Half-yearly Report
BlackRock World Mining Trust plc
Half Yearly Financial Report 30 June 2014
Performance to 30 June 2014
Six Five
months years
Net asset value per share:
- capital only -2.0% +11.8%
- with income reinvested +0.8% +24.0%
-------- --------
Ordinary share price:
- capital only -0.4% +20.5%
- with income reinvested +2.4% +35.2%
-------- --------
Euromoney Global Mining Index*:
- capital only +1.4% -1.2%
- with income reinvested +3.0% +10.6%
-------- --------
* Adjusted for exchange rates relative to sterling.
A dividend of 14.00p per share went ex dividend on 5 March 2014. Where
performance has income included, it is reinvested on the ex dividend date.
Sources: BlackRock and Datastream.
Chairman's statement
Overview
Following a challenging year in 2013, the mining sector has posted positive
returns so far in 2014 in what has been a more stable market environment for
the sector. Commodity price moves have been mixed, with base and precious
metals generally outperforming bulk commodities. However, the market's focus
has been on the improvement in operational delivery, increasing evidence of
capital discipline and management rhetoric around improving returns to
shareholders, with the major diversified companies leading this charge. As
sentiment towards the sector has improved and tightness has returned to
specific areas of the commodities markets, such as in nickel, we have seen the
positive performance become increasingly widespread across the market cap
spectrum.
In the six months to 30 June 2014, the Company's net asset value ("NAV")
returned 0.8% and the share price returned 2.4% (both calculated in sterling
terms with income reinvested). During the same period, the Company's benchmark,
the Euromoney Global Mining Index returned 3.0%. Further information on
investment performance is given in the Investment Manager's Report.
Since the period end, the Company's net asset value has increased by 7.1%
compared to a rise of 7.9% in the benchmark index.
Revenue Return and Dividends
Revenue return per share for the six month period to 30 June 2014 amounted to
10.13p (six months to 30 June 2013: 12.82p). The Directors are pleased to
declare an interim dividend of 7.00p per share (2013: 7.00p per share) payable
on 19 September 2014 to shareholders on the register on 29 August 2014 (ex
dividend date 27 August 2014).
Appointment of Director
We were pleased to welcome Russell Edey to the Board with effect from
8 May 2014. Russell has been the chairman of Avocet Mining PLC since
September 2010 and a non-executive director since July 2010. He retired as
chairman of AngloGold Ashanti Limited in May 2010 having been a member of that
company's board since 1998 and in June retired as a non-executive director of
several companies in the Rothschild Group, which he joined in 1977. Prior to
that, he worked for Anglo American Corporation of South Africa Limited in
South Africa and Australia.
Alternative Investment Fund Managers' Directive ("AIFMD")
In conformity with the European directive, BlackRock Fund Managers Limited
("BFM") was appointed as the Company's Alternative Investment Fund Manager
("AIFM") on 2 July 2014 having been authorised as an AIFM by the Financial
Conduct Authority ("FCA") on 1 May 2014. The terms agreed with the AIFM enable
the Board to continue to act independently of the AIFM. The arrangements in
respect of the management fee remain unchanged. The new Investment Management
Agreement terms also strike the appropriate balance between the Board's control
over the Company, its investment policies and compliance with the regulatory
obligations.
The Board has also appointed BNY Mellon Trust & Depositary (UK) Limited (the
"Depositary") to act as the Company's depositary, as required by the AIFMD, on
the terms and subject to the conditions of a depositary agreement between the
Company, BFM and the Depositary.
Facilitating Retail Investments
The Company currently conducts its affairs so that its shares can be
recommended by independent financial advisers to retail investors in accordance
with the FCA rules in relation to non-mainstream investment products and
intends to do so for the foreseeable future. The shares are excluded from the
FCA's restrictions which apply to non-mainstream products because they are
shares in an investment trust.
Outlook
There is further evidence that global growth is improving. Europe appears to
have joined the US on the path to economic recovery, albeit on a more
fragile-footing, and Asian markets have recently been strengthening on signs of
improving economic stability. In stark contrast to the past decade, when the
race for growth saw poor operating and capital discipline, the mining industry
is becoming increasingly cost conscious. This more rigorous focus is
translating into rising free cash flows and the potential for capital returns
to shareholders. Unfortunately, the appreciation of sterling has and looks set
to continue to act as a headwind for income generation from our predominantly
US dollar denominated portfolio.
With mining companies trading on undemanding valuations and attractive dividend
yields we expect 2014 to be a year of transition and are optimistic about the
mining sector in the longer term.
A W Lea
14 August 2014
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;
- Market;
- Financial;
- Regulatory;
- Operational;
- Resource; and
- Gearing.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended
31 December 2013. A detailed explanation can be found in the Strategic Report
on pages 8 and 9 and note 18 on pages 55 to 63 of the Annual Report and
Financial Statements which is available on the website maintained by BlackRock
Investment Management (UK) Limited, at blackrock.co.uk/brwm.
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 Disclosure and Transactions with Investment Manager
BlackRock Investment Management (UK) Limited ("BIM (UK)") is the Investment
Manager and is regarded as a related party under the Listing Rules. Details
of the management and marketing fees payable are set out in note 3 and note
8. BlackRock Fund Managers Limited ("BFM") was appointed as the Company's
AIFM with effect from 2 July 2014. BIM (UK) continues to act as the Company's
Investment Manager under a delegation agreement with BFM. The related party
transactions with the Directors are set out in note 9.
Going Concern
The Directors are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future and is financially sound.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements. The Company has a portfolio of investments which are
considered to be readily realisable and is able to meet all of its liabilities
from its assets and income generated from these assets.
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 FCA's Disclosure and Transparency Rules.
This half yearly report has been reviewed by the Company's auditor.
The half yearly financial report was approved by the Board on 14 August 2014
and the above responsibility statement was signed on its behalf by the
Chairman.
A W Lea
For and on behalf of the Board
14 August 2014
Investment Manager's Report
We are pleased to report that after three consecutive years of falling share
prices the mining sector finally seems to be catching the eye of investors. For
the first half of 2014 the Euromoney Global Mining Index (formerly the HSBC
Global Mining Index) posted a competitive period of performance relative to
broader equity markets and was positive for the first time in four years. In
fact the performance looks even stronger when looking back over the last twelve
months, with the Index up by 18.9% in US dollar terms. The strengthening of
sterling over this same period has muted the impact of this recovery, with the
sector up by only 5.6% in sterling terms.
