Half-yearly Report
BLACKROCK WORLD MINING TRUST plc
Half yearly financial results for the six months ended 30 June 2010
Performance to 30 June 2010 Six months Five years
Net asset value per share - undiluted:
- capital only -4.8% 135.2%
- with income reinvested -4.2% 149.1%
Net asset value per share - diluted:
- capital only -4.8% 135.2%
- with income reinvested -4.2% 145.6%
Ordinary share price:
- capital only -0.2% 134.4%
- with income reinvested 0.6% 150.5%
HSBC Global Mining Index*:
- capital only -5.2% 148.9%
- with income reinvested -4.4% 175.0%
* Adjusted for exchange rates relative to sterling.
A dividend of 4.75p per share went ex-dividend on 17 March 2010. Where
performance has income included, it is reinvested on the ex-dividend date.
Sources: BlackRock and Datastream.
For further information please contact:
Jonathan Ruck Keene, Managing Director,
Investment Companies Division - 020 7743 2178
Evy Hambro, Fund Manager - 020 7743 4511
Emma Phillips, Media & Communications - 020 7743 2922
BlackRock Investment Management (UK) Limited
Or
William Clutterbuck - 020 7379 5151
Maitland Consultancy
Chairman's Statement
Overview
After the strong recovery in mining shares in 2009, following the severe
downturn in the second half of 2008, January started positively with share
prices rising on the back of a strong macro-economic environment. However,
towards the end of the month, the market weakened as investors became more risk
averse due to uncertainties in global markets. Despite this instability,
February and March proved to be strong months for mining commodities and it was
not until late April that commodity prices began to fall.
During the period, investors' concerns have included the increase in controls
on the banking sector; a slowdown in demand from China, the world's largest
metals consumer, following the introduction of a tighter monetary policy; the
European debt crisis; and the proposal by the Australian Government to
introduce a resources "super" tax on mining profits.
Against these uncertainties, over the six month period to 30 June 2010 the
Company's net asset value decreased by 4.2% and the share price increased by
0.6% (both with income reinvested). By comparison, your Company's benchmark,
the HSBC Global Mining Index, fell by 4.4%.
We are pleased to note a rise in markets since the period end with the
Company's net asset value increasing by 8.6% compared to an increase of 8.1%
in the benchmark index. In the year to date, the Company's net asset value
has risen by 4.1% compared to an increase of 3.3% in the benchmark index.
Performance
The Board is pleased to report that, in May, the Association of Investment
Companies placed the Company first on a list of investment trusts producing the
most consistent outperformance over the past ten years. The Company came top
when discrete annual returns were benchmarked against the average performance
of the investment company industry. The Company also emerged as the most
consistent outperformer over ten years when assessing share price performance.
Alternative Investment Fund Managers ("AIFM") Directive
In my annual statement to shareholders, I reported on The European Commission's
AIFM Directive which will create new regulatory obligations and costs for the
investment trust sector. The Commission's original proposals for a Directive
have been debated for some months and, although the legislation is still to be
finalised, we are hopeful that the worst outcomes of the original proposals
will be avoided for investment trusts. Again, we will keep shareholders advised
of progress.
Outlook
In the near term, volatility within the mining sector is likely to persist
until there is greater certainty that the global economic recovery that began
last summer can be sustained. However, short term concerns have provided good
buying opportunities to benefit from future growth in leading developing
markets, and the medium to long term prospects for the mining sector remain
robust.
A W Lea
11 August 2010
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational;
- Resource; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 December 2009.
A detailed explanation can be found on pages 18 and 19 of the Annual Report and
Accounts which is available on the website maintained by the Investment
Manager, BlackRock Investment Management (UK) Limited, at
www.blackrock.co.uk/its.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 3.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting"; and
- the interim management report, together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency
Rules.
The half yearly financial report has been reviewed by the Company's auditors.
The half yearly financial report was approved by the Board on 11 August 2010
and the above responsibility statement was signed on its behalf by the
Chairman.
