Final Results

BLACKROCK WORLD MINING TRUST plc ANNUAL RESULTS ANNOUNCEMENT for the year ended 31 December 2013 Financial Highlights Attributable to ordinary 31 December 31 December Change shareholders 2013 2012 % Assets Net assets (Â£'000) 885,346 1,215,743 -27.2 Net asset value per ordinary share 499.39p 685.75p -27.2 - with income reinvested -24.6 Ordinary share price (mid-market) 465.00p 586.50p -20.7 - with income reinvested -17.5 Euromoney Global Mining Index 466.03 613.72 -24.1 Discount to net asset value 6.9% 14.5% For the year For the year ended ended 31 December 31 December Change 2013 2012 % Revenue Net revenue return after taxation (Â£'000) 39,633 38,614 +2.6 Revenue return per ordinary share 22.36p 21.78p +2.6 Dividend per ordinary share - Final 14.00p 14.00p - - Interim 7.00p 7.00p - Chairman's Statement Overview Despite a generally improving economic environment, mining shares suffered poor returns in 2013. Fears of a worse than expected slowdown in China, which has been the main motor for demand growth in the last decade, led to price falls in most commodities. In addition, the breakdown in trust between mining companies and investors on the back of poor returns on investment and excessive capital spending, further derated mining company share prices. Accordingly, despite an otherwise strong recovery in broader equity markets generally, the mining sector has struggled. Against this backdrop, the Company's net asset value ('NAV') per share returned -24.6% and the Company's share price returned -17.5% over the twelve months to 31 December 2013. The Company's benchmark index, the Euromoney Global Mining Index (formerly the HSBC Global Mining Index) returned -24.1% in the same period (all percentages calculated in sterling terms with income reinvested). Since the year end, the Company's NAV has returned 4.7% compared with a return of 5.1% in the benchmark index. Revenue return and dividend The Company's revenue return per share for the year to 31 December 2013 amounted to 22.36p compared with 21.78p for the previous year. The Directors recommend the payment of a final dividend of 14.00p per share for the year ended 31 December 2013 (2012: 14.00p), which together with the interim dividend of 7.00p per share (2012: 7.00p), makes a total dividend of 21.00p per share (2012: 21.00p). The dividend will be paid on 15 May 2014 to shareholders on the register of members on 7 March 2014. Since the launch of the Company in 1993 and following the payment of the forthcoming final dividend, total dividends paid will be greater than the initial public offering price paid on the Company's ordinary shares. Discount Your Board recognises that it is in the long term interests of shareholders that the discount to NAV at which the shares trade should be minimised as far as possible and will continue to focus on attempting to narrow this margin. The Company's discount has narrowed considerably in the last year and averaged 10.2% on a cum income NAV. Currently the shares are trading at a discount of 0.8% on a cum income basis and a premium of 2.5% on a capital only basis. The Board We were pleased to welcome Ian Cockerill to the Board with effect from 14 November 2013. Mr Cockerill has nearly 40 years' experience in the mining industry, having previously been responsible for business development in AngloGold, and chief executive officer of both Gold Fields Ltd and AngloCoal, between 1999 and 2009. Oliver Baring, who has served on the Board since November 2004, will retire as a Director at the forthcoming Annual General Meeting. I would like to thank Oliver on behalf of the Board for his wise counsel over this period and wish him every success for the future. Royalty investments In July, shareholders approved changes to the investment policy clarifying that the Company may, as part of its existing authority to invest in unquoted investments, invest in royalties which arise from the production of metals and minerals. The limit on unquoted investments was also raised from 10% to 20% of gross assets to allow greater exposure to metal and mining related royalties. It was announced in October that the Company had reached a non-binding agreement on key commercial terms for a US$12 million smelter return royalty investment with Avanco Resources Limited. The Company and Avanco are currently working on heads of terms. Whilst this would represent a relatively small commitment for the Company, the Board believes that the investment will offer an attractive addition to the royalty portfolio and also diversify the Company's existing royalty holdings by type of asset. Alternative Investment Fund Managers' Directive The Alternative Investment Fund Managers' Directive (the 'Directive') is a European Directive which seeks to reduce systemic risk by regulating alternative investment fund managers ('AIFMs'). AIFMs are responsible for managing investment products that fall within the category of Alternative Investment Funds ('AIFs') and investment trusts are included in this. The Directive was implemented on 22 July 2013, although the Financial Conduct Authority will permit a transitional period of one year after that during which UK AIFMs must seek authorisation. The Board has taken, and will continue to take, independent advice on the consequences for the Company and has decided in principle that BlackRock Fund Managers Limited will be appointed as its AIFM in advance of the end of the transitional period on 22 July 2014. New reporting requirements There have been a number of revisions to reporting requirements for companies with accounting periods ending on, or after, 30 September 2013. These changes are intended to increase the quality and structure of reporting and include the introduction of a new Strategic Report which is intended to replace the Business Review section of the Directors' Report, providing insight into the Company's objectives, strategy and principal risks. The Strategic Report should also enable shareholders to assess how effective Directors have been in promoting the success of the Company during the course of the year under review. Other changes comprise additional Audit Committee reporting requirements on the external audit process, as set out on pages 36 to 38 of the Annual Report, and changes to the structure and voting requirements in respect of the Directors' Remuneration Report which are explained in more detail on pages 27 to 29 of the Annual Report. Annual General Meeting The Annual General Meeting of the Company will be held at the offices of BlackRock Investment Management (UK) Limited at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 8 May 2014 at 11.30 a.m. Details of the business of meeting are set out in the Notice of Meeting on pages 71 to 74 of the Annual Report. The Portfolio Managers will make a presentation to shareholders on the Company's performance and the outlook for the year ahead. Articles of Association At the forthcoming Annual General Meeting, shareholders will be asked to approve new Articles of Association in substitution for the current Articles. The Board is proposing to make these amendments to the Articles in response to the Alternative Investment Fund Managers' Directive; details of the principal changes are given on pages 25 and 26 of the Annual Report. Outlook The mining industry has faced many challenges since the start of the decade. However, much progress has now been made in trimming back the unwelcome increase in operating costs taken on in the boom years. In addition, much of the previously planned expansion in capacity has now also been reassessed resulting in cut backs in the light of the harsher operating environment and a need to reset the balance between reinvestment and shareholder returns. It is hoped that the consequence of these actions will result in a marked increase in free cash flow for the companies allowing them to better reward shareholders with increased returns. A W Lea Chairman 20 February 2014 Strategic report The Directors present the Strategic Report of the Company for the year ended 31 December 2013. The aim of the Strategic Report is to provide shareholders with the ability to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders. Principal activity The Company carries on business as an investment trust. Its principal activity is portfolio investment and that of its subsidiary, BlackRock World Mining Investment Company Limited (the 'Group'), is investment dealing. General Meeting The Company held a general meeting on 21 August 2013 to amend the Company's investment policy. The principal changes clarified that the Company may invest in royalties derived from the production of metals and minerals as part of its permission to invest in unquoted investments; permit the Company to invest up to 20% of its gross assets in unquoted investments including royalties (previously 10%); and enable the Company to invest in any single holding that would represent up to 20% of gross assets at the time of acquisition, as compared with the previous 10%. Objective The Company's objective is to maximise total returns to shareholders through a worldwide portfolio of mining and metal securities. The Board recognises the importance of dividends to shareholders in achieving that objective, in addition to capital returns. Strategy, Business Model and Investment Policy In order to achieve its objective, it is intended that the Group will normally be fully invested, which means at least 90% of the gross assets of the Company and its subsidiary will be invested in stocks, shares, royalties and physical metals. However, if such investments are deemed to be overvalued, or if the Investment Manager finds it difficult to identify attractively priced opportunities for investment, then up to 25% of the portfolio may be held in cash or cash equivalents. The Company's investment policy is to provide a diversified investment in mining and metal securities worldwide. While the policy is to invest principally in quoted securities, the Company's investment policy includes investing in royalties derived from the production of metals and minerals, as well as physical metals. Risk is spread by investing in a number of holdings, many of which themselves are diversified companies. The Group may occasionally utilise derivative instruments such as options, futures and contracts for difference, if it is deemed that these will, at a particular time or for a particular period, enhance the performance of the Group in the pursuit of its objective. The Company is permitted to enter into stock lending arrangements. The Group may invest in any single holding, of quoted or unquoted investments, that would represent up to 20% of gross assets at the time of acquisition. Although investments are principally in companies listed on recognised stock exchanges, the Company may invest up to 20% of the Group's gross assets in investments other than quoted securities. Such investments include unquoted equities or bonds, royalties, physical metals and derivatives. In order to afford the Company the