Unlike in recent years where share prices have generally underperformed
underlying commodity prices, this year they are working hard to claw back the
lost ground. For example, the price of copper in the first half was down by
4.7% in US dollar terms versus the performance of copper producer First Quantum
which was up by 19.3% (total return in US dollar terms). In addition, some
smaller higher growth copper producers did even better with Lundin Mining up by
27.2% (total return in US dollar terms). As mentioned in the Annual Report our
decision to increase exposure to this mid cap area of the market has certainly
added value to the Company. Even in the case where commodity prices are down
the share prices seem to be falling less than the commodity prices; for example
Vale is down by 12.2% versus a 30.1% fall in the price of iron ore (all in US
dollar terms).
Outside of commodity price moves, share prices have also reacted positively to
the shift in strategy within the companies away from investing for growth and
towards increased returns to investors. Without this change in direction,
investor uncertainty on how operating cash flows would be used, after
experiencing the traumatic list of write-downs taken during the last few years,
would have continued to restrict demand for the shares. It is clear that with
investors still underweight the mining sector, there remains a significant
doubt on how long lived this change in direction will be before management is
tempted to return to the old ways.
Whilst we are still early in the process of improving returns to shareholders
and concerns about world growth remain ever present, we are cautiously
optimistic that the bottom of the cycle might well be behind us. On the back of
this we are continuing to deploy capital into companies with a more aggressive
growth path and taking advantage of the constrained capital markets to generate
attractive entry points.
Strategic shift
During the last 18 months the pressure on companies to refocus their strategy
away from investing for the sake of growth to increasing returns for
shareholders has been a key factor in the market. It has become commonplace to
read reports and presentations from mining companies talking about cuts to
capital expenditure, reduction in operating costs, paying down debt and
portfolio simplification. Between 2012 and 2013, Rio Tinto took capex down from
US$17.6 billion to US$12.9 billion and BHP Billiton has reduced it by 25% or
US$5.5 billion since mid 2012. In addition, cuts to operating costs have been
dramatic with cost savings of US$2.3 billion announced by Rio Tinto and US$4.9
billion by BHP; probably the most impressive of all has been Glencore post the
acquisition of Xstrata. When Glencore announced the bid for Xstrata they
forecast a cost saving goal of US$500 million. Since then this number has been
upgraded twice and the current savings target is US$2.4 billion.
As the companies have saved money within their businesses and cash flow has
subsequently increased they have used this to repair balance sheets. The graph
on page 9 of the Half Yearly Financial Report shows how much gearing ratios
have improved since their peak in the first half of 2013 and their expected
trajectory for the rest of the year.
With the companies now on a much stronger footing and commodity prices
remaining at levels which continue to produce healthy margins, shareholder
expectations for increased payouts of cash are high. To date there have been
some encouraging steps in this direction but the tone from management is also
supportive of such moves. However, the proof will be in the actions and with
the company results season around the corner we await them with interest.
It would be remiss of us not to mention that whilst the companies have been
delivering on their promises, investor concerns around China remain high. The
Chinese leadership remains committed to the 7.5% GDP growth number for 2014 but
the data to date appears to be running slightly weaker than this. In addition,
fears around the domestic property market continued to be fanned by poor house
price moves and reduced investment into new projects. In the past such weak
periods of data for the economy would have been swiftly followed by
announcements of broad-based stimulus measures by the Chinese government but
for most of the earlier part of the year any stimulus that has been announced
has targeted specific areas of the market rather than across the economy as a
whole. More recently, however, we have seen the tone shift slightly and a range
of policy changes and new projects have been announced that should provide some
support for commodities in the second half of the year.
More importantly for the commodity markets has been the reduction in financial
liquidity within the Chinese economy. This year the banks have been under
pressure to reduce lending and enforce tighter controls on lending. The
shortage of credit has led to a crackdown on commodity related finance trades
where commodities had been used as collateral for loans. These actions sparked
fears that significant amounts of metal could be released to the market and the
sudden increase in supply would force down prices. In reality these fears were
largely unfounded but the effect was to increase commodity price volatility
with the price of copper falling by 6% over two days in March. The much
talked-of glut of metal failed to materialise and prices have since moved higher.
Elsewhere in the world, economic data has generally been supportive for
commodity prices. The US economy has continued to grow in line with
expectations and fears of a further collapse in Europe have waned. In fact when
one looks at the level at which the VIX (measure of volatility) is trading it is
hard to imagine that investors have any fears at the moment (see chart on page
10 of the Half Yearly Financial Report).
Selected commodity price changes
% change over % change
Price six months to average price
Commodity 30 June 2014 30 June 2014 H1 2014 vs H1 2013
Baltic Freight Index 850.00 -62.7 +40.0
Palladium US$/oz 843.00 +17.7 +7.3
Zinc US$/lb 1.00 +7.4 +5.8
Nickel US$/lb 8.60 +37.2 +2.5
Tin US$/lb 10.22 +0.9 +1.8
Lead US$/lb 0.97 -2.1 -3.2
Platinum US$/oz 1486.00 +8.5 -7.2
Copper US$/lb 3.19 -4.7 -8.3
Aluminium US$/lb 0.84 +5.8 -8.5
Thermal Coal (Newcastle) US$/t 70.35 -16.8 -14.9
Gold US$/oz 1327.00 +10.1 -15.2
Iron Ore (China 62% fines) US$/t 93.80 -30.1 -18.5
Uranium US$/lb 28.25 -17.9 -21.7
Met Coal US$/t 120.00 -21.1 -22.0
Potash US$/t 345.00 +5.5 -23.5
Silver US$/oz 21.03 +8.0 -24.6
Sources: Bloomberg and CLSA. All spot prices.
Base metals
For the first time in a few years we have seen a wide divergence in the
performance of base metal prices. Nickel has been the star performer in 2014
following the cessation of exports of direct shipping nickel ore from Indonesia
in January. The move to ban exports came as a surprise to the market as most
investors had been expecting some kind of resolution which would have allowed
exports to continue. The loss of around 18% of nickel supply to the world
caused the nickel price to move up sharply and to the end of June it was up by
37% in US dollar terms. Nickel mining companies have followed the move in the
price and the Company's holdings in Western Areas and Norilsk were up by 106%
and 23% respectively (total return in US dollar terms). In addition to these
companies, the Company also has significant indirect exposure via its holding
in GlencoreXstrata.
The Company's main base metal exposure continues to be to copper producers and
despite the fall in the copper price year to date, the share prices have
delivered strong returns as discussed earlier. The key behind this is that
despite the price move, operating margins have remained at very healthy levels
with prices continuing to average well above US$3/lb year to date. In addition,
some of the Company's holdings that had been derated in prior years due to
balance sheet weakness, project development concerns and M&A risks, started to
rerate during the first half of the year. We expect this process to continue as
many of these share prices remain depressed relative to the underlying growth
within them. Outside of nickel and copper, the Company continues to have
limited exposure to other base metals, but early in the year we took advantage
of the Company's ability to invest directly in metals futures to get exposure
to zinc.
