Half-yearly Report
BLACKROCK WORLD MINING TRUST plc
Half yearly financial results for the six months ended 30 June 2009
Performance to 30 June 2009 Six months Five years
Net asset value per share - undiluted:
- capital only 32.3% 119.0%
- with income reinvested 34.4% 132.6%
Net asset value per share - diluted:
- capital only 32.3% 114.9%
- with income reinvested 34.4% 125.4%
Ordinary share price:
- capital only 52.2% 114.1%
- with income reinvested 55.1% 129.5%
HSBC Global Mining Index*:
- capital only 23.6% 128.6%
- with income reinvested 25.3% 153.9%
* Adjusted for exchange rates relative to sterling.
Dividends totalling 5.50p per share went ex-dividend on 18 February 2009. Where
performance has income included, it is reinvested on the ex-dividend date.
Sources: BlackRock and Datastream.
For further information please contact:
Jonathan Ruck Keene, Managing Director,
Investment Companies Division - 020 7743 2178
Evy Hambro, Fund Manager - 020 7743 4511
Emma Phillips, Media & Communications - 020 7743 2922
BlackRock Investment Management (UK) Limited
Or
William Clutterbuck - 020 7379 5151
Maitland Consultancy
Chairman's Statement
Following the severe downturn in the second half of 2008 and continued
volatility in the first two months of 2009, from early March commodities
generally performed strongly before yielding to a correction in June. Despite
this fall, which affected equity markets in general, the Company's net asset
value grew by 34.4% in the six months to 30 June 2009 and the share price rose
by 55.1% (both with income reinvested). By comparison, the Company's benchmark
index increased by 25.3%.
Since the period end, the Company's net asset value has increased by 15.3% and
the share price has risen by 11.4% (with income reinvested). Further
information on the Company's performance is included in the Investment
Manager's Report.
2006 Bonus warrant issue
The Company effected a bonus issue of warrants to its shareholders, on the
basis of one warrant for every five shares held on 15 March 2006. The warrants
were exercisable at a stepped exercise price, at three different exercise
points, and matured in February 2009. Of the 33,659,228 warrants issued,
24,712,936 were exercised and 8,946,292 lapsed.
VAT
I am pleased to report that, following the success of the Association of
Investment Companies ("AIC") and JPMorgan Claverhouse challenging the
imposition of VAT on management services supplied to investment trusts, HM
Revenue & Customs has now repaid all of the irrecoverable VAT for the periods
from date of launch to 1996 and from 2001 onwards. Claims for the period 1996
to 2000 have been filed on a protective basis pending the outcome of ongoing
litigation unrelated to the JPMorgan Claverhouse case.
The total amount of VAT recovered amounts to £3.1 million and a further amount
in respect of interest is due to be received shortly. The VAT recovered has
been credited to the Consolidated Income Statement.
Award
The Company has recently won Best Report & Accounts for a Specialist Trust in
the AIC "Best Information to Shareholders" awards.
Outlook
Despite recent strength in the sector, we believe that equity valuations still
look compelling, being less than half what they were in May 2008 and with many
still trading well below the estimated cost of replacing existing assets.
Corrections, such as seen in June, are not unusual after such a strong rally
and increasing monetary and fiscal policy stimulus should pave the way for an
economic recovery of sorts in the second half of the year. Although we remain
wary in the short term due to uncertainty over raw material demand, the longer
term view is one of cautious optimism.
A W Lea
14 August 2009
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational;
- Resource; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 December 2008.
A detailed explanation can be found on pages 18 and 19 of the Annual Report and
Accounts which is available on the website maintained by the Investment
Manager, BlackRock Investment Management (UK) Limited, at
www.blackrock.co.uk/its.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 3.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting"; and
- the interim management report, together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency
Rules.
The half yearly financial report was approved by the Board and the above
responsibility statement was signed on its behalf by the Chairman.
A W Lea
By order of the Board
14 August 2009
Investment Manager's Report
After the financial crisis decimated world markets during the second half of
2008, we are pleased to report a significant recovery in the valuation of the
Company's assets. During the last few months of 2008 trade in commodities
collapsed as customers and producers were unable to complete transactions due
to the severe strains in the banking system. Metal stockpiles surged higher as
producers, traders, speculators and customers sold assets to raise cash. The
combination of these two events was responsible for the majority of the share
price falls. However, there was further downward pressure as fears of
bankruptcy heightened as companies were seemingly unable to refinance
everything from working capital to long term debt. As 2008 drew to a close
there were signs that things were improving but this confidence was tested
during the first two months of the year when equity indices such as the
S&P 500 fell to new lows.
However, since the lows in February 2009, performance has been strong and we
are pleased to report that despite running a fairly cautious portfolio since
the start of the year the share price has risen by 55.1% to 384.25p per share
and the NAV by 34.4% to 438.33p per share (all figures in sterling terms and on
a total return basis, unless otherwise stated). This compares to a 25.3%
increase in the HSBC Global Mining Index.
During the period we took advantage of many of the refinancings undertaken by
mining companies. These involved rights issues, sub-underwriting, equity
placements, corporate bond and convertible bond issuances. In addition to these
transactions there have been a number of M&A deals, both attempted and
achieved, as assets continue to trade below replacement cost and banks/
investors seem willing to lend or invest once again. The most opportunistic of
these deals have come from China, as they have attempted to deploy surplus
dollars into the global resources sector to match expected future needs. Some
of these deals encountered Government hurdles, whilst others have been
completed and we would not be surprised to see further investment from China in
the resources sector over the near future.