flexibility of obtaining exposure to metal and mining related royalties, it is possible that, in order to diversify risk, all or part of such exposure may be obtained directly or indirectly through a holding company, a fund or another investment or special purpose vehicle, which may be quoted or unquoted. The Board will seek the prior approval of shareholders to any unquoted investment in a single company, fund or special purpose vehicle or any single royalty which represents more than 10% of the Group's assets at the time of acquisition. As at 31 December 2013, the Company held two unquoted investments. Unquoted investments can prove to be more risky than listed investments. The two investments, the Marampa royalty contract and Banro gold-linked preference shares, are held at Directors' valuation. In addition, while the Company may hold shares in other listed investment companies (including investment trusts) the Company will not invest more than 15% of the Group's gross assets in other UK listed investment companies. The Group's financial statements are maintained in sterling. Although many investments are denominated and quoted in currencies other than sterling, the Board does not intend to employ a hedging strategy against fluctuations in exchange rates. The Investment Manager believes that tactical use of gearing can add value from time to time. This gearing is typically in the form of an overdraft or short term loan facility, which can be repaid at any time or matched by cash. The level and benefit of gearing is discussed and agreed with the Board regularly. In order to provide flexibility for future royalty transactions, the Board would allow for gearing to increase but to no more than 25% of the Group's net assets, the limit stipulated in the Company's Articles of Association. The maximum level of gearing used during the year was 12.8% and, at the financial reporting date, net gearing (calculated as borrowings less cash as a percentage of net assets) stood at 9.6% of shareholders' funds (2012: 7.1%). For further details on borrowings refer to note 14 on page 53 of the Annual Report. No material change will be made to the investment policy without shareholder approval. Portfolio analysis Information regarding the Company's investment exposures is contained within the ten largest investments, the investments listing and portfolio analysis. Further information regarding investment risk and activity throughout the year can be found in the Investment Manager's Report. Continuation of the Company As agreed by shareholders in 1998, an ordinary resolution for the continuance of the Company is proposed at each Annual General Meeting. The Company has a strong long term investment record, providing excellent returns to shareholders, and the Directors recommend that shareholders vote in support of the Company's continuation. Performance In the year to 31 December 2013, the Company's net asset value per share returned -24.6% compared with a return in the Euromoney Global Mining Index of -24.1%. (The HSBC Global Mining Index was renamed on 1 October 2013.) The Company's share price returned -17.5% over the same period. (All figures calculated in sterling terms with income reinvested). Results and dividends The results for the Company are set out in the Consolidated Statement of Comprehensive Income. The total loss for the year, after taxation, was Â£293,167,000 (2012: loss of Â£64,031,000) of which Â£39,633,000 (2012: Â£38,614,000) is revenue profit. It is the Board's intention to distribute the maximum dividend possible in terms of earnings each year. The Directors recommend the payment of a final dividend of 14.00p per share in respect of the year ended 31 December 2013 (2012: 14.00p per share) which, together with the interim dividend of 7.00p per share (2012: 7.00p), makes a total of 21.00p per share in respect of the year ended 31 December 2013 (2012: 21.00p). The dividend will be paid on 15 May 2014 to shareholders on the register of members at close of business on 7 March 2014. Dividend payments for the year ended 31 December 2013 (including the interim dividend) amount to Â£37,230,000 (2012: Â£37,230,000). Key performance indicators The Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The key performance indicators ('KPIs') used to measure the progress and performance of the Company over time and which are comparable to those reported by other investment trusts are set out below. 2013 2012 Net asset value per share 499.39p 685.75p Share price 465.00p 586.50p Discount to net asset value 6.9% 14.5% Revenue earnings per share 22.36p 21.78p Ongoing charges* 1.4% 1.4% * Ongoing charges represent the management fee and all other operating expenses excluding interest as a % of average shareholders' funds. The Board monitors the above KPIs on a regular basis. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company's relative performance of the various components such as asset allocation and stock selection. Discount The Directors recognise that it is in the long term interests of shareholders that shares do not trade at a significant discount to their prevailing net asset value. In the year under review, the Company's shares traded at a discount to net asset value of between 5.4% and 15.8%, with the average being 10.2%. The shares ended the year at a discount of 6.9%. Principal risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below: - Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objectives and for monitoring the performance of the Investment Manager and implementation of the strategy. An inappropriate strategy may lead to underperformance, against the benchmark index. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and mandates an adequate spread of investments in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the Company's investment policy. The Board also receives and reviews regular reports showing an analysis of the Company's performance against the Euromoney Global Mining Index and other similar indices, including the performance of major companies in the sector. Past performance is not necessarily a guide to future performance and the value of an investment in the Company and the income from it can fluctuate as the value of the underlying investments fluctuate. - Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio and investment activity. Any change in the tax treatment of the dividends or interest received by the Company (including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests) may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of income forecasts and considers the level of income at each meeting. - Market risk - Market risk arises from volatility in the prices of the Company's investments. It represents the potential loss the Company might suffer through realising investments in the face of negative market movements. Changes in general economic and market conditions, such as interest rates, rates of inflation, industry conditions, tax laws, political events and trends can also substantially and adversely affect the securities and, as a consequence, the Company's prospects and share price. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. - Financial risk - The Company's investment activities expose it to a variety of financial risks which include market risk, currency risk, interest rate risk, market price risk, liquidity risk and credit risk. Further details are disclosed in note 18 on pages 55 to 63 of the Annual Report, together with a summary of the policies for managing these risks. - Regulatory risk - The Company operates as an investment trust in accordance with the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board at each meeting. The Board and the Investment Manager also monitor changes in government policy and legislation which may have an impact on the Company. The Company must also comply with the provisions of the Companies Act 2006 and, as its shares are admitted to the Official List, the UKLA Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules. A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing, which in turn would breach the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. - The Board relies on the services of its professional advisers and its Company Secretary to ensure compliance with all relevant regulations. The Company Secretary has stringent compliance procedures in place and monitors regulatory developments and changes. Following authorisation under the Alternative Investment Fund Managers' Directive (the 'Directive') the Company and its appointed AIFM will be subject to the risk that the requirements of the Directive are not correctly complied with. - Operational risk - In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These have been regularly tested and monitored and an internal controls report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit & Management Engagement Committee at least twice a year. The Investment Manager, the custodian and the fund accountant also produce regular Service Organisation Control reports (SOC 1) or AAF 01/06 reports which are reviewed by their reporting accountants and give assurance regarding the design and effective operation of controls. - Resource risk - The quality of the investment management team employed by the Investment Manager is a crucial factor in delivering good performance and the loss by the management of key staff could affect investment returns. The Investment Manager has training and development programmes in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff. - Gearing risk - The Company has the power to borrow money (gearing) and does so when the Investment Manager is confident that market conditions and opportunities exist to enhance investment returns. However, if the investments fall in value, any borrowings will magnify the extent of this loss. All borrowings require the approval of the Board and gearing levels are discussed by the Board and Investment Manager. Future prospects The Board's main focus is to maximise total returns over the longer term. The future performance of the Company is much dependent upon the success of the investment strategy and, to a large degree, on the performance of financial markets. The outlook for the Company in the next twelve months is discussed in both the Chairman's Statement and the Investment Manager's Report. Social, community and human rights issues As an investment trust, the Company has no direct social or community responsibilities. However, the Company believes that it is in shareholders' interests to consider environmental, social and governance factors and human rights issues when selecting and retaining investments. Details of the Company's policy on socially responsible investment are set out on page 33 of the Annual Report. Directors, employees and gender representation The Directors of the Company on 31 December 2013 are set out in the Directors' biographies on page 21 of the Annual Report. The Board consists of six male Directors and no female Directors. The Company does not have any