Blackrock World Mining Trust (BRWM)

[richfool]

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.

Yes, I noted BERI was up 2.87% and CYN up 2.99% yesterday.

There's actually a BRWM Portfolio Update on Investegate, for those interested:

BLACKROCK WORLD MINING TRUST PLC (LEI - LNFFPBEUZJBOSR6PW155 )

All information is at 30 September 2022 and unaudited.

Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -0.4% 4.0% 15.7% 71.4% 89.6%
Share price -8.3% 0.2% 15.8% 90.3% 107.0%
MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)* -1.4% 1.8% 3.9% 42.8% 52.7%
* (Total return)
Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream

At month end
Net asset value (including income)1: 602.56p
Net asset value (capital only): 575.43p
1 Includes net revenue of 27.13p
Share price: 569.00p
Discount to NAV2: 5.6%
Total assets: £1,328.5m
Net yield3: 7.6%
Net gearing: 10.8%
Ordinary shares in issue: 188,753,036
Ordinary shares held in Treasury: 4,258,806
Ongoing charges4: 0.9%
Ongoing charges5: 0.8%

2 Discount to NAV including income.
3 Based on a third interim dividend of 5.50p per share declared on 18 November 2021 and a final dividend of 27.00p per share declared on 8 March 2022 in respect of the year ended 31 December 2021, and a first and second interim dividend of 5.50p per share declared on 6 May 2022 and 23 August 2022 respectively, in respect of year ending 31 December 2022.
4 The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 31 December 2021.
5 The Company’s ongoing charges are calculated as a percentage of average daily gross assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 31 December 2021.
Country Analysis Total
Assets (%)

Global 68.0
Latin America 8.2
Australasia 6.5
United States 4.9
Canada 3.4
Other Africa 2.3
South Africa 0.7
Indonesia 0.7
United Kingdom 0.1
Net Current Assets 5.2
-----
100.0
=====

Sector Analysis Total
Assets (%)

Diversified 39.6
Copper 21.1
Gold 12.6
Industrial Minerals 6.9
Steel 6.1
Iron Ore 2.8
Aluminium 2.4
Platinum Group Metals 1.8
Nickel 0.7
Mining Services 0.6
Zinc 0.2
Net Current Assets 5.2
-----
100.0
=====


Ten largest investments

Company Total Assets %

Vale:
Equity 6.0
Debenture 2.8
BHP 8.7
Glencore 8.1
Anglo American 6.2
First Quantum Minerals:
Equity 2.3
Bond 1.9
Rio Tinto 4.0
Teck Resources 3.4
Freeport-McMoRan 3.3
ArcelorMittal 2.8
Franco-Nevada 2.7


Asset Analysis Total Assets (%)
Equity 87.8
Bonds 4.2
Preferred Stock 2.8
Net Current Assets 5.2
-----
100.0
=====


Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV fell by 0.4% in September, outperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which returned -1.4% (performance figures in GBP).
The mining sector came under pressure in September, albeit outperforming broader equity markets, with the MSCI ACWI TR Index falling by 9.6%. Rising interest rate expectations weighed on markets as the US 10-year yield rose from 3.1% to 3.8%. Economic data from China remained weak, with the country’s manufacturing PMI for September declining to 48.1 (indicating contraction). There are signs that China is beginning to ease Covid restrictions, but we are not expecting a meaningful update until after October’s Communist Party Congress.
Mined commodity prices were generally weak, with copper and iron ore (62% fe) prices falling by 2.1% and 1.0% respectively. However, precious metals outside of gold were a bright spot, with silver and palladium prices rising by 5.8% and 6.4% respectively.
Strategy and Outlook
Supply and demand in mined commodity markets is generally very tight today and prices look well-supported in our view. On the demand side, increased global infrastructure spending is supporting demand, whilst we expect the mining sector to play a critical role in the coming years in supplying materials required for lower-carbon technologies, like wind turbines, solar panels and electric vehicles. The Russia/Ukraine crisis puts greater focus on energy independence, particularly for Europe, and will further accelerate investment into renewable energy capacity build out in our view. On the supply side, we are encouraged by what we are hearing from management teams in terms of maintaining their focus on capital discipline. Longer term, ill-discipline remains a risk but, regardless, increases in capital expenditure would take some time to feed through into new supply given the time-lags associated with mining projects.
Mining companies are generally in robust financial shape today with strong balance sheets and high levels of free cash flow being generated. Finally, we view mining equities as an effective way to hedge portfolios against persistent inflationary pressures.
All data points are in USD terms unless stated otherwise.