Gold and precious metals & minerals
Following the "annus horribilis" of 2013, gold and silver fared significantly
better in the first half of 2014, rising by 10.1% and 8.0% respectively (in US
dollar terms) to end the period at US$1327/oz and US$21/oz respectively. This
positive move in prices was delivered almost entirely in the first quarter,
with the gold price reaching a peak of US$1418/oz in March. Gold benefited from
a combination of a slowing of gold sales from physically-backed exchange traded
funds ("ETFs") to a trickle, strong central bank purchases and increasing
speculative length in gold futures markets. The most dramatic change versus the
first half of 2013 was the sharp turnaround in the ETF market; in the first
half of 2013 over 600 tonnes of gold (19.5moz) were sold out of ETFs compared
to less than 37 tonnes (1.2moz) in the first half of 2014. This has boosted the
market's confidence that the unwind of the "QE Trade" is now complete -
financial investors no longer require gold as a hedge against potential
currency devaluation and inflation as the perceived risk of these has fallen
following the Federal Reserve's withdrawal of liquidity from the market
bringing Quantitative Easing or QE to an end. The focus then moved to other
areas of the market such as the fall in US treasury yields, the pushing out of
interest rate rise expectations and increasing geopolitical tensions, all of
which were supportive of a rising gold price. However, as gold prices moved
above US$1350/oz, physical demand out of China and India proved price sensitive
and there was insufficient momentum to maintain prices above these levels.
Our expectation for the remainder of the year is that gold and silver prices
are likely to stay range-bound as the threat of interest rate rises will
continue to hold back financial investors from returning to gold in force.
However, an improving economic outlook for the Indian economy with the
potential for import restrictions to be lifted, coupled with continued physical
demand from China, should provide incremental support for gold which makes us
increasingly confident that average prices are well supported and have the
potential to improve in coming years.
Last year's fall in the prices of gold and silver meant profit margins for the
producers shrank significantly and debt-to-equity ratios increased rapidly.
This increase in operating and financial leverage was in part responsible for
the strong outperformance in H1 of the equities relative to the positive move
in the gold and silver prices. In addition, following industry wide asset
write-downs, a recalculation of reserves using lower metal price assumptions
and evidence of a reduction in both operating and capital costs, investor
sentiment towards the sector improved. In US dollar terms, the FTSE Gold Mines
Index rose 21% (on a total return basis) and gold and silver equities were
generally the strongest performers in the mining sector as a whole. The
Company's silver holdings were some of the largest contributors to relative
performance; in particular Tahoe Resources whose share price increased by over
58% in the first half as the company successfully ramped up their Escobal mine
in Guatemala.
Prices of platinum group metals were positively impacted by the five month long
strike by 70,000 platinum company mineworkers which began on 23 January 2014
and ended in late June. The palladium price reached 13 year highs in June and
ended the first half up by 17.7%. The platinum price closed up 8.5% (in US
dollar terms). The legacy of the strike will be felt for many months and the
industry will be watching to see how smoothly the ramp-up is back to full
production. Labour unrest in South Africa's platinum industry has been an
ongoing issue now for a number of years; as such the portfolio has limited
exposure to the equities of the producers, but does have exposure to platinum
through the physically backed ETF.
Rough diamond prices surprised the market positively in the first half of the
year and the Company's holdings in Petra Diamonds and Lucara Diamond delivered
strong share price appreciation, up by 59% and 46% respectively. This was
because both companies have delivered operationally, growing production of high
quality stones and articulating clearly a business plan that will see them
growing free cash flows in the coming years.
Diversified mining and industrial metals
For the first time in a few years there has been significant dispersion between
the performance of the diversified mining companies and the Index as a whole.
Unlike in the past when the sector rallied, all share prices tended to benefit
and similarly when it was falling it took them all down together, in the first
half of the year stock specific drivers have had much more of an impact on
share prices. The most significant factor has been exposure to bulk
commodities. Those with the greatest exposure started the year well but as soon
as the price falls in iron ore, coking coal and thermal coal gathered momentum
these companies rapidly lost ground. For the first half of 2014 the Index was
up by 4.7% in US dollar terms whereas Rio Tinto was down 3.8%, Teck Resources
was down by 10.6% and Vale fell by 12.2%. The outperformance of Rio relative to
the other bulk commodity heavyweights is due to its strong volume growth,
expectations of further capital management plans and also the aggressive focus
on cost reduction, all of which have been embraced by the market.
Another specific factor has been balance sheet restructuring. As mentioned
earlier this has helped Rio Tinto but was not sufficient to offset its exposure
to iron ore. For those with greater diversification and following similar cost
reduction, capex reduction and asset sale strategies performance was positive;
for example BHP Billiton was up by 6.6%, GlencoreXstrata was up 9.7% and Anglo
American delivered a stunning 10.8% for the first half (total return in US
dollar terms). The Company has had minimal exposure to Anglo American due to
fears over the risks they face in implementing the changes outlined by the new
CEO. This position has been maintained and careful use of option writing
strategies during the period has helped to offset the negative impact of such a
low level of exposure. The Company's holding in Glencore helped performance
during the first half of the year and in part this was due to their success in
harvesting the synergies from the Xstrata takeover but also the disposal of Las
Bambas to China MinMetals. It is hoped that funds raised from the sale will be
used to pay down debt and have already given the company the ability to
effectively start reducing its share count by buying back the convertible which
matures in December 2014.
Despite all of the above, the diversified holding that delivered the most
significant returns, both relative and absolute, for the Company was Vedanta.
The holding had been gradually increased during the last year following the
appointment of Tom Albanese, the former CEO of Rio Tinto. It is hoped that
along with a new pro-business government in power in India, he will be able to
unlock some of the significant value that is trapped within a complicated
corporate structure, as well as align the interests of minorities with those of
the controlling shareholder. With the shares up by 22.6% during the first half
of 2014 there is clearly momentum behind his appointment and with some of the
value he may be able to deliver, combined with a commodity mix that fits with
our expectations of likely metal price performance, this has become a
significant position for the Company.
Royalties & illiquid investments
8.2% of the Company's portfolio is invested in illiquid royalty or royalty-like
investments, where cash flows are linked to the rate of production and
commodity prices. The Company has the ability to invest up to 20% in such
investments and the Board considers this an important way of diversifying the
Company's income while providing investors with leverage to production growth
and commodity price movements.
