Performance record
| As at 31 December 2023 | As at 31 December 2022 | ||
| Net assets (£’000)¹ | 1,160,051 | 1,299,285 | |
| Net asset value per ordinary share (NAV) (pence) | 606.78 | 688.35 | |
| Ordinary share price (mid-market) (pence) | 587.00 | 697.00 | |
| Reference index2 – net total return | 6,002.54 | 5,863.32 | |
| (Discount)/premium to net asset value3 | (3.3)% | 1.3% | |
| ======== | ======== |
| For the year ended 31 December 2023 | For the year ended 31 December 2022 | ||
| Performance (with dividends reinvested) | |||
| Net asset value per share3 | -6.2% | +17.7% | |
| Ordinary share price3 | -10.4% | +26.0% | |
| Reference index2 | +2.4% | +11.5% | |
| ————— | ————— | ||
| Performance since inception (with dividends reinvested) | |||
| Net asset value per share3 | +1,319.4% | +1,413.6% | |
| Ordinary share price3 | +1,365.9% | +1,535.8% | |
| Reference index2 | +1,005.2% | +979.6% | |
| ======== | ======== |
| For the year ended 31 December 2023 | For the year ended 31 December 2022 | Change % | |
| Revenue | |||
| Net revenue profit after taxation (£’000) | 64,691 | 76,013 | -14.9 |
| Revenue return per ordinary share (pence)4 | 33.95 | 40.68 | -16.6 |
| ————— | ————— | ————— | |
| Dividends per ordinary share (pence) | |||
| – 1st interim | 5.50 | 5.50 | – |
| – 2nd interim | 5.50 | 5.50 | – |
| – 3rd interim | 5.50 | 5.50 | – |
| – Final | 17.00 | 23.50 | -27.7 |
| ————— | ————— | ————— | |
| Total dividends paid and payable | 33.50 | 40.00 | -16.3 |
| ======== | ======== | ======== |
1 The change in net assets reflects portfolio movements, share reissues and dividends paid during the year.
2 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). With effect from 31 December 2019, the reference index changed to the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). Prior to 31 December 2019, the reference index was the EMIX Global Mining Index (net total return). The performance returns of the reference index since inception have been blended to reflect this change.
3 Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.
4 Further details are given in the Glossary in the Annual Report and Financial Statements.
Chairman’s Statement
Highlights
· NAV per share -6.2%1 (with dividends reinvested)
· Share price -10.4%1 (with dividends reinvested)
· Total dividends of 33.50p per share
Overview
After a solid year of performance in 2022, the last 12 months to 31 December 2023 have proved more difficult for the mining sector. The sector performed strongly at the start of the financial year with mined commodity prices up almost across the board, supported by the pace of China’s reopening following COVID-19 and expectations for a pick-up in demand. However, the mining sector soon pulled back as improvements in Chinese economic data were slower than had been hoped for and, as we progressed through the year, there were concerns about the demand outlook in major Western economies as well. Increased geopolitical tensions in the Middle East and expectations that higher interest rates would persist for longer than initially anticipated also contributed to a challenging time for the sector. As we entered the final part of the Company’s financial year, signs of moderating inflation and easing interest rate expectations led to positive market sentiment for both the mining sector and broader equity markets.
Performance
Over the twelve months to 31 December 2023, the Company’s net asset value per share (NAV) returned -6.2%1 and the share price returned -10.4%1. In comparison, over the same period, the Company’s reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return), returned +2.4%, the FTSE All-Share Index returned +7.9% and the UK Consumer Price Index increased by 4.0%.
Our portfolio managers provide a more detailed explanation on the Company’s performance and the factors that contributed to, or detracted from, performance during the year in their Investment Manager’s Report that follows. They also provide more insight into the positioning of the portfolio and their views on the outlook for the coming year.
Revenue return and dividends
The Company’s revenue return per share for the year amounted to 33.95p, a 16.6% decrease compared with the prior year revenue return per share of 40.68p. Lower commodity prices, higher all in costs and a weakening US Dollar (as many commodity company dividends are paid in US Dollars) contributed to the reduction in earnings, leading to lower returns for shareholders.
During the year, three quarterly interim dividends of 5.50p per share were paid on 5 May 2023, 6 October 2023 and 24 November 2023. The Board is proposing a final dividend payment of 17.00p per share for the year ended 31 December 2023. This, together with the quarterly interim dividends, makes a total of 33.50p per share (2022: 40.00p per share) representing a decrease of 16.3% on payments made in the previous financial year.
As in past years, all dividends are fully covered by income. In accordance with the Board’s stated policy, the total dividends represent substantially all of the year’s available income.
Subject to approval at the Annual General Meeting, the final dividend will be paid on 14 May 2024 to shareholders on the Company’s register on 22 March 2024, the ex-dividend date being 21 March 2024. It remains the Board’s intention to seek to distribute substantially all of the Company’s available income along similar lines in the future.