24 October 2022

Latest information is available by typing http://www.blackrock.com/uk/brwm 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.

https://www.investegate.co.uk/blackrock ... 4759P8D12/

[richfool]

An April 2023 Update on BRWM from HL:

How it fits in a portfolio

BlackRock World Mining Trust aims to maximise the total return to investors through a combination of capital growth and consistent dividends. The managers achieve this by investing in mining and metals assets across the globe, including some higher risk emerging markets. While they mainly invest in shares, they’ll also look at other assets including mining royalties, bonds and some physical metals to help with diversification.

Investing in the trust could help boost a portfolio’s long-term growth potential but this is a specialist area so adds risk. We think funds and investment trusts investing in a specific sector, should usually only form a small part of a well-diversified investment portfolio. Investors in investment trusts should be aware the trust can trade at a discount or a premium to its net asset value (NAV).

https://www.hl.co.uk/news/articles/blac ... 023-update

I have a modest holding in BRWM, which I view as a slightly riskier investment (than most of my other IT's).

(I also hold: BERI and a small holding in CYN)

[richfool]

A portfolio update on BRWM, as at 31st March 2023.:

https://www.investegate.co.uk/blackrock ... 0255P711C/

[77ss]

.....

I have a modest holding in BRWM, which I view as a slightly riskier investment (than most of my other IT's).....

I wonder how you define 'riskier'? Over the next year or so BRWM may not do too well - but over the next 5 or 10?

As ever, it all depend upon your own personal circumstances. portfolio and objectives.

FWIW my holding is currently 3.7% of my capital, and given the chunky dividends I get this month (RIO and BRWM), I may well be upping this to 4%.

[BullDog]

To me, portfolio seems quite nicely positioned to benefit from electrification of economies and renewable energy. Bought into this for the first a few months ago after selling BERI and will hold on.

As ever, mining is feast and famine.

[BullDog]

Noting my previous comment of feast and famine, how secure is the dividend at BRWM?

It's a very cyclical business this mining and the May 2022 and May 2023 dividends are significantly out of line with the longer term dividend return of BRWM. To me it looks like a dividend cut might be on the cards for May 2024 if the world economy turns down in the face of rapidly increasing interest rates.

I don't have a crystal ball, the answer is nobody really knows.

I notice the around 7% dividend and a share price around NAV. I am tempted to sell BRWM for a small gain and redeploy the money into infrastructure assets that are currently on wide NAV discounts and are returning around the same level of income.

Interested in other views on this, thanks.

[77ss]

Noting my previous comment of feast and famine, how secure is the dividend at BRWM?

It's a very cyclical business this mining and the May 2022 and May 2023 dividends are significantly out of line with the longer term dividend return of BRWM. To me it looks like a dividend cut might be on the cards for May 2024 if the world economy turns down in the face of rapidly increasing interest rates.

I don't have a crystal ball, the answer is nobody really knows.

I notice the around 7% dividend and a share price around NAV. I am tempted to sell BRWM for a small gain and redeploy the money into infrastructure assets that are currently on wide NAV discounts and are returning around the same level of income.

Interested in other views on this, thanks.

I assume that it is not secure at all. Check out their stated dividend policy.

'21 and '22 were bumper years for the miners. '23 may not be - you only have to look at the recent RIO interims. It does seem to depend on China and I have no crystal ball.

This is not a sell recommendation - that is clearly a matter for you. I make the current yield about 6.4% - exactly how concerned would you be if it got halved for a year or two - back to 2019-2020 levels?

FWIW, I retain a full holding (about 100% of median) and do not intend to sell. I did dump 30% last year - having become uncomfortably overweight in the mining sector.

[BullDog]

Noting my previous comment of feast and famine, how secure is the dividend at BRWM?

