Blackrock World Mining Trust (BRWM)

[richfool]

Cross post to Investment Strategy post about miners and BRWM (Blackrock World Mining Trust):

viewtopic.php?f=8&t=25219

[richfool]

Extracts from today's BRWM portfolio update:

Performance

The Company’s NAV returned +0.5% in November, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which fell by 0.1% (Figures in GBP).

Global equity markets came under pressure in November after the emergence of a new COVID-19 variant, Omicron, feared to be more transmissible and more resistant to vaccines than previous strains. Federal Reserve Chairman, Jerome Powell, added to investor fears when he indicated the committee would be discussing potentially accelerating its tapering program at the upcoming December meeting. In terms of key macro data for the mining sector, China’s year-on-year industrial production growth was relatively soft at 3.5%, whilst the country’s steel production continued to decline. Bulk commodity prices were weak, with the iron ore (62% fe.) price falling a further 6.6% over the month, ending at $106/tonne. Meanwhile, energy market shortages eased, causing thermal coal prices to decline along with some of the more energy-intensive commodities, such as aluminium. Elsewhere in the base metal space, the copper price was down by 3.0% but the physical market remained very tight, with copper for immediate delivery trading at a significant premium.

Strategy and Outlook

We believe the outlook for mined commodity prices remains robust, whilst mining shares offer attractive value. Recovering global economic growth, accommodative monetary policy, rising government spending and increased focused on green capital investment all point towards strong demand. Meanwhile, supply is constrained following years of capital discipline from the producers, and we are seeing no signs that this is set to change.

https://www.investegate.co.uk/blackrock ... 5347P596E/

[richfool]

An RNS about BRWM's exposure to Russia:

Statement re. Russian portfolio holdings

The Board of BlackRock World Mining Trust plc note that, in light of the Russian invasion of Ukraine, BlackRock on Monday, 28 February 2022, suspended the purchase of all Russian securities in its active and index funds.

The Board confirms that the Company's Manager (BlackRock Fund Managers Limited) is taking the necessary actions to ensure adherence to relevant sanctions laws and regulations including those of the US, UK and EU.

As at 3 March 2022, 0.12% of net assets (with a value of £1.74 million) was in securities with exposure to companies whose principal activities are in Russia.

https://www.investegate.co.uk/blackrock ... 1716P40F7/

[77ss]

Finals out today:

https://www.investegate.co.uk/blackrock ... 0000PFAFD/

225.3% increase in the Q4 dividend. Not unexpected, given the results of some individual miners.

The commentary makes interesting general reading.

The two Russian gold miners held appear to have become almost worthless:

As at balance sheet date, 2.1% of net assets (with a value of £24.5 million) was in securities with exposure to companies whose principal activities are in Russia. This has since fallen on 3 March 2022 to 0.1% of net assets (with a value of £1.7 million).

[richfool]

Blackrock World Mining Trust P
Dividend Declaration

BLACKROCK WORLD MINING TRUST PLC (LEI - LNFFPBEUZJBOSR6PW155)

ANNOUNCEMENT OF QUARTERLY INTERIM DIVIDEND

6 May 2022

The Board of BlackRock World Mining Trust plc is pleased to announce that the first quarterly interim dividend in respect of the quarter ended 31 March 2022 of 5.50p per ordinary share has been declared by the Directors, payable on 30 June 2022 to holders of ordinary shares on the register at the close of business on 27 May 2022 (ex-dividend date is 26 May 2022).

https://www.investegate.co.uk/blackrock ... 0258P2FE0/

I've been waiting to see what their next dividend would be after the big final dividend (Q4) of 27p (ex div 27th March. Pay day 19th May). So back to the previous Q2 and Q3 amounts of 5.5p. With the large dividends being paid by the big miners, I thought it might have been more than 5.5p. Hmm.

[77ss]

.... first quarterly interim dividend in respect of the quarter ended 31 March 2022 of 5.50p per ordinary share has been declared by the Directors, payable on 30 June 2022 to holders of ordinary shares on the register at the close of business on 27 May 2022 (ex-dividend date is 26 May 2022).

https://www.investegate.co.uk/blackrock ... 0258P2FE0/

I've been waiting to see what their next dividend would be after the big final dividend (Q4) of 27p (ex div 27th March. Pay day 19th May). So back to the previous Q2 and Q3 amounts of 5.5p. With the large dividends being paid by the big miners, I thought it might have been more than 5.5p. Hmm.