A W Lea
By order of the Board
11 August 2010
Investment Manager's Report
The early part of 2010 started positively, continuing the trend of recovery
from the lows reached in 2008. However, this proved to be short lived as a
series of government induced shocks buffeted investor confidence in the
continuation of a recovery in the global economy. Government-led calls for
increased banking controls, fiscal tightening in China, European debt
downgrades and, most alarmingly, the Australian Resources Super Tax Proposal
were significant headwinds for the mining sector to contend with. The end
result was that the first half, as a whole, was more akin to a roller coaster
as financial markets swung between gains and losses. Given the issues the
sector has had to deal with, the overall fall has not been as bad as first
feared and whilst commodity prices remain at current levels the companies
should generate significant cash flows.
Macro headwinds - Fiscal tightening and tax change
During 2008, the Australian Government started a review process on the domestic
tax system. This review was led by the Treasury Department under the leadership
of Ken Henry and despite much speculation on what would be identified for
change, what the new level of tax would be and what would then subsequently be
adopted from this review, the Government opted for the proposed Resource Super
Profit Tax ("RSPT"). The main areas of contention were that it is in addition
to the existing royalties and corporate tax that companies already pay; the
"super profits" are deemed to have been reached at a return hurdle that is
lower than the cost of capital for most mining companies; and that it is
payable before invested capital is recovered. In summary, it would have
penalised efficient operations that have already paid back the original capital
investment and introduces the Government as an effective non-contributing
silent partner in existing assets and new projects. If introduced, the RSPT
would have made Australia one of the least attractive places in the world for
mining companies to operate and invest; the irony is that it has one of the
greatest mineral endowments!
The prospect of this tax coming into effect caused massive falls in the
valuation of all mining assets. The Company was caught up in this move due to
its high exposure to growth orientated companies, especially in the iron ore
and coal sectors in Australia. However, as a result of combined pressure from
the voting public and the mining sector, the Prime Minister of Australia was
forced to resign and a consultation process with the mining sector was
initiated by Julia Gillard, the new Prime Minister. The process has concluded
with a new tax proposal called the Mineral Resources Rent Tax ("MRRT"). The
new tax overcomes most of the controversial aspects of the RSPT and results
in a more manageable increase in taxation. To date, mining company valuations
have not recovered the lost ground owing to the other headwind of fiscal
tightening in China.
For most of the first half of 2010, China has sought to moderate the rate of
economic growth after GDP growth soared to 10.7% in the fourth quarter of 2009,
well above the level targeted by the Government. Despite still posting strong
GDP growth data for the first quarter of 2010 (11.9%), these measures unsettled
investors as they feared such moves could lead to a hard landing for the
world's largest commodity consumer. To date the Chinese Government has
succeeded in cooling economic activity; the latest data for June showed that
loan and construction growth rates are falling towards the targeted levels.
Most importantly for the mining sector, the level of commodity imports
(although now lower than first forecast) is holding up relative to
expectations. It is too early to tell, but should economic activity continue to
cool then it is feasible that the Government might start to loosen policy later
in the year and this should ease investor fears of a hard landing for Chinese
commodity demand.
Base metals
Base metals had a mixed first half, with prices generally peaking in April 2010
following strong consumption growth out of both China and the US. The LME
inventories of several metals peaked during the first half of the year and are
now declining, with inventories of copper (one of the most important metals for
the Company) decreasing by 19% from their peak in February. In terms of price
performance, zinc was the poorest performer over the period, down 30.4%, whilst
nickel was the strongest performer up 6.7%. The nickel price was driven by
rapid restocking in the stainless steel market during the first quarter, which
led to a short term squeeze that took the price from around US$8.30/lb at the
start of the year to over US$12.30/lb in April. However, with weakening
economic data and fears over the sustainability of the global recovery,
stainless steel producers began to destock and nickel prices ended the period
only marginally up for the year. However, it was encouraging to note the change
in average first half prices, which showed a marked increase year-on-year for
all metals apart from uranium. It is our expectation that this, combined with
the lagged effect of cost cutting initiatives started last year, should
translate into significantly improved profit margins for the mining companies.
