Portfolio Update

BLACKROCK WORLD MINING TRUST plc
All information is at 29 February 2016 and unaudited.
Performance at month end with net income reinvested
		One			Three				One	Three		Five
		Month			Months				Year	Years		Years
Net asset value		22.2%			12.2%				-28.9%	-57.8%		-68.0%
Share price		17.5%			2.7%				-32.0%	-59.3%		-68.5%
Euromoney Global Mining Index		22.5%			13.9%				-31.1%	-51.0%		-63.6%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income*:								244.46p
Net asset value capital only:								228.00p
*Includes net revenue of 16.46p
Share price:								201.00p
Discount to NAV**:								17.8%
Total assets:								£481.0m
Net yield***:								10.4%
Net gearing:								11.0%
Ordinary shares in issue:								177,287,242
Ordinary shares held in treasury:								15,724,600
Ongoing charges****:								1.2%
** Discount to NAV including income. *** Based on an interim dividend of 7.00p per share and a final dividend of 14.00p per share in respect of the year ended 31 December 2015. **** Calculated as a percentage of average net assets and using expenses, excluding finance costs for the year ended 31 December 2015.
Sector	% Total					Country Analysis					% Total
	Assets										Assets
						Global					46.5
Diversified	38.9					Latin America					17.7
Gold	22.3					Other Africa					10.5
Copper	19.0					Australasia					9.7
Silver & Diamonds	14.3					Canada					6.5
Industrial Minerals	4.8					Emerging Europe					4.6
Other	0.6					South Africa					3.8
Iron Ore	0.1					Indonesia					0.7
Net current liabilities	(0.0)					Net current liabilities					(0.0)
	-----										-----
	100.0										100.0
	=====										=====
Ten Largest Investments
Company				% Total Assets
Rio Tinto				11.5
BHP Billiton				9.5
Fresnillo				5.7
First Quantum Minerals				5.2
Glencore				5.0
Lundin Mining				4.7
Sociedad Minera Cerro Verde				4.2
Norilsk Nickel				4.1
Randgold Resources				3.4
Franco-Nevada				2.9

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

Performance

February was a very strong month for the mining sector, with the Euromoney Global Mining TR Index up +22.5%, on the back of some price strength amongst the mined commodities, a rally in the gold equity space, investor short covering and a better than expected reporting season. Iron ore (62% fe) was the best performing mined commodity up +18.5% reflecting seasonal demand strength, restocking in China and some supply disruption as a consequence of the Samarco Brazilian dam disaster. The majority of the base metals were also up over the month, with zinc, aluminium and copper prices rising +10.0%, +7.0% and +4.8% respectively. Whilst being one of the mining sector’s strongest ever months relative to broader equity markets (the MSCI World TR Index finished up +0.8%), there appeared to be limited improvement in underlying fundamentals. Economic data from China was mixed with manufacturing data below expectations but bank lending coming in at a record high, indicative of loosening monetary policy.

The mining sector entered its financial reporting season in February. The period saw high-profile dividend cuts from BHP Billiton and Rio Tinto, who cut by -75% and -50% respectively, bringing an end to their progressive dividend policies. Meanwhile, Glencore announced the completion of a US$500m precious metals streaming deal with Franco Nevada and increased its asset sales target by US$1bn, which represented a step closer to the company achieving the deleveraging plans it laid out in December last year. Elsewhere, Anglo American revealed details of its restructuring programme, which included a target of US$3bn to US$4bn of asset sales and Freeport McMoRan announced the sale of a 13% interest in its Morenci Mine to Sumitomo Metal Mining.

Within the Company’s unquoted investments, Banro, where the Company has exposure via a gold-linked preference share, completed its previously announced financing agreement with a Chinese mining investment fund, Resource FinanceWorks, for US$98.75m.

Strategy and Outlook

The performance of mining equities has been torrid in recent years. However, it is important to remember that the sector is cyclical and will not stay out of favour forever. In the near term, sentiment towards China is likely to remain the primary driver of the sector’s performance. Looking ahead, we believe that the Chinese administration has the levers to pull to effectively manage China’s economic transition to more normalised growth rates. However, the administration has work to do to reassure investors, and the country’s situation is uncertain, which contributes to our expectation for commodity prices to remain subdued in the near term.

Today, many mined commodities’ prices sit well below marginal costs, which should mean that downside for prices is limited. However, importantly, the sector as a whole has been able to meaningfully cuts costs, whilst weakening commodity currencies and lower oil prices have provided additional cost benefits which have compressed commodity cost curves. Fundamentally, whilst supply can be sticky for a number of reasons, a cash negative operation cannot persist indefinitely. We have just begun to see the first of the long-awaited supply cuts announced but mined commodity prices will need to remain at current levels for a few months or move lower before we see real momentum in cuts. In light of this, we believe dividends in the sector will remain under pressure and we expect to see companies further reduce capital spending and operating costs this year in order to bolster their balance sheets.

All data points are in sterling terms unless stated otherwise.

15 March 2016

ENDS

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