On the other hand - 22% up on the previous year's Q1 figure of 4.5p. Not to be sneezed at. Some of large dividends you refer to (e.g. RIO) won't have been paid in time for Q1 - we may see a higher Q2 - but as last year I would expect any major change (up or down) to be reflected in the Q4 dividend.

Worth remembering the clear statement in their 2021 finals:

It has been an exceptional year for dividend receipts. The Company’s income is highly dependent on the dividends paid by the companies it invests in. It should not be assumed that the very high level of these dividends will continue this year or that the Company’s revenue return, and accordingly the Company’s total dividends, will be at the same level as last year. It remains the Board’s intention to seek to distribute substantially all of the Company’s available income in the future.


https://www.investegate.co.uk/blackrock ... 0000PFAFD/

[richfool]

Kepler Fund Profile of Blackrock World Mining Trust:

BRWM is providing the best of both worlds: growth and income…
Overview

BlackRock World Mining (BRWM) is a specialist trust offering exposure to mining and metals companies globally. A number of themes have coalesced in the last couple of years to provide a strong tailwind to the sector. Despite short term volatility, profitability, dividends and sentiment towards mining companies and BRWM have all improved significantly. In our recent meeting with the managers, they expressed their firm opinion that the tailwinds are still entrenched and gave a positive outlook.

Underpinning the positive outlook is the fact that mining and metals groups have exercised strong discipline on their cost structure and capital expenditure programmes. As a result, constrained supply capacity facing up against structural demand has led to elevated commodity prices. This has resulted in improved corporate balance sheets, profitability and impressive dividend pay-outs. In turn, this has resulted in BRWM’s revenues more than doubling over the last financial year and enabled its own annual dividend to surge up by 109%, with a historic dividend yield in excess of 6%.

Bull

Large liquid trust in a specialist sector, using the structure’s flexibility to the full
Prospects for attractive dividend yield
Structural tailwinds to the investment case look entrenched

Bear

Single sector portfolio that is highly cyclical in nature adds volatility
Dividend yield (both underlying, and that of the trust) is not progressive
Discount has historically been wide, and could quickly return if market sentiment drops

https://www.trustintelligence.co.uk/inv ... l-may-2022

[dundas666]

Uplift to NAV announcement:

The Directors of BlackRock World Mining Trust plc (the Company) note the announcement from Ivanhoe Electric Inc. that it intends to IPO on Friday, 24 June 2022.

As disclosed in the Company’s 2021 Annual Report, the Company’s investment consists of common shares of Ivanhoe Electric Inc. and I-Pulse Inc., as well as a series of convertible notes, which together equated to 1.2% of the portfolio as at 31 December 2021.

Assuming the mid-point of the announced IPO valuation range, it is estimated that the total value of our holding will increase resulting in an uplift of approximately 140 basis points to the Company’s NAV based on a portfolio valuation date of 21 June 2022.

BRWM is up around 5% this morning.

[Laughton]

Well yes - but after being down over 8% over the past week so still some catching up to do.

[dundas666]

Well yes - but after being down over 8% over the past week so still some catching up to do.

And down around 17% from when I bought it two weeks ago, near its peak

[BullDog]

In two minds about BRWM at the moment. Historical evidence suggests commodities are a decent inflation hedge. On the other hand a deep and extended period of recession will depress demand for commodities. Zero sum situation?

I don't have any commodities exposure in the portfolio at the moment. So looking possibly at buying some BRWM as diversification and a useful boost to dividend income. Not a huge position, maybe 3 to 4% of total portfolio value. Definitely not interested in single company mining shares.

Any thoughts on BRWM presently from TLFers more experienced in holding mining shares please? Thanks.

[JohnW]

Historical evidence suggests commodities are a decent inflation hedge

Do we have any information on mining stocks and inflation, as BRWM is a fund of miners not commodities I think?
Is as little as 3% of a portfolio in anything other than bitcoin before it goes mad up again going to make an important difference to returns or volatility?

[77ss]

In two minds about BRWM at the moment. Historical evidence suggests commodities are a decent inflation hedge. On the other hand a deep and extended period of recession will depress demand for commodities. Zero sum situation?

I don't have any commodities exposure in the portfolio at the moment. So looking possibly at buying some BRWM as diversification and a useful boost to dividend income. Not a huge position, maybe 3 to 4% of total portfolio value. Definitely not interested in single company mining shares.