Gearing
The Company operates a flexible gearing policy which depends on prevailing market conditions. The Company may borrow up to 25% of the Group’s net assets. The maximum level of gearing used during the year was 14.6% and the level of gearing at 31 December 2023 was 11.9%. Average gearing over the year to 31 December 2023 was 11.9%. For the calculations, please see the Glossary in the Annual Report and Financial Statements.
Management of share rating
The Directors recognise the importance to investors that the market price of the Company’s shares should not trade at a significant premium or discount to the underlying NAV. Accordingly, in normal market conditions, the Board may use the Company’s share buyback authority or alternatively re-issue shares from treasury or issue new shares (at a premium to NAV) to ensure that the share price is broadly in line with the underlying NAV, if it is deemed to be in shareholders’ interests.
The Company’s shares started the year under review trading at a premium and I am pleased to report that during the year the Company reissued 2,430,000 ordinary shares from treasury for a total gross consideration of £15,658,000, at an average price of 644.37p per share and an average 1.4% premium to NAV. The Company did not buy back any shares and, since the year end, no further shares have been reissued. The discount at the year end was 3.3% and on 5 March 2024 (the latest date before approving this Annual Report) was 6.5%.
Resolutions to renew the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.
Board composition
As mentioned in the Half Yearly Financial Report, the Board was delighted to welcome Charles (Chip) Goodyear as a non-executive Director. I also advised at that time that I would be stepping down as Chairman following the forthcoming Annual General Meeting (AGM) and that Chip would succeed me as Chairman. It has been a privilege to be Chairman of the Company for the past five years. I would like to thank all shareholders for their support, as well as thanking my Board colleagues and the team at BlackRock for making my tenure as Chairman as rewarding and enjoyable as it has undoubtedly been. With Chip’s extensive experience of leading mining companies, I leave the Company in the capable hands of the Board and Investment Manager and wish it every success for the future.
The Board commenced a search to identify a new Director in early 2024, assisted by a third-party recruitment firm, Fletcher Jones. The successful candidate will be appointed as a Director following the conclusion of the AGM on 9 May 2024.
30th anniversary
In celebration of the Company’s 30th anniversary, the Board agreed to make an annual donation of US$15,000 over three years to the Julian Baring Scholarship Fund (the Fund). The Fund was established in 2000 in the name of the Company’s first fund manager, Julian Baring. The advisers to the Fund, with the support of the industry, endow annual scholarships for talented, but financially disadvantaged, students in Africa and South America to continue their studies and to pursue a career in the mining industry. The Fund has assisted more than 150 individuals since inception in mining related faculties.
Following Chip Goodyear’s appointment last August, he sought approval to waive his rights to compensation related to his role as a Director of the Company. This waiver was at his initiative and request. The Board discussed the matter and decided it was appropriate to donate annually to the Fund an amount equivalent to Chip’s Director’s fee, in addition to the US$15,000 discussed above. With our previous support at the time of the Company’s 25th anniversary, the Fund was able to broaden its reach from Africa to include South America. The Board receives regular updates from the Fund trustees about students past and present and their progress and Justin Baring, the chair of the Fund, will provide a brief introduction to shareholders at the forthcoming AGM.
Annual General Meeting arrangements
The Company’s AGM will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 9 May 2024 at 11.30 a.m. Details of the business of the meeting are set out in the Notice of Meeting on pages 156 to 159 in the Annual Report and Financial Statements. The Board very much looks forward to meeting shareholders and answering any questions you may have on the day.
For the benefit of shareholders who are unable to attend this year’s AGM in person, we have arranged for the proceedings to be viewed via a webinar. You can register to watch the AGM by scanning the QR Code inside the cover of the Annual Report or by visiting our website at www.blackrock.com/uk/brwm and clicking on the registration banner.
Please note that it is not possible to speak or vote at the AGM via this medium and joining the webinar does not constitute attendance at the AGM. Shareholders wishing to exercise their right to attend, speak and vote at the AGM should either attend in person or exercise their right to appoint a proxy to do so on their behalf.
Outlook
Higher interest rates and greater volatility have resulted in a high level of uncertainty for markets and a remarkable dispersion in commodity price returns during 2023. There has also been a challenging geopolitical backdrop with little end in sight for the conflicts in both Eastern Europe and the Middle East, as well as structural competition between US and China. The number of volatile situations worldwide is the highest in decades and 2024 is set to be the biggest election year, with more than half the world’s population voting.
However, against this backdrop, inflationary pressures are easing in the US and UK and inflation is expected to return towards target in 2024. Remaining COVID-19 pandemic era supply disruptions are also fading and the Chinese government has moved forward with a series of stimulus measures to turn round its ailing economy which should support commodity demand. The energy transition to a low carbon economy is also set to increase demand for materials in the supply chain for low carbon technologies, including copper, steel and lithium, which is a positive tailwind for selective parts of the mining sector.
DAVID CHEYNE
Chairman
7 March 2024