Base metals
Base metal prices rebounded during the first half of 2009 following the massive
falls seen in the second half of last year. Unlike in previous years, there is
less dispersion of returns with the price of aluminium showing a small rise
year to date versus larger moves for the others. The main driver of these moves
has been the rapid increase in metal imports from China combined with the
actions taken by the mining companies to cut production rapidly in response to
falling demand.
Whilst the rest of the world has been weighed down by the collapse in economic
activity, it seems as though the confidence created by the fiscal spending
plans outlined by the Chinese Government triggered a recovery in domestic
commodities demand far more quickly than in the US or Europe. As such, there
has been a massive decoupling in demand between China and the Western World as
their economies move in opposite directions; China saw 6.1% GDP growth in the
first quarter while the US and Europe shrank by 5.5% and 2.5%, respectively.
India also seems set to be a positive feature for commodities demand and,
although small by world standards, it is having a bigger impact given the
weakness elsewhere.
Production cuts by the mining companies have generally been larger than in
previous cycles and have happened more quickly. This was in part due to the
speed at which demand collapsed but also due to consolidation in the
industry during previous decades. Most of the dominant producers of each
commodity showed leadership by cutting production, thereby speeding up the
inventory destocking cycle. We believe that this would not have happened
to the same extent in previous cycles as the industry was more fragmented.
In addition to production cuts, producers have also delayed or cancelled
over US$150bn of capital expenditure scheduled for 2009 and 2010. We
believe this will have a positive impact on commodity prices over the next
few years.
Copper led the way with not only the price rising by a massive 76.3%, but also
the rapid erosion of copper inventories highlighted that this metal might
easily end up in deficit as demand recovers and new projects are further
delayed. Data released by China throughout the first half showed big increases
in copper imports and strategic buying by the Government. As such, inventories
which peaked at 548,400t on the LME finished the half year down 51.5% from the
high. We expected copper equities to be one of the best performing parts of the
mining sector this year and thus have considerable holdings in pure copper
miners such as Freeport McMoRan, Cerro Verde, Antofagasta and Kazakhmys.
% change % change
Price six months to average
Commodity 30 June 2009 30 June 2009 H1 2009/H1 2008
Gold Bullion US$/oz 938.05 +8.8 +0.6
Silver US$/oz 13.94 +29.2 -24.3
Platinum US$/oz 1186.0 +32.1 -43.6
Copper US$/lb 2.32 +76.3 -50.0
Nickel US$/lb 7.26 +48.1 -57.2
Aluminium US$/lb 0.73 +10.7 -49.7
Zinc US$/lb 0.71 +39.7 -41.8
Lead US$/lb 0.78 +81.3 -49.0
Tin US$/lb 6.78 +44.4 -39.2
Iron Ore Lump USc/ltu* 113 -44.0 N/A
Iron Ore Fines USc/ltu* 97 -33.0 N/A
Coking Coal US$/t* 129 -57.0 N/A
Thermal Coal US$/t* 72 -44.6 N/A
Uranium US$/lb 54 +1.9 -34.3
Potash US$/t* 625 0.0 N/A
*Annually negotiated price meaning % change relates to previous year settlement
price.
Sources: Datastream, Bank of America Merrill Lynch and UBS equities.
As can been seen from the table above, the price recovery in aluminium has been
a notable laggard. Despite large production cuts by producers, inventories of
metal have continued to grow and by the end of June LME inventories had reached
4.398mts, up 88.9% in the year to date ("YTD"). Looking forward we do see a
recovery in demand and recent comments from the CEO of Alcoa suggest that
business is improving. However, given recent Government initiatives to
reactivate uneconomic smelters in Russia and China, we feel that the outlook
does not bode well. In addition, low power prices in China mean that many of
their high cost smelters are now considerably lower cost.
Nickel prices have performed well on the back of supply side cuts and signs
that stainless steel demand is recovering. However, the nickel market will be
impacted by two large new mines coming into production later this year and
continual substitution for ferrochrome as ferritic stainless steel continues to
gain market share. Also, the threat of exporting low cost nickel-rich iron ore
to customers in China means that, longer term, nickel prices could be capped.
With these points in mind we have invested only in those companies that we feel
will be able to make good returns even at low prices whilst we await further
price recovery. Lead and zinc prices have recovered significantly this year and
exposure to these metals is via diversified companies such as Teck Resources
and Xstrata.
Gold and precious commodities
Despite a brief foray above US$1,000oz during February, this year gold prices
have traded within a US$900oz to US$1,000oz range much to the disappointment of
many investors who felt that given the financial crisis the price should have
stayed well above US$1,000oz. The average price of gold during the first half
was US$915oz which is the highest six month average ever and up 5% on the
average of last year as a whole. Despite falling jewellery demand, the other
drivers of rapidly rising investment demand through ETF's and much reduced
Central Bank selling have buoyed the market. In fact, only a few months ago,
China not only demanded a new reserve currency to replace the US dollar but
also revealed that they had increased their gold holdings by over 400 tonnes
during the last few years. It seems sentiment towards the yellow metal remains
high.
The combination of the higher price and the moderation of cost pressures in the
gold mining industry caused gold equities to strongly outperform the price of
gold for most of the first half. In fact, with costs for many producers now
falling and the price rising, it seems likely that gold shares should start to
report solid earnings growth in 2009.
Gold equity exposure in the portfolio has been adjusted many times during the
last few years as we have had to deal with violent currency moves, declining
production and resource nationalism. Key gold holdings today such as Minas
Buenaventura and Newcrest Mining are expected to grow production from existing
mines or projects in the coming years. This is in contrast to the whole gold
industry which, despite higher prices, continues to see production falling. We
are also confident that gold companies will start to increase dividends on the
back of better margins.