employees. By order of the Board BlackRock Investment Management (UK) Limited Secretary 20 February 2014 Related party transactions The investment management fee for the year (including secretarial and administration fees) was Â£12,656,000 (2012: Â£16,185,000). At the year end, the following amount was outstanding in respect of the investment management fee: Â£20,752,000 (2012: Â£8,096,000). In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 31 December 2013 amounted to Â£51,200 including VAT (2012: nil), of which Â£51,200 (2012: nil) was outstanding at 31 December 2013. The Board consists of six non-executive Directors all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 October 2013 the Chairman receives an annual fee of Â£45,000, the Chairman of the Audit & Management Engagement Committee receives an annual fee of Â£37,500, and each other Director receives an annual fee of Â£30,000. All six members of the Board hold shares in the Company. Mr Lea holds 6,000 ordinary shares, Mr Barby 25,000 ordinary shares, Mr Buchan 24,000 ordinary shares, Mr Baring 3,000 ordinary shares, Mr Cheyne 4,000 ordinary shares and Mr Cockerill 17,630 ordinary shares. The amount of Directors fees outstanding at 31 December 2013 was Â£72,000 (2012: Â£29,000). Statement of Directors' Responsibilities The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the financial statements under IFRS as adopted by the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: - present fairly the financial position, financial performance and cash flows of the Company; - select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently; - present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; - make judgements and estimates that are reasonable and prudent; - state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; - provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, Directors' Report, the Directors' Remuneration Report, the Corporate Governance Statement and the Report of the Audit & Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Investment Manager for the maintenance and integrity of the Company's corporate and financial information included on the Investment Manager's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors at the date of this report, whose names are listed on page 21 of the Annual Report, confirm to the best of their knowledge that: - the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and - the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The 2012 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit & Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit & Management Engagement Committee's Report on pages 36 to 38 of the Annual Report. As a result, the Board has concluded that the Annual Report for the year ended 31 December 2013, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy. For and on behalf of the Board A W Lea Chairman 20 February 2014 Investment Manager's Report Portfolio performance 2013 marked the third year in a row of negative returns for mining shares. Over this period a combination of moderating economic growth in China, rising metals and minerals supply, and a reduction in the mining sector's profitability and free cash flow weighed heavily on share prices. The mining sector had begun to respond to these changing conditions in 2012, accelerating in 2013 as new management teams at the largest mining companies implemented cost-cutting strategies and scaled back capital expenditures. However, it was only in the second half of 2013 that this began to translate into improving operating and financial results. Increasing stability in metals and minerals prices, as well as recognition of the widening disparity in valuations between the mining sector and other parts of the equity market, particularly with respect to dividend yields, helped the mining sector to stage a somewhat muted recovery in the second half of 2013. The Company's move to diversify its mining exposure into royalties and fixed income helped to partially offset the poor equity performance of the higher growth, more operationally leveraged producers within the portfolio. For the calendar year 2013, the Company's undiluted net asset value ('NAV') and share price fell by 24.6% and 17.5% respectively, in sterling terms with income reinvested. In "capital" only terms, the NAV fell by 27.1% and the share price by 20.7%. By comparison, in sterling terms, the Euromoney Global Mining Index (formerly the HSBC Global Mining Index) fell by 26.2% (capital only) and 24.1% (with income reinvested). Mining sector overview The mining sector entered 2013 in the throes of change. Managements were under attack from investors to rebalance the mix between returns to shareholders and reinvestment of cash flows back into the "ground". In addition, investors were nervous about the prospects for China, the world's largest commodity consumer, as media reports debated between hard and soft landings for the economy. In North America the economy finished 2012 showing signs of improvement and whilst monetary policy remained accommodative (through quantitative easing) so as not to allow economic momentum to stall, "taper talk" was already beginning to creep into markets. During the first half of the year, the bearish commentators won the debate. Share prices fell, demand fears increased and management teams at the world's largest mining companies were replaced with fresh blood. Write-downs in the carrying values of assets built or purchased during the good times were commonplace. Despite all of the negative headlines, demand for commodities continued to improve during the year rather than fall. This fact seemed to go unnoticed by investors as they reached for the sell button on their holdings. In fact, the dispersion in performance between the prices of iron ore and copper versus the respective producers of those commodities was startling. The overwhelming urge to sell exposure to the sector resulted in the Euromoney Global Mining Index falling 24.9% in US dollar terms (26.2% in sterling terms in the first half of the year). All in all it was a sorry state of affairs. However, it looks as though the seeds of change were planted during this period and in the second half of the year fortunes started to show signs of improvement. New management teams appear to have embraced the challenges facing their businesses. Promises to cut operating costs, cancel or delay planned investments into new capacity, curtail M&A activity (after the overwhelmingly poor track record of returns from this endeavour), and when appropriate increase returns to shareholders, were all well-received. However, until the evidence of change has enough data points to prove the cynics wrong, investors will doubt that the leopards can change their spots. Asset sales were also showcased by majors keen to reduce debt, but to date completed transactions have not raised as much cash as had been hoped for. In fact, a number of assets have since been withdrawn from sale due to a lack of interest at the valuations being demanded by the vendors. Of note, though, was the ability of mid-cap mining companies to pick up growth assets that have the potential to rerate their valuation. One such deal was done by Lundin Mining by purchasing the Eagle nickel project from Rio Tinto. This deal was taken well by investors and the shares of Lundin significantly outperformed post the deal's announcement. This difficult environment provided fertile ground for the braver investors to seek out new opportunities to put capital to work. The Company was one such investor with the conclusion of two royalty related transactions in gold and copper. During the first half of the year we concluded a deal to help finance Banro in the DRC with gold linked preference shares. In the second half, we entered into a royalty agreement on the copper/gold project portfolio of Avanco in Brazil (there is more detail on these deals later in the report). In the gold equity arena troubles were severe. The average gold equity fell by greater than 50% during the year as gold prices slumped by 27.3% (in US dollar terms). The compression of operating margins only served to add to the already damaging derating that gold equities have gone through during the last two years. The end result was a collapse in valuations and has left many gold companies perilously close to the edge in terms of their futures. For example, Barrick, the world's largest gold producer, opted to raise US$3 billion in an equity placement to help restore confidence in its balance sheet. Other gold producers have cut projects, reduced costs and many are seeking to adjust production profiles in order to survive at lower prices. However, for those that have been better guardians of shareholder capital, this price move has played into their hands. During the last few months of 2013 there were a number of smaller M&A deals done as mid-cap companies consolidated growth projects into their business plans. Should prices recover in the near term this strategy might easily serve them well. Just as in previous years, commodity exposure in the Company has continued to be linked to companies that are likely to be able to generate healthy margins and not suffer unduly from the volatility in metal prices seen elsewhere in the commodity complex. As such, exposure in the Company during 2013 was again centred on copper and iron ore. The prices of these commodities averaged well above marginal production cost levels and as a result cash generation remained buoyant. In fact, iron ore prices not only remained high but the average price for 2013 was up 4.1% (in US dollar terms) on the previous year. When added to the movement in exchange rates during the year, for producers in Australia, Brazil and South Africa, margins should have been even better. Base metals The performance of base metals in 2013 reflected the fact that metal inventories ballooned to multi-year highs during the first half of the year and in the case of aluminium and nickel to record levels, primarily driven by growth in supply exceeding growth in demand. Unsurprisingly, aluminium and nickel were the worst performers over the year, down 14.0% and 18.6% respectively. For zinc and copper however, fears of a growing surplus in the second half of the year were proved wrong as consumers began to restock and inventory levels fell sharply. Combined copper exchange inventories hit a 10 year high at the end of June 2013 but then began an almost unbroken run of daily stock declines such that by the end of 2013, inventories had fallen by 45%. Zinc, used in galvanising steel and the best base metal price performer of 2013, also showed impressive inventory erosion with combined exchange inventories falling 23% from a record 1.5mt high at the end of January 2013. The zinc price was also buoyed by recognition in the market that a number of large zinc mines are coming to the end of their lives, as evidenced by the news in December 2013 of the closure in 2015 of Minmetals' Century mine in Australia, the world's third largest