The copper price has been the most resilient of the base metals, averaging 14%
higher than in the previous half at over US$3.20/lb. At these levels, the
Company's copper holdings have been benefiting from high profit margins, which
has led to extremely strong cash flow generation. Having resumed paying
dividends in October 2009, one of the Company's largest copper positions,
Freeport McMoRan, doubled its quarterly dividend in April 2010. Another of the
Company's copper holdings, First Quantum, has had a more difficult first half
owing to ongoing issues with the Government of the Democratic Republic of Congo
("DRC"). In September 2009, First Quantum's 65% owned Kolwezi project,
partnered with the International Finance Corporation (part of the World Bank)
and Industrial Development Corporation of South Africa, was confiscated by the
DRC Government. In February 2010 the company, along with its partners,
commenced international arbitration proceedings over this confiscation,
subsequent to which the DRC Government has threatened to expropriate the
company's other two producing mines in the country. Despite strong cash flows
from operations both within and outside of the DRC, and regardless of its
efforts to diversify away from the country through the development of the
Kevitsa nickel-copper project in Finland, the acquisition of BHP Billiton's
Ravensthorpe nickel mine in Australia, and the acquisition of the Kalumbila
projects in Zambia, the share price continues to be weighed down by the issues
in the DRC. The current share price is more than discounting the loss of all
of First Quantum's assets in the DRC; we view this as a positive for future
share price performance.
One of the measures discussed in the Company's report last year as a positive
signal for a recovery in metal prices was the production cuts that producers
initiated. It is pleasing to see that much of this production continues to
remain idle, with the exception of aluminium. This reason, combined with the
large physical stock piles held by traders and in LME warehouses, is why the
Company continues to have limited exposure to the metal. However, we are
watching the negotiations between alumina producers and their customers with
interest to see if they can reach agreement on a change in the way that alumina
is sold. If this goes according to our expectations, there could be
considerable value transfer to upstream in the aluminium production process and
this is where the portfolio is positioned.
% change % change
Price six months to average
Commodity 30 June 2010 30 June 2010 H1 2010/H1 2009
-------------------------------------------------------------------------------
Gold Bullion US$/oz 1,243.65 +13.5 +25.9
Silver US$/oz 18.74 +10.3 +34.3
Platinum US$/oz 1,532 +4.9 +45.6
Copper US$/lb 2.94 -11.7 +76.8
Nickel US$/lb 8.93 +6.7 +82.1
Aluminium US$/lb 0.89 -11.2 +49.8
Zinc US$/lb 0.8 -30.4 +63.6
Lead US$/lb 0.78 -28.2 +57.5
Tin US$/lb 7.88 +3.0 +43.3
Iron Ore Lump US$/t* 133.5 +31.0 n/a
Coking Coal US$/t* 210 +16.7 n/a
Thermal Coal US$/t* 98.3 +14.3 n/a
Uranium US$/t 41.75 -6.2 -10.2
*Spot price.
Sources: Datastream and Macquarie.
Gold and precious commodities
Similar to last year, gold prices have continued to trend higher with the
half-on-half average price up 26% and the year to date price rising 13.5%,
peaking at over US$1,260/oz (a new all time high). The move higher was
primarily driven by a combination of continued uncertainty over the stability
of sovereign debt, particularly in Europe, and strong demand from gold ETF
buyers. This year has also seen announcements from Central Banks which outline
much reduced levels of sales and, more importantly, a growing list of buyers.
It might be too early to call this a change in trend, but if Central Banks have
truly reversed strategy and are now buyers, then the gold price looks to be
well supported at a level which should drive gold mining company earnings
higher.
During the first half of the year, the Company benefited from the takeover bid
by Newcrest for Lihir. At first the prospect of combining the two companies was
not understood by the market and what was gained in Lihir was lost in the
Newcrest holding. However, by the end of the period, Newcrest had started to
re-rate and momentum seems to be behind the deal. There have also been a number
of smaller transactions in the gold sector as larger companies either shed non
core assets or sought to consolidate positions in key producing areas. What is
more important for us, as investors, is that management begin to return part of
the improved profitability to shareholders through dividends; this trend seems
to be developing.