During 2008, the platinum market was hit by both a collapse in demand of
massive proportions and the liquidation of consumer inventories. This caused
the price to fall from over US$2,200oz to a low of US$800oz. Since then, the
price has improved considerably rising by 32% YTD. This improvement has come
mainly from investor demand for platinum rather than a recovery in automotive
consumers. Over the next few years we expect automotive demand recovery and as
such we have maintained a high level of exposure to Impala Platinum. In 2009,
we benefited from the bid for Ridge Mining by Aquarius Platinum.
Our main silver investments, Fresnillo and Industrias Penoles, enjoyed strong
increases in their share price from the lows seen in 2008. Unfortunately, the
management of Fresnillo had a baptism of fire post their initial public
offering ("IPO") in London last year. Having fallen from the IPO price of £5.55
per share to a low of £0.93 per share, the price finished the half year at £
5.20 per share.
Diversified mining companies and industrial minerals
The diversified mining companies have provided the bulk of the returns for the
portfolio in the year to date but the returns have varied greatly. The large
diversified miners that refinanced during the early part of the year enjoyed
the most significant re-rating with Xstrata and Rio Tinto leading the way
with +81% and +71%, respectively YTD. In comparison, those that either did
not need to, such as BHP Billiton (+5.4% YTD), or chose not to, such as
Anglo American (+17%) lagged well behind. Given the massive divergence in
performance of these companies and cautious portfolio construction, the long
term relative return for the portfolio to its benchmark has been significantly
impacted. We hope to rectify this once commodity demand starts to normalise
after the disruptions of the last twelve months.
The bulk commodity prices, although down sharply on last year, seem to have
been settled by and large at levels better than most people expected. Coking
coal and thermal negotiations ended some months ago with prices down 57% and
44%, respectively versus last year. Iron ore contract prices seem to have been
agreed, with most customers down 33%, on 2008 but with China still holding out
for a larger price cut. We await news on this with interest.
Despite the global financial turbulence it has not prevented the sector from
consolidating. Last year was characterised by the hostile bid for Rio Tinto by
BHP Billiton. The latter decided to walk away from this deal during the peak
of the financial crisis. However, as a result, BHP Billiton came out of the
crisis best positioned to take advantage of its relative balance sheet strength.
At the opposite end of the scale, it left Rio Tinto at the mercy of the (closed)
debt markets with the company desperate to refinance the debt taken on to buy
Alcan in 2007. In the early months of 2009, Rio Tinto announced a deal with
Chinalco for them to buy into various assets within the group, as well as provide
funds to refinance much of the Alcan acquisition debt. As metal prices improved
and debt markets reopened, the deal became increasingly unpalatable for Rio Tinto
shareholders and they encouraged management to rethink a deal done at the bottom
of the market. The end result was the combining of the iron ore operating assets
of BHP and Rio in Australia and a large Rio Tinto rights issue. Its seems as
though this deal will capture many of the synergies talked about when BHP went
hostile for Rio without having to merge the two companies. We must applaud both
companies for being able to reach a deal that seems to benefit all shareholders
and the mining industry as a whole.
Xstrata has also been corporately active during the year. They completed the
acquisition of the Prodeco coal mine for US$2bn from Glencore as part of the
larger rights issue refinancing. More recently Xstrata announced a proposal
for a nil premium merger with the embattled Anglo American. We await with
interest to see how this proposal unfolds but it continues to showcase the
value that is available in the resource equity market.
In other parts of the world refinancing moves have been just as commonplace.
In Canada, Teck Resources has led the way with a combination of new debt
offerings, asset disposals and a large private placement to China Investment
Corporation. The combination of these deals has placed the company back on a
firm footing after the near death experience of last year's acquisition of
Fording Coal. Other companies have completed equity placements and bond issues.
In the portfolio we have taken advantage of these deals to add to existing
holdings in resource corporate debt (6.3% of the Company). The majority of
these investments are in convertible bonds with very attractive yields, far
in excess of the Company's cost of debt. We continue to monitor the market for
further opportunities in this area given the uncertain demand outlook for
commodities.
Derivatives activity
As usual, the Group from time to time enters into derivatives contracts, mostly
involving the sale of "puts" and "calls". The option premia is taken to
revenue, unless the option represents an incidental part of a larger capital
transaction, and are subject to strict Board guidelines which limit their
magnitude to an aggregate 10% of the portfolio.
Gearing
At 30 June 2009, the Company had no net debt.
Outlook
With financial markets in considerably better shape than at the start of the
year, it would be easy to be optimistic about the rest of the year. Economic
data out of China suggests further strong growth this year and commodity import
data is very supportive of current metal prices. However, we continue to meet
with management from our investments who report to us that outside of strong
demand from China there is slight to no improvement in metals demand above and
beyond restocking. In the absence of better economic data from the Western
World, we plan to keep to the fairly cautious investment style we have been
running for much of this year. However, once we become confident that
underlying demand is normalising, we look forward to moving the portfolio on
to a more aggressive tack.
Evy Hambro and Catherine Raw
BlackRock Investment Management (UK) Limited
14 August 2009
Ten Largest Investments
30 June 2009
Vale - 11.9% (2008: 15.6%) formerly known as CVRD, is the world's largest
producer of iron ore. Based in Brazil, the company also has significant
interests in other commodities such as nickel, aluminium, copper, gold and
coal. In addition, Vale owns and operates transport infrastructure. The company
made a transformational acquisition in 2006 by purchasing Inco for cash. This
considerably broadened the company's asset mix and made it a formidable
competitor in the global mining industry. Having led iron ore contract price
discussions in the past, Vale has actively hung back from price negotiations in
2009 following an early settlement last year which saw them receiving a lower
price than their major competitors Rio Tinto and BHP Billiton.