Marampa Royalty Contract (6.5%)
In July 2012, the Company purchased a 2% net revenue royalty over the Marampa
iron ore mine in Sierra Leone from London Mining plc, the owner and operator of
the asset. As at the end of June 2014, the Company had received a total of
US$7.7 million in royalty payments. London Mining are forecasting production of
4.9 to 5.4 million wet metric tonnes (wmt) in 2014, an increase of 32% to 46%
year on year, expanding to a run-rate of 6.5 million wmt per annum by the end
of 2015. The Marampa iron ore mine has a reserve life of over 40 years at this
rate of production and has the potential to expand output further.
The Marampa royalty contract is independently valued at the year end and reviewed
by the Board as part of the audit of the interim results. The iron ore price
assumptions and production forecasts have been reviewed and the Board has
concluded that the valuation of the royalty remains within an acceptable range of
the holding value.
Banro Gold-Linked Preference Share (1.7%)
In April 2013, the Company purchased a gold-linked preference share from
Canadian-listed Banro Corporation. The preference share provides exposure to
the gold price as well as to production growth with the principal moving in
line with the gold price and the coupon ranging between 10% and 15% depending
on Banro's overall level of production. As at the end of June 2014, the Company
had received a total of US$3.4 million in dividends, US$1.4 million of which
were received in the first half of 2014.
As part of the audit of the interim results the Board has reviewed the valuation
methodology for the preference share. This review included considering the
operational, financial and political factors that could influence the value of the
holding. The Board has concluded that the valuation methodology remains appropriate.
Avanco Royalty Contract
In July 2014, the Company entered into a royalty agreement with Australian
listed Avanco Resources over their exploration licences within the world-class
mineral district of Carajas in Brazil. The Company will provide US$12 million
in return for a Net Smelter Return royalty comprising 2% on copper, 25% on gold
and 2% on all other metals that will be produced from their Antas North and
Pedra Branca (Stage 1 and Stage 2) licences. In addition there will be a flat
2% royalty over all metals produced from Avanco's licence area at the time of
the agreement. The purchase is conditional on the publication of a JORC
compliant resource statement, the receipt of a mining licence for Stage 1 and
will only be drawn-down in parallel with debt draw-downs. As at June 2014, the
company had announced JORC compliant resources of 6.38 million tonnes at a
copper grade of 2.38% copper and 0.5g/t gold.
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. This year we have continued to make use of these tools
and to the end of the first half £2.5 million of income had been generated. In
addition, for the first time in some years the Company now has commodity
futures exposure in the form of a future in zinc. This was taken out to reflect
our positive view on the improving fundamentals in the zinc market.
Gearing
At 30 June 2014, the Company had £94.8 million of net debt. This was made up
mostly of a US dollar loan held against the London Mining royalty contract and
a smaller sterling denominated loan. The Company also makes use of a short term
overdraft facility to manage near term liquidity.
Outlook
At the end of last year we highlighted that the potential combination of a less
risky macro environment, combined with the positive steps that the companies
were taking to improve returns to shareholders, might turn the tide in favour
of the sector. On the back of this confidence we had started to increase
exposure to higher growth companies as well as take advantage of the lack of
finance available to these groups. To date this process has worked well despite
the "recovery" being still nascent in absolute terms. We have continued to add
to these positions as well as selectively adding to new holdings.
The strengthening of sterling in the first half acted as a drag on the
Company's performance and income generation, which is on the whole US dollar
exposed. So far in the second half of the year this trend has continued and
therefore is likely to act as a headwind to our otherwise more optimistic
outlook.
For the second half of the year it is essential that management teams of major
mining companies deliver on the capital management commitments made to
shareholders during the last 18 months. In order for this to be achieved,
commodity prices will need to at least remain range bound and this is in turn
dependent upon the world economy continuing to grind higher. Beyond the end of
2014 commodity fundamentals start to become very supportive for nickel, copper
and even zinc which bodes well for the way the portfolio is invested.
Evy Hambro and Catherine Raw
BlackRock Investment Management (UK) Limited*
14 August 2014
* BlackRock Fund Managers Limited ("BFM") was appointed as the Alternative
Investment Fund Manager on 2 July 2014. BlackRock Investment Management (UK)
Limited continues to act as the Investment Manager of the Company under a
delegation agreement with BFM.
Ten Largest Investments
30 June 2014
Rio Tinto* - 10.7% (2013: 11.9%) is the world's second largest mining company
by market capitalisation. It has interests over a broad range of metals and
minerals including iron ore, aluminium, copper, coal, industrial minerals, gold
and uranium. The company is mid-way through expanding its Pilbara iron
operations to 360mtpa. In May 2014, the company announced it had reached a
run-rate of 290mtpa and they are targeting to have the necessary infrastructure
in place to take production to 360mtpa by mid 2015.
BHP Billiton - 10.4% (2013: 10.6%) is the world's largest mining company by
market capitalisation. The company is an important global player in a number of
commodities including iron ore, copper, coal, manganese, aluminium, diamonds
and uranium. The company is the only sizeable holding in the portfolio with
significant oil and gas assets. Management have guided the market towards the
potential for share buybacks following their full year financial results in
August 2014.
GlencoreXstrata - 9.9% (2013: 9.9%) is the world's third largest mining company
by market capitalisation. It has activities in mining, smelting, refining,
processing and marketing of metals and minerals, energy products and
agricultural products globally. In addition the company provides financing,
logistics, marketing and purchasing services to producers and consumers of
commodities. In May 2013, Glencore merged with Xstrata. In April 2014, the
company announced the sale of the Las Bambas copper mine for US$5.85 billion
plus capital costs incurred in the year to date. In the same month, they
announced the purchase of Caracal Energy Inc. for US$1.35 billion, the majority
owner of West African oil assets in which GlencoreXstrata already owned a 25%
stake.
First Quantum Minerals* - 8.8% (2013: 7.8%) is an integrated copper producer
whose principal operating assets are in Africa, but also with nickel assets in
Australia and Finland. In April 2013, the company completed its C$5.1 billion
acquisition of Inmet, a copper producer whose major development project was the
Cobre Panama mine in Panama. First Quantum is in the midst of a significant
expansion of the business comprising of six major projects.
In addition, the Company holds corporate bonds issued by First Quantum. First
Quantum Minerals refinanced bonds originally issued by Inmet to fund the
development of Cobre Panama in February 2014. The bonds have coupons of 6.75%
and 7% respectively.
Marampa Royalty Contract# - 6.5% (2013: 6.6%) is a 2% revenue-related royalty
calculated on any iron ore sales over the life of the mine from
London Mining Plc's Marampa mine in Sierra Leone. The royalty is payable
quarterly in arrears calculated on the amount receivable at the relevant point
of sale, currently calculated with reference to the net freight on board price
received from sales of iron ore in Sierra Leone (terms similar to that of the
existing royalty payable to the Government of Sierra Leone).