zinc mine. Zinc prices were flat over 2013 whilst copper prices closed down by 6.7%. Selected commodity price changes during 2013 Price % change % change 31 December over average 2013 12 months 2013 vs. 2012 Tin (USc/lb) 10.13 -4.5 +7.9 Iron Ore - fines 62% Fe China Import US$/t 134.2 -7.4 +4.1 Lead (USc/lb) 0.99 -5.4 +1.0 Zinc (USc/lb) 0.93 +0.2 -1.7 Platinum (US$/troy oz) 1,357 -11.1 -8.0 Copper (USc/lb) 3.35 -6.7 -8.8 Aluminium (USc/lb) 0.80 -14.0 -9.5 Thermal Coal (US$/tonne) 86.3 -6.5 -12.2 Nickel (USc/lb) 6.27 -18.6 -16.4 Hard Coking Coal (US$/tonne) 133.0 -16.9 -22.4 Gold (US$/troy oz) 1,207.85 -27.3 -22.9 Uranium (US$/lb) 34.50 -21.1 -22.9 Silver (US$/oz) 19.50 -34.9 -32.5 Sources: Datastream and Bloomberg. Copper remains the Company's largest single metal exposure, representing nearly 25% of the portfolio. This is due to the strong profit margins generated by existing producers and the metal's constructive medium to long term fundamentals. Poor scrap availability, robust demand and the scarcity of new discoveries have helped to keep prices firmer than many market commentators would have expected, despite the growth in mine production delivered in 2013 and expected in 2014. The Company's second largest copper holding, Freeport-McMoRan Copper & Gold (6.5% of the portfolio), was one of the strongest performers in the portfolio having had a poor 2012. The company rerated as management better articulated their strategy to reduce debt. The Company's other core copper holding, First Quantum Minerals (7.8% of the portfolio), also contributed positively to relative performance although the shares began to struggle towards the end of the year as the eagerly awaited update on its development project, Cobre Panama, was pushed back into Q1 2014. The Company continued to add to its smaller market-cap copper exposure with new positions in Nevsun Resources (1.1% of the portfolio) and Tiger Resources (0.5% of the portfolio). These are both strong cash flow producers in Africa and good illustrations of the high quality opportunities that exist in this area of the market. Exposure to the other base metals remains limited as the metal prices sit at or below the marginal cost of production and profit margins for the companies are correspondingly low or negative. A reluctance to cut high cost capacity coupled with strong growth in Chinese production has kept aluminium prices low, although premiums for the metal have been elevated owing to warehouse bottle-necks. Whilst the Company did have a trading position in Alcoa during the year, it had no direct exposure to aluminium producers at the end of the year under review. The nickel market is also suffering from severe oversupply; however, there is the potential for a price catalyst in the coming months with the Indonesian government restricting the export of all types of unbeneficiated ore from the country including nickel-rich low grade iron ore. This is significant for nickel as low grade nickel pig iron has become a major raw material for stainless steel production in China, displacing traditional nickel demand. Given the high level of inventories, these restrictions are unlikely to have any near term impact on the market surplus; however, it does suggest downside risk to the nickel price has reduced. During the year, the Company initiated a position in Norilsk Nickel (0.6% of the portfolio), the world's largest nickel producer, as well as a significant producer of palladium, platinum and copper. The Company increased its zinc exposure indirectly through the year by adding to its position in Vedanta (1.2% of the portfolio). Gold and precious metals Precious metals remained under pressure in 2013 with silver the worst performer, declining close to 35% over the year. Gold fared little better falling over 27%, the worst annual performance since 1981. Strong equity market performance, a firmer US dollar and an absence of inflationary pressures meant the demand from institutional investors for gold, which is treated as a store of value, diminished. Gold was particularly hard hit during the first half of the year as the market began to expect "tapering" (the phasing out of the Federal Reserve's bond-buying programme, or quantitative easing) and the bears made the most of speculation that Cyprus could have to sell part of its gold holdings (which are only 13.9 tonnes) as part of its bailout terms. Liquidation in the futures market, followed by selling in the physically-backed exchange traded funds ('ETFs'), pushed the gold price to a low of US$1,180/oz in June 2013. At these lower levels, there was a surge in retail demand for jewellery, bars and coins in the second quarter, particularly from China and India. These two countries are now expected to represent around 60% of global demand. The challenge for the gold market is that for now this retail demand, Chinese demand in particular, is price sensitive, pulling back when prices neared US$1,300/oz. This meant during the second half of the year, the price was range-bound closing the year at US$1,207/oz. The sharp fall in the gold price pushed the gold industry into loss-making territory and the sector has been forced to take drastic action. Going forward the gold industry will need to adjust mine plans for the new lower gold price environment in order to return to profitability. Those companies with the highest quality assets have the greatest flexibility and have already begun to announce their new production profiles and mine plans to the market. However, those with mines that are low grade, with short lives and limited scope for adjustment, will struggle. The impact of this will only become clear in the medium term but it is our expectation that we shall see global gold production start to fall in coming years. The Company has been underweight gold producers for a number of years and this remains the case. The beta of the gold sector to the gold price has returned so we are watching carefully for an improvement in the fundamentals for gold and will adjust our exposure accordingly. There was one significant addition to the Company's gold exposure in the form of gold-linked preference shares issued by Banro, an African gold producer that is in the process of bringing its second operation online. As referred to earlier, the security's dividend is royalty-like in nature, linked to the level of production and the prevailing gold price. Platinum and palladium, mainly used in auto catalysts, outperformed gold and silver with platinum falling by just over 11% and palladium rising by 2%. Supply for both metals has come under pressure owing to challenges facing the world's major producing countries. In the case of platinum, South Africa represents approximately 72% of world supply and mine production has been impacted by rising costs, frequent disruptions and a highly fractious and politicised relationship between the management of the platinum mining companies and the labour unions. Russia is the largest source of primary palladium, representing 42% of supply, with South Africa at 37%. Dwindling strategic stockpiles has meant the supply of Russian palladium into the market has declined. Unlike gold and silver, platinum and palladium did not see a sharp reduction in physically backed ETF holdings; palladium holdings ended 2013 virtually unchanged and platinum holdings rose to record levels owing predominantly to the launch of the South African NewPlat ETF in May 2013. By the end of the period under review, the NewPlat ETF represented 35% of all platinum ETF holdings. The Company continued to reduce its overall exposure to South African platinum producers. However, owing to the improving outlook for platinum demand and the ongoing supply side challenges, the Company switched some of its exposure into Impala Platinum, a physically backed platinum ETF (0.6% of the portfolio), giving it direct exposure to the platinum price. In addition, the Company added to its holding in Platinum Group Metals (0.7% of the portfolio), an exciting development company with what looks to be a world-class discovery at its Waterberg joint venture. Energy commodities After sharp declines in 2012, thermal and coking coal markets continued to be challenged in 2013 due to oversupply. Spot thermal coal prices fell by over 6% and averaged over 12% down year-on-year. The impact of the closure of higher cost US coal production capacity and some let-up in the degree of coal-to-gas switching by the US power utilities was more than offset by growing production elsewhere in the world. Australian coal producers have sought to reduce operating costs through improving productivity via volume growth, adding to an already oversupplied market. In addition, a reduction in the use of higher cost contractors and a weaker Australian dollar have helped to make the Australian producers more competitive in a global context, bringing down the overall cost curve for the industry. In December, the Company initiated a position in China Shenhua Energy (0.2% of the portfolio), a Chinese coal producer. The outlook for the Chinese domestic coal market is significantly better than that for the seaborne market and the sell-off in Chinese equities provided what we believe will be an attractive entry point. After a fall of over 40% in 2012, coking coal prices ended the year down a further 17% and average prices were down by over 22% year-on-year. Growth in seaborne supply from Australia and Canada, as well as increasing Chinese domestic production, counteracted the stronger than expected growth in production from the Chinese steel industry, the largest source of demand for coking coal. The Company's only major coking coal exposure is indirectly through the holding in Teck Resources. Uranium prices fell for a third year in a row, closing the year down over 21%. Despite universal acknowledgement that the uranium price is unsustainably low, the uncertain demand environment (with Japanese nuclear reactors still off-line and power utilities stepping back from the market) has kept prices under pressure. The much anticipated end to the US-Russia Highly Enriched Uranium (HEU) Agreement had no obvious effect on the supply-side environment, although the full impact of this will only likely be felt from 2014 onwards. Whilst markets today remain in balance, it is our expectation that the fundamentals for the sector are beginning to show some signs of improvement over coming years as the nuclear reactors under construction in China come on-line and Japan potentially restarts at least part of their reactor fleet but with a lack of new uranium production being developed to meet that demand growth. As such we initiated a position in Cameco, the world's lowest cost, highest quality producer. Along with our existing position in the Canadian explorer UEX, uranium makes up 0.5% of the portfolio. During the second half of the year, the Company re-entered the oil sands market by taking advantage of a failed corporate deal in producer Canadian Oil Sands. The holding provides direct exposure to the oil market as well