BHP Billiton - 8.4% (2008: 14.0%) is the world's largest diversified natural
resource company, formed in 2001 from the merger of BHP and Billiton. The
company is an important global player in a number of commodities including iron
ore, copper, coal, manganese, aluminium, diamonds and uranium. In addition, the
company is the only sizeable holding in the portfolio with significant oil and
gas assets. BHP Billiton approached Rio Tinto in November 2007 about a
potential merger but was rebuffed. It subsequently launched a hostile bid in
February 2008 but withdrew in November 2008 in part due to worsening economic
conditions and poor financial markets. As a result of being in an offer period
for most of 2008, BHP accrued a significant amount of cash on its balance sheet
leaving it in an incredibly strong position going into 2009 relative to its
peers. In June 2009, BHP Billiton and Rio Tinto announced that they had agreed
to a 50:50 iron ore joint venture in exchange for a US$5.8bn "equalisation"
payment by BHP to Rio Tinto.
Rio Tinto - 7.3% (2008: 5.9%) is the world's third largest mining company. It
has interests over a broad range of metals and minerals including iron ore,
aluminium, copper, coal, industrial minerals, gold and uranium. In October
2007, Rio Tinto acquired Alcan making it the world's largest bauxite and
aluminium producer, but also significantly increasing its debt burden. During
much of 2008 the company was the subject of a bid by its major rival BHP
Billiton. However, in November 2008, with financial markets in crisis,
commodity prices collapsing and onerous conditions required for EU approval for
the deal, BHP Billiton withdrew. Rio Tinto was left severely indebted and at
the start of 2009 looked unable to fulfil its debt obligations. In February
2009, the company announced a deal with Chinalco, the Chinese state aluminium
company, worth US$19.5bn through a combination of convertible debt and the sale
of stakes in core assets. Shareholder outcry over the lack of pre-emption
rights, the departure of the company's chairman and an improvement in financial
and commodity market conditions meant Rio Tinto walked away from the Chinalco
deal, instead raising money through a US$3.5bn bond issue, a US$15.2bn rights
issue and a 50:50 iron ore joint venture with BHP Billiton.
Minas Buenaventura - 6.0% (2008: 7.5%) is South America's premier precious
metals company. Its main asset is a 43.65% stake in the Yanacocha gold mine in
Peru, which it jointly owns with Newmont Mining. The company also operates
seven mines in Peru, has a controlling interest in zinc miner Minera El Brocal,
and an 18.5% interest in copper miner Cerro Verde.
Impala Platinum - 5.9% (2008: 6.1%) is the world's second largest producer of
platinum group metals, with mining and refining operations in South Africa. The
company also owns a number of substantial assets in Zimbabwe. Impala
restructured in 2006, converting the Bafokeng tribe's royalty into an equity
stake. In April 2008, the company exited from its position in Aquarius Platinum
at a significant premium to its initial investment. In October 2008, Impala
announced a friendly takeover bid for Northam Platinum and Mvelaphanda
Resources; however, following a sharp decline in platinum prices and a
worsening economic climate, Impala walked away.
First Quantum Minerals - 4.3% (2008: 1.4%) is an integrated copper producer,
focused on the copper-cobalt belt in Zambia and the Democratic Republic of
Congo, but also with an operation in Mauritania and an exploration project in
Finland. It has proved itself to be adept at doing business in challenging
political and operating environments, avoiding many of the pitfalls that have
tripped up competitors in the central African region. In 2009, the company
carried out a US$345m equity financing and issued US$500m in convertible bonds
to fund the development of its Kolwezi mine in the DRC.
Teck Resources - 4.0% (2008: 1.6%) is a Canadian diversified miner that is a
leader in the production of metallurgical coal and zinc, as well as a
significant producer of copper. In September 2008 the company acquired Fording
Coal Trust, which owned a 60% non-operating interest in Teck's metallurgical
coal operations. The cash portion of the deal was primarily funded by a
US$9.8bn bridge and term loan facility. The subsequent global financial crisis
and deterioration in the global economy meant Teck started 2009 unable to
refinance or pay-down this relatively short term debt. However, through the
sale of its gold and other non-core assets, the renegotiation and extension of
the bridge and term loan facility, a bond issuance worth US$4.3bn, and a
private placement of 17.2% of the company to China Investment Corporation, Teck
has managed to strengthen its balance sheet sufficiently enough to allay market
concerns.
Newcrest Mining - 3.2% (2008: 3.3%) is Australia's largest gold producer and
was formed by the merger of Newmont Australia and BHP Gold Ltd in 1990. In
September 2008, the company closed out its hedge-book. It has low gearing,
complete exposure to the gold price and a strong growth profile both in
Australia and through its joint venture with Harmony Gold in Papua New Guinea.
Fresnillo - 3.2% (2008: 2.0%) is the world's largest primary silver producer
and Mexico's second largest gold producer. The company has three producing
operations and a portfolio of high quality development and exploration
projects. Industrias Penoles, one of Mexico's leading mining companies, owns
77% of the company; the remainder is publicly listed on the London Stock
Exchange.
Freeport McMoRan - 2.9% (2008: 1.9%) is one of the largest copper producers in
the world. It has a large portfolio of assets including the Grasberg mining
complex in Indonesia, the world's largest copper and gold mine. In 2007, the
company merged with Phelps Dodge, an Americas-focused copper and molybdenum
miner. In February 2009, the company raised US$725m through an equity issue
thereby dispelling market fears over its ability to service and pay down debt.