The price of silver also did well during the period rising by 10.3% and, as
such, holdings in Fresnillo and Penoles were key contributors to overall
performance. Platinum lagged the price of gold and silver but still posted a
respectable 4.9% rise during the period. However, the share prices of the
Company's platinum investments, having done well during the early months of the
year, gave up the gains in the second quarter as prices for the suite of
platinum group metals retreated from recent highs. We remain confident that the
rising demand from the automotive sector will continue during the second half
and, with prices now lower, the threat of substitution should start to abate.
Diversified mining companies and industrial minerals
Unlike last year when the diversified producers provided the bulk of the
returns, this year they have lagged the precious metal and base metal miners.
It is a conundrum that such large producers of iron ore, coking and thermal
coal can perform so poorly when the underlying commodity prices have done so
well. In part, this can be put down to the high level of exposure to Australia
and the damage to sentiment that the proposed new tax had on investors.
However, now that this tax seems to have been made more manageable and
underlying commodity prices remain at current levels, these holdings look set
to generate considerable amounts of cash flow. Our hope is that the
conservatism from 2009 remains intact and management pay down debt and return
surplus cash to shareholders. This will serve to rebuild the shareholder trust
that was so damaged during 2008.
During the period under review, the Australian based iron ore producers finally
achieved the goal they have been working towards during the last few years.
Rather than the usual annual fixed price contracts, the iron ore market appears
to have moved to a shorter time period adjusted contract price (not only
quarterly but one with a reference price that reflects the cost in shipping
iron ore from further afield than Australia). This should result in improved
margins for Australian iron ore miners but at a cost of increased price
volatility.
The iron ore market has also been party to a number of mergers and acquisitions
("M&A") deals. In West Africa, Chinese investors have not only bought into a
number of iron ore projects but also promised to invest considerable sums in
infrastructure which has always been the main barrier preventing these projects
from being developed. In addition Vale, the world's largest iron ore producer,
took the market by surprise when it bought into the Simandou project in Guinea.
This project is the subject of much contention and we will be watching this
situation closely to see if the deal works out for Vale.
Coking coal miners have also benefited considerably during the year as prices
soared during the early months before settling at current levels. The Company
has considerable exposure to this commodity through its holding in Teck
Resources (the sixth largest holding in the portfolio) and Peabody, as well as
via the large diversified mining companies. The coal sector has seen
considerable M&A activity: this was especially prevalent in Australia, where
hostile bid battles for domestic producers have continued throughout the first
half of the year. In addition, Glencore exercised their option to repurchase
the Prodeco mine from Xstrata in March for US$2.25 billion. Outside of this
specific deal there have also been numerous media reports that Glencore and
Xstrata might combine into one company. To date, neither company has commented
on such a deal but should this happen the Company is exposed via shares in
Xstrata and the holding in Glencore convertible bonds.
Derivatives activity
The Company from time to time enters into derivatives contracts with most of
the activity involving the sale of "puts" and "calls". The option premia are
taken to revenue, unless the option represents an incidental part of a larger
capital transaction, and are subject to strict Board guidelines which limit
their magnitude to an aggregate 10% of the portfolio.
Gearing
As at 30 June 2010, the Company had gearing amounting to £27.3 million (2.4%).
At 30 June 2009 and 31 December 2009, gearing amounted to nil and £42.0 million
(3.6%), respectively.
Outlook
Commodity prices during the year, although volatile, have been stronger than
most companies expected and this bodes well for company earnings. During the
remaining six months of the financial year, we expect further commodity price
volatility, as economic statistics tackle the higher base set in the second
half of 2009 for looking at year-on-year changes. However, with the apparent
success of measures taken by China to moderate growth, the balance of
probability is for looser monetary policy rather than further tightening.
Despite these short term headwinds, the long term prospects remain robust. In
addition, when investors receive clarity on the Australian tax reform, the
losses triggered by the first proposal should reverse. Last but by no means
least, we will be watching closely for signs of poor capital management by the
mining companies and should this happen we will act to protect the portfolio
from such misplaced strategies.