It's a very cyclical business this mining and the May 2022 and May 2023 dividends are significantly out of line with the longer term dividend return of BRWM. To me it looks like a dividend cut might be on the cards for May 2024 if the world economy turns down in the face of rapidly increasing interest rates.

I don't have a crystal ball, the answer is nobody really knows.

I notice the around 7% dividend and a share price around NAV. I am tempted to sell BRWM for a small gain and redeploy the money into infrastructure assets that are currently on wide NAV discounts and are returning around the same level of income.

Interested in other views on this, thanks.

I assume that it is not secure at all. Check out their stated dividend policy.

'21 and '22 were bumper years for the miners. '23 may not be - you only have to look at the recent RIO interims. It does seem to depend on China and I have no crystal ball.

This is not a sell recommendation - that is clearly a matter for you. I make the current yield about 6.4% - exactly how concerned would you be if it got halved for a year or two - back to 2019-2020 levels?

FWIW, I retain a full holding (about 100% of median) and do not intend to sell. I did dump 30% last year - having become uncomfortably overweight in the mining sector.

Thanks. Yes, you state more or less exact what I'm thinking. I'm in two minds but leaning towards buying into heavily discounted infrastructure with the proceeds of a BRWM sale. We're close to peak interest rates and in or close to recession which encourages me to proceed.

[richfool]

I assume that it is not secure at all. Check out their stated dividend policy.

'21 and '22 were bumper years for the miners. '23 may not be - you only have to look at the recent RIO interims. It does seem to depend on China and I have no crystal ball.

This is not a sell recommendation - that is clearly a matter for you. I make the current yield about 6.4% - exactly how concerned would you be if it got halved for a year or two - back to 2019-2020 levels?

FWIW, I retain a full holding (about 100% of median) and do not intend to sell. I did dump 30% last year - having become uncomfortably overweight in the mining sector.

Thanks. Yes, you state more or less exact what I'm thinking. I'm in two minds but leaning towards buying into heavily discounted infrastructure with the proceeds of a BRWM sale. We're close to peak interest rates and in or close to recession which encourages me to proceed.

Hi Bulldog, as a holder of BRWM I reduced a couple of months back and was thinking of selling my remaining holding (though that would involve a loss), in view of the prospects of a recession and the fact that the miners are cutting their dividends.

I was a bit puzzled, however, that you previously sold BERI and bought into BRWM. To my thinking, BERI spreads the risk in that it holds miners and energy. Noted there you would likely have had a good gain on BERI to capitalise on.

I still hold BERI (as well as a small holding in BRWM).

[BullDog]

Thanks. Yes, you state more or less exact what I'm thinking. I'm in two minds but leaning towards buying into heavily discounted infrastructure with the proceeds of a BRWM sale. We're close to peak interest rates and in or close to recession which encourages me to proceed.

Hi Bulldog, as a holder of BRWM I reduced a couple of months back and was thinking of selling my remaining holding (though that would involve a loss), in view of the prospects of a recession and the fact that the miners are cutting their dividends.

I was a bit puzzled, however, that you previously sold BERI and bought into BRWM. To my thinking, BERI spreads the risk in that it holds miners and energy. Noted there you would likely have had a good gain on BERI to capitalise on.

I still hold BERI (as well as a small holding in BRWM).

Thanks for the thoughts and comments. Indeed, I sold out of BERI crystallising a handsome capital gain and a fair dividend as a bonus. I looked at BRWM to keep an exposure to commodities and ratchet up the income.

My current thinking on BRWM is more opportunistic than anything. But I think there might just be a chance of maintaining my income stream from the over sold infrastructure trusts whilst medium term benefitting from a capital uplift once the interest rate cycle turns. I see the likes of PINT, HEIT, NESF as bond-like and likely to benefit from the rate cycle that I see turning down H1-24.

I see maintaining my income stream plus a chance of enhancing the capital compared to possibly seeing both aspects suffer at BRWM.

Of course, I might be dead wrong.