Freeport-McMoRan Copper & Gold - 6.2% (2013: 6.5%) is the world's second
largest copper producer. It is also a major producer of gold and molybdenum
from mines in North and South America, as well as Indonesia and the DRC. In
June 2013, the company completed the acquisition of Plains Exploration &
Production and McMoRan Exploration giving it significant US oil and gas
exposure. The company's Grasberg copper-gold mine has been negatively impacted
by the Indonesian ban on concentrate exports. The company is working with the
government to resolve this issue and have announced to the market the
requirement to invest in new smelting capacity in Indonesia along with changes
to taxation. The company will also start renegotiating its mining contract
which is due to expire in 2021.
Banro*# - 2.6% (2013: 2.5%) is a Canadian listed gold company that is operating
and developing assets in the DRC. Although at the higher end of the
geo-political risk spectrum, the assets are geologically high quality with the
potential to operate towards the lower end of the cost curve. There is also a
high degree of exploration potential across exploration licences. The Company
has a position in a preference share that is royalty-like in its return profile
in that the coupon varies with the amount of gold produced and the gold price
in each quarter and the principal due at maturity also varies with the gold
price. In addition, the Company holds a corporate bond.
Fresnillo - 2.5% (2013: 2.2%) 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
75% of the company; the remainder is publicly listed on the London Stock
Exchange.
Vale* - 2.4% (2013: 4.1%), 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, acquiring Canadian nickel miner
Inco, which considerably broadened the company's asset mix away from just iron
ore. More recently they have ventured into the fertiliser sector, Zambian
copper and Guinean iron ore.
Cerro Verde - 2.3% (2013: 2.5%) is a copper and molybdenum operation in Peru
operated by Freeport-McMoRan Copper & Gold where they maintain a 53.6%
ownership in the company. During the first quarter of 2013 construction
activities commenced on the US$4.4 billion large-scale expansion of the asset
to triple production at the concentrator facilities and provide an incremental
600mlbs of copper and 15mlbs of molybdenum from 2016.
* Includes fixed interest securities.
# Investments held at Directors' valuation.
All percentages reflect the value of the holding as a percentage of total
investments. Percentages in brackets represent the value of the holding as at
31 December 2013. Together, the ten largest investments represent 62.3% of
total investments (31 December 2013: 64.7%).
Portfolio Analysis
30 June 2014
Commodity Exposure*
BlackRock World Mining Trust plc Euromoney Global Mining Index
2014 2013 2014
% % %
Aluminium 0 0 4.3
Platinum 1.1 1.9 1.6
Coal 1.4 0.2 5.5
Industrial Minerals 2.8 3.3 0.6
Silver & Diamonds 6.5 6.4 2.7
Gold 8.5 7.2 17.2
Iron Ore 12.2 12.5 0.7
Copper 24.6 23.7 12.1
Diversified 40.9 41.7 53.1
Other 2.0 3.1 2.2
Geographical Exposure*
2014 2013
% %
Global 54.6 57.4
Africa (ex SA) 16.6 18.1
Latin America 11.9 12.4
Australia 5.6 3.2
Canada 4.0 2.5
South Africa 3.5 4.1
Other 2.7 *** 2.2 **
USA 1.1 0.1
* Based on the principal commodity exposure and place of operation of each
investment.
** Consists of Guatemala, Indonesia, Papua New Guinea, People's Republic of
China and Russia.
*** Consists of Guatemala, Indonesia, Papua New Guinea, People's Republic of
China, Russia, Serbia and Sweden.
Source: BlackRock.
Investments
as at 30 June 2014
Main Market
geographical value % of
exposure £'000 investments
Diversified
Rio Tinto* Global 102,580 10.7
BHP Billiton Global 100,143 10.4
GlencoreXstrata Global 96,526 9.9
Vale* Global 23,213 2.4
Teck Resources Global 14,004 1.5
Vedanta Resources Global 13,308 1.4
African Rainbow Minerals South Africa 10,225 1.1
Lundin Mining Global 9,636 1.0
Norilsk Nickel Russia 8,685 0.9
Hudbay Minerals* Canada 7,609 0.8
Boliden Sweden 4,241 0.4
Anglo American South Africa 3,432 0.4
Rio Tinto call option 18/7/14 Global (127) 0.0
-------- --------
393,475 40.9
-------- --------
Copper
First Quantum Minerals* Global 84,523 8.8
Freeport-McMoRan Copper & Gold Global 59,755 6.2
Cerro Verde Peru 22,301 2.3
Southern Copper Peru 17,762 1.8
Antofagasta Chile 12,971 1.3
Nevsun Resources Eritrea 12,052 1.3
Avanco Resources Brazil 9,488 1.0
Tiger Resources DRC 4,652 0.5
Imperial Metals Canada 4,239 0.4
Katanga Mining DRC 2,502 0.3
Reservoir Minerals Serbia 2,479 0.3
Ivanhoe Mines# DRC 1,864 0.2
Nevada Copper USA 1,389 0.1
Cordoba Minerals Colombia 756 0.1
Mawson West DRC 300 0.0
-------- --------
237,033 24.6
-------- --------
Iron Ore
Marampa Royalty Contract# Sierra Leone 62,521 6.5
Fortescue Metals Australia 16,809 1.7
African Minerals*~ Sierra Leone 15,615 1.6
London Mining convertible Sierra Leone 12,135 1.3
Kumba Iron Ore South Africa 9,288 1.0
IRC Russia 1,060 0.1
Equatorial Resources Republic of Congo 571 0.0
Fortescue Metals put option 24/7/14 Australia (157) 0.0
-------- --------
117,842 12.2
-------- --------
Gold
Banro*+# DRC 24,667 2.6
Franco Nevada Global 10,025 1.0
Northern Star Resources Australia 9,042 0.9
Randgold Resources Mali 8,528 0.9
Eldorado Gold Global 7,142 0.7
Newcrest Mining Australia 6,092 0.6
Barrick Gold Global 5,351 0.6
Shanta Gold convertible Tanzania 2,749 0.3
Minas Buenaventura Peru 2,748 0.3
G Resources Indonesia 2,408 0.3
Metals X Australia 1,703 0.2
Stratex Ethiopia 866 0.1
Pacific Niugini Papua New Guinea 26 0.0
-------- --------
81,347 8.5
-------- --------
Silver & Diamonds
Fresnillo Mexico 23,980 2.5
Industrias Penoles Mexico 14,607 1.5
Petra Diamonds South Africa 6,591 0.7
Tahoe Resources Botswana 6,077 0.6
Dominion Diamond Canada 4,173 0.4
Lucara Diamond Guatemala 4,037 0.4
Sierra Metals Peru 1,520 0.2
Volcan Peru 1,445 0.2
-------- --------
62,430 6.5
-------- --------
Industrial Minerals
Iluka Resources Australia 19,522 2.0
Kenmare Resources Mozambique 6,045 0.7
RB Energy Canada 1,196 0.1
Australian Carbon# Australia - 0.0
-------- --------
26,763 2.8
-------- --------
Coal
China Shenhua Energy People's Republic of China 13,523 1.4
-------- --------
13,523 1.4
-------- --------
Platinum
Platinum Group Metals South Africa 6,260 0.7
Source Physical Platinum MA Platinum P-ETC Global 4,282 0.4
-------- --------
10,542 1.1
-------- --------
Other
Canadian Oil Sands Canada 13,271 1.4
Cameco Canada 2,405 0.2
UEX Canada 1,760 0.2
Western Areas Australia 1,719 0.2
Soc Min El Brocal Peru 366 0.0
Bindura Nickel Zimbabwe 89 0.0
-------- --------
19,610 2.0
-------- --------
Portfolio 962,565 100.0
======= =======
* Includes fixed interest investments.