Evy Hambro and Catherine Raw
BlackRock Investment Management (UK) Limited
11 August 2010
Ten Largest Investments
30 June 2010
Vale^ - 9.9% (2009: 10.8%) formerly known as CVRD, is the world's largest
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 by purchasing Inco for cash. This
considerably broadened the company's asset mix. More recently, they have
ventured into the fertiliser sector acquiring assets from Rio Tinto. In
June 2010, Vale announced the acquisition of Simandou iron ore assets in Guinea
for US$2.5 billion. These licenses were originally owned by Rio Tinto; however
they were forced to give them up by the Guinean Government in 2008.
Rio Tinto* - 9.4% (2009: 9.1%) is the world's third largest 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. In October 2007, Rio Tinto acquired Alcan making it the world's
largest bauxite and aluminium producer, but also significantly increasing its
debt burden. During much of 2008, the company was the subject of a bid by its
major rival BHP Billiton. However in November 2008, with financial markets in
crisis, commodity prices collapsing and onerous conditions required for EU
approval for the deal, BHP Billiton withdrew. Rio Tinto was left severely
indebted and at the start of 2009 looked unable to fulfil its debt obligations.
In February 2009, the company announced a deal with Chinalco, the Chinese state
aluminium company. However, shareholder outcry over the lack of pre-emption
rights, the departure of the company's chairman and an improvement in financial
and commodity market conditions meant Rio Tinto walked away from the deal.
Instead they raised money through an equity rights issue, a bond issue and a
proposed 50:50 iron ore joint venture with BHP Billiton.
BHP Billiton - 7.2% (2009: 7.3%) is the world's largest 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. In addition, the
company is the only sizeable holding in the portfolio with significant oil and
gas assets. BHP Billiton approached Rio Tinto in November 2007 about a
potential merger but was rebuffed. It subsequently launched a hostile bid in
February 2008 but withdrew in November 2008 in part due to worsening economic
conditions and poor financial markets. In June 2009, BHP Billiton and Rio Tinto
announced that they had agreed to a proposed 50:50 iron ore joint venture,
approval of which has yet to be granted by the relevant regulatory bodies.
Minas Buenaventura - 7.0% (2009: 5.0%) is South America's premier precious
metals company. Its main asset is a 43.65% stake in the Yanacocha gold mine in
Peru, which it jointly owns with Newmont. The company operates seven mines in
Peru, has a controlling interest in zinc miner Minera El Brocal, and an 18.5%
interest in copper miner Cerro Verde. In addition, the company has a
significant exploration portfolio, including the Chucapaca project in southern
Peru which it has joint ventured with Gold Fields Limited.
Glencore* - 6.0% (2009: 5.1%) is a leading, privately held, 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. These activities are supported by
investments in industrial assets operating in Glencore's core commodity areas,
including a 35% stake in Xstrata. The company has been operating for
thirty-five years and is one of the world's largest privately held companies
(as measured by revenues).
Teck Resources* - 5.6% (2009: 5.1%) is a Canadian diversified miner that is a
leader in the production of metallurgical coal and zinc, as well as a
significant producer of copper. In September 2008, the company acquired Fording
Coal Trust which owned a 60% non-operating interest in Teck's metallurgical
coal operations. With the onset of the financial crisis in the second half of
2008, the company looked unable to refinance its short term debt. However, Teck
was able to strengthen its balance sheet over the course of 2009 and 2010
through the sale of its gold and other non-core assets, the renegotiation and
extension of its debt facilities, a bond issuance worth US$4.3 billion, and a
private placement of 17.2% of the company to China Investment Corporation.
Impala Platinum - 4.6% (2009: 4.7%) is the world's second largest producer of
platinum group metals, with mining and refining operations in South Africa. The
company also owns a number of substantial assets in Zimbabwe. Impala
restructured in 2006, converting the Bafokeng tribe's royalty into an equity
stake. In April 2008, the company exited from its position in Aquarius platinum
at a significant premium to its initial investment. In October 2008, Impala
announced a friendly takeover bid for Northam Platinum and Mvelaphanda
Resources. However, following a sharp decline in platinum prices and a
worsening economic climate, Impala walked away.