as delivering a high yield, tied directly to the oil price. Royalties and illiquid investments Marampa royalty contract (6.6% of the portfolio) - In July 2012, the Company purchased for US$110 million a 2% revenue-related royalty contract calculated on any iron ore sales over the life of mine from London Mining Plc's Marampa mine in Sierra Leone. The ramp-up of the Marampa operation successfully delivered over 100% growth in production year-on-year. The mine exited the year at a run-rate of 5.4 million tonnes per annum (mtpa). In September 2013, the company announced the results of its life of mine study including a JORC compliant reserve of 539mt which supports a life of over 40 years at an annual production rate of over 6.5mtpa. In addition, the company is looking at potential expansion options including 10mtpa and 16-20mtpa. Banro gold-linked preference shares (1.7% of the portfolio) - In April 2013, the Company purchased US$30 million gold-linked preference shares from Banro Corporation to help fund the development of its second gold mine, Namoya. The gold-linked preference shares provide exposure to the gold price as well as to volume growth with the principal moving in-line with the gold price and the coupon ranging between 10-15% depending on Banro's overall level of production. The company has ramped-up quarterly gold production from Twangiza (its first operation) from 19.6koz in Q1 of 2013 to 22.9koz in Q4 2014 and has also announced first gold production from Namoya. Avanco royalty contract - In October 2013, the Company entered into a royalty agreement with Avanco Resources over its exploration licenses within the world-class mineral district of Carajas in Brazil. The Company will provide US$12 million in return for Net Smelter Return (net revenue after deductions for freight, smelter and refining charges) royalty payments comprising 2% on copper, 25% on gold and 2% on all other metals that will be produced from their Antas North and Pedra Branca (Stage 1 and Stage 2) licenses. In addition, there will be a flat 2% royalty over all metals produced from any other discoveries within Avanco's licence area as at the time of the agreement. The purchase of the royalty is conditional on the publication of a JORC compliant reserve statement, the receipt of a mining license for Stage 1 and will only be drawn-down in parallel with debt draw-downs. It is expected that this will take place from the middle of 2014. Fixed income securities The Company's exposure to natural resource debt securities has been a significant contributor to overall performance since the decision was taken post the financial crisis to take advantage of the attractive yield opportunities available in the market. At the start of 2013, the Company switched its exposure from Glencore's convertible bond into the equity, taking advantage of the implied premium at which the bond was trading relative to the equity. As at the end of 2013, the Company had 3.7% of the portfolio in convertible debt and 4.9% in corporate debt. The First Quantum Minerals 8.75% coupon debt was our largest single position at 3.3%. Derivatives activity The Company sometimes holds positions in derivatives contracts with virtually all the activity focused on selling either puts or calls in order to increase or decrease position sizes. These derivative positions, which are small in comparison with the size of the Company, usually have the effect of obliging us to buy or sell stock or futures at levels we believe are attractive. During 2013, we primarily focused on writing short-dated calls in order to reduce some of our larger positions. The income generated by such option writing enables us to maximise the potential exit price from a position if the option is exercised. In addition to writing calls, we also took advantage of volatility in the market occasionally to write puts. Both strategies worked well during the year and income from option writing increased by over 150% from Â£2.1 million in 2012 to Â£5.4 million in 2013. At the end of 2013 we had one put option outstanding in the portfolio and this expired at the end of January. Gearing At 31 December 2013, the Company had net gearing (calculated as borrowings less cash) amounting to Â£85.4 million, dropping from around Â£86.4 million as a result of a call option exercise in December. For the most part, this gearing has been drawn-down against the higher yielding mining company corporate debt and royalty portfolios. Gearing, which can be drawn-down or repaid at any time, is used in the portfolio to take tactical advantage of market volatility and opportunities as well as enhance overall returns during the medium to long term. Once again the reduced risk appetite of banks around the world continues to present numerous investment opportunities especially in the mid-size part of the market. With this in mind it is likely that we could end up drawing-down more from our debt facilities during 2014. Outlook and strategy for 2014 Looking into 2014 it is clear that the world economy is now in a better state than it has been during the last few years. The overall macro picture is pointing towards synchronous global growth for the first time in years and with industrial production expanding in most of the world's key commodity-consuming countries the demand picture is supportive at worst. Should demand surprise to the upside, then the enormous supply surpluses that have been forecast to arrive each year for the past two might once again fail to be realised. This would certainly retire the bears into hibernation. At the mining company level we remain optimistic that management teams will continue to deliver a strategy built around improved capital discipline and increased returns to shareholders. At the moment the sceptics remain convinced that this will not be the case and the sector is largely under-owned by generalist investors. If momentum starts to build on the back of better than expected results and a supportive metal price environment, then this should provide the necessary catalyst for these investors to return to the share registers of mining companies. Meanwhile, we continue to search for new investment opportunities not only in the traditional equity environment but also looking to add new royalties to the portfolio as companies find it difficult to raise development capital. With the mandate from shareholders to go beyond the previous 10% ceiling we are well placed to add new royalty deals during 2014. Evy Hambro and Catherine Raw BlackRock Investment Management (UK) Limited 20 February 2014 Ten Largest Investments 31 December 2013 Set out below is a brief description by the Investment Manager of the Company's ten largest investments. Rio Tinto* - 11.9% (2012: 10.1%) is a leading mining company by market cap. It has interests over a broad range of metals and minerals including iron ore, aluminium, copper, coal, industrial minerals, gold and uranium. As part of its annual investment seminar in November 2013, Rio Tinto announced a revised expansion plan of its Australian iron at a significantly lower capital cost than previous expectations. The company continues to remain focused on delivering greater value for shareholders. Rio Tinto remains on track to achieve its US$5 billion cost savings target by 2014; capital expenditure in 2013 was 20% lower than in 2012 and US$3.3 billion of divestments were announced or completed during the year. BHP Billiton - 10.6% (2012: 9.4%) is a leading diversified natural resource company, formed in 2001 from the merger of BHP and Billiton. The company is an important global player in a number of commodities including iron ore, copper, coal, manganese, aluminium, diamonds and uranium. The company is the only sizeable holding in the portfolio with significant oil and gas assets. In December 2013, the company hosted an important analyst site visit to its US Petroleum business focusing on its longer term growth potential. Productivity improvement is a key focus at BHP with the company reducing controllable costs by US$2.7 billion at the year end in June 2013. GlencoreXstrataâ€ - 9.9% (2012: 9.1%) is a leading, diversified natural resources group with activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. It provides financing, logistics, marketing and purchasing services to producers and consumers of commodities. In May 2013, Glencore announced completion of the merger with Xstrata to form GlencoreXstrata. As part of its investor day in September 2013, the company announced synergies of at least US$2 billion for 2014 via head office cuts with further benefits to come from operational efficiencies. First Quantum Minerals*â€ - 7.8% (2012: 7.6%) is an integrated copper producer whose principal operating assets are in Africa, but also with nickel assets in Australia and Finland. In April 2013, the company completed its C$5.1 billion offer for Inmet, a copper producer who is currently developing the Cobre Panama project in Panama. First Quantum is in the midst of a significant expansion of the business comprising of six major projects. The company is due to provide a revised capital cost estimate and project schedule for its Cobre Panama project in the first quarter of 2014. In addition to the equity, the Company holds a corporate bond originally issued by Inmet to fund the development of Cobre Panama. The bond has a coupon of 8.75% and matures in 2020. Marampa Royalty Contract# - 6.6% (2012: 5.1%) is a 2% revenue-related royalty calculated on any iron ore sales over the life of mine from London Mining Plc's Marampa mine in Sierra Leone. The royalty is payable quarterly in arrears calculated on the amount receivable at the relevant point of sale, currently calculated with reference to the net freight on board price received from sales of iron ore in Sierra Leone (terms similar to that of the existing royalty payable to the Government of Sierra Leone). In September 2013, the company announced the results of the Marampa Life of Mine study which shows that the asset is capable of supporting a 40 year operation at 6mtpa, with the potential for further expansions over time. Freeport-McMoRan Copper & Gold - 6.5% (2012: 3.8%) is a leading copper producer, accounting for 9% of global mined copper production annually. It is also a major producer of gold and molybdenum from mines in North and South America, as well as Indonesia and the DRC. Its Grasberg mine in Indonesia contains the world's largest recoverable copper and gold reserves. In May 2013, the mine was temporarily shut down following an underground incident which reduced 2013 production by 115mlbs copper and 115koz gold. In June 2013, the company announced the completion of the acquisition of Plains Exploration & Production and McMoRan Exploration to enter into US oil & gas. Vale* - 4.1% (2012: 3.5%) is a leading producer of iron ore. Based in Brazil, the company also has significant interests in other commodities such as nickel, aluminium, copper, gold and coal. In addition, Vale owns and operates transport infrastructure. The company