
|
|
|
| Net (loss)/profit for the year |
| – | – | – | – | (143,676) | 64,691 | (78,985) |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 9,10 | – | 3,386 | – | 12,305 | – | – | 15,691 |
| Share reissue costs | 9,10 | – | – | – | (33) | – | – | (33) |
| Dividends paid1 | 7 | – | – | – | – | – | (75,907) | (75,907) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2023 |
| 9,651 | 151,493 | 22,779 | 193,008 | 725,161 | 57,959 | 1,160,051 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| For the year ended 31 December 2022 |
|
|
|
|
|
|
|
|
| At 31 December 2021 |
| 9,651 | 138,818 | 22,779 | 155,123 | 742,430 | 74,073 | 1,142,874 |
| Total comprehensive income: |
|
|
|
|
|
|
|
|
| Net profit for the year |
| – | – | – | – | 126,407 | 76,013 | 202,420 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Ordinary shares reissued from treasury |
| – | 9,289 | – | 25,683 | – | – | 34,972 |
| Share reissue costs |
| – | – | – | (70) | – | – | (70) |
| Dividends paid2 | 7 | – | – | – | – | – | (80,911) | (80,911) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2022 |
| 9,651 | 148,107 | 22,779 | 180,736 | 868,837 | 69,175 | 1,299,285 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
1 The final dividend of 23.50p per share for the year ended 31 December 2022, declared on 3 March 2023 and paid on 26 April 2023; 1st interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 18 April 2023 and paid on 31 May 2023; 2nd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 24 August 2023 and paid on 6 October 2023 and 3rd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 11 October 2023 and paid on 22 December 2023.
2 The final dividend of 27.00p per share for the year ended 31 December 2021, declared on 8 March 2022 and paid on 19 May 2022; 1st interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 6 May 2022 and paid on 30 June 2022; 2nd interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 23 August 2022 and paid on 30 September 2022 and 3rd interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 16 November 2022 and paid on 22 December 2022.
Parent Company Statement of Changes in Equity for the year ended 31 December 2023
|
|
| Called | Share | Capital |
|
|
|
|
| For the year ended 31 December 2023 |
|
|
|
|
|
|
|
|
| At 31 December 2022 |
| 9,651 | 148,107 | 22,779 | 180,736 | 874,567 | 63,445 | 1,299,285 |
| Total comprehensive (loss)/income: |
|
|
|
|
|
|
|
|
| Net (loss)/profit for the year |
| – | – | – | – | (143,500) | 64,515 | (78,985) |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 9,10 | – | 3,386 | – | 12,305 | – | – | 15,691 |
| Share reissue costs | 9,10 | – | – | – | (33) | – | – | (33) |
| Dividends paid1 | 7 | – | – | – | – | – | (75,907) | (75,907) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2023 |
| 9,651 | 151,493 | 22,779 | 193,008 | 731,067 | 52,053 | 1,160,051 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
| For the year ended 31 December 2022 |
|
|
|
|
|
|
|
|
| At 31 December 2021 |
| 9,651 | 138,818 | 22,779 | 155,123 | 748,107 | 68,396 | 1,142,874 |
| Total comprehensive income: |
|
|
|
|
|
|
|
|
| Net profit for the year |
| – | – | – | – | 126,460 | 75,960 | 202,420 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Ordinary shares reissued from treasury |
| – | 9,289 | – | 25,683 | – | – | 34,972 |
| Share reissue costs |
| – | – | – | (70) | – | – | (70) |
| Dividends paid1 | 7 | – | – | – | – | – | (80,911) | (80,911) |
|
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2022 |
| 9,651 | 148,107 | 22,779 | 180,736 | 874,567 | 63,445 | 1,299,285 |
|
|
| ========= | ========= | ========= | ========= | ========= | ========= | ========= |
1 The final dividend of 23.50p per share for the year ended 31 December 2022, declared on 3 March 2023 and paid on 26 April 2023; 1st interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 18 April 2023 and paid on 31 May 2023; 2nd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 24 August 2023 and paid on 6 October 2023 and 3rd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 11 October 2023 and paid on 22 December 2023.
2 The final dividend of 27.00p per share for the year ended 31 December 2021, declared on 8 March 2022 and paid on 19 May 2022; 1st interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 6 May 2022 and paid on 30 June 2022; 2nd interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 23 August 2022 and paid on 30 September 2022 and 3rd interim dividend of 5.50p per share for the year ended 31 December 2022, declared on 16 November 2022 and paid on 22 December 2022.
For information on the Company’s distributable reserves please refer to note 17 in the Annual Report and Financial Statements.