Fresnillo - 4.1% (2009: 3.1%) is the world's largest primary silver producer
and Mexico's second largest gold producer. The company has three producing
operations and a portfolio of high quality development and exploration
projects. Industrias Penoles, one of Mexico's leading mining companies, owns
77% of the company; the remainder is publicly listed on the London Stock
Exchange.
First Quantum Minerals* - 3.0% (2009: 4.2%) is an integrated copper producer,
focused on the copper-cobalt belt in Zambia and the Democratic Republic of
Congo, but also with an operation in Mauritania and a polymetallic development
project in Finland. In September 2009, its Kolwezi mine was confiscated by the
DRC Government; the company has commenced arbitration proceedings. In
December 2009, the company acquired the Ravensthorpe nickel mine from
BHP Billiton for US$340 million, significantly less than BHP Billiton had spent
to develop the operation.
Newcrest Mining - 2.9% (2009: 2.7%) is Australia's largest gold producer and
was formed by the merger of Newmont Australia and BHP Gold Ltd in 1990. In
September 2008, the company closed out its hedge-book. It has a strong growth
profile both in Australia and through its joint venture with Harmony Gold in
Papua New Guinea. In May 2010, Newcrest and Lihir agreed to a merger, creating
the world's fourth largest gold producer with operations in five countries.
^ Includes fixed interest securities.
* Includes fixed interest securities and two open option positions.
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 2009.
Portfolio Analysis
30 June 2010
Commodity Exposure*
BlackRock World Mining Trust plc HSBC Global Mining Index
30 June 2010 31 December 2009 30 June 2010
% % %
Aluminium 1.0 2.5 2.5
Zinc 1.1 1.1 0.6
Coal 3.7 3.1 7.3
Platinum 7.5 7.6 3.4
Silver & Diamonds 7.8 6.5 2.6
Gold 13.7 12.0 24.1
Copper 14.4 16.1 5.9
Diversified 46.6 46.9 49.5
Other 4.2 4.2 4.1
Geographical Exposure*
30 June 2010 31 December 2009
% %
Latin America 29 27
Global 25 24
South Africa 10 10
Canada 9 8
Australia 9 10
USA 3 4
Europe 1 1
Other 14*** 16**
* Based on the principal commodity exposure and place of operation of each
investment.
** Consists of Africa, Botswana, Republic of Congo, DRC, India, Indonesia,
Kazakhstan, Lesotho, Mozambique, Zambia and Zimbabwe.
*** Consists of Botswana, Republic of Congo, DRC, India, Indonesia, Kazakhstan,
Lesotho, Mongolia, Mozambique, Papua New Guinea, Russia, Zambia and Zimbabwe.
Source: BlackRock.