# Investments held at Directors' valuation.
+ Includes Banro gold-linked preference share.
~ Includes group holdings.
All investments are in equity shares unless otherwise stated.
The total number of investments as at 30 June 2014 (including options
classified as liabilities for an amount of £284,000 (31 December 2013: £60,000)
on the Statement of Financial Position) was 70 (31 December 2013: 71).
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2014
Revenue £'000 Capital £'000 Total £'000
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
30.06.14 30.06.13 31.12.13 30.06.14 30.06.13 31.12.13 30.06.14 30.06.13 31.12.13
Notes (unaudited) (audited) (unaudited) (audited) (unaudited) (audited)
Income
from
investments
held at fair
value
through
profit or
loss 2 19,259 24,556 42,865 - - - 19,259 24,556 42,865
Other
income 2 2,902 2,937 5,937 - - - 2,902 2,937 5,937
-------- ------- -------- ------- -------- -------- -------- -------- -------
Total
revenue 22,161 27,493 48,802 - - - 22,161 27,493 48,802
-------- ------- -------- ------- -------- -------- -------- -------- -------
Losses on
investments
held at fair
value
through
profit or
loss - - - (7,629) (357,296) (324,228) (7,629) (357,296) (324,228)
Gains
/(losses) on
foreign
exchange - - - 817 (6,740) (718) 817 (6,740) (718)
-------- ------- -------- ------- -------- ------- -------- -------- -------
22,161 27,493 48,802 (6,812) (364,036) (324,946) 15,349 (336,543) (276,144)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Expenses
Investment
management
fee 3 (1,470) (1,529) (3,164) (4,412) (4,586) (9,492) (5,882) (6,115) (12,656)
Other
expenses 4 (514) (442) (975) (9) - - (523) (442) (975)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Total
operating
expenses (1,984) (1,971) (4,139) (4,421) (4,586) (9,492) (6,405) (6,557) (13,631)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Net profit
/(loss)
before
finance
costs and
taxation 20,177 25,522 44,663 (11,233) (368,622) (334,438) 8,944 (343,100) (289,775)
-------- -------- -------- ------- -------- ------- ------- -------- -------
Finance costs (188) (214) (391) (566) (643) (1,175) (754) (857) (1,566)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Net profit
/(loss) on
ordinary
activities
before
taxation 19,989 25,308 44,272 (11,799) (369,265) (335,613) 8,190 (343,957) (291,341)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Taxation (2,022) (2,580) (4,639) 749 1,800 2,813 (1,273) (780) (1,826)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Profit
/(loss)
for the
period 6 17,967 22,728 39,633 (11,050) (367,465) (332,800) 6,917 (344,737) (293,167)
-------- ------- -------- ------- -------- ------- -------- -------- -------
Earnings
/(loss) per
ordinary
share 6 10.13p 12.82p 22.36p (6.23p) (207.27p) (187.72p) 3.90p (194.45p) (165.36p)
======= ====== ====== ====== ======= ======= ======= ======= =======
The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in
accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union ("EU").
The supplementary revenue and capital columns are both prepared under guidance published by the Association of
Investment Companies ("AIC"). All items in the above statement derive from continuing operations. No operations
were acquired or disposed of during the period. All income is attributable to the equity holders of BlackRock
World Mining Trust plc. There were no minority interests.
The final dividend of 14.00p per share in respect of the year ended 31 December 2013 was declared on
20 February 2014 and paid on 15 May 2014. This can be found in the Consolidated Statement of Changes in Equity
for the six months ended 30 June 2014.
The net profit of the Company for the period was £6,917,000 (six months ended 30 June 2013: loss of
£344,737,000; year ended 31 December 2013: loss of £293,167,000).
The Group does not have any other comprehensive income. The net profit/(loss) for the period disclosed above
represents the Group's total comprehensive income.
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2014
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 2014
(unaudited)
At 31 December 2013 9,651 127,155 116,471 22,779 558,791 50,499 885,346
Total comprehensive
income:
Net (loss)/profit for
the period - - - - (11,050) 17,967 6,917
Transactions with
owners:
Dividend paid (a) - - - - - (24,820) (24,820)
-------- -------- -------- -------- -------- -------- --------
At 30 June 2014 9,651 127,155 116,471 22,779 547,741 43,646 867,443
-------- -------- -------- -------- -------- -------- --------
For the six months
ended 30 June 2013
(unaudited)
At 31 December 2012 9,651 127,155 116,471 22,779 891,591 48,096 1,215,743
Total comprehensive
income:
Net (loss)/profit for
the period - - - - (367,465) 22,728 (344,737)
Transactions with
owners:
Dividend paid (b) - - - - - (24,820) (24,820)
-------- -------- -------- -------- -------- -------- --------
At 30 June 2013 9,651 127,155 116,471 22,779 524,126 46,004 846,186
-------- -------- -------- -------- -------- -------- --------
For the year ended
31 December 2013
(audited)
At 31 December 2012 9,651 127,155 116,471 22,779 891,591 48,096 1,215,743
Total comprehensive
income:
Net (loss)/profit for
the year - - - - (332,800) 39,633 (293,167)
Transactions with
owners:
Dividend paid (c) - - - - - (37,230) (37,230)
-------- -------- -------- -------- -------- -------- --------
At 31 December 2013 9,651 127,155 116,471 22,779 558,791 50,499 885,346
======== ======== ======== ======== ======== ======== ========
(a) The final dividend for the year ended 31 December 2013 of 14.00p per share, declared on
20 February 2014 and paid on 15 May 2014.
(b) The final dividend for the year ended 31 December 2012 of 14.00p per share, declared on
19 February 2013 and paid on 2 May 2013.
(c) The final dividend in respect of the year ended 31 December 2012 of 14.00p per share,
declared on 19 February 2013 and paid on 2 May 2013 and the interim dividend for the year
ended 31 December 2013 of 7.00p per share declared on 21 August 2013 and paid on
26 September 2013.
The transaction costs incurred on the acquisition and disposal of investments are included
within the capital reserves. Purchase and sale costs amounted to £279,000 and £187,000
respectively for the period ended 30 June 2014 (six months ended 30 June 2013: £431,000 and
£290,000; year ended 31 December 2013: £662,000 and £474,000).