Consolidated and Parent Company Statements of Financial Position as at 31 December 2023
|
|
| 31 December 2023 | 31 December 2022 | ||
|
|
| Group | Company | Group | Company |
| Non current assets |
|
|
|
|
|
| Investments held at fair value through profit or loss |
| 1,298,420 | 1,305,827 | 1,424,844 | 1,432,075 |
| Current assets |
|
|
|
|
|
| Current tax asset |
| 1,276 | 1,276 | 821 | 821 |
| Other receivables |
| 3,592 | 3,592 | 4,431 | 4,431 |
| Cash collateral held with brokers |
| 6,269 | 6,269 | 6,795 | 6,795 |
| Cash and cash equivalents |
| 10,612 | 4,261 | 29,492 | 23,317 |
|
|
| --------------- | --------------- | --------------- | --------------- |
| Total current assets |
| 21,749 | 15,398 | 41,539 | 35,364 |
|
|
| ========= | ========= | ========= | ========= |
| Total assets |
| 1,320,169 | 1,321,225 | 1,466,383 | 1,467,439 |
|
|
| ========= | ========= | ========= | ========= |
| Current liabilities |
|
|
|
|
|
| Current tax liability |
| (352) | (352) | (373) | (361) |
| Other payables |
| (8,052) | (9,108) | (6,155) | (7,223) |
| Derivative financial liabilities held at fair value through profit or loss |
| (1,401) | (1,401) | (1,227) | (1,227) |
| Bank loans |
| (149,828) | (149,828) | (158,783) | (158,783) |
|
|
| --------------- | --------------- | --------------- | --------------- |
| Total current liabilities |
| (159,633) | (160,689) | (166,538) | (167,594) |
|
|
| ========= | ========= | ========= | ========= |
| Total assets less current liabilities |
| 1,160,536 | 1,160,536 | 1,299,845 | 1,299,845 |
|
|
| ========= | ========= | ========= | ========= |
| Non current liabilities |
|
|
|
|
|
| Deferred taxation liability |
| (485) | (485) | (560) | (560) |
|
|
| --------------- | --------------- | --------------- | --------------- |
| Net assets |
| 1,160,051 | 1,160,051 | 1,299,285 | 1,299,285 |
|
|
| ========= | ========= | ========= | ========= |
| Equity attributable to equity holders |
|
|
|
|
|
| Called up share capital | 9 | 9,651 | 9,651 | 9,651 | 9,651 |
| Share premium account | 10 | 151,493 | 151,493 | 148,107 | 148,107 |
| Capital redemption reserve | 10 | 22,779 | 22,779 | 22,779 | 22,779 |
| Special reserve | 10 | 193,008 | 193,008 | 180,736 | 180,736 |
| Capital reserves: |
|
|
|
|
|
| At 1 January |
| 868,837 | 874,567 | 742,430 | 748,107 |
| Net (loss)/profit for the year |
| (143,676) | (143,500) | 126,407 | 126,460 |
|
|
| --------------- | --------------- | --------------- | --------------- |
| At 31 December | 10 | 725,161 | 731,067 | 868,837 | 874,567 |
| Revenue reserve: |
|
|
|
|
|
| At 1 January |
| 69,175 | 63,445 | 74,073 | 68,396 |
| Net profit for the year |
| 64,691 | 64,515 | 76,013 | 75,960 |
| Dividends paid |
| (75,907) | (75,907) | (80,911) | (80,911) |
|
|
| --------------- | --------------- | --------------- | --------------- |
| At 31 December | 10 | 57,959 | 52,053 | 69,175 | 63,445 |
|
|
| ========= | ========= | ========= | ========= |
| Total equity |
| 1,160,051 | 1,160,051 | 1,299,285 | 1,299,285 |
|
|
| ========= | ========= | ========= | ========= |
| Net asset value per ordinary share (pence) | 8 | 606.78 | 606.78 | 688.35 | 688.35 |
|
|
| ========= | ========= | ========= | ========= |
Consolidated and Parent Company Cash Flow Statements for the year ended 31 December 2023
|
| 31 December 2023 | 31 December 2022 | ||
|
| Group | Company | Group | Company |
| Operating activities |
|
|
|
|
| Net (loss)/profit on ordinary activities before taxation | (76,309) | (76,309) | 205,686 | 205,686 |
| Add back finance costs | 9,541 | 9,541 | 4,702 | 4,702 |
| Net loss/(profit) on investments and options held at fair value through profit or loss (including transaction costs) | 140,576 | 140,400 | (152,937) | (152,990) |
| Net (profit)/loss on foreign exchange | (9,018) | (9,018) | 17,645 | 17,645 |
| Sale of investments and return of capital on contractual rights | 648,272 | 648,272 | 489,236 | 489,236 |
| Purchase of investments and options held at fair value through profit or loss | (662,250) | (662,250) | (503,782) | (503,782) |
| Decrease in other receivables | 1,069 | 1,069 | 13 | 13 |
| Increase in other payables | 1,556 | 1,556 | 1,025 | 1,013 |
| (Increase)/decrease in amounts due from brokers | (409) | (409) | 243 | 243 |
| Net movement in cash collateral held with brokers | 526 | 526 | (6,215) | (6,215) |
|
| --------------- | --------------- | --------------- | --------------- |
| Net cash inflow from operating activities before taxation | 53,554 | 53,378 | 55,616 | 55,551 |
|
| ========= | ========= | ========= | ========= |
| Taxation paid | (12) | (12) | (432) | (432) |
| Taxation on investment income included within gross income | (2,664) | (2,664) | (3,210) | (3,210) |
|
| --------------- | --------------- | --------------- | --------------- |
| Net cash inflow from operating activities | 50,878 | 50,702 | 51,974 | 51,909 |
|
| ========= | ========= | ========= | ========= |
| Financing activities |
|
|
|
|
| Drawdown of loans | – | – | 2,359 | 2,359 |
| Interest paid | (9,571) | (9,571) | (4,720) | (4,720) |
| Net proceeds from ordinary shares reissued from treasury | 15,658 | 15,658 | 34,902 | 34,902 |
| Dividends paid | (75,907) | (75,907) | (80,911) | (80,911) |
|
| --------------- | --------------- | --------------- | --------------- |
| Net cash outflow from financing activities | (69,820) | (69,820) | (48,370) | (48,370) |
|
| ========= | ========= | ========= | ========= |
| Decrease/(increase) in cash and cash equivalents | (18,942) | (19,118) | 3,604 | 3,539 |
| Cash and cash equivalents at start of the year | 29,492 | 23,317 | 25,976 | 19,866 |
| Effect of foreign exchange rate changes | 62 | 62 | (88) | (88) |
|
| --------------- | --------------- | --------------- | --------------- |
| Cash and cash equivalents at end of year | 10,612 | 4,261 | 29,492 | 23,317 |
|
| ========= | ========= | ========= | ========= |
| Comprised of: |
|
|
|
|
| Cash and cash equivalents | 10,612 | 4,261 | 29,492 | 23,317 |
|
| --------------- | --------------- | --------------- | --------------- |
|
| 10,612 | 4,261 | 29,492 | 23,317 |
|
| ========= | ========= | ========= | ========= |
Notes to the financial statements for the year ended 31 December 2023
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. The Company was incorporated in England on 28 October 1993 and this is the 30th Annual Report.
The principal activity of the subsidiary, BlackRock World Mining Investment Company Limited, is investment dealing.
2. Material accounting policies
The material accounting policies adopted by the Group and Company have been applied consistently, other than where new policies have been adopted and are set out below.
(a) Basis of preparation
On 31 December 2020, International Financial Reporting Standards (IFRS) as adopted by the European Union at that date were brought into UK law and became UK-adopted International Accounting Standards (IAS), with future changes being subject to endorsement by the UK Endorsement Board and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The Group and Company financial statements have been prepared under the historic cost convention modified by the revaluation of certain financial assets and financial liabilities held at fair value through profit or loss and in accordance with UK-adopted IAS. The Company has taken advantage of the exemption provided under Section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income 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) in October 2019 and updated in July 2022, is compatible with UK-adopted IAS, the financial statements have been prepared in accordance with guidance set out in the SORP.