[Mememe]

I’ve cut BRWM gradually as gains got bigger and bigger over the last 2/3 years on the proviso that commodities are cyclical. I allocated 5% to it then cut as it grew. I cut to 4% after a rally a while back and I’ll keep it at that now. If it drops 25% from here so be it. Want to keep some exposure. I’m hoping that energy transition will prop it up but if not I’ll wait until the next cycle at this level without adding unless it gets hammered at some stage

[richfool]

BlackRock World Mining Trust plc
LEI - LNFFPBEUZJBOSR6PW155

(Extracts from) Condensed Half Yearly Financial Report 30 June 2023

CHAIRMAN’S STATEMENT

Overview
The global economy performed well at the start of the year, supported by factors such as falling energy prices, strong consumer balance sheets and the reopening of the Chinese economy. There was positive sentiment in the mining sector too following China’s reversal of its zero COVID-19 policies which initially led to strong commodity demand and the majority of mined commodity prices performing well. However, relatively quickly, positive momentum stalled as global manufacturing activity receded and China’s economy, historically a major demand engine, delivered a disappointing rebound. By the end of the first half of the year, most mined commodity prices had fallen below the levels where they started.

Performance
Against this backdrop, over the six months ended 30 June 2023, the Company’s net asset value per share (NAV) returned -7.1% and the share price -10.3%. The Company’s reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, returned -5.4% (all percentages calculated in Sterling terms with dividends reinvested).

Since the period end and up to the close of business on 22 August 2023, the Company’s NAV has decreased by 5.2% compared to a fall of 3.2% (on a net return basis) in the reference index (in Sterling terms with dividends reinvested). Further information on the Company’s performance and the factors that contributed to, or detracted from, performance during the six months are set out in the Investment Manager’s Report below.

Revenue return and dividends
The Company’s revenue return per share for the six-month period ended 30 June 2023 amounted to 16.73p per share, compared to 20.07p per share during the same six-month period last year. This represents a decrease of 16.6% and reflects reductions in dividends from many mining companies.

The first quarterly dividend of 5.50p per share was paid on 31 May 2023 and, today, the Board has announced a second quarterly dividend of 5.50p per share which will be paid on 6 October 2023 to shareholders on the register on 8 September 2023, the ex-dividend date being 7 September 2023. It remains the Board’s intention to distribute substantially all of the Company’s available income in the future.

INVESTMENT MANAGERS’ REPORT

The first half of 2023 finished worse than expected, despite a strong start to the year. Commodity prices initially moved higher but by March started to fall, finishing the period in negative territory on the back of fears of further interest rate hikes and uncertainty on Chinese economic activity. The combination of these two factors was able to overwhelm supportive supply side constraints and growth from the energy transition related demand. Mining company share prices fell in tandem with the aforementioned moves but were also pressured by cost inflation that compressed margins.

Given the negative backdrop of the period, returns would historically have been worse than what transpired due to weak balance sheets, overspending on growth and falling margins. These factors have nearly always resulted in enlarging the negative returns and driving the steep cyclicality most investors associate with the sector, but once again the sector proved to be more resilient than in the past. Mining companies have largely paid down debt, leaving balance sheets supportive rather than the opposite. Disciplined capital spending has reduced commitments to growth related capital expenditure and thus freed up cash to spend on buybacks and dividends. If companies can hold to the capital allocation frameworks outlined at last cycle’s low point, 2016, then there is a strong probability that once the near-term economic noise dissipates, the underlying fundamentals should drive returns.

Over the period, the NAV of the Company was down by 7.1% with dividends reinvested and the share price total return was down by 10.3%. This compares to the FTSE 100 Index which was up by 3.2%, the Consumer Price Index (during the 12 months to 30 June 2023) which was up by 7.9% and the reference index (MSCI ACWI Metals & Mining Index 30% Buffer 10/40 Index net total return) which was down by 5.4% (all total return numbers based in Sterling terms).

https://www.investegate.co.uk/announcem ... rt/7715893

[richfool]

BRWM third quarter's dividend declaration:

BLACKROCK WORLD MINING TRUST PLC (LEI - LNFFPBEUZJBOSR6PW155)

ANNOUNCEMENT OF QUARTERLY INTERIM DIVIDEND

11 October 2023

The Board of BlackRock World Mining Trust plc is pleased to announce that the third quarterly interim dividend in respect of the quarter ended 30 September 2023 of 5.50p per ordinary share has been declared by the Directors, payable on 22 December 2023 to holders of ordinary shares on the register at the close of business on 24 November 2023 (ex-dividend date is 23 November 2023).

https://www.investegate.co.uk/announcem ... on/7810723

I no longer hold BRWM, but I do hold BERI.