Investments
30 June 2010
Main Market
geographical value % of
exposure £'000 investments
Diversified
Vale*^ Brazil 112,879 9.9
Rio Tinto* Global 107,555 9.4
BHP Billiton Global 82,462 7.2
Glencore* Global 68,344 6.0
Teck Resources* Canada 64,287 5.6
African Rainbow Minerals South Africa 28,076 2.4
Vedanta* India 21,153 1.8
Xstrata Global 17,736 1.5
Anglo American* Global 13,325 1.2
Sterlite Industries India 13,288 1.2
Eurasian Natural Resources Kazakhstan 4,305 0.4
Grafton Resources# Global 355 0.0
------- ----
533,765 46.6
------- ----
Copper
First Quantum Minerals* Zambia 34,821 3.0
Freeport McMoRan Indonesia 29,637 2.6
Soc Min Cerro Verde Peru 26,175 2.3
Equinox Minerals Zambia 23,273 2.0
Antofagasta Chile 18,876 1.7
Oz Minerals Australia 18,428 1.6
Kazakhmys Kazakhstan 7,952 0.7
Katanga Mining DRC 2,822 0.2
Grupo Mexico Mexico 1,590 0.1
Anvil Mining DRC 697 0.1
Southern Peru Copper Peru 688 0.1
Ivanhoe Mines Mongolia 433 0.0
------- ----
165,392 14.4
------- ----
Gold
Minas Buenaventura Peru 79,664 7.0
Newcrest Mining Australia 32,913 2.9
IAMGOLD Canada 17,710 1.5
Newmont Mining USA 12,376 1.1
Lihir Gold Papua New Guinea 4,844 0.4
G Resources Indonesia 4,199 0.4
Gold Fields South Africa 2,786 0.2
Minera IRL Peru 1,938 0.2
------- ----
156,430 13.7
------- ----
Silver & Diamonds
Fresnillo Mexico 46,526 4.1
Industrias Penoles Mexico 26,226 2.3
Harry Winston Diamond Corp. Canada 8,190 0.7
Gem Diamonds Lesotho 6,749 0.6
Lucara Diamond Botswana 1,434 0.1
------ ---
89,125 7.8
------ ---
Platinum
Impala Platinum South Africa 53,362 4.6
Anglo Platinum South Africa 20,648 1.8
Aquarius Platinum* South Africa 9,850 0.9
Platmin Mining South Africa 2,070 0.2
------ ---
85,930 7.5
------ ---
Coal
Peabody Energy USA 19,581 1.7
Coal & Allied Industries Australia 10,433 0.9
Aquila Resources Australia 7,988 0.7
Australian Energy# Australia 3,020 0.3
Coal of Africa South Africa 1,108 0.1
------ ---
42,130 3.7
------ ---
Zinc
Nyrstar* Belgium 10,111 0.9
Soc Min El Brocal Peru 2,103 0.2
------ ---
12,214 1.1
------ ---
Aluminium
Alumina Australia 10,762 0.9
United Company Rusal Russia 1,199 0.1
------ ---
11,961 1.0
------ ---
Other
Iluka Resources Australia 15,582 1.4
Minsur Peru 13,959 1.2
Jumelles# Republic of Congo 6,016 0.5
UEX Canada 5,155 0.5
Kenmare Resources Mozambique 2,874 0.3
Atlas Iron Australia 2,816 0.2
Noventa Mozambique 704 0.1
London Mining Global 562 0.0
Bindura Nickel Zimbabwe 189 0.0
------ ---
47,857 4.2
--------- -----
Portfolio 1,144,804 100.0
========= =====
* Includes fixed interest securities.
# Investments held at Directors' valuation.
^ At 30 June 2010, Vale had two open option positions valued at (£387,000).
All investments shown are in ordinary shares unless otherwise stated.
The total number of investments held at 30 June 2010 was 59 (31 December 2009:
60).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2010
Revenue £'000 Capital £'000 Total £'000
-----------------------------------------------------------------------------------------------------
Six Six Six Six Six Six
months months Year months months Year months months Year
ended ended ended ended ended ended ended ended ended
30 30 31 30 30 31 30 30 31
June June December June June December June June December
2010 2009 2009 2010 2009 2009 2010 2009 2009
Notes (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Income
from
investments
held at
fair value
through
profit or
loss 2 14,593 6,937 16,397 - - - 14,593 6,937 16,397
Other
income 2 2,029 1,100 1,110 - - - 2,029 1,100 1,110
Interest
on
prior
years'
VAT 2 - - 658 - - - - - 658
------ ----- ------- ------ ----- ----- ------ ----- ------
Total
revenue 16,622 8,037 18,165 - - - 16,622 8,037 18,165
------ ----- ------- ------ ----- ----- ------ ----- ------
(Losses)/
gains on
investments
held at
fair value
through
profit or
loss - - - (51,205) 194,504 589,000 (51,205) 194,504 589,000
Realised
losses on
foreign
exchange - - - (3,937) (1,090) (579) (3,937) (1,090) (579)