Substantially all of the assets of the Group consist of securities that are readily realisable and, accordingly, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future for the period to 31 March 2024, being a period of at least twelve months from the date of approval of the financial statements and therefore consider the going concern assumption to be appropriate. The Directors have reviewed compliance with the covenants associated with the bank overdraft facility, loan facility, income and expense projections and the liquidity of the investment portfolio in making their assessment.
The Directors have considered the impact of climate change on the value of the investments included in the financial statements and have concluded that:
· there was no further impact of climate change to be considered as the investments are valued based on market pricing as required by IFRS 13; and
· the risk is adequately captured in the assumptions and inputs used in measurement of Level 3 assets, as noted in note 18 of the Financial Statements.
None of the Group's other assets and liabilities were considered to be potentially impacted by climate change.
The Group’s financial statements are presented in Sterling, which is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.
Adoption of new and amended International Accounting Standards and interpretations:
IFRS 9 – Fees in the ’10 per cent’ Test for Derecognition of Financial Liabilities (effective 1 January 2022). The International Accounting Standards Board (IASB) has amended IFRS 9 Financial Instruments to clarify the fees that a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.
IFRS 17 – Insurance contracts (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide range of accounting practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features.
IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction (effective 1 January 2023). The IASB has amended IAS 12 Income Taxes to require companies to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance, a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might have a significant impact on the preparation of financial statements by companies that have substantial balances of right-of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the recognition of additional deferred tax assets and liabilities.
IAS 8 – Definition of accounting estimates (effective 1 January 2023). The IASB has amended IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help distinguish between accounting policies and accounting estimates, replacing the definition of accounting estimates.
IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies (effective 1 January 2023). The IASB has amended IAS 1 Presentation of Financial Statements to help preparers in deciding which accounting policies to disclose in their financial statements by stating that an entity is now required to disclose material accounting policies instead of significant accounting policies.
IAS 12 – International Tax Reform Pillar Two Model Rules (effective 1 January 2023). The IASB has published amendments to IAS 12 Income Taxes to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two rules on the accounting for income taxes. The amendment is an exception to the requirements in IAS 12 that an entity does not recognise and does not disclose information about deferred tax assets as liabilities related to the OECD pillar two income taxes and a requirement that current tax expenses must be disclosed separately to pillar two income taxes.
Relevant International Accounting Standards that have yet to be adopted:
IAS 1 – Classification of liabilities as current or non-current (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to clarify its requirement for the presentation of liabilities depending on the rights that exist at the end of the reporting period. The amendment requires liabilities to be classified as non current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights.
IAS 1 – Non-current liabilities with covenants (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to introduce additional disclosures for liabilities with covenants within 12 months of the reporting period. The additional disclosures include the nature of covenants, when the entity is required to comply with covenants, the carrying amount of related liabilities and circumstances that may indicate that the entity will have difficulty complying with the covenants.
None of the standards that have been issued, but are not yet effective, are expected to have a material impact on the Group.
(b) Basis of consolidation
The Group’s financial statements are made up to 31 December each year and consolidate the financial statements of the Company and its wholly owned subsidiary, which is registered and operates in England and Wales, BlackRock World Mining Investment Company Limited (together ‘the Group’). The subsidiary company is not considered an investment entity. In the financial statements of the Parent Company, the investment in the subsidiary company is held at fair value.
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 Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated 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 as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends and interest income 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 and deposit interest is accounted for on an accruals basis.
Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. Where the purpose of the option is the generation of income, the premium is treated as a revenue item. Where the purpose of the option is the maintenance of capital, the premium is treated as a capital item.
Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue account of the Consolidated Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Group’s investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital account of the Consolidated Statement of Comprehensive Income.
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 comprises 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 net profit 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 net profit on investments held at fair value through profit or loss.
Where the Group has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.
Underwriting commission receivable is taken into account on an accruals basis.
(f) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue account of the Consolidated Statement of Comprehensive Income, except as follows:
· expenses which are incidental to the acquisition or sale of an investment are charged to the capital account of the Consolidated Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 10 to the financial statements on in the Annual Report and Financial Statements;
· expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; and
· the investment management fee and finance costs have been allocated 75% to the capital account and 25% to the revenue account of the Consolidated Statement of Comprehensive Income in line with the Board’s expectations of the long-term split of returns, in the form of capital gains and income, respectively, from the investment portfolio.
(g) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.
Where expenses are allocated between capital and revenue accounts, any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.
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
In accordance with IFRS 9, the Group classifies its investments at initial recognition as held at fair value through profit or loss and are managed and evaluated on a fair value basis in accordance with its investment strategy and business model.
All investments, including contractual rights, are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Contractual rights are recognised on the completion date, where a purchase of the rights is under a contract, and are initially measured at fair value excluding transaction costs. Sales of investments are recognised at the trade date of the disposal.
The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated future selling costs. This policy applies to all current and non-current asset investments held by the Group.
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 IAS, the investment in the subsidiary in the Company’s Statement of Financial Position is fair valued which is deemed to be the net asset value of the subsidiary.
Changes in the 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 ‘Net profit on investments held at fair value through profit or loss’. Also included within the heading are transaction costs in relation to the purchase or sale of investments.
For all financial instruments not traded in an active market, the fair value is determined by using various valuation techniques. Valuation techniques include 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 where possible). See note 2(q) below.
(i) Options
Options are held at fair value through profit or loss 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 through profit or loss of the option based on traded prices. Where the premium is taken to the revenue account, 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 exercised, the gain or loss is accounted for as a capital gain or loss. Any cost on closing out an option is transferred to the revenue account along with any remaining unamortised premium.
(j) 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 on an amortised cost basis.
(k) Dividends payable
Under IAS, 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 recognised in the financial statements unless they have been paid.
Dividends payable to equity shareholders are recognised in the Consolidated and Parent Company Statements of Changes in Equity.
(l) 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 and non-monetary assets held at fair value 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. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in the profit/(loss) on investments held at fair value through profit or loss in the Consolidated Statement of Comprehensive Income.