All percentages reflect the value of the holding as a percentage of total
investments.
Percentages in brackets represent the value of the holding as at 31 December
2008.
Portfolio Analysis
30 June 2009
Commodity Exposure*
BlackRock World Mining Trust plc HSBC Global Mining Index
30 June 2009 31 December 2008 30 June 2009
% % %
Zinc/Lead 0.9 0.6 0.8
Aluminium 2.6 4.5 2.5
Coal 4.0 3.3 7.4
Silver & Diamonds 6.8 7.6 1.8
Platinum 8.7 9.5 3.9
Gold 14.1 12.1 19.2
Copper 14.6 8.2 8.0
Diversified 42.8 44.1 48.2
Other 5.5 10.1 8.2
Geographic Exposure*
30 June 2009 31 December 2008
% %
Latin America 30 35
Global 19 21
South Africa 11 13
Australia 10 8
Canada 7 5
USA 5 8
Europe 1 1
Other 17*** 9**
* Based on the principal commodity exposure and place of operation of each
investment.
** Consists of India, Indonesia, Kazakhstan, Laos, Lesotho, Mozambique and
Zambia.
*** Consists of India, Indonesia, Kazakhstan, Laos, Lesotho, Mozambique and
Zambia.
Source: BlackRock.
Investments
30 June 2009
Main Market
geographical value % of
exposure £'000 investments
Diversified
Vale Brazil 91,934 11.9
BHP Billiton Global 64,790 8.4
Rio Tinto* Global 56,177 7.3
Teck Resources* Canada 31,178 4.0
African Rainbow Minerals South Africa 20,387 2.6
OZ Minerals Australia 16,033 2.1
Vedanta* India 13,635 1.7
Sterlite Industries India 13,209 1.7
Xstrata Global 11,503 1.5
Anglo American* Global 11,269 1.5
Eurasian Natural Resources Kazakhstan 655 0.1
Grafton Resources# USA 353 0.0
------- ----
331,123 42.8
------- ----
Copper
First Quantum Minerals* Zambia 33,456 4.3
Freeport McMoRan Indonesia 22,411 2.9
Soc Min Cerro Verde Peru 20,025 2.6
Antofagasta Chile 14,100 1.8
Equinox Minerals Zambia 13,960 1.8
Kazakhmys Kazakhstan 5,040 0.7
PanAust Laos 3,535 0.5
Southern Copper Peru 355 0.0
------- ----
112,882 14.6
------- ----
Gold
Minas Buenaventura Peru 46,394 6.0
Newcrest Mining Australia 25,090 3.2
Newmont Mining* USA 10,084 1.3
Iam Gold Canada 9,239 1.2
Lihir Gold Australia 8,689 1.1
G Resources Indonesia 4,904 0.7
Minera IRL Peru 2,720 0.4
Gold Fields South Africa 1,684 0.2
------- ----
108,804 14.1
------- ----
Platinum
Impala Platinum South Africa 45,515 5.9
Anglo Platinum South Africa 12,691 1.6
Aquarius Platinum* South Africa 5,751 0.7
Ridge Mining South Africa 4,125 0.5
------ ---
68,082 8.7
------ ---
Silver & Diamonds
Fresnillo Mexico 24,754 3.2
Industrias Penoles Mexico 19,224 2.5
Gem Diamonds Lesotho 4,933 0.6
Harry Winston Diamond Corp. Canada 3,623 0.5
------ ---
52,534 6.8
------ ---
Coal
Bumi Resources Indonesia 14,307 1.9
Peabody Energy USA 13,735 1.8
Australian Energy# Australia 2,626 0.3
------ ---
30,668 4.0
------ ---
Aluminium
Alumina Australia 10,604 1.4
Alcoa USA 9,400 1.2
------ ---
20,004 2.6
------ ---
Zinc
Nyrstar Belgium 6,430 0.8
Soc Min El Brocal Peru 588 0.1
----- ---
7,018 0.9
----- ---
Other
Iluka Resources Australia 12,592 1.6
Minsur Peru 12,379 1.6
UEX Corp. Canada 7,217 0.9
Potash Corp. Canada 4,242 0.6
Mosaic USA 2,017 0.3
Agrium USA 1,816 0.2
Atlas Iron Australia 1,052 0.1
Talvivaara Mining Finland 849 0.1
Noventa Mozambique 523 0.1
International Nickel Indonesia Indonesia 123 0.0
------ ---
42,810 5.5
------- -----
Portfolio 773,925 100.0
======= =====
* Includes convertibles and fixed interest.
# Investments held at Directors' valuation.
All investments shown are in ordinary shares unless otherwise stated.
The total number of investments held at 30 June 2009 was 53 (31 December 2008:
50).