Any thoughts on BRWM presently from TLFers more experienced in holding mining shares please? Thanks.

I have held RIO for nearly 25 years now and it has been a fine investment. I have dabbled in other miners (FRES, ANTO, BHP) - sometimes profitably, sometimes not.

August last year, I decided to up my exposure to mining and bought a full holding (about 3%) of BRWM. Early days so far, but so far so good. Share prices can be pretty volatile in this industry and purchase price matters. I was very lucky with my timing - average purchase price 568p (614p today).

It won't be to everyones taste, but you can considerably enhance your returns in this industry by occasional tinkering. I sold 30% of my holding at 703p.

One point to bear in mind with this IT - if I understand their accounts - is that they do not smooth their dividends by using reserves. So a general mining slump will result in a reduced dividend.

[BullDog]

In two minds about BRWM at the moment. Historical evidence suggests commodities are a decent inflation hedge. On the other hand a deep and extended period of recession will depress demand for commodities. Zero sum situation?

I don't have any commodities exposure in the portfolio at the moment. So looking possibly at buying some BRWM as diversification and a useful boost to dividend income. Not a huge position, maybe 3 to 4% of total portfolio value. Definitely not interested in single company mining shares.

Any thoughts on BRWM presently from TLFers more experienced in holding mining shares please? Thanks.

I have held RIO for nearly 25 years now and it has been a fine investment. I have dabbled in other miners (FRES, ANTO, BHP) - sometimes profitably, sometimes not.

August last year, I decided to up my exposure to mining and bought a full holding (about 3%) of BRWM. Early days so far, but so far so good. Share prices can be pretty volatile in this industry and purchase price matters. I was very lucky with my timing - average purchase price 568p (614p today).

It won't be to everyones taste, but you can considerably enhance your returns in this industry by occasional tinkering. I sold 30% of my holding at 703p.

One point to bear in mind with this IT - if I understand their accounts - is that they do not smooth their dividends by using reserves. So a general mining slump will result in a reduced dividend.

Thanks very much, that's useful.

[richfool]

In two minds about BRWM at the moment. Historical evidence suggests commodities are a decent inflation hedge. On the other hand a deep and extended period of recession will depress demand for commodities. Zero sum situation?

I don't have any commodities exposure in the portfolio at the moment. So looking possibly at buying some BRWM as diversification and a useful boost to dividend income. Not a huge position, maybe 3 to 4% of total portfolio value. Definitely not interested in single company mining shares.

Any thoughts on BRWM presently from TLFers more experienced in holding mining shares please? Thanks.

I have held RIO for nearly 25 years now and it has been a fine investment. I have dabbled in other miners (FRES, ANTO, BHP) - sometimes profitably, sometimes not.

August last year, I decided to up my exposure to mining and bought a full holding (about 3%) of BRWM. Early days so far, but so far so good. Share prices can be pretty volatile in this industry and purchase price matters. I was very lucky with my timing - average purchase price 568p (614p today).

It won't be to everyones taste, but you can considerably enhance your returns in this industry by occasional tinkering. I sold 30% of my holding at 703p.

One point to bear in mind with this IT - if I understand their accounts - is that they do not smooth their dividends by using reserves. So a general mining slump will result in a reduced dividend.

My thoughts are much as yours, Bulldog, regarding the conflict between the inflation hedge aspect versus vulnerable to falls in a recession. China's industrial activity must also have implications for miners.

My main holding is in BERI, which holds commodities, basic resources/miners and energy. Though I do have a small holding in BRWM., which as stated above is more volatile and the dividends will be vulnerable. BRWM's top holdings currently are: Glencore, BHP, Vale and Anglo-American. I note that BRWM also has some exposure to gold.

BRWM's (now historic) yield will also have been given a boost by the one-off large final dividend paid in May this year, which one could argue is unlikely to be repeated next year.

https://www.fundslibrary.co.uk/FundsLib ... %2bsPy&r=1

[BullDog]

In two minds about BRWM at the moment. Historical evidence suggests commodities are a decent inflation hedge. On the other hand a deep and extended period of recession will depress demand for commodities. Zero sum situation?

I don't have any commodities exposure in the portfolio at the moment. So looking possibly at buying some BRWM as diversification and a useful boost to dividend income. Not a huge position, maybe 3 to 4% of total portfolio value. Definitely not interested in single company mining shares.