(m) Cash and cash equivalents
Cash comprises cash in hand, bank overdrafts 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. Bank overdrafts are shown separately on the Consolidated and Parent Company Statements of Financial Position.
(n) Bank borrowings
Bank overdrafts and loans are recorded at the net proceeds received. Finance charges, including any premium 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.
(o) Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the Consolidated and Parent Company 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.
(p) Share repurchases, share reissues and new share issues
Shares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased and the capital redemption reserve is correspondingly increased in accordance with Section 733 of the Companies Act 2006. The full cost of the repurchase is charged to the special reserve.
Shares repurchased and held in treasury – the full cost of the repurchase is charged to the special reserve.
Where treasury shares are subsequently reissued:
· amounts received to the extent of the repurchase price are credited to the special reserve and capital reserves based on a weighted average basis of amounts utilised from these reserves on repurchases; and
· any surplus received in excess of the repurchase price is taken to the share premium account.
Where new shares are issued, amounts received to the extent of any surplus received in excess of the par value are taken to the share premium account.
Share issue costs are charged to the share premium account. Costs on share reissues are charged to the special reserve and capital reserves.
(q) 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 unquoted financial instruments
When the fair values of financial assets and financial liabilities recorded in the Consolidated and Parent Company 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.
(a) The fair value of the BHP Brazil contractual rights was 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 Consolidated and Parent Company 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.
(b) The fair value of the investment in equity shares of Jetti Resources and MCC Mining were assessed by an independent valuer with a recognised and relevant professional qualification.
The valuation is carried out based on market approach using earnings multiple and price of recent transactions. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the Consolidated and Parent Company 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.
(c) The investment in the subsidiary company was valued based on the net assets of the subsidiary company, which is considered appropriate based on the nature and volume of transactions in the subsidiary company.
The key assumptions used to determine the fair value of the unquoted financial instruments and sensitivity analyses are provided in note 18(d).
3. Income
|
| 2023 | 2022 |
| Investment income: |
|
|
| UK dividends | 8,647 | 17,536 |
| UK special dividends | – | 2,167 |
| Overseas dividends | 33,457 | 45,094 |
| Overseas special dividends | 17,736 | 3,808 |
| Income from contractual rights (BHP Brazil Royalty) | 4,186 | 3,096 |
| Income from Vale debentures | 2,608 | 3,863 |
| Income from fixed income investments | 1,683 | 2,523 |
|
| --------------- | --------------- |
| Total investment income | 68,317 | 78,087 |
|
| ========= | ========= |
| Other income: |
|
|
| Option premium income | 5,964 | 7,297 |
| Deposit interest | 678 | 513 |
| Broker interest received | 104 | 18 |
| Stock lending income | 81 | 81 |
|
| --------------- | --------------- |
|
| 6,827 | 7,909 |
|
| ========= | ========= |
| Total income | 75,144 | 85,996 |
|
| ========= | ========= |
During the year, the Group received option premium income in cash totalling £6,724,000 (2022: £7,541,000) for writing put and covered call options for the purposes of revenue generation.
Option premium income is amortised evenly over the life of the option contract and, accordingly, during the year, option premiums of £5,964,000 (2022: £7,297,000) were amortised to revenue.
At 31 December 2023, there were three open positions (2022: three) with an associated liability of £1,401,000 (2022: £1,227,000).
Dividends and interest received in cash during the year amounted to £59,542,000 and £5,159,000 (2022: £68,630,000 and £5,918,000).
Special dividends of £630,000 have been recognised in capital during the year (2022: £811,000).
4. Investment management fee
|
| 2023 | 2022 | ||||
|
| Revenue | Capital | Total | Revenue | Capital | Total |
| Investment management fee | 2,374 | 7,317 | 9,691 | 2,615 | 8,031 | 10,646 |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Total | 2,374 | 7,317 | 9,691 | 2,615 | 8,031 | 10,646 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
The investment management fee (which includes all services provided by BlackRock) is 0.80% of the Company’s gross assets (subject to certain adjustments). During the year, £9,421,000 (2022: £9,848,000) of the investment management fee was generated from net assets and £270,000 (2022: £798,000) from the gearing effect on gross assets due to the quarter–on– quarter increase in the NAV per share for the year as set out below:
|
| Cum income | Quarterly | Gearing effect |
| 31 December 2021 | 622.21 | – | – |
| 31 March 2022 | 769.58 | +23.7 | 267 |
| 30 June 2022 | 584.86 | -24.0 | – |
| 30 September 2022 | 602.65 | +3.0 | 294 |
| 31 December 2022 | 688.35 | +14.2 | 237 |
| 31 March 2023 | 664.51 | -3.5 | – |
| 30 June 2023 | 612.72 | -7.8 | – |
| 30 September 2023 | 601.47 | -1.8 | – |
| 31 December 2023 | 606.78 | +0.9 | 270 |
|
| ========= | ========= | ========= |
The daily average of the net assets under management during the year ended 31 December 2023 was £1,203,977,000 (2022: £1,232,043,000).
The fee is allocated 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income.
There is no additional fee for company secretarial and administration services.
5. Other operating expenses
|
| 2023 | 2022 |
| Allocated to revenue: |
|
|
| Custody fee | 109 | 101 |
| Auditors’ remuneration: |
|
|
| – audit services | 55 | 51 |
| – non-audit services1 | 9 | 9 |
| Registrar’s fee | 86 | 86 |
| Directors’ emoluments2 | 179 | 197 |
| AIC fees | 21 | 21 |
| Broker fees | 25 | 24 |
| Depositary fees | 116 | 116 |
| FCA fee | 40 | 30 |
| Directors’ insurance | 22 | 23 |
| Marketing fees | 144 | 132 |
| Stock exchange fees | 52 | 37 |
| Legal and professional fees | 147 | 35 |
| Bank facility fees3 | 85 | 97 |
| Printing and postage fees | 55 | 47 |
| Directors’ search fees | 25 | – |
| Write back of prior year expenses4 | – | (55) |
| Other administrative costs | 108 | 86 |
|
| --------------- | --------------- |
|
| 1,278 | 1,037 |
|
| ========= | ========= |
| Allocated to capital: |
|
|
| Transaction charges5 | 15 | 28 |
|
| --------------- | --------------- |
|
| 1,293 | 1,065 |
|
| ========= | ========= |
|
| 2023 | 2022 |
| The Company’s ongoing charges6, calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items were: |
|
|
|
| ========= | ========= |
| The Company’s ongoing charges6, calculated as a percentage of average daily gross assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items were: |
|
|
|
| ========= | ========= |
1 Fees paid to the auditors for non-audit services of £9,350 excluding VAT (2022: £8,925) relate to the review of the Condensed Half Yearly Financial Report.
