BlackRock World Mining Trust (BRWM) aims to maximise total returns from an actively managed worldwide portfolio of mining and metal securities. Its report for the year to 31 December 2016 shows shareholders’ assets of £677 million, compared to £377 million at end-2015 and £1,708 million at end-2010.
Evy Hambro has managed BRWM since 2009, with Olivia Markham as co-manager since March 2015. The portfolio is invested principally in quoted securities, including corporate debt. It holds some unquoted investments and has invested in a royalty agreement with Avanco Resources. Up to 10 per cent can be held in physical metals and up to 25 per cent in cash. Borrowings and derivatives can be used to enhance returns.
At end-2016, nearly half BRWM’s portfolio was comprised of diversified mining companies, most of which are large and global. Twenty per cent of its overall exposure was in copper producers, 19 per cent in gold mining companies and 10 per cent in companies focused mainly on silver and diamonds.
Dividends accounted for half BRWM’s revenue in 2016 and are expected to rise in 2017, whereas option premiums contributed 22.2 per cent and are expected to fall due to reduced market volatility. Fixed income contributed 20.8 per cent, and royalty income 5.5 per cent. Gearing ended 2016 at 12.4 per cent. Ongoing charges fell to 1.1 per cent. Net asset value per share total returns were 92.9 per cent, just short of the 94 per cent rise from the Euromoney Global Mining index. A contraction in the discount to 12.4 per cent lifted share price total returns to 100.6 per cent. With earnings per share 28.6 per cent down at 13.19p, the dividend was cut from 21p to 13p. EPS are expected to pick up in 2017 and the board intends to continue a full distribution policy and to start paying out dividends quarterly.
The managers hope for continued recovery in returns, provided mining companies do not restart mothballed production or recommence capital expenditure too soon in the cycle.
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