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BlackRock World Mng (BRWM)

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Wednesday 20 November, 2019

BlackRock World Mng

Portfolio Update

All information is at 31 October 2019 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -2.8% -9.1% 4.7% 20.9% 36.5%
Share price -5.0% -11.0% 4.7% 19.3% 30.6%
EMIX Global Mining Index (Net)* -1.7% -6.8% 14.5% 27.6% 46.6%
(Total return)
Sources: BlackRock, EMIX Global Mining Index, Datastream
At month end
Net asset value including income1: 403.32p
Net asset value capital only: 390.98p
1 Includes net revenue of 12.34p
Share price: 340.00p
Discount to NAV2: 15.7%
Total assets: £823.1m
Net yield3: 5.9%
Net gearing: 11.8%
Ordinary shares in issue: 176,122,207
Ordinary shares held in treasury: 16,889,635
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 38.0 Global 62.6
Gold 23.5 Latin America 9.5
Copper 18.0 Australasia 8.3
Silver & Diamonds 6.0 Canada 6.6
Industrial Minerals 5.1 South Africa 3.0
Materials 3.3 United Kingdom 1.3
Coal 1.1 Other Africa 1.2
Nickel 1.0 Indonesia 1.0
Zinc 0.3 Sweden 0.9
Aluminium 0.1 Kazakhstan 0.8
Iron Ore 0.1 Russia 0.7
Current assets 3.5 USA 0.5
Argentina 0.1
Current assets               3.5
----- -----
100.0 100.0
===== =====
Ten Largest Investments 

% Total
BHP 9.2

Rio Tinto 8.5
Barrick Gold 5.1
Newmont Mining 4.5
Anglo American                          4.4
OZ Minerals Brazil:

Agnico Eagle Mines                      3.9
Wheaton Precious Metals 3.6
First Quantum Minerals 3.6


Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
The Company’s NAV fell by 2.8% in October, underperforming its reference index, the EMIX Global Mining Index (net return), which declined by 1.7%.
During the month we saw a degree of thawing in terms of the trade tensions between the US and China. Elsewhere, the yield curve for US 10-year Treasuries reversed and is no longer inverted below the 2-year rate. In other news, at the end of the month the US Federal Reserve (the Fed) cut interest rates to a target range of 1.50% to 1.75%. This was the third rate cut that we have seen from the Fed this year. The Fed also flagged that there were no plans to start raising rates again until they see a significant increase in inflation. In this environment, equity markets posted positive returns, with the MSCI World Index rising by 2.5%.  (Figures in USD.)
Most mined commodity prices were up over the month. The base metals benefited from the improvement in the global economic growth outlook, with copper, aluminium and zinc prices up by 1.3%, 3.1% and 4.0% respectively. Meanwhile, in the precious metals space, gold and silver prices were up by 2.5% and 5.6% respectively, as US dollar weakness provided a tailwind. The bulk commodities were mixed, however, with the coking coal price up by 5.2% but the iron ore (62% fe) price falling by 9.6% to $84/tonne. (Figures in USD.)
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 12-18 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.
 20 November 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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