2 Details of the Directors’ emoluments can be found in the Directors’ Remuneration Report in the Annual Report and Financial Statements. The Company has no employees.
3 There is a 4 basis point facility fee chargeable on the full loan facility whether drawn or undrawn.
4 No expenses have been written back during the year (2022: Directors' expenses, miscellaneous fees, legal fees and professional services fees).
5 For the year ended 31 December 2023, expenses of £15,000 (2022: £28,000) were charged to the capital account of the Consolidated Statement of Comprehensive Income. These include transaction costs charged by the custodian on sale and purchase trades.
6 Alternative Performance Measure, see Glossary in the Annual Report and Financial Statements.
6. Finance costs
|
| 2023 | 2022 | ||||
|
| Revenue | Capital | Total | Revenue | Capital | Total |
| Interest paid on bank loans | 2,370 | 7,151 | 9,521 | 1,177 | 3,505 | 4,682 |
| Interest paid on bank overdraft | 5 | 15 | 20 | 5 | 15 | 20 |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| Total | 2,375 | 7,166 | 9,541 | 1,182 | 3,520 | 4,702 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
7. Dividends
Dividends paid on equity shares:
|
|
|
| 2023 | 2022 |
| Final dividend of 23.50p per share for the year ended 31 December 2022 (2021: 27.00p) | 10 March 2023 | 26 April 2023 | 44,392 | 49,898 |
| 1st interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 5 May 2023 | 31 May 2023 | 10,485 | 10,251 |
| 2nd interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 8 September 2023 | 6 October 2023 | 10,515 | 10,381 |
| 3rd interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 24 November 2023 | 22 December 2023 | 10,515 | 10,381 |
|
|
|
| --------------- | --------------- |
|
|
|
| 75,907 | 80,911 |
|
|
|
| ========= | ========= |
The total dividends payable in respect of the year ended 31 December 2023 which form the basis of Section 1158 of the Corporation Tax Act 2010 and Section 833 of the Companies Act 2006, and the amounts declared, meet the relevant requirements as set out in this legislation.
Dividends paid or declared on equity shares:
|
| 2023 | 2022 |
| 1st quarterly interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 10,485 | 10,251 |
| 2nd quarterly interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 10,515 | 10,381 |
| 3rd quarterly interim dividend of 5.50p per share for the year ended 31 December 2023 (2022: 5.50p) | 10,515 | 10,381 |
| Final dividend of 17.00p per share for the year ended 31 December 2023 (2022: 23.50p) | 32,501 | 44,392 |
|
| --------------- | --------------- |
|
| 64,016 | 75,405 |
|
| ========= | ========= |
1 Based on 191,183,036 ordinary shares in issue on 7 March 2024.
8. Consolidated earnings and net asset value per ordinary share
Total revenue, capital (loss)/earnings and net asset value per ordinary share are shown below and have been calculated using the following:
|
| 2023 | 2022 |
| Net revenue profit attributable to ordinary shareholders (£’000) | 64,691 | 76,013 |
| Net capital (loss)/profit attributable to ordinary shareholders (£’000) | (143,676) | 126,407 |
|
| ----------------- | ----------------- |
| Total (loss)/profit attributable to ordinary shareholders (£’000) | (78,985) | 202,420 |
|
| ========== | ========== |
| Equity shareholders’ funds (£’000) | 1,160,051 | 1,299,285 |
| The weighted average number of ordinary shares in issue during the year on which the earnings per ordinary share was calculated was: | 190,564,324 | 186,868,187 |
| The actual number of ordinary shares in issue at the year end on which the net asset value per ordinary share was calculated was: | 191,183,036 | 188,753,036 |
| Earnings per ordinary share |
|
|
| Revenue earnings per share (pence) – basic and diluted | 33.95 | 40.68 |
| Capital (loss)/earnings per share (pence) – basic and diluted | (75.40) | 67.64 |
|
| ----------------- | ----------------- |
| Total (loss)/earnings per share (pence) – basic and diluted | (41.45) | 108.32 |
|
| ========== | ========== |
|
| As at | As at |
| Net asset value per ordinary share (pence) | 606.78 | 688.35 |
| Ordinary share price (pence) | 587.00 | 697.00 |
|
| ========= | ========= |
9. Called up share capital
|
| Ordinary shares |
|
| Nominal |
| Allotted, called up and fully paid share capital comprised: |
|
|
|
|
| Ordinary shares of 5p each |
|
|
|
|
| At 31 December 2022 | 188,753,036 | 4,258,806 | 193,011,842 | 9,651 |
| Ordinary shares reissued from treasury | 2,430,000 | (2,430,000) | – | – |
|
| ----------------- | ----------------- | ----------------- | ----------------- |
| At 31 December 2023 | 191,183,036 | 1,828,806 | 193,011,842 | 9,651 |
|
| ========== | ========== | ========== | ========== |
During the year ended 31 December 2023 the Company:
– did not buy back shares into treasury (2022: none);
– reissued 2,430,000 shares (2022: 5,071,920 shares) from treasury for a net consideration after costs of £15,658,000 (2022: £34,902,000).
Since the year end and up to 7 March 2024, the Company has not reissued or bought back any shares.