Any thoughts on BRWM presently from TLFers more experienced in holding mining shares please? Thanks.

I have held RIO for nearly 25 years now and it has been a fine investment. I have dabbled in other miners (FRES, ANTO, BHP) - sometimes profitably, sometimes not.

August last year, I decided to up my exposure to mining and bought a full holding (about 3%) of BRWM. Early days so far, but so far so good. Share prices can be pretty volatile in this industry and purchase price matters. I was very lucky with my timing - average purchase price 568p (614p today).

It won't be to everyones taste, but you can considerably enhance your returns in this industry by occasional tinkering. I sold 30% of my holding at 703p.

One point to bear in mind with this IT - if I understand their accounts - is that they do not smooth their dividends by using reserves. So a general mining slump will result in a reduced dividend.

My thoughts are much as yours, Bulldog, regarding the conflict between the inflation hedge aspect versus vulnerable to falls in a recession. China's industrial activity must also have implications for miners.

My main holding is in BERI, which holds commodities, basic resources/miners and energy. Though I do have a small holding in BRWM., which as stated above is more volatile and the dividends will be vulnerable. BRWM's top holdings currently are: Glencore, BHP, Vale and Anglo-American. I note that BRWM also has some exposure to gold.

BRWM's (now historic) yield will also have been given a boost by the one-off large final dividend paid in May this year, which one could argue is unlikely to be repeated next year.

https://www.fundslibrary.co.uk/FundsLib ... %2bsPy&r=1

Thanks. I was fortunate in timing an exit from BERI. I don't believe a BRWM 7% yield is sustainable either. But the share price is well away from year highs. So I am tempted to tuck some away. I would be happy with a 5% ish yield but some share price growth would be welcome medium term. With massive electrification across the world I do think prospects for copper, nickel, cobalt etc is very much a tailwind. Medium to longer term. Cheers.

[richfool]

Thanks. I was fortunate in timing an exit from BERI. I don't believe a BRWM 7% yield is sustainable either. But the share price is well away from year highs. So I am tempted to tuck some away. I would be happy with a 5% ish yield but some share price growth would be welcome medium term. With massive electrification across the world I do think prospects for copper, nickel, cobalt etc is very much a tailwind. Medium to longer term. Cheers.

This may be of interest, BRWM's Half Yearly Report, just released:

Condensed Half Yearly Financial Report 30 June 2022
Extracts:

OVERVIEW AND PERFORMANCE
CHAIRMAN’S STATEMENT

OVERVIEW
It has been a challenging market environment in the first half of the financial year, dominated by the war in Ukraine and the devastating humanitarian consequences that have followed. In response, nations and governments across the world have united to sever financial and business ties with Russia. The war in Europe is the most significant crisis in decades and food security and energy needs have become key concerns, with the West following a determined path to reduce its reliance on Russian energy and imports. A long period of steady growth and low inflation is over and we now have a world of heightened macro volatility where central banks face a difficult trade-off between addressing soaring inflation and stabilising an already fragile economic recovery following the COVID-19 pandemic.

Against this difficult backdrop, the mining sector had a positive start to the year, driven by a commodity-focused market environment and higher prices for mined commodities. However, June was a particularly difficult month, with the Company’s Reference Index (the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index) recording its worst month in ten years. This resulted in the mining equities giving back almost all of the returns during the month of June (the June NAV was down by 17.2%), but it remained meaningfully ahead of broader equity markets for the six months through to the end of June.

PERFORMANCE
Over the six months ended 30 June 2022, the Company’s net asset value (NAV) returned -1.7%1 and the share price +1.8%1. The Company’s Reference Index returned -4.3% (all percentages calculated in Sterling terms with dividends reinvested).

Since the period end and up to the close of business on 22 August 2022, the Company’s NAV has increased by 5.5% compared to a rise of 4.2% (on a net return basis) in the Reference Index (with dividends reinvested). Further information on the Company’s performance and the factors that contributed to performance during the six months are set out in the Investment Manager’s Report below.

REVENUE RETURN AND DIVIDENDS
The Company’s net revenue earnings for the six months to 30 June 2022 amounted to 20.07p per share, compared to 18.64p per share during the same six-month period last year. This represents an increase of 7.7%. Despite the broader market turmoil, the income generated to date this year is positive but, as mentioned in the Investment Manager’s Report below, some investee companies are choosing to prioritise share repurchases over dividends to shareholders.