Consolidated Statement of Financial Position
as at 30 June 2014
30 June 30 June 31 December
2014 2013 2013
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value
through profit or loss 962,849 933,987 986,122
Deferred tax asset 1,277 2,222 1,795
-------- -------- --------
964,126 936,209 987,917
Current assets
Cash and cash equivalents 29,995 30,232 16,553
Other receivables 4,697 5,411 3,488
Amounts due from brokers 872 11,753 2,805
-------- -------- --------
35,564 47,396 22,846
-------- -------- ---------
Total assets 999,690 983,605 1,010,763
-------- -------- ---------
Current liabilities
Other payables (4,183) (15,881) (21,603)
Amounts due to brokers (2,878) (1,243) (1,346)
Derivative financial instruments
- written options (284) (60) (276)
Bank loans and overdrafts (124,834) (119,997) (101,915)
-------- -------- --------
(132,179) (137,181) (125,140)
-------- -------- --------
Total assets less current
liabilities 867,511 846,424 885,623
Non current liabilities
Deferred tax liabilities (68) (238) (277)
-------- -------- --------
Net assets 867,443 846,186 885,346
-------- -------- --------
Equity attributable to equity
holders
Ordinary share capital 7 9,651 9,651 9,651
Share premium account 127,155 127,155 127,155
Special reserve 116,471 116,471 116,471
Capital redemption reserve 22,779 22,779 22,779
Capital reserves 547,741 524,126 558,791
Revenue reserve 43,646 46,004 50,499
-------- -------- --------
Total equity 867,443 846,186 885,346
-------- -------- --------
Net asset value per ordinary
share 6 489.29p 477.30p 499.39p
======= ======= =======
Consolidated Cash Flow Statement
for the six months ended 30 June 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash inflow from operating activities
before financing activities 14,526 28,194 38,985
------- ------- -------
Financing activities
Drawdown of loans 22,937 13,383 168
Dividends paid (24,820) (24,820) (37,230)
------- ------- -------
Net cash outflow from financing
activities (1,883) (11,437) (37,062)
------- ------- -------
Increase in cash and cash equivalents 12,643 16,757 1,923
Effect of foreign exchange rate changes 799 (1,018) 137
------- ------- -------
Change in cash and cash equivalents 13,442 15,739 2,060
Cash and cash equivalents at start of
period 16,553 14,493 14,493
------- ------- -------
Cash and cash equivalents at end of
period 29,995 30,232 16,553
======= ======= ======
Comprised of:
Cash 28,458 29,783 15,261
Collateral pledged for written option
contracts 1,537 449 1,292
------- ------- -------
29,995 30,232 16,553
======= ======= =======
Reconciliation of Net Income Before Finance Costs and Taxation to Net Cash Flow
from Operating Activities
for the six months ended 30 June 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
Net profit/(loss) before taxation* 8,190 (343,957) (291,341)
Add back interest paid 754 857 1,566
Losses on investments held at fair value
through profit or loss including
transaction costs 7,629 357,296 324,228
Net (gains)/losses on foreign exchange (817) 6,740 718
Sales of investments held at fair value
through profit or loss 159,916 237,175 317,195
Purchases of investments held at fair
value through profit or loss (144,347) (210,288) (309,159)
(Increase)/decrease in other receivables (1,209) 37 (94)
Decrease/(increase) in amounts due from
brokers 1,933 (11,558) (2,610)
Increase/(decrease) in amounts due to
brokers 1,532 (11,228) (11,125)
(Decrease)/increase in other payables (17,417) 4,674 12,399
------- ------- -------
Net cash inflow from operating activities
before interest and taxation 16,164 29,748 41,777
------- ------- -------
Interest paid (754) (857) (1,566)
Taxation paid (234) - -
Taxation on overseas income (650) (697) (1,226)
------- ------- -------
Net cash inflow from operating activities
before financing activities 14,526 28,194 38,985
======= ======= =======
* See the Consolidated Statement of Comprehensive Income.
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 sections 1158-1165 of the Corporation Tax Act 2010.
The principal activity of its subsidiary, BlackRock World Mining Investment
Company Limited, is investment dealing.
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Group's Annual Report and Financial
Statements for the year ended 31 December 2013 (which were prepared in
accordance with International Financial Reporting Standards ("IFRS") as adopted
by the European Union and as applied in accordance with the provisions of the
Companies Act 2006) and in accordance with International Accounting Standard
34, 'Interim Financial Reporting'. Insofar as the Statement of Recommended
Practice ("SORP") for investment trust companies and venture capital trusts
issued by the Association of Investment Companies ("AIC"), revised in
January 2009, is compatible with IFRS, the financial statements have been
prepared in accordance with guidance set out in the SORP.
2. Income
Six months ended Six months ended Year ended
30 June 2014 30 June 2013 31 December 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Income from investments:
UK listed dividends 4,612 5,647 10,870
Overseas listed dividends 9,338 8,654 15,209
Overseas listed special
dividends - 3,702 4,130
Income from contractual
rights 1,224 1,515 2,984
Fixed interest income 4,085 5,038 9,672
------- ------- -------
19,259 24,556 42,865
------- ------- -------
Other income:
Option premiums 2,538 2,734 5,440
Gains of commodity futures 357 - -
Deposit interest and other
income 7 203 22
Underwriting commission - - 475
------- ------- -------
2,902 2,937 5,937
------- ------- -------
Total income 22,161 27,493 48,802
======= ======= =======
The Group considers the treatment of premiums arising on option transactions on
a case-by-case basis. During the six month period ended 30 June 2014, the
option premium income of £2,846,000 (six months ended 30 June 2013: £2,820,000;
year ended 31 December 2013: £5,521,000) received by the Group was from options
written for income purposes of which £2,538,000 (six months ended 30 June 2013:
£2,734,000; year ended 31 December 2013: £5,440,000) has been credited to the
revenue column of the Consolidated Statement of Comprehensive Income as it is
recognised evenly over the life of the option contract.