10. Reserves
|
|
|
|
|
| Capital |
|
| At 31 December 2022 | 148,107 | 22,779 | 180,736 | 428,323 | 440,514 | 69,175 |
| Movement during the year: |
|
|
|
|
|
|
| Total comprehensive income/(loss): |
|
|
|
|
|
|
| Net profit/(loss) for the year | – | – | – | 82,077 | (225,753) | 64,691 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 3,386 | – | 12,305 | – | – | – |
| Share reissue costs | – | – | (33) | – | – | – |
| Dividends paid | – | – | – | – | – | (75,907) |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2023 | 151,493 | 22,779 | 193,008 | 510,400 | 214,761 | 57,959 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
|
|
|
| Distributable reserves | |||
|
|
|
|
|
| Capital |
|
| At 31 December 2022 | 148,107 | 22,779 | 180,736 | 426,822 | 447,745 | 63,445 |
| Movement during the year: |
|
|
|
|
|
|
| Total comprehensive income/(loss): |
|
|
|
|
|
|
| Net profit/(loss) for the year | – | – | – | 82,077 | (225,577) | 64,515 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 3,386 | – | 12,305 | – | – | – |
| Share reissue costs | – | – | (33) | – | – | – |
| Dividends paid | – | – | – | – | – | (75,907) |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2023 | 151,493 | 22,779 | 193,008 | 508,899 | 222,168 | 52,053 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
|
|
|
|
|
| Capital |
|
| At 31 December 2021 | 138,818 | 22,779 | 155,123 | 345,594 | 396,836 | 74,073 |
| Movement during the year: |
|
|
|
|
|
|
| Total comprehensive income: |
|
|
|
|
|
|
| Net profit for the year | – | – | – | 82,729 | 43,678 | 76,013 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 9,289 | – | 25,683 | – | – | – |
| Share reissue costs | – | – | (70) | – | – | – |
| Dividends paid | – | – | – | – | – | (80,911) |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2022 | 148,107 | 22,779 | 180,736 | 428,323 | 440,514 | 69,175 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
|
|
|
| Distributable reserves | |||
|
|
|
|
|
| Capital |
|
| At 31 December 2021 | 138,818 | 22,779 | 155,123 | 344,093 | 404,014 | 68,396 |
| Movement during the year: |
|
|
|
|
|
|
| Total comprehensive income: |
|
|
|
|
|
|
| Net profit for the year | – | – | – | 82,729 | 43,731 | 75,960 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
| Ordinary shares reissued from treasury | 9,289 | – | 25,683 | – | – | – |
| Share reissue costs | – | – | (70) | – | – | – |
| Dividends paid | – | – | – | – | – | (80,911) |
|
| --------------- | --------------- | --------------- | --------------- | --------------- | --------------- |
| At 31 December 2022 | 148,107 | 22,779 | 180,736 | 426,822 | 447,745 | 63,445 |
|
| ========= | ========= | ========= | ========= | ========= | ========= |
Pursuant to a resolution of the Company passed at an Extraordinary General Meeting on 13 January 1998 and following the Company’s application to the Court for cancellation of its share premium account, the Court approval was received on 27 January 1999 and £157,633,000 was transferred from the share premium account to a special reserve which is a distributable reserve.
The share premium account and capital redemption reserve are not distributable reserves under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the special reserve and capital reserves of the Parent Company may be used as distributable reserves for all purposes and, in particular, the repurchase by the Parent Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserves and the revenue reserve may be distributed by way of dividend. The Parent Company’s capital gains of £731,067,000 (2022: £874,567,000) comprise a gain on the capital reserve arising on investments sold of £508,899,000 (2022: £426,822,000), a gain on the capital reserve arising on revaluation of listed investments of £189,283,000 (2022: £409,037,000) revaluation gains on unquoted investments of £25,478,000 (2022: £31,477,000) and a revaluation gain on the investment in the subsidiary of £7,407,000 (2022: gain of £7,231,000). The capital reserve arising on the revaluation of listed investments of £189,165,000 (2022: £409,037,000) is subject to fair value movements and may not be readily realisable at short notice; as such it may not be entirely distributable. The investments are subject to financial risks, as such capital reserves (arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation of these investments. The reserves of the subsidiary company are not distributable until distributed as a dividend to the Parent Company.
11. Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Consolidated and Parent Company Statements of Financial Position at their fair value (investment and derivatives) or at amortised cost (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Group to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Group are explained in the accounting policies note 2(h) to the Financial Statements above.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Group does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.
Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Group.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement requires judgement, considering factors specific to the asset or liability including an assessment of the relevant risks including but not limited to credit risk, market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager and these risks are adequately captured in the assumptions and inputs used in measurement of Level 3 assets or liabilities.
Valuation process and techniques for Level 3 valuations
(a) BHP Brazil Royalty
The Directors engage a mining consultant, an independent valuer with a recognised and relevant professional qualification, to conduct a periodic valuation of the contractual rights and the fair value of the contractual rights is assessed with reference to relevant factors. At the reporting date the income streams from contractual rights have been valued on the net present value of the pre-tax cash flows discounted at a rate the external valuer considers reflects the risk associated with the project. The valuation model uses discounted cash flow analysis which incorporates both observable and non-observable data. Observable inputs include assumptions regarding current rates of interest and commodity prices. Unobservable inputs include assumptions regarding production profiles, price realisations, cost of capital and discount rates. In determining the discount rate to be applied, the external valuer considers the country and sovereign risk associated with the project, together with the time horizon to the commencement of production and the success or failure of projects of a similar nature. To assess the significance of a particular input to the entire measurement, the external valuer performs a sensitivity analysis. The external valuer has undertaken an analysis of the impact of using alternative discount rates on the fair value of contractual rights.
This investment in contractual rights is reviewed regularly to ensure that the initial classification remains correct given the asset’s characteristics and the Group’s investment policies. The contractual rights are initially recognised using the transaction price as it was indicative of the best evidence of fair value at acquisition and are subsequently measured at fair value, taking into consideration the relevant IFRS 13 requirements. In arriving at their estimates of market values, the valuers have used their market knowledge and professional judgement. The Group classifies the fair value of this investment as Level 3.
Valuations are the responsibility of the Directors of the Company. In arriving at a final valuation, the Directors consider the independent valuer’s report, the significant assumptions used in the fair valuation and the review process undertaken by BlackRock’s Pricing Committee. The valuation of unquoted investments is performed on a quarterly basis by the Investment Manager and reviewed by the Pricing Committee of the Manager. On a quarterly basis the Investment Manager will review the valuation of the contractual rights and inputs for significant changes. A valuation of contractual rights is performed annually by an external valuer, SRK Consulting (UK) Limited, and reviewed by the Pricing Committee of the Manager. The valuations are also subject to quality assurance procedures performed within the Pricing Committee. On a semi-annual basis, after the checks above have been performed, the Investment Manager presents the valuation results to the Directors. This includes a discussion of the major assumptions used in the valuations. There were no changes in valuation techniques during the year.