The first quarterly dividend of 5.50p per share was paid on 30 June 2022 and, today, the Board has announced a second quarterly dividend of 5.50p per share which will be paid on 30 September 2022 to shareholders on the register on 2 September 2022, the ex-dividend date being 1 September 2022. It remains the Board’s intention to distribute substantially all of the Company’s available income in the future.

OUTLOOK
Following the COVID-19 pandemic, the fragility of the global economy has been further stressed by the Russia-Ukraine crisis, both of which have led to growing concerns around inflation, increasing pressure on central banks to raise interest rates. Economic data from China has also remained relatively weak, as the country has struggled with rising COVID-19 cases and localised lockdowns as a result of its zero COVID-19 policy. However, recent indications suggest that growth momentum may show some recovery in China in the second half of the year, with cities beginning to reopen and helped by government policy stimulus.

Against this challenging backdrop, our Portfolio Managers remain cautiously optimistic for the mining sector. Mining companies are generally in robust financial shape today with strong balance sheets and high levels of free cash flow being generated. Supply and demand in mined commodity markets is also generally tight and prices look well-supported. The transition to net zero carbon emissions will continue to create investment opportunities in those companies that service the associated supply chains.
DAVID CHEYNE
Chairman
23 August 2022

INVESTMENT MANAGER’S REPORT

The first half of 2022 was certainly volatile and it seems that from where we started the year to where this period has ended is radically different. The mining sector moved from spectacular returns during the first few months to giving back almost all of them during the month of June alone, with the Company's Reference Index falling by 15.9% during the month. In isolation this is disappointing given the huge gains made during the first five months, but when looked at versus broader financial markets the result remains well ahead on most metrics. For context, the FTSE All-Share Index was down 4.6% and the MSCI World Index was down 11.3% versus a gain of 1.8% for the Company’s share price (all percentages calculated in Sterling terms with dividends reinvested).

In hindsight, the ongoing COVID-19 related economic weakness in China, the threat of a recession in the developed economies and the Russian invasion of Ukraine were too much for commodity prices, triggering a violent sell-off as the first half of the year ended. Stale long positions were liquidated at speed during June causing downward moves in share prices. The scale of falls were reminiscent of the panic selling in 2008, despite the strong balance sheets that mining companies have today. It is our expectation that once the dust settles this will present a significant opportunity for the Company.

At the time of writing it is too early to see how well the companies have done during the first half of the year. Finding a balance between managing the cost pressures from inflation, whilst trying to capture strong prices when selling production, is going to be key to successful first half year results. Nevertheless, cash generation is likely to have remained high and with capital allocation continuing to favour shareholder returns it is our expectation that dividends will once again be at healthy levels.

Over the period, the net asset value (NAV) of the Company returned -1.7% and the share price returned +1.8%. This compares to the FTSE 100 Index which returned -1.0%, Consumer Price Index (CPI) which was up by 9.4% for June 2022 and the Reference Index (MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return)) which returned -4.3% (all percentages other than CPI are in Sterling terms with dividends reinvested).

https://www.investegate.co.uk/blackrock ... 5752P3B98/

[BullDog]

I notice BRWM is having a very satisfactory day today. One of the few things I have purchased recently that's actually making a decent gain. Long may it continue.

[kempiejon]

I notice BRWM is having a very satisfactory day today. One of the few things I have purchased recently that's actually making a decent gain. Long may it continue.

I spotted that too today. I hold 2 of the BlackRock commodity offerings, Blackrock energy and resources BERI and the miner BRWM. They do share some holdings I've had BERI for 5 or 6 years BRWM only a couple. I have thought about making a pick for one or the other and recently thought BWMA might be the choice. Over a year BERI has pulled ahead 5 years not much in it. As I like a dividend BRWM is returning my cash to me twice as fast.

[Lootman]

I notice BRWM is having a very satisfactory day today. One of the few things I have purchased recently that's actually making a decent gain. Long may it continue.

Mining shares are up big today because of indications from China that they may relax their lockdowns and their ridiculous zero Covid policy.

So the fact that BRWM is up today has nothing to do with the fund itself but rather an inevitable consequence of being in that space. Some individual mining shares are up 10% today.

And this could be short-lived as China has a habit of reintroducing lockdowns at short notice.