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BlackRock World Mng (BRWM)

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Tuesday 15 October, 2019

BlackRock World Mng

Portfolio Update

All information is at 30 September 2019 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -1.0% -5.0% 2.2% 32.8% 21.9%
Share price 1.4% -3.6% 3.5% 36.2% 11.9%
EMIX Global Mining Index (Net)* -1.4% -4.1% 12.6% 38.8% 41.0%
(Total return)
Sources: BlackRock, EMIX Global Mining Index, Datastream
At month end
Net asset value including income1: 414.80p
Net asset value capital only: 403.32p
1 Includes net revenue of 11.48p
Share price: 358.00p
Discount to NAV2: 13.7%
Total assets: £848.3m
Net yield3: 5.6%
Net gearing: 13.1%
Ordinary shares in issue: 176,222,207
Ordinary shares held in treasury: 16,789,635
Ongoing charges4: 0.9%
2 Discount to NAV including income.
3 Based on quarterly interim dividends of 4.00p per share declared on 20 August 2019 and 2 May 2019 in respect of the year ending 31 December 2019 and a quarterly interim dividend of 3.00p per share declared on 8 November 2018 and a final dividend of 9.00p per share announced on 28 February 2019 in respect of the year ended 31 December 2018.
4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2018.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 38.6 Global 63.2
Gold 23.8 Australasia 10.3
Copper 18.1 Latin America 10.2
Silver & Diamonds 6.0 Canada 6.2
Industrial Minerals 5.9 Other Africa 1.7
Materials 2.3 South Africa 1.4
Nickel 1.2 United Kingdom 1.2
Coal 1.0 Indonesia 1.1
Zinc 0.3 Russia 0.7
Aluminium 0.1 USA 0.7
Iron Ore 0.1 Kazakhstan 0.6
Current assets 2.6 Argentina 0.1
Current assets 2.6
----- -----
100.0 100.0
===== =====
Ten Largest Investments 

% Total
BHP 9.4
  Equity 4.9
  Debenture 3.9
Rio Tinto 8.7
Barrick Gold 5.2
Newmont Mining 4.4
First Quantum Minerals 4.1
Anglo American 4.0
Oz Minerals Brazil:
  Royalty 2.3
  Equity 1.7
Agnico Eagle Mines 3.5
Wheaton Precious Metals 3.5


Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
The Company’s NAV fell by 1.0% in September, outperforming its reference benchmark, the EMIX Global Mining Index (net return), which declined by 1.4%.
September saw more indications of a deteriorating global economic growth outlook. US manufacturing activity contracted for the second consecutive month, for example, whilst China’s official manufacturing PMI came in at 49.8, indicating a fifth consecutive month of contraction. The US Federal Reserve (the Fed) cut interest rates for the second time this year in response to weaker economic data, lowering the target range to 1.75-2.00%, as had widely been expected. China’s central bank also announced a fresh round of stimulus, cutting the reserve requirement ratio to the lowest level since 2007. Meanwhile, political news was mixed, with uncertainty increased by drone attacks on Saudi Arabia’s oil fields and news emerging of an impeachment enquiry into US President Donald Trump. However, geopolitical concerns were eased somewhat by confirmation that US-China trade talks would resume in early October. Against this backdrop, broader equity markets posted positive returns, with the MSCI World Index rising by 2.1% in USD terms.
In the mined commodity space, the precious metals gave back some of their strong year-to-date gains, with gold and silver prices falling by 3.6% and 7.2% respectively in September. Whilst the US interest rate cut was positive for gold, it had been expected and language from the Fed was perceived as more hawkish than expected. Elsewhere, the base metals were mixed, with the copper price rising by 0.7% but aluminium and nickel prices falling by 1.3% and 4.4% respectively. Meanwhile, bulk commodities were strong, with the iron ore (62% fe) price up by 9.3% on stronger Chinese imports. (Figures in USD terms.)
Strategy and Outlook
We see an attractive valuation opportunity in mining today. The mining sector is generating close to record free cash flow today, whilst balance sheets are in strong shape and companies remain focused on capital discipline. Whilst US-China trade tensions are fuelling uncertainty, our base case remains that we have positive global economic growth for the next 12 to 18 months, albeit at a slower rate than was expected this time last year. Barring an economic recession, we expect the mining sector to re-rate as the miners continue to generate robust free cash flow and return capital to shareholders through dividends and buybacks. We expect most mined commodity prices to be stable to rising through the remainder of this year. On the commodity demand side, we do not anticipate a hard-landing type event in China and we have been encouraged by stimulus measures beginning to feed through into improvements in some economic data points. On the commodity supply side, supply is tight in most mined commodity markets and, given the cuts in mining sector spending since 2012 (down ~66%), we expect it to remain so.
All data points are in GBP terms unless stated otherwise.
15 October 2019
Latest information is available by typing on the internet. 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.

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