(b) Jetti Resources and MCC Mining equity shares
The fair value of the investment equity shares of Jetti Resources and MCC Mining were assessed by an independent valuer with a recognised and relevant professional qualification. The valuation is carried out based on market approach using earnings multiple and price of recent transactions. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the Consolidated and Parent Company 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 a sensitivity analysis.
Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.
| Financial assets/(liabilities) at fair value through profit or loss | Level 1 | Level 2 | Level 3 | Total |
| Assets: |
|
|
|
|
| Equity investments | 1,193,969 | – | 32,695 | 1,226,664 |
| Fixed income securities | 16,924 | 36,516 | – | 53,440 |
| Investment in contractual rights | – | – | 18,316 | 18,316 |
|
| --------------- | --------------- | --------------- | --------------- |
| Total assets | 1,210,893 | 36,516 | 51,011 | 1,298,420 |
|
| ========= | ========= | ========= | ========= |
| Liabilities: |
|
|
|
|
| Derivative financial instruments – written options | – | (1,401) | – | (1,401) |
|
| --------------- | --------------- | --------------- | --------------- |
| Total | 1,210,893 | 35,115 | 51,011 | 1,297,019 |
|
| ========= | ========= | ========= | ========= |
| Financial assets/(liabilities) at fair value through profit or loss | Level 1 | Level 2 | Level 3 | Total |
| Assets: |
|
|
|
|
| Equity investments | 1,250,984 | 9 | 35,692 | 1,286,685 |
| Fixed income securities | 68,894 | 48,066 | – | 116,960 |
| Investment in contractual rights | – | – | 21,199 | 21,199 |
|
| --------------- | --------------- | --------------- | --------------- |
| Total assets | 1,319,878 | 48,075 | 56,891 | 1,424,844 |
|
| ========= | ========= | ========= | ========= |
| Liabilities: |
|
|
|
|
| Derivative financial instruments – written options | – | (1,227) | – | (1,227) |
|
| --------------- | --------------- | --------------- | --------------- |
| Total | 1,319,878 | 46,848 | 56,891 | 1,423,617 |
|
| ========= | ========= | ========= | ========= |
| Financial assets/(liabilities) at fair value through profit or loss | Level 1 | Level 2 | Level 3 | Total |
| Assets: |
|
|
|
|
| Equity investments | 1,193,969 | – | 40,102 | 1,234,071 |
| Fixed income securities | 16,924 | 36,516 | – | 53,440 |
| Investment in contractual rights | – | – | 18,316 | 18,316 |
|
| --------------- | --------------- | --------------- | --------------- |
| Total assets | 1,210,893 | 36,516 | 58,418 | 1,305,827 |
|
| ========= | ========= | ========= | ========= |
| Liabilities: |
|
|
|
|
| Derivative financial instruments – written options | – | (1,401) | – | (1,401) |
|
| --------------- | --------------- | --------------- | --------------- |
| Total | 1,210,893 | 35,115 | 58,418 | 1,304,426 |
|
| ========= | ========= | ========= | ========= |
| Financial assets/(liabilities) at fair value through profit or loss | Level 1 | Level 2 | Level 3 | Total |
| Assets: |
|
|
|
|
| Equity investments | 1,250,984 | 9 | 42,923 | 1,293,916 |
| Fixed income securities | 68,894 | 48,066 | – | 116,960 |
| Investment in contractual rights | – | – | 21,199 | 21,199 |
|
| --------------- | --------------- | --------------- | --------------- |
| Total assets | 1,319,878 | 48,075 | 64,122 | 1,432,075 |
|
| ========= | ========= | ========= | ========= |
| Liabilities: |
|
|
|
|
| Derivative financial instruments – written options | – | (1,227) | – | (1,227) |
|
| --------------- | --------------- | --------------- | --------------- |
| Total | 1,319,878 | 46,848 | 64,122 | 1,430,848 |
|
| ========= | ========= | ========= | ========= |
A reconciliation of fair value measurement in Level 3 is set out below.
|
| Group | Company | ||
| 2023 | 2022 | 2023 | 2022 | |
| Opening fair value | 56,891 | 33,413 | 64,122 | 40,591 |
| Return of capital – royalty | (497) | (267) | (497) | (267) |
| Additions at cost | – | 20,106 | – | 20,106 |
| Transfer of equities from Level 1 to Level 3 | – | 2 | – | 2 |
| Conversion of equity and transfer to Level 1 | – | (2,546) | – | (2,546) |
| Conversion of convertible bonds to equity and transfer to Level 2 | – | (10,160) | – | (10,160) |
| Transfer of equities and convertible bonds to Level 2 | – | (19,305) | – | (19,305) |
| Total profit or loss included in net profit on investments in the Consolidated Statement of Comprehensive Income: |
|
|
|
|
| – assets transferred to Level 1 during the period | – | 169 | – | 169 |
| – assets transferred to Level 2 during the period | – | 14,212 | – | 14,212 |
| – assets held at the end of the period | (5,383) | 21,267 | (5,207) | 21,320 |
|
| --------------- | --------------- | --------------- | --------------- |
| Closing balance | 51,011 | 56,891 | 58,418 | 64,122 |
|
| ========= | ========= | ========= | ========= |
The Level 3 valuation process and techniques used are explained in the accounting policies in note 2(h). A more detailed description of the techniques is found under ‘Valuation process and techniques’ for Level 3 valuations.
The Level 3 investments as at 31 December 2023 in the table that follows relate to the BHP Brazil Royalty, convertible bonds and equity shares of Jetti Resources and MCC Mining. In accordance with IFRS 13, these investments were categorised as Level 3.
In arriving at the fair value of the BHP Brazil Royalty, the key inputs are the underlying commodity prices and illiquidity discount. In arriving at the fair value of Jetti Resources and MCC Mining securities, the key inputs are shown in the Annual Report and Financial Statements.
The Level 3 valuation process and techniques used by the Company are explained in the accounting policies in notes 2(h) and 2(q) and a detailed explanation of the techniques is also available under ‘Valuation process and techniques’.
The Lifezone SPAC Pipe commitment held at nil value as at 31 December 2022 was transferred to Level 1 on completion of the merger transaction and the successful initial public offering during the year.
