Portfolio Update

BLACKROCK WORLD MINING TRUST plc  (LEI - LNFFPBEUZJBOSR6PW155)
All information is at 31 October 2017 and unaudited.
Performance at month end with net income reinvested
		One			Three				One	Three		Five
		Month			Months				Year	Years		Years
Net asset value		3.4%			3.4%				16.3%	31.4%		-19.7%
Share price		5.4%			4.7%				21.7%	33.2%		-13.4%
Euromoney Global Mining Index		2.1%			2.3%				11.3%	29.3%		-8.6%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income1:								422.63p
Net asset value capital only:								414.79p
1 Includes net revenue of 7.84p
Share price:								382.50p
Discount to NAV2:								9.5%
Total assets:								£836.1m
Net yield3:								3.9%
Net gearing:								12.8%
Ordinary shares in issue:								176,455,242
Ordinary shares held in treasury:								16,556,600
Ongoing charges4:								1.10%
2 Discount to NAV including income. 3 Based on quarterly interim dividends of 3.00p per share declared on 4 May 2017 and 10 August 2017 in respect of the year ending 31 December 2017 and a final dividend of 9.00p per share in respect of the year ended 31 December 2016. 4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2016.
Sector	% Total Assets					Country Analysis					% Total Assets
Diversified	46.8					Global					63.5
Copper	21.5					Latin America					11.9
Gold	16.7					Australasia					11.3
Industrial Minerals	7.0					Other Africa					6.8
Silver & Diamonds	6.7					Canada					4.2
Zinc	1.4					USA					0.9
Aluminium	0.2					South Africa					0.7
Iron Ore	0.1					Russia					0.5
Net current liabilities	(0.4)					Kazakhstan					0.4
	-----					India					0.2
	100.0					Net current liabilities					(0.4)
	=====										-----
											100.0
											=====
Ten Largest Investments
Company				% Total Assets
BHP				9.8
Rio Tinto				9.5
Glencore				8.8
First Quantum Minerals				8.3
Vale				6.5
Sociedad Minera Cerro Verde				3.9
Lundin Mining				3.4
Newmont Mining				3.1
South32				3.0
Teck Resources				2.6

Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:

Performance

The Company’s NAV increased by 3.4% in October, whilst its benchmark, the Euromoney Global Mining Index, returned +2.8% (performance in GBP terms).

For the mining sector, mined commodity performance was generally positive. Base metals performed strongly during the month, with nickel, zinc, copper and aluminium increasing by 17.7%, 3.6%, 6.0% and 3.0% respectively.  On the other hand, bulk commodities came under moderate pressure with the price of iron ore falling modestly by 1.1%.

The 19th National Congress of the Communist Party of China took place during the month. Key takeaways for us included the fact that the outlook for China’s economy remains robust and the Leadership have a clear plan; tackling pollution remains a key priority and supply side reforms are likely to continue.

Elsewhere in the mining space, LME week, the largest annual meeting of mined commodity producers and consumers, also took place at the end of the month.  Electric vehicles and battery materials emerged as the key theme, with lithium, cobalt and nickel being the main metals of focus.  This positive sentiment saw a rally in the volume of nickel traded in both London and Shanghai, with the price of nickel gaining 17.7% over the month.

Strategy and Outlook

Over the past 18 months we have seen a remarkable turnaround in the financial health of the mining sector. For some time we have been confident that January 2016 marked the bottom of the mining cycle as, back then, the market was concerned about a ‘hard-landing’ in China, as well as mining companies’ stretched balance sheets. Today, balance sheets are in much better shape and, given current commodity prices, we are optimistic about a continued recovery in share prices. The mining sector has among the highest free cash flow yield out of any global sector and, given the improvement in balance sheets, we expect lower earnings volatility relative to the previous three years to help drive a re-rating.

Whilst the mining sector has performed strongly, we are only back at 2014 levels and still a very long way below the peak in 2011. Mined commodity prices still look elevated in some cases but, importantly, mining shares are still pricing in commodity prices well below current spot prices.

We recognize that China remains the key risk for investors in the mining sector but believe that the Chinese administration has shown itself willing and able to step in with support to avoid a ‘hard-landing’ type event. Reform measures put in place by the government across a range of industries, including steel, coal and aluminium, to tackle pollution and excess capacity, have been more effective than many expected and have improved the profitability across a number of sectors, which we see as a key benefit in the longer-term. China should also benefit from a spill-over effect from the wider improvements we have seen in global economic growth in recent months. Concerns mounted in Q2 2017 of this year that tighter credit conditions in the country could lead to a slowdown. However, economic data has continued to defy the sceptics and exceed expectations.

Meanwhile, commodity prices should also be supported by constraints on the supply side resulting from the underinvestment we have seen in the mining sector in recent years, with global mining sector capex down 66% since the peak in 2012. The key question for investors today is whether the mining companies can maintain the same level of capital discipline or will they slip back into bad habits? For now, we feel the pain of the recent down-cycle is still too fresh and rhetoric from management teams gives us optimism that the sector’s focus remains on shareholder returns.

All data points are in US dollar terms unless stated otherwise.

14 November 2017

ENDS

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