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2009
Revenue £'000 Capital £'000 Total £'000
Six Six Six Six Six Six
months months Year months months Year months months Year
ended ended ended ended ended ended ended ended ended
30.06.09 30.06.08 31.12.08 30.06.09 30.06.08 31.12.08 30.06.09 30.06.08 31.12.08
Notes (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Income from
investments
held at
fair value
through
profit or
loss 2 6,937 12,801 30,295 - - - 6,937 12,801 30,295
Other
income 2 1,100 1,905 (2,867) - - - 1,100 1,905 (2,867)
----- ------ ------ ------ ------ ------ ----- ------ ------
Total
revenue 8,037 14,706 27,428 - - - 8,037 14,706 27,428
----- ------ ------ ------ ------ ------ ----- ------ ------
Gains/
(losses) on
investments
held at
fair value
through
profit or
loss - - - 194,504 156,402 (776,959) 194,504 156,402 (776,959)
Realised
(losses)/
gains on
foreign
exchange - - - (1,090) (115) 269 (1,090) (115) 269
----- ------ ------ ------- ------- -------- ------- ------- --------
8,037 14,706 27,428 193,414 156,287 (776,690) 201,451 170,993 (749,262)
----- ------ ------ ------- ------- -------- ------- ------- --------
Expenses
Management
fees 3 (4,663) (9,198) (13,969) - - - (4,663) (9,198) (13,969)
Write back
of prior
years' VAT 3 3,108 - - - - - 3,108 - -
Other
expenses 4 (316) (844) (1,269) - - - (316) (844) (1,269)
----- ------ ------- ------ ------ ------ ------ ------ ------
Total
operating
expenses (1,871) (10,042) (15,238) - - - (1,871) (10,042) (15,238)
------ ------- ------- ------ ------ ------ ------ ------- -------
Profit/
(loss)
before
finance
costs and
taxation 6,166 4,664 12,190 193,414 156,287 (776,690) 199,580 160,951 (764,500)
Finance
costs - (179) (976) - - - - (179) (976)
----- ----- ------ ------- ------- -------- ------- ------- -------
Profit/
(loss)
before
taxation 6,166 4,485 11,214 193,414 156,287 (776,690) 199,580 160,772 (765,476)
----- ----- ------ ------- ------- -------- ------- ------- --------
Taxation (73) (563) (1,383) - - - (73) (563) (1,383)
----- ----- ------ ------- ------- -------- ------- ------- ------
Profit/
(loss)
for the
period 6 6,093 3,922 9,831 193,414 156,287 (776,690) 199,507 160,209 (766,859)
===== ===== ===== ======= ======= ======== ======= ======= ========
Earnings/
(loss) per
ordinary
share -
undiluted 6 3.43p* 2.30p 5.64p 108.75p 91.84p (445.65p) 112.18p 94.14p (440.01p)
===== ===== ===== ======= ====== ======== ======= ====== ========
Earnings/
(loss)
per
ordinary
share -
diluted 6 3.43p* 2.28p 5.64p 108.75p 91.02p (445.65p) 112.18p 93.30p (440.01p)
===== ===== ===== ======= ====== ======== ======= ====== ========
* Earnings per share for the six months to 30 June 2009 amount to 3.43p,
which includes the write back of prior years' VAT of 1.75p. Excluding
the VAT write back, the underlying earnings per share were 1.68p.
The total column of this statement represents the Consolidated Income
Statement, prepared in accordance with International Financial Reporting
Standards ("IFRS"). The supplementary revenue and capital columns are both
prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations. No
operations were acquired or disposed of during the period. All income is
attributable to the equity shareholders of BlackRock World Mining Trust plc.
There are no minority interests. The final dividend of 5.50p per share in
respect of the year ended 31 December 2008 were declared on 11 February 2009
and paid on 30 April 2009. This can be found in the Consolidated Statement of
Changes in Equity for the six months ended 30 June 2009.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2009
Ordinary Share Capital
share premium Special redemption Capital Revenue
Capital account reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 30 June 2009
(unaudited)
At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927
Net profit for the
period - - - - 193,414 6,093 199,507
Exercise of warrants - 8 - - - - 8
Shares purchased
during the period (c) - - (1,480) - - - (1,480)
Dividend paid of 5.50p
per share (b) - - - - - (9,777) (9,777)
----- ------- ------- ------ ------- ------ -------
At 30 June 2009 9,651 127,155 119,578 22,779 474,601 25,421 779,185
===== ======= ====== ====== ======= ====== =======
For the six months
ended 30 June 2008
(unaudited)
At 31 December 2007 8,607 28,452 122,457 22,779 1,057,877 27,948 1,268,120
Net profit for the period - - - - 156,287 3,922 160,209
Exercise of warrants 1,044 98,695 - - - - 99,739
Shares purchased during
the period (c) - - (330) - - - (330)
Ordinary dividend paid
of 3.00p per share (a) - - - - - (4,731) (4,731)
Special dividend paid
of 2.50p per share (a) - - - - - (3,943) (3,943)
----- ------- ------- ------ --------- ------ ---------
At 30 June 2008 9,651 127,147 122,127 22,779 1,214,164 23,196 1,519,064
===== ======= ======= ====== ========= ====== =========
For the year ended 31
December 2008 (audited)
At 31 December 2007 8,607 28,452 122,457 22,779 1,057,877 27,948 1,268,120
Net (loss)/profit for
the year - - - - (776,690) 9,831 (766,859)
Exercise of warrants 1,044 98,695 - - - - 99,739
Shares purchased during
the year (c) - - (1,399) - - - (1,399)
Ordinary dividend paid
of 3.00p per share (a) - - - - - (4,731) (4,731)
Special dividend paid
of 2.50p per share (a) - - - - - (3,943) (3,943)
----- ------- ------- ------ ------- ------ -------
At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927
===== ======= ====== ====== ======= ====== =======
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves. Purchase and sale costs amounted to
£349,000 and £174,000, respectively for the period ended 30 June 2009 (six
months ended 30 June 2008: £1,081,000 and £300,000; year ended 31 December
2008: £1,325,000 and £499,000).
(a) The final and special dividends for the year ended 31 December 2007,
declared on 14 February 2008 and paid on 17 April 2008.
(b) The final dividend for the year ended 31 December 2008, declared on
11 February 2009 and paid on 30 April 2009.
(c) Held in treasury.