Quantitative information of significant unobservable inputs – Level 3 – Group and Company
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy, together with an estimated quantitative sensitivity analysis, as at 31 December 2023 and 31 December 2022 are as shown below.
|
| As at |
|
| Range of |
|
|
| BHP Brazil Royalty | 18,316 | Discounted | Discounted rate– | 5.0% – 8.0% | 1.0% | £1.0m |
|
|
|
| Average | US$1,706– | 10.0% | £1.8m |
|
|
|
| Average | US$8,397– | 10.0% | £1.2m |
| Jetti Resources | 27,204 | Market | Earnings multiple | 6.00x | 5.0% | £1.4m |
| MCC Mining | 5,491 | Market | Price of recent |
|
|
|
| Polyus | – | Listing |
|
|
|
|
| Polymetal International | – | Delisted – |
|
|
|
|
|
| --------------- |
|
|
|
|
|
| Total | 51,011 |
|
|
|
|
|
|
| ========= |
|
|
|
|
|
1 The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.
|
| As at |
|
| Range of |
|
|
| OZ Minerals Brazil Royalty | 21,199 | Discounted | Discounted rate– | 5.0% – 8.0% | 1.0% | £1.0m |
|
|
|
| Average | US$1,400– | 10.0% | £1.5m |
|
|
|
| Average | US$7,209– | 10.0% | £1.0m |
| Jetti Resources | 29,873 | Market | Earnings multiple | 5.93x | 5.0% | £0.6m |
| MCC Mining | 5,819 | Market | Price of recent |
| 5.0% | £0.3m |
| Lifezone commitment (see Note 21) | – |
|
|
|
|
|
| Polyus | – | Listing |
|
|
|
|
|
| --------------- |
|
|
|
|
|
| Total | 56,891 |
|
|
|
|
|
|
| ========= |
|
|
|
|
|
1 The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.
The sensitivity impact on fair value is calculated based on the sensitivity estimates set out by the independent valuer in its report on the valuation of contractual rights. Significant increases/(decreases) in estimated commodity prices and discount rates in isolation would result in a significantly higher/(lower) fair value measurement. Generally, a change in the assumption made for the estimated value is accompanied by a directionally similar change in the commodity prices and discount rates.
For exchange listed equity investments, the quoted price is the bid price. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any price related risks, including climate risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.
(e) Capital management policies and procedures
The Group’s capital management objectives are:
– to ensure it will be able to continue as a going concern; and
– to achieve a balanced return of dividends and capital growth over the longer term, by investing primarily in securities of companies in the mining and metals sectors.
This is to be achieved through an appropriate balance of equity capital and gearing. The Company operates a flexible gearing policy which depends on prevailing conditions. The policy is that debt should not be more than 25% of the Group’s net assets.
The Group’s total invested capital at 31 December 2023 was £1,309,879,000 (2022: £1,458,068,000) comprising of bank loans and an overdraft of £149,828,000 (2022: £158,783,000) and equity shares, capital and reserves of £1,160,051,000 (2022: £1,299,285,000).
Under the terms of the overdraft and loan facility agreement, the Group’s total indebtedness shall at no time exceed £230 million or 25% of the Group’s net asset value (whichever is the lowest).
The cash and bank overdraft accounts of the Company and subsidiary in the same currency are managed under a compensated group arrangement and are therefore presented on a net basis in the Group financial statements.
The Board with the assistance of the Investment Manager monitors and reviews the broad structure of the Group’s capital on an ongoing basis. This review includes:
– the planned level of gearing, which takes into account the Investment Manager’s view on the market; and
– the need to buy back equity shares, either for cancellation or to be held in treasury, which takes account of the difference between the NAV per share and the share price (i.e. the level of share price discount or premium).
The Group is subject to externally imposed capital requirements:
– as a public company, the Group has a minimum share capital of £50,000; and
– in order to be able to pay dividends out of profits available for distribution, the Group has to be able to meet one of the two capital restrictions tests imposed on investment companies by law.
During the year, the Group complied with the externally imposed capital requirements to which it was subject.
12. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Group’s consent) delegated certain portfolio and risk management services, and other ancillary services to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report in the Annual Report and Financial Statements.
The investment management fee due for the year ended 31 December 2023 amounted to £9,691,000 (2022: £10,646,000). At the year end, £7,262,000 was outstanding in respect of the management fee (2022: £5,443,000).
In addition to the above services, BIM (UK) has provided the Group with marketing services. The total fees paid or payable for these services for the year ended 31 December 2023 amounted to £144,000 excluding VAT (2022: £132,000). Marketing fees of £55,000 were outstanding as at 31 December 2023 (2022: £62,000).
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in Delaware, USA.
13. Related party disclosure
Directors’ emoluments
At the date of this report, the Board consists of five non-executive Directors, all of whom are considered to be independent of the Manager by the Board. Following the conclusion of the Annual General Meeting on 9 May 2024, the Board will consist of five non-executive Directors.
Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report in the Annual Report and Financial Statements. As at 31 December 2023, £17,000 (2022: £16,000) was outstanding in respect of Directors’ fees.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of BlackRock Inc. (Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are, as a result, considered to be related parties to the Company (Significant Investors).
As at 31 December 2023
|
| Total % of shares held by Significant | Number of Significant Investors who |
| 1.29 | n/a | n/a |
As at 31 December 2022
| Total % of shares held by Related | Total % of shares held by Significant | Number of Significant Investors who |
| 2.27 | n/a | n/a |
14. Capital commitment
There was no capital commitment at 31 December 2023 (2022: one commitment for US$10,000,000 in relation to the SPAC PIPE commitment for investment in Lifezone SPAC).
15. 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 2023 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 2023 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 2022, 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.
16. 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 Secretary, BlackRock World Mining Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.
17. Annual General Meeting
The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 9 May 2024 at 11.30 a.m.
The Annual Report and Financial Statements will also be available on the BlackRock website at www.blackrock.com/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:
Charles Kilner, Director, Closed End Funds, BlackRock Investment Management (UK) Limited – Tel: 020 7743 3000
Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited – Tel: 020 7743 3000
Emma Phillips, Media & Communications, BlackRock Investment Management (UK) Limited – Tel: 020 7743 2922
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3616
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
7 March 2024
12 Throgmorton Avenue
London EC2N 2DL
ENDS
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