[kempiejon]

I no longer hold BRWM, but I do hold BERI.

I have both, I switched my allegiances and hence new investment money from BERI to BWMA 5 years ago. I think my reasoning was sound at the time though I forget the specifics, perhaps it was for slightly broader geographical diversification. I see dividends have held up better in BRWM since, the sp do appear to broadly follow the same path and of course they share holdings.

[88V8]

I no longer hold BRWM, but I do hold BERI.

I have both, I switched my allegiances and hence new investment money from BERI to BWMA 5 years ago. I think my reasoning was sound at the time though I forget the specifics, perhaps it was for slightly broader geographical diversification. I see dividends have held up better in BRWM since, the sp do appear to broadly follow the same path and of course they share holdings.

I sold BERI when the yield fell below 4%. Nice profit, at the time.
Yield still below 4%, whereas BRWM exceeds 7% with better than 2x cover.
For income, no contest really.

V8

[richfool]

I have both, I switched my allegiances and hence new investment money from BERI to BWMA 5 years ago. I think my reasoning was sound at the time though I forget the specifics, perhaps it was for slightly broader geographical diversification. I see dividends have held up better in BRWM since, the sp do appear to broadly follow the same path and of course they share holdings.

I sold BERI when the yield fell below 4%. Nice profit, at the time.
Yield still below 4%, whereas BRWM exceeds 7% with better than 2x cover.
For income, no contest really.

V8

V8, The dividend yield is based on the large "final" dividend received last March. The other quarterly dividends are much smaller. With miners reducing their dividends, it remains to be seen if that large "final" dividend continues to the same extent next March onwards. That said, I don't hold them (BERI or BRWM) solely for the dividend income.

I preferred BERI because it gave exposure to both miners and energy. Thus I didn't have all my eggs in one basket, so to speak; and I was becoming concerned about the cyclicality of miners at that (and this) point in the cycle..

I have held BERI for a long time (yield on cost over 6%), so I too took some profit last year. As I had some funds available recently, and with the latest middle eastern conflict likely to exert upward pressure on oil prices, I decided to split those funds between adding JAM and topping up BERI with its exposure to energy and big oil.

[77ss]

I sold BERI when the yield fell below 4%. Nice profit, at the time.
Yield still below 4%, whereas BRWM exceeds 7% with better than 2x cover.
For income, no contest really.

V8

V8, The dividend yield is based on the large "final" dividend received last March. The other quarterly dividends are much smaller. With miners reducing their dividends, it remains to be seen if that large "final" dividend continues to the same extent next March onwards. That said, I don't hold them (BERI or BRWM) solely for the dividend income.....

Quite right! Todays announcement of the expected 5.5p Q3 dividend brings the total to 16.5p so far.

Last year's Q4 was 23.5p for an annual total of 40p. Going by the 44% fall in RIO's annual dividend, I am mentally pencilling in a substantial fall in BRWMs dividend to about 24p. Expecting a Q4 dividend of about 7.5p - for a total of 24p. Yield 4.25%. Pessimistic perhaps, but I prefer to err on that side.

4.25% is still fine by me, but if you are expecting 7%+ you may be in for a nasty surprise.

[kempiejon]

4.25% is still fine by me, but if you are expecting 7%+ you may be in for a nasty surprise.

Of course we all know that yield is a function of dividend amount and share price, so a halving of the share price with a dividend around 25p would give 7%! I guess the Blackrock stable only pay out dividend based on what they receive them so as quite a few miners gave specials in the past couple of years and have pulled back this year. Your pessimistic forecast is in the range of mine.

[richfool]

4.25% is still fine by me, but if you are expecting 7%+ you may be in for a nasty surprise.

Of course we all know that yield is a function of dividend amount and share price, so a halving of the share price with a dividend around 25p would give 7%! I guess the Blackrock stable only pay out dividend based on what they receive them so as quite a few miners gave specials in the past couple of years and have pulled back this year. Your pessimistic forecast is in the range of mine.

Yes, indeed. As said, I bailed out of BRWM last year, in anticipation of falling prospects and (falling) dividend yield..