made a transformational acquisition in 2006, acquiring Canadian nickel miner Inco, which considerably broadened the company's asset mix away from just iron ore. More recently they have ventured into the fertiliser sector, Zambian copper and Guinean iron ore. Since 2011, under the leadership of new CEO Murilo Ferreira, Vale has revised down its capital expenditure and growth forecasts. At its most recent annual investor day in November 2013, the company announced a capital expenditure budget of US$14.8 billion for 2014, 18% lower than its peak in 2011. Cerro Verde - 2.5% (2012: 3.0%) is a copper and molybdenum operation in Peru operated by Freeport-McMoRan Copper & Gold where they maintain a 53.6% ownership in the company. During the first quarter of 2013 construction activities commenced on the US$4.4 billion large-scale expansion of the asset to triple production at the concentrator facilities and provide an incremental 600mlbs of copper and 15mlbs of molybdenum from 2016. Banro*# - 2.5% (2012: 0.8%) is a Canadian listed gold company that is operating and developing assets in the DRC. The Company has a position in a preference share that is royalty-like in its return profile in that the coupon varies with the amount of gold produced and the gold price in each quarter and the principal due at maturity also varies with the gold price. In addition, the Company holds a position in a 10% coupon 2017 corporate bond. Although at the higher end of the geo-political risk spectrum, the assets are geologically high quality with the potential to operate towards the lower end of the cost curve. There is also a high degree of exploration potential across the large land package over which the company has licenses. Antofagasta - 2.3% (2012: 3.0%) is a Chilean-based copper company with interests in energy, transport and water distribution. The company is 65% owned by the Luksic family of Chile with the remaining 35% free float listed on the London Stock Exchange. Antofagasta is expected to produce 700kt of copper during 2013, with additional growth via the already approved Antucoya expansion project, as well as yet to be approved expansions at Los Pelambres and the Centinela District. * Includes fixed interest securities. # Investments held at Directors' valuation. All percentages reflect the value of the holding as a percentage of total investments. Percentages in brackets represent the value of the holding as at 31 December 2012. Together, the ten largest investments represent 64.7% of total investments (ten largest investments as at 31 December 2012: 53.6%). â€ 2012 percentages reflects Glencore and Xstrata combined and First Quantum Minerals and Inmet Mining combined. Investments 31 December 2013 Main Market % geographical value of exposure Â£'000 investments Diversified Rio Tinto* Global 117,010 11.9 BHP Billiton Global 104,664 10.6 GlencoreXstrata Global 97,875 9.9 Vale* Global 40,191 4.1 Teck Resources Global 19,612 2.0 Vedanta Global 11,669 1.2 African Rainbow Minerals South Africa 10,866 1.1 Lundin Mining Global 8,849 0.9 ------- ---- 410,736 41.7 ------- ---- Copper First Quantum Minerals* Global 77,341 7.8 Freeport-McMoRan Copper & Gold Global 63,802 6.5 Cerro Verde Peru 24,408 2.5 Antofagasta Chile 23,072 2.3 Southern Copper Peru 14,729 1.5 Nevsun Resources Eritrea 11,108 1.1 Imperial Metals Canada 4,540 0.5 Tiger Resources DRC 4,481 0.5 Katanga Mining DRC 2,813 0.3 Ivanhoe Mines DRC 2,573 0.2 Avanco Resources Brazil 2,470 0.2 Oz Minerals Australia 1,272 0.1 Nevada Copper USA 756 0.1 Mawson West DRC 620 0.1 ------- ---- 233,985 23.7 ------- ---- Iron Ore Marampa Royalty Contract# Sierra Leone 65,342 6.6 African Minerals*~ Sierra Leone 22,259 2.3 London Mining convertible Sierra Leone 14,151 1.4 Kumba Iron Ore South Africa 12,653 1.3 Fortescue Metals Australia 6,266 0.6 IRC Russia 1,493 0.2 Equatorial Resources Republic of Congo 1,360 0.1 ------- ---- 123,524 12.5 ------- ---- Gold Banro*+# DRC 24,398 2.5 Franco Nevada Global 7,325 0.7 Randgold Resources Mali 6,633 0.7 Polymetal International Russia 6,372 0.6 Eldorado Gold Global 4,618 0.5 Newcrest Mining Australia 4,424 0.4 Yamana Gold Global 3,636 0.4 New Gold Global 2,985 0.3 Minas Buenaventura Peru 2,915 0.3 Shanta Gold convertible Tanzania 2,777 0.3 G Resources Indonesia 2,370 0.2 Barrick Gold Global 1,702 0.2 Stratex Ethiopia 1,237 0.1 Pacific Niugini Papua New Guinea 36 0.0 ------ --- 71,428 7.2 ------ --- Silver & Diamonds Fresnillo Mexico 21,620 2.2 Industrias Penoles Mexico 20,226 2.1 Dominion Diamond Canada 4,267 0.4 Gem Diamonds Lesotho 4,247 0.4 Tahoe Resources Guatemala 3,984 0.4 Lucara Diamond Botswana 2,753 0.3 Petra Diamonds South Africa 2,660 0.3 Sierra Metals Peru 2,069 0.2 Volcan Peru 1,404 0.1 ------ --- 63,230 6.4 ------ --- Industrial Minerals Iluka Resources Australia 20,113 2.0 Kenmare Resources Mozambique 9,125 0.9 Sirocco Mining Chile 1,698 0.2 Mineral Deposits Senegal 1,420 0.2 ------ --- 32,356 3.3 ------ --- Platinum Platinum Group Metals South Africa 6,478 0.7 Impala Platinum South Africa 5,311 0.6 Source Physical Platinum MA Platinum P-ETC Global 4,056 0.4 Aquarius Platinum 4% 18/12/15 convertible South Africa 2,414 0.2 ------ --- 18,259 1.9 ------ --- Coal China Shenhua Energy Peoples' Republic of China 2,291 0.2 China Shenhua Energy put option Peoples' Republic of China (276) 0.0 ----- --- 2,015 0.2 ----- --- Other Minsur sa 'I' Peru 6,982 0.7 Canadian Oil Sands Canada 6,809 0.7 Norilsk Nickel Russia 6,010 0.6 Potash Corp of Saskatchewan Canada 3,980 0.4 Cameco Canada 2,881 0.3 UEX Canada 1,939 0.2 Metals X Australia 1,111 0.1 Soc Min El Brocal Peru 563 0.1 Bindura Nickel Zimbabwe 38 0.0 ------ --- 30,313 3.1 ------- ----- Portfolio 985,846 100.0 ======= ===== * Includes fixed interest investments. # Investments held at Directors' valuation. + Includes Banro Gold-Linked preference shares. ~ Includes group holdings. All investments are in equity shares unless otherwise stated. The total number of investments (including options classified as liabilities on the balance sheet) as at 31 December 2013 was 71 (31 December 2012: 77). Portfolio analysis 31 December 2013 Commodity Exposure* BlackRock World Mining Trust plc Euromoney Global Mining Index 2013 2012 2013 % % % Aluminium 0.0 0.0 3.2 Coal 0.2 0.0 6.1 Platinum 1.9 2.8 1.8 Industrial Minerals 3.3 3.0 1.0 Silver & Diamonds 6.4 9.3 2.5 Gold 7.2 10.4 14.9 Iron Ore 12.5 12.9 1.1 Copper 23.7 21.9 12.4 Diversified 41.7 38.1 55.2 Other 3.1 1.6 1.8 Geographical Exposure* 2013 2012 % % Global 57.4 51.2 Africa (ex SA) 18.1 13.1 Latin America 12.4 20.3 South Africa 4.1 5.5 Australia 3.2 6.9 Canada 2.5 0.5 Other 2.2*** 2.0** USA 0.1** 0.5 * Based on the principal commodity exposure and place of operation of each investment. ** Consists of Indonesia, Kazakhstan, Mongolia, Oman, Papua New Guinea and Russia. *** Consists of Guatemala, Indonesia, Papua New Guinea, People's Republic of China and Russia. Consolidated Statement of Comprehensive Income for the year ended 31 December 2013 Revenue Revenue Capital Capital Total Total 2013 2012 2013 2012 2013 2012 Notes Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Income from investments held at fair value through profit or loss 3 42,865 42,508 - - 42,865 42,508 Other income 3 5,937 2,553 - - 5,937 2,553 ------ ------ -------- ------- ------ ------ Total revenue 48,802 45,061 - - 48,802 45,061 ------ ------ -------- ------- ------ ------ Losses on investments held at fair value through profit or loss - - (324,228) (93,808) (324,228) (93,808) Realised (losses)/ gains on foreign exchange - - (718) 1,705 (718) 1,705 ------ ------ -------- ------- -------- ------- 48,802 45,061 (324,946) (92,103) (276,144) (47,042) ------ ------ -------- ------- -------- ------- Expenses Investment management fees 4 (3,164) (4,046) (9,492) (12,139) (12,656) (16,185) Other expenses 5 (975) (902) - (766) (975) (1,668) ------ ------ -------- ------- ------ ------- Total operating expenses (4,139) (4,948) (9,492) (12,905) (13,631) (17,853) ------ ------ -------- ------- ------- ------- Net profit/(loss) before finance costs and taxation 44,663 40,113 (334,438) (105,008) (289,775) (64,895) ------ ------ -------- -------- -------- ------- Finance costs 6 (391) (299) (1,175) (895) (1,566) (1,194) ------ ------ -------- -------- -------- ------- Net profit/(loss) on ordinary activities before taxation 44,272 39,814 (335,613) (105,903) (291,341) (66,089) ------ ------ -------- -------- -------- ------- Taxation (4,639) (1,200) 2,813 3,258 (1,826) 2,058 ------ ------ -------- -------- -------- ------- Net profit/(loss) for the year 39,633 38,614 (332,800) (102,645) (293,167) (64,031) ------ ------ -------- -------- -------- ------- Earnings/(loss) per ordinary share 8 22.36p 21.78p (187.72p) (57.90p) (165.36p) (36.12p) ====== ====== ======== ======= ======== ======= The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards ('IFRS'), as adopted by the European Union. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ('AIC'). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of BlackRock World Mining Trust plc. There were no minority interests. The net loss of the Company for the year was Â£293,167,000 (2012: loss of Â£64,031,000). The Group does not have any other comprehensive income. The net return for the year disclosed above represents the Group's comprehensive income. Statements of Changes in Equity for the year ended 31 December 2013 Ordinary Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Group Note Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the year ended 31 December 2012 At 31 December 2011 9,651 127,155 116,471 22,779 994,236 46,712 1,317,004 Total comprehensive income: (Loss)/profit for the year - - - - (102,645) 38,614 (64,031) Transactions with owners: Dividend paid 7 - - - - - (37,230) (37,230) ----- ------- ------- ------ ------- ------- ------- At 31 December 2012 9,651 127,155 116,471 22,779 891,591 48,096 1,215,743 ===== ======= ======= ====== ======= ====== ========= For the year ended 31 December 2013 At 31 December 2012 9,651 127,155 116,471 22,779 891,591 48,096 1,215,743 Total comprehensive income: (Loss)/profit for the year - - - - (332,800) 39,633 (293,167) Transactions with owners: Dividend paid 7 - - - - - (37,230) (37,230) ----- ------- ------- ------ ------- ------- ------- At 31 December 2013 9,651 127,155 116,471 22,779 558,791 50,499 885,346 ===== ======= ======= ====== ======= ====== ======= Ordinary Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Company Note Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the year ended 31 December 2012 At 31 December 2011 9,651 127,155 116,471 22,779 1,005,137 35,811 1,317,004 Total comprehensive income: (Loss)/profit for the year - - - - (102,640) 38,609 (64,031) Transactions with owners: Dividend paid 7 - - - - - (37,230) (37,230) ----- ------- ------- ------ ------- ------- -------- At 31 December 2012 9,651 127,155 116,471 22,779 902,497 37,190 1,215,743 ===== ======= ======= ====== ======= ====== ========= For the year ended 31 December 2013 At 31 December 2012 9,651 