3. Investment management fee
Six months ended Six months ended Year ended
30 June 2014 30 June 2013 31 December 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment management fee:
- Allocated to revenue (25%) 1,470 1,529 3,164
- Allocated to capital (75%) 4,412 4,586 9,492
------- ------- -------
5,882 6,115 12,656
======= ======= =======
The investment management fee is levied quarterly at a rate of 1.3% per annum,
based on the value of the gross assets on the last day of each quarter.
Investment management fees are allocated 75% to the capital column and 25% to
the revenue column of the Consolidated Statement of Comprehensive Income.
4. Other expenses
Six months ended Six months ended Year ended
30 June 2014 30 June 2013 31 December 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Allocated to revenue:
Custody fee 51 105 183
Marketing fees 127 - 43
Registrar's fees and other
administrative costs 235 280 616
Directors' emoluments 101 57 133
-------- -------- --------
514 442 975
-------- -------- --------
Allocated to capital:
Transaction charges - capital 9 - -
-------- -------- --------
523 442 975
-------- -------- --------
5. Dividends
The final dividend of 14.00p per share for the year ended 31 December 2013 was
paid on 15 May 2014. The Board has declared an interim dividend of 7.00p per
share for the period ended 30 June 2014 which will be paid on 19 September 2014
to shareholders on the register on 29 August 2014. This dividend has not been
accrued in the financial statements for the six months ended 30 June 2014, as
under IFRS, interim dividends are not recognised until paid. Dividends are
debited directly to reserves.
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 2014 30 June 2013 31 December 2013
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 17,967 22,728 39,633
Net capital loss attributable to
ordinary shareholders (£'000) (11,050) (367,465) (332,800)
-------- -------- --------
Total profit/(loss) attributable to
ordinary shareholders (£'000) 6,917 (344,737) (293,167)
-------- -------- --------
Equity shareholders' funds (£'000) 867,443 846,186 885,346
-------- -------- --------
The weighted average number of
ordinary shares in issue during each
period, on which the return per
ordinary share was calculated was: 177,287,242 177,287,242 177,287,242
The actual number of ordinary shares
in issue at the end of each period,
on which the net asset value was
calculated was: 177,287,242 177,287,242 177,287,242
Revenue earnings per share 10.13p 12.82p 22.36p
Capital loss per share (6.23p) (207.27p) (187.72p)
------- -------- --------
Total earnings per share 3.90p (194.45p) (165.36p)
------- -------- --------
Net asset value per share 489.29p 477.30p 499.39p
Share price 463.10p 426.80p 465.00p
======= ======= =======
At 30 June 2014 the 15,724,600 (30 June 2013 and 31 December 2013: 15,724,600)
shares held in treasury were not dilutive to earnings per share, as the share
price was below the net asset value.
7. Share capital
Ordinary Treasury
shares shares
number number Total
(nominal) (nominal) shares £'000
Allotted, called up and
fully paid share capital
comprised:
Ordinary shares of 5p each
----------- ---------- ----------- --------
At 1 January 2014 and
30 June 2014 177,287,242 15,724,600 193,011,842 9,651
=========== ========== =========== =======
8. Transactions with the Investment Manager
BlackRock Investment Management (UK) Limited ("BIM (UK)") provided management
and administrative services to the Company under a contract which was
terminated with effect from 2 July 2014. Details of the fees payable to BIM
(UK) in relation to these services are set out in note 3 above.
BlackRock Fund Managers Limited ("BFM") was appointed as the Company's AIFM
with effect from 2 July 2014. BIM (UK) continues to act as the Company's
Investment Manager under a delegation agreement with BFM.
The fee due to BIM (UK) for the six months ended 30 June 2014 amounted to
£5,882,000 (six months ended 30 June 2013: £6,115,000; year ended
31 December 2013: £12,656,000). At the period end, £3,150,000 was outstanding
in respect of the investment management fee (six months ended 30 June 2013:
£14,211,000; year ended 31 December 2013: £20,752,000).
In addition to the above services, with effect from 1 November 2013, BIM (UK)
has provided the Company with marketing services. The total fees paid or
payable for these services for the period ended 30 June 2014 amounted to
£127,000 excluding VAT (six months ended 30 June 2013: nil; 31 December 2013:
£43,000), of which £170,000 (30 June 2013: nil; 31 December 2013: £43,000) was
outstanding at 30 June 2014.
9. Related party disclosure
The Board currently consists of six non-executive Directors all of whom are
considered to be independent by the Board. None of the Directors has a service
contract with the Company. The Chairman receives an annual fee of £45,000, the
Chairman of the Audit and Management Engagement Committee receives an annual
fee of £37,500 and each of the other Directors receive an annual fee of
£30,000.
All six members of the Board hold shares in the Company as set out below:
Ordinary shares
30 June 2014
A W Lea 6,000
I C S Barby 25,000
C A M Buchan 24,000
D W Cheyne 4,000
I D Cockerill 18,136
R P Edey (appointed 8 May 2014) 7,000
10. Contingent liabilities
There were no contingent liabilities at 30 June 2014 (30 June 2013: nil;
31 December 2013: nil).
11. Publication of non-statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts, as defined in section 435 of the Companies
Act 2006. The financial information for the six months ended 30 June 2014 and
30 June 2013 has not been audited.
The information for the year ended 31 December 2013 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditor on those financial statements
contained no qualification or statement under sections 498(2) or (3) of the
Companies Act 2006.
12. Annual results
The Board expects to announce the annual results for the year ended
31 December 2014 in mid February 2015. Copies of the results announcement can
be obtained from the Secretary on 020 7743 3000. The annual report should be
available by the end of February 2015, with the Annual General Meeting being
held in April 2015.
12 Throgmorton Avenue
London
EC2N 2DL
14 August 2014
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 months ended
30 June 2014 which comprises the Consolidated Statement of Comprehensive
Income, Consolidated Statement of Changes in Equity, Consolidated Statement of
Financial Position, Consolidated Cash Flow Statement, Reconciliation of Net
Income before 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 information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with guidance contained
in 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. 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 Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group 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 International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
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 months ended 30 June 2014 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
14 August 2014
ENDS
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at blackrock.co.uk/brwm. Neither the contents of
the Manager's website nor the contents of any website accessible from
hyperlinks on the Manager's website (or any other website) is incorporated
into, or forms part of, this announcement.
For further information, please contact:
Jonathan Ruck Keene, Head of Closed End Funds Group,
BlackRock Investment Management (UK) Limited - Tel: 020 7743 2178
Evy Hambro, Fund Manager,
BlackRock Investment Management (UK) Limited - Tel: 020 7743 4511
Emma Phillips, Media & Communications,
BlackRock Investment Management (UK) Limited - Tel: 020 7743 2922
12 Throgmorton Avenue
London EC2N 2DL
14 August 2014