CONSOLIDATED BALANCE SHEET
as at 30 June 2009
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair
value through
profit or loss 773,925 1,522,509 581,698
Current assets
Cash and cash equivalents 9,125 880 -
Investments - 4,992 280
Other receivables 2,487 2,019 890
Amounts due from brokers 7,297 548 13,911
-------- ---------- --------
18,909 8,439 15,081
-------- ---------- --------
Total assets 792,834 1,530,948 596,779
Current liabilities
Other payables (2,902) (6,181) (2,706)
Amounts due to brokers (10,747) (5,703) -
Bank overdrafts - - (3,104)
------- ------- -------
(13,649) (11,884) (5,810)
------- ------- -------
Total assets less current
liabilities 779,185 1,519,064 590,969
Non current liabilities
Deferred tax - - (42)
------- --------- -------
Net assets 779,185 1,519,064 590,927
======= ========= =======
Equity attributable to
equity holders
Ordinary share capital 7 9,651 9,651 9,651
Share premium account 127,155 127,147 127,147
Special reserve 119,578 122,127 121,058
Capital redemption reserve 22,779 22,779 22,779
Capital reserves 474,601 1,214,164 281,187
Revenue reserve 25,421 23,196 29,105
------- --------- -------
Total equity 779,185 1,519,064 590,927
======= ========= =======
Net asset value per ordinary
share - undiluted 6 438.33p 850.93p 331.39p
======= ======= =======
Net asset value per ordinary
share - diluted 6 438.33p 837.28p 331.39p
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2009
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash inflow/(outflow) from
operating activities before
financing 24,568 (89,203) (92,502)
------ ------- -------
Financing activities
Purchase of ordinary shares (1,480) (330) (1,393)
Exercise of warrants 8 99,745 99,739
Dividends paid (9,777) (8,674) (8,674)
------ ------ ------
Net cash (outflow)/inflow from
financing (11,249) 90,741 89,672
------- ------ ------
Increase/(decrease) in cash and
cash equivalents 13,319 1,538 (2,830)
Effect of foreign exchange rate
changes (1,090) (115) 269
------- ------ ------
Change in cash and cash
equivalents 12,229 1,423 (2,561)
Cash and cash equivalents at
start of period (3,104) (543) (543)
------- ------ ------
Cash and cash equivalents at
end of period 9,125 880 (3,104)
===== === ======
RECONCILIATION OF NET INCOME BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW
FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
Profit/(loss) before taxation 199,580 160,772 (765,476)
Add back interest paid - 179 976
(Gains)/losses on investments held
at fair value through profit or
loss including transaction costs (194,504) (156,402) 776,959
Net movement on foreign exchange 1,090 115 (269)
Net sales of current asset
investments by subsidiary 315 1,887 1,373
Sales of investments held at fair
value through profit or loss 145,125 182,249 317,377
Purchases of investments held at
fair value through profit or loss (142,848) (281,638) (409,320)
(Increase)/decrease in other
receivables (1,822) 555 1,332
Decrease/(increase) in amounts due
from brokers 6,614 (548) (13,911)
Increase in amounts due to brokers 10,747 5,703 -
Increase/(decrease) in other
payables 555 814 (2,225)
Dealing (profits)/losses (35) (1,371) 3,855
------ ------- ------
Net cash inflow/(outflow) from
operating activities before
interest and taxation 24,817 (87,685) (89,329)
------ ------- -------
Interest paid - (179) (976)
Taxation paid (134) (788) (609)
Taxation on overseas income (115) (551) (1,588)
------ ------- -------
Net cash inflow/(outflow) from
operating activities 24,568 (89,203) (92,502)
====== ======= =======
NOTES TO THE HALF YEARLY FINANCIAL STATEMENTS
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of section 842 of the Income and Corporation Taxes Act 1988.
The principal activity of its subsidiary, BlackRock World Mining Investment
Company Limited, is investment dealing. The other subsidiary, BlackRock Gold
Limited, is no longer trading.
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Company's Annual Report and Financial
Statements for the year ended 31 December 2008 and in accordance with
International Accounting Standard 34. The taxation charge has been calculated
by applying the estimate of the annual effective tax rate to any profit for the
period.
2. Income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Income from investments:
UK listed dividends 2,509 2,377 6,101
Overseas listed dividends 3,357 9,920 19,969
Overseas listed special
dividends 762 504 4,225
Interest income 309 - -
----- ------ ------
6,937 12,801 30,295
----- ------ ------
Other operating income:
Deposit interest 53 386 653
Dealing profits/(losses) 35 1,371 (3,855)
Stock lending income - 31 218
Underwriting commission 1,012 117 117
----- ----- ------
1,100 1,905 (2,867)
----- ----- ------
Total income 8,037 14,706 27,428
===== ====== ======
Dealing profits/(losses) are presented after deducting transaction costs
incurred on the purchase and sale of investments.
3. Management fees
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Management fees 4,663 9,198 13,762
Write back of prior years' VAT (3,108) - -
VAT - - 207
----- ----- ------
1,555 9,198 13,969
===== ===== ======
Following the aggregation of the 1.25% management fee and the 0.05%
administration fee during 2008, the management fee is now levied at a rate of
1.3% per annum. This is based on the value of the gross assets on the last day
of each quarter, and is charged wholly to the revenue account.
4. Other expenses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Custody fee 104 215 389
Administration fee - 423 484
Registrar's fees and other
administrative costs 162 156 297
Directors' emoluments 50 50 99
--- --- -----
316 844 1,269
=== === =====
5. Dividend
The Board has not declared an interim dividend, as dividends are considered and
paid annually in respect of each accounting period. The final dividend of 5.50p
per share for the year ended 31 December 2008 was paid on 30 April 2009.