127,155 116,471 22,779 902,497 37,190 1,215,743 Total comprehensive income: (Loss)/profit for the year - - - - (332,792) 39,625 (293,167) Transactions with owners: Dividend paid 7 - - - - - (37,230) (37,230) ----- ------- ------- ------ ------- ------- ------- At 31 December 2013 9,651 127,155 116,471 22,779 569,705 39,585 885,346 ----- ------- ------- ------ ------- ------ ------- Statements of Financial Position as at 31 December 2013 2013 2013 2012 2012 Group Company Group Company Notes Â£'000 Â£'000 Â£'000 Â£'000 Non current assets Investments held at fair value through profit or loss 986,122 998,536 1,318,360 1,330,766 Deferred tax asset 1,795 1,795 3,002 3,002 ------- --------- --------- --------- 987,917 1,000,331 1,321,362 1,333,768 ------- --------- --------- --------- Current assets Cash and cash equivalents 16,553 5,273 14,493 3,224 Other receivables 6,293 6,293 3,693 3,693 ------- ------ ------ ------ 22,846 11,566 18,186 6,917 --------- ------ ------ ------ Total assets 1,010,763 1,011,897 1,339,548 1,340,685 --------- --------- --------- --------- Current liabilities Other payables (22,949) (24,083) (21,672) (22,809) Derivative financial instruments - written options (276) (276) (250) (250) Bank loans and bank overdrafts (101,915) (101,915) (100,892) (100,892) -------- -------- -------- -------- (125,140) (126,274) (122,814) (123,951) -------- -------- -------- -------- Total assets less current liabilities 885,623 885,623 1,216,734 1,216,734 Non current liabilities Deferred tax liabilities (277) (277) (991) (991) ------- ------- --------- --------- Net assets 885,346 885,346 1,215,743 1,215,743 ======= ======= ========= ========= Equity attributable to equity holders Ordinary share capital 9 9,651 9,651 9,651 9,651 Share premium account 127,155 127,155 127,155 127,155 Special reserve 116,471 116,471 116,471 116,471 Capital redemption reserve 22,779 22,779 22,779 22,779 Capital reserves 558,791 569,705 891,591 902,497 Revenue reserve 50,499 39,585 48,096 37,190 ------- ------- --------- --------- Total equity 885,346 885,346 1,215,743 1,215,743 ======= ======= ========= ========= Net asset value per ordinary share 8 499.39p 499.39p 685.75p 685.75p ======= ======= ======= ======= Cash Flow Statements for the year ended 31 December 2013 2013 2013 2012 2012 Group Company Group Company Â£'000 Â£'000 Â£'000 Â£'000 Operating activities Loss before taxation (291,341) (291,344) (66,089) (66,091) Add back interest paid 1,566 1,566 1,194 1,194 Losses on investments held at fair value through profit or loss including transaction costs 324,228 324,220 93,808 93,803 Net losses/(gains) on foreign exchange 718 718 (1,705) (1,705) Sales of investments held at fair value through profit or loss 317,195 317,195 281,719 281,719 Purchases of investments held at fair value through profit or loss (309,159) (309,159) (340,539) (340,539) Increase in other receivables (94) (94) (138) (138) Increase in amounts due from brokers (2,610) (2,610) (189) (189) (Decrease)/increase in amounts due to brokers (11,125) (11,125) 12,462 12,462 Increase in other payables 12,399 12,399 3,927 3,927 ------ ------ ------ ------ Net cash inflow/(outflow) from operating activities before interest and taxation 41,777 41,766 (15,550) (15,557) ------ ------ ------- ------- Interest paid (1,566) (1,566) (1,194) (1,194) Taxation paid - - (40) (40) Taxation on overseas income (1,226) (1,226) (1,144) (1,144) ------ ------ ------ ------ Net cash inflow/(outflow) from operating activities before financing activities 38,985 38,974 (17,928) (17,935) ------ ------ ------- ------- Financing activities Drawdown of loan 168 168 40,624 40,624 Dividend paid (37,230) (37,230) (37,230) (37,230) ------- ------- ------- ------- Net cash (outflow)/inflow from financing activities (37,062) (37,062) 3,394 3,394 ------- ------- ------ ------ Increase/(decrease) in cash and cash equivalents 1,923 1,912 (14,534) (14,541) ------ ------ ------- ------- Effect of foreign exchange rate changes 137 137 (1,086) (1,086) ------ ------ ------ ------ Change in cash and cash equivalents 2,060 2,049 (15,620) (15,627) Cash and cash equivalents at start of year 14,493 3,224 30,113 18,851 ------ ------ ------ ------ Cash and cash equivalents at end of year 16,553 5,273 14,493 3,224 ====== ====== ====== ====== Comprised of: Cash 15,261 3,981 13,325 2,056 Collateral pledged for written option contracts 1,292 1,292 1,168 1,168 ------ ------ ------ ------ 16,553 5,273 14,493 3,224 ====== ====== ====== ====== Notes to the Financial Statements 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. The principal activity of the subsidiary, BlackRock World Mining Investment Company Limited, is investment dealing. 2. Accounting policies The principal accounting policies adopted by the Group and the Company are set out below. (a) Basis of preparation The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The Group has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes. The Group's financial statements are presented in sterling, which is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (Â£'000) except where otherwise indicated. New standards, amendments to standards and interpretations effective for annual periods beginning after 1 January 2013 that have been adopted by the Group in preparing these financial statements are: IFRS 13 - "Fair Value Measurement" (effective 1 January 2013) establishes a single source of guidance under IFRS for all fair value measurements. It does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. IFRS 13 defines fair value as an exit price. The standard does not have any impact on the classification and/or valuation of the Group and Company's financial instruments. IFRS 13 also requires additional disclosures, and these are provided in Note 18 on pages 55 to 63 of the Annual Report. IFRS 7 (amendment), Financial Instruments - Disclosures (effective for periods beginning on or after 1 January 2013) - amendments enhancing disclosures about offsetting financial assets and financial liabilities. The disclosures required by this standard are given in Note 18 on pages 56 to 64 of the Annual Report. A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Company; however, additional disclosures will be required. However, IFRS 9 "Financial Instruments" issued in November 2009 will change the classification of financial assets, but is not expected to have an impact on the measurement basis of the financial assets since the majority of the Company's financial assets are measured at fair value through profit or loss. IFRS 9 - "Financial Instruments" deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: at amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of "held to maturity", "available for sale" and "loans and receivables". The standard is not yet approved by the EU. IFRS 10 - "Consolidated Financial Statements" (effective 1 January 2014) establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated by a parent. The standard is not likely to have any impact on the Group. IFRS 11 - "Joint Arrangements" (effective 1 January 2014) removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. This is not applicable to the Group as it holds no interests in joint arrangements. IFRS 12 - "Disclosure of Involvement with Other Entities" (effective 1 January 2014) now requires additional disclosures that relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. This standard is not expected to apply to the Group as it does not invest in structured entities. Insofar as the Statement of Recommended Practice ('SORP') for investment trusts and venture capital trusts issued by the Association of Investment Companies ('AIC'), revised in January 2009 is compatible with IFRS, the financial statements have been prepared in accordance with the guidance set out in the SORP. (b) Basis of consolidation The Group financial statements consolidate the financial statements of the Company and its wholly owned subsidiary, BlackRock World Mining Investment Company Limited, which are registered and operate in England and Wales. (c) Presentation of the Consolidated Statement of Comprehensive Income In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. (d) Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business being investment business. (e) Income Dividends receivable on equity shares are recognised on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Interest income is accounted for on an accruals basis. Income from contractual rights is measured at the fair value of the consideration received or receivable where the Investment Manager can reliably estimate the amount, pursuant to the terms of the agreement. Income from contractual rights received comprise of a return of income and a return of capital based on the underlying cost of the contract and, accordingly, the return of income element is taken to the revenue account and the return of capital element is taken to the capital account. These amounts are disclosed in the Consolidated Statement of Comprehensive Income within income from investments and gains/losses on investments held at fair value through profit or loss, respectively. The useful life of the contractual rights will be determined by reference to the contractual arrangements, the planned mine life on commencement of mining and the underlying cost of the contractual rights will be revalued on a systematic basis using the units of production method over the life of the contractual rights which is estimated using available estimated proved and probable reserves specifically associated with the mine. The Investment Manager relies on public disclosures for information on proven and probable reserves from the operators of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of contractual rights and iron ore reserves. These are disclosed in the Consolidated Statement of Comprehensive Income within gains/losses on investments held at fair value through profit or loss. Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue column of the Consolidated Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Company's investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital column of the Consolidated Statement of Comprehensive Income. When an option is closed out or exercised the gain or loss is accounted for as capital. (f) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows: - expenses which are incidental to the acquisition of an investment are included within the cost of the investment. Details of transaction costs on the purchases and sales of investments are disclosed in Note 10 on page 52 of the Annual Report. - effective from 1 January 2012, the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio; - expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. (g) Taxation Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. (h) Investments held at fair value through profit or loss The Company's investments, including contractual rights, are classified as held at fair value through profit or loss in accordance with IAS 39 - "Financial Instruments: Recognition and Measurement" and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments, including contractual rights, are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value which will be regarded as the proceeds of sale less any transaction costs. Contractual rights are recognised on the completion date, where a purchase of the rights is under a contract, and is initially measured at fair value excluding transaction costs. The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. For all financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed by the Board to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible). Gains and losses arising from changes in fair value of investments and on disposal of investments are recognised directly in the Consolidated Statement of Comprehensive Income. The gains and losses from changes in fair value of contractual rights are taken to the Consolidated Statement of Comprehensive Income and arise as a result of the revaluation of the underlying cost of the contractual rights, changes in commodity prices and changes in estimates of proven and probable reserves specifically associated with the mine. In order to improve the disclosure of how companies measure the fair value of their financial investments, the disclosure requirements in IFRS 13 have been extended to include a fair value hierarchy. The fair value hierarchy consists of the following three levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valued by reference to valuation techniques using market observable inputs such as quoted prices; Level 3 - inputs for the asset or liability that are not based on observable market data. Under IFRS, the investment in the subsidiary is fair valued which is deemed to be the net asset value of the subsidiary. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. (i) Other receivables and other payables Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value. (j) Dividends payable Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid. Dividends payable to equity shareholders are recognised in the Statements of Changes in Equity when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend, and have become a liability of the Group. (k) Foreign currency translation Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income. (l) Cash and cash equivalents Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. (m) Bank borrowings Bank overdrafts and loans are recorded as the proceeds received. Finance charges, including any premia payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Consolidated Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. (n) Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Fair value of financial instruments When the fair values of financial assets and financial liabilities recorded in the Statements of Financial Position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of valuation models. The fair value of contractual rights was assessed by IMC Group Consulting Limited, an independent valuer with a recognised and relevant professional qualification. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The estimates include considerations of production profiles, commodity prices, cash flows and discount rates. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the Statements of Financial Position and the level where the instruments are disclosed in the fair value hierarchy. To assess the significance of a particular input to the entire measurement, the external valuer performs sensitivity analysis. The key assumptions used to determine the fair value of the contractual rights and sensitivity analyses are provided in note 18 of the Annual Report. 3. Income 2013 2012 Â£'000 Â£'000 Investment income: UK listed dividends 10,870 9,264 Overseas listed dividends 15,209 20,759 Overseas listed special dividends 4,130 446 Income from contractual rights 2,984 266 Fixed interest income 9,672 11,773 ------ ------ 42,865 42,508 ------ ------ Other income: Option premiums 5,440 2,114 Deposit interest 22 21 Underwriting commission and other income 475 418 ------ ------ 5,937 2,553 ------ ------ Total income 48,802 45,061 ====== ====== Total income comprises: Dividends 30,209 30,469 Deposit interest 22 21 Option premiums 5,440 2,114 Income from contractual rights 2,984 266 Fixed interest income 9,672 11,773 Other income 475 418 ------ ------ 48,802 45,061 ====== ====== The Company considers the treatment of premium arising on option transactions on a case-by-case basis. During the year ended 31 December 2013, the option premium income of Â£5,521,000 (2012: Â£2,114,000) received by the Company was from options written for income purposes of which Â£5,440,000 has been credited to the revenue column of the Consolidated Statement of Comprehensive Income as it is recognised evenly over the life of the option contract. 4. Management fee 2013 2012 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment management fee 3,164 9,492 12,656 4,046 12,139 16,185 ===== ===== ====== ===== ====== ====== The investment management fee is levied quarterly at a rate of 1.3% per annum, based on the value of gross assets on the last day of each quarter and, effective from 1 January 2012, 75% of investment management fees are allocated to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income. 5. Other expenses 2013 2012 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Custody fee 183 - 183 379 - 379 Auditor's remuneration: - audit services 28 - 28 39 - 39 - other assurance services*# 6 - 6 6 198 204 Registrar's fee 98 - 98 72 - 72 Directors' emoluments** 133 - 133 119 - 119 Other administrative costs# 527 - 527 287 568 855 --- --- --- --- --- ----- 975 - 975 902 766 1,668 --- --- --- --- --- ----- 2013 2012 The Company's ongoing charges, calculated as a percentage of average net assets for the year and using expenses, excluding finance costs were: 1.4% 1.4% ---- ---- * Other assurance services relate to the review of the half yearly financial statements. ** The emoluments of the Chairman, who was also the highest paid Director, were Â£33,750 (2012: Â£30,000). # In 2012, expenses charged to capital include Â£198,000 paid to the auditors relating to tax and structuring services and Â£568,000 paid to legal and corporate finance advisers relating to advice provided for a proposed but not completed corporate acquisition. 6. Finance costs 2013 2012 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Interest on bank loans 390 1,172 1,562 297 890 1,187 Interest on bank overdrafts 1 3 4 2 5 7 --- ----- ----- --- --- ----- 391 1,175 1,566 299 895 1,194 === ===== ===== === === ===== 7. Dividends Under IFRS, final dividends are not recognised until they are approved by shareholders, and special and interim dividends are not recognised until they are paid. They are also debited directly to reserves. Amounts recognised as distributable to ordinary shareholders for the period to 31 December were as follows: 2013 2012 Â£'000 Â£'000 Interim ordinary dividend in respect of the year ended 31 December 2013 of 7.00p per share, declared on 21 August 2013 12,410 12,410 Final ordinary dividend in respect of the year ended 31 December 2012 of 14.00p per share, approved by shareholders on 25 April 2013 24,820 24,820 ------ ------ 37,230 37,230 ====== ====== The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in this legislation. 2013 2012 Â£'000 Â£'000 Dividends paid or proposed on equity shares: Interim ordinary dividend paid of 7.00p (2012: 7.00p)* 12,410 12,410 Proposed final ordinary dividend of 14.00p per share (2012: 14.00p)* 24,820 24,820 ------ ------ 37,230 37,230 ------ ------ * Based on 177,287,242 (2012: 177,287,242) ordinary shares. 8. Consolidated earnings and net asset value per ordinary share Revenue and capital returns per share and net asset value per share are shown below and have been calculated using the following: 2013 2012 Net revenue profit attributable to ordinary shareholders (Â£'000) 39,633 38,614 Net capital loss attributable to ordinary shareholders (Â£'000) (332,800) (102,645) -------- -------- Total loss attributable to ordinary shareholders (Â£'000) (293,167) (64,031) ======== ======== Total equity attributable to ordinary shareholders (Â£'000) 885,346 1,215,743 ======== ======== The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated was: 177,287,242 177,287,242 The number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was: 177,287,242 177,287,242 ----------- ----------- Revenue earnings per share 22.36p 21.78p Capital loss per share (187.72p) (57.90p) -------- -------- Total loss per share (165.36p) (36.12p) -------- -------- Net asset value per share 499.39p 685.75p Share price 465.00p 586.50p ======== ======== At 31 December 2013, the 15,724,600 (2012: 15,724,600) shares held in treasury were not dilutive to earnings per share, as the share price was below the net asset value. 9. Share capital Ordinary Treasury shares shares number number Total (nominal) (nominal) shares Â£'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each ----------- ---------- ----------- ----- At 1 January 2013 177,287,242 15,724,600 193,011,842 9,651 ----------- ---------- ----------- ----- At 31 December 2013 177,287,242 15,724,600 193,011,842 9,651 =========== ========== =========== ===== During the year, no shares (2012: nil) were repurchased (2012: cost of Â£nil). 10. Contingent liabilities There were no contingent liabilities at 31 December 2013 (2012: nil). 11. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The annual report and financial statements for the year ended 31 December 2013 will be filed with the Registrar of Companies after the Annual General Meeting. The figures set out above have been reported upon by the Auditor, whose report for the year ended 31 December 2013 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The comparative figures are extracts from the audited financial statements of BlackRock World Mining Trust plc and its subsidiary for the year ended 31 December 2012, which have been filed with the Registrar of Companies. The report of the Auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act 2006. 12. Annual Report Copies of the annual report will be published shortly and will be available from the registered office, c/o The Company Secretary, BlackRock World Mining Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 13. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 8 May 2014 at 11.30 a.m. ENDS The Annual Report will also be available on the BlackRock Investment Management website at www.blackrock.co.uk/brwm. 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. For further information, please contact: Jonathan Ruck Keene, Chairman, Specialist Client Group, BlackRock Investment Management (UK) Limited - Tel: 020 7743 2178 Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited - Tel: 020 7743 4511 Emma Phillips, Media & Communications, BlackRock Investment Management (UK) Limited - Tel: 020 7743 2922 20 February 2014 12 Throgmorton Avenue London EC2N 2DL

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