BlackRock World Mining Trust plc Half-Year Report 2022

Blackrock World Mining Trust P

Half-year Report

BlackRock World Mining Trust plc

Condensed Half Yearly Financial Report 30 June 2022

OVERVIEW AND PERFORMANCE

PERFORMANCE RECORD

¹  The change in net assets reflects market movements, dividends paid and the reissue of ordinary shares from treasury during the period.
²  MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
³  Alternative Performance Measures, see Glossary in the Condensed Half Yearly Financial Report. Performance figures are calculated in Sterling terms with dividends reinvested.
⁴  Further details are given in the Glossary in the Condensed Half Yearly Financial Report.

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.

Share Price Discount/Premium
The Directors recognise the importance to investors that the Company’s share price should not trade at a significant premium or discount to NAV, and therefore, in normal market conditions, may use the Company’s share buy back and share issuance powers to ensure that the share price does not go to an excessive discount or premium to the underlying NAV.

The discount of the Company’s share price to the underlying NAV per share finished the period under review at 2.0% on a cum income basis, having stood at a discount of 5.3% at the beginning of the period. At the close of business on 22 August 2022, the Company’s shares were trading at a discount of 3.3% on a cum income basis.

Over the six months to 30 June 2022, the Company’s shares have traded at an average discount of 0.6%, and within a range of a 7.3% discount to a 3.8% premium. I am pleased to report that, during the period, the Company reissued 4,286,920 ordinary shares from treasury at an average price of 709.11p per share for a net consideration of £30,399,000. All shares were reissued at a premium to the prevailing cum income NAV and were therefore accretive to existing shareholders. The Company did not buy back any shares during the period. Since the period end and up to the date of this report, a further 785,000 ordinary shares have been reissued.

Gearing
The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 25% of the net assets of the Group. Gearing as at 30 June 2022 was 12.1% which was the maximum during the period.

Shareholder Communication
We appreciate how important access to regular information is to our shareholders. To supplement our website, we offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company, as well as news, views and insights. Further information on how to sign up is included on the inside cover of the Condensed Half Yearly Financial Report.

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.

¹  Alternative Performance Measures. All percentages calculated in Sterling terms with dividends reinvested. Further details of the calculation of performance with dividends reinvested are given in the Glossary in the Condensed Half Yearly Financial Report.