6. Consolidated earnings and net asset value per ordinary share
Total revenue and capital returns per share are shown below and have been
calculated using the following:
Six months Six months Year
ended ended ended
30 June 2009 30 June 2008 31 December 2008
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 6,093 3,922 9,831
Net capital return/(loss)
attributable to
ordinary shareholders (£'000) 193,414 156,287 (776,690)
------- ------- --------
Total return/(loss) attributable
to ordinary shareholders (£'000) 199,507 160,209 (766,859)
======= ======= ========
Equity shareholders' funds (£'000) 779,185 1,519,064 590,927
The weighted average number of
ordinary shares in issue during each
period, on which the return per
ordinary share was calculated, was: 177,849,417 170,173,722 174,283,731
The weighted average number of
ordinary shares in issue during each
period, on which the diluted return
per ordinary share was calculated,
was: 177,849,417 171,710,189 174,283,731
The actual number of ordinary
shares in issue at the end of
each period, on which the net
asset value was calculated, was: 177,762,242 178,517,729 178,317,729
Warrants in issue - 8,947,605 8,947,605
The actual number of ordinary
shares in issue at the end of
each period, on which the diluted
net asset value was calculated was: 177,762,242 187,465,334 187,265,334
Undiluted:
Revenue return per share 3.43p 2.30p 5.64p
Capital return/(loss) per share 108.75p 91.84p (445.65p)
------- ------ --------
Total earnings/(loss) per share 112.18p 94.14p (440.01p)
======= ====== ========
Diluted:
Revenue return per share 3.43p 2.28p 5.64p
Capital return/(loss) per share 108.75p 91.02p (445.65p)
------- ------ --------
Total earnings/(loss) per share 112.18p 93.30p (440.01p)
======= ====== ========
Net asset value per share -
undiluted# 438.33p 850.93p 331.39p
Net asset value per share -
diluted* # 438.33p 837.28p 331.39p
Share price 384.25p 710.50p 252.50p
Warrant price - 160.50p 2.50p
* The Company does not have any dilutive securities at 30 June 2009.
# Excludes 15,249,600 ordinary shares bought back and held in treasury.
7. Share capital
Ordinary Treasury
shares shares
number number Total
(nominal) (nominal) shares £'000
Authorised share capital:
Ordinary shares of 5p each
At 1 January 2009 178,317,729 14,692,800 193,010,529 9,651
Shares transferred into
treasury (556,800) 556,800 - -
Ordinary shares issued as
a result of warrants
exercised 1,313 - 1,313 -
----------- ---------- ----------- -----
At 30 June 2009 177,762,242 15,249,600 193,011,842 9,651
=========== ========== =========== =====
On 27 February 2009, 1,313 warrants were exercised for a total consideration of
£8,000. During the period, 556,800 ordinary shares were bought back and held in
treasury for a total consideration of £1,480,000.
8. Distributable status of capital reserves
Under the terms of the Company's Articles of Association, sums standing to the
credit of the capital reserves are distributable only by way of redemption or
purchase of any of the Company's own shares, for so long as the Company carries
on business as an investment company. Company law states that investment
companies may only distribute accumulated "realised" profits.
The Institute of Chartered Accountants in England and Wales in its technical
guidance TECH 01/08, states that profits arising out of a change in fair value
of assets, recognised in accordance with accounting standards, may be
distributed, provided the change recognised can be readily converted into cash.
Securities listed on a recognised stock exchange are generally regarded as
being readily convertible into cash and hence any unrealised profits in respect
of such securities, currently included within capital reserves, may be treated
as distributable under company law.
The technical interpretation of the meaning of distributable reserves would, as
a consequence, give rise at 30 June 2009 to capital reserves available for
distribution of approximately £471,622,000, including net unrealised capital
profits of £137,640,000.
9. Publication of non-statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts, as defined in the Companies Act 2006. The
financial information for the six months ended 30 June 2009 and 2008 has not
been audited.
The information for the year ended 31 December 2008 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditors on those financial
statements contained no qualification or statement under either section 498(2)
or 498(3) of the Companies Act 2006.
10. Annual results
The Board expects to announce the annual results for the year ended 31 December
2009, in mid February 2010. Copies of the annual results announcement can be
obtained from the Secretary on 020 7743 3000. The annual report should be
available by the end of February 2010, with the Annual General Meeting being
held in April 2010.
11. Copies of the half yearly financial report will be posted to shareholders
on 26 August 2009. Copies will also be available to the public from the
Company's registered office at 33 King William Street, London EC4R 9AS and on
BlackRock Investment Management's website at www.blackrock.co.uk/its.
14 August 2009
33 King William Street
London EC4R 9AS
Independent Review Report
to BlackRock World Mining Trust plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six month period ended
30 June 2009 which comprises the Consolidated Income Statement, Consolidated
Statement of Changes in Equity, Consolidated Balance Sheet, Consolidated Cash
Flow Statement, Reconciliation of Net Income before Finance Costs and Taxation
to Net Cash Flow from Operating Activities, and the related notes. We have read
the other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half yearly financial report in accordance with the Listing Rules of the
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union. The condensed set of financial
statements included in this half yearly financial report has been prepared in
accordance with the Accounting Standards Board Statement "Half Yearly Financial
Reports".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six month period ended 30 June 2009 is not prepared,
in all material respects, in accordance with the Accounting Standards Board
Statement "Half Yearly Financial Reports" and the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
14 August 2009
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