------ ----- ------ ------- ------- ------- ------- ------- -------
16,622 8,037 18,165 (55,142) 193,414 588,421 (38,520) 201,451 606,586
------ ----- ------ ------- ------- ------- ------- ------- -------
Expenses
Investment
management
fee 3 (7,936) (4,663) (11,864) - - - (7,936) (4,663) (11,864)
VAT
recovered
from
prior
years 3 - 3,108 3,559 - - - - 3,108 3,559
Other
expenses 4 (468) (316) (680) - - - (468) (316) (680)
------ ------ ------ ----- ----- ----- ------ ------ ------
Total
operating
expenses (8,404) (1,871) (8,985) - - - (8,404) (1,871) (8,985)
------ ------ ------ ----- ----- ----- ------ ------ ------
Profit/
(loss)
before
finance
costs
and
taxation 8,218 6,166 9,180 (55,142) 193,414 588,421 (46,924) 199,580 597,601
Finance
costs (329) - (23) - - - (329) - (23)
----- ----- ----- ------- ------- ------- ------- ------- -------
Profit/
(loss)
before
taxation 7,889 6,166 9,157 (55,142) 193,414 588,421 (47,253) 199,580 597,578
----- ----- ----- ------- ------- ------- ------- ------- -------
Taxation (593) (73) (443) - - - (593) (73) (443)
----- ----- ----- ------- ------- ------- ------- ------- -------
Profit/
(loss)
for the
period 6 7,296 6,093 8,714 (55,142) 193,414 588,421 (47,846) 199,507 597,135
===== ===== ===== ======= ======= ======= ======= ======= =======
Earnings
per
ordinary
share 6 4.10p 3.43p 4.90p (31.02p) 108.75p 330.94p (26.92p) 112.18p 335.84p
===== ===== ===== ======= ======= ======= ======= ======= =======
The total column of this statement represents the Consolidated Statement
of Comprehensive Income, prepared in accordance with International
Financial Reporting Standards ("IFRS"). 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 disposed of during the year. All income is attributable to equity
shareholders of BlackRock World Mining Trust plc. There are no minority
interests. The final dividend of 4.75p per share in respect of the year
ended 31 December 2009 was declared on 18 February 2010 and paid on
28 April 2010. This can be found in the Consolidated Statement of Changes in
Equity for the six months ended 30 June 2010.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2010
Ordinary Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 30 June 2010
(unaudited)
At 31 December 2009 9,651 127,155 119,578 22,779 869,608 28,042 1,176,813
Net (loss)/profit
for the period - - - - (55,142) 7,296 (47,846)
Dividend paid of
4.75p per share* - - - - - (8,444) (8,444)
----- ------- ------- ------ ------- ------ ---------
At 30 June 2010 9,651 127,155 119,578 22,779 814,466 26,894 1,120,523
===== ======= ======= ====== ======= ====== =========
For the six months
ended 30 June 2009
(unaudited)
At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927
Net profit for the
period - - - - 193,414 6,093 199,507
Exercise of warrants - 8 - - - - 8
Shares purchased
during the period*** - - (1,480) - - - (1,480)
Dividend paid of
5.50p per share** - - - - - (9,777) (9,777)
----- ------- ------- ------ ------- ------ -------
At 30 June 2009 9,651 127,155 119,578 22,779 474,601 25,421 779,185
===== ======= ======= ====== ======= ====== =======
For the year ended 31
December 2009 (audited)
At 31 December 2008 9,651 127,147 121,058 22,779 281,187 29,105 590,927
Net profit for the
year - - - - 588,421 8,714 597,135
Exercise of warrants - 8 - - - - 8
Shares purchased
during the year*** - - (1,480) - - - (1,480)
Ordinary dividend
paid of 5.50p per
share** - - - - - (9,777) (9,777)
----- ------- ------- ------ ------- ------ ---------
At 31 December 2009 9,651 127,155 119,578 22,779 869,608 28,042 1,176,813
===== ======= ======= ====== ======= ====== =========
* The final dividend for the year ended 31 December 2009, declared on
18 February 2010 and paid on 28 April 2010.
** The final dividend for the year ended 31 December 2008, declared on
11 February 2009 and paid on 30 April 2009.
*** Held in treasury.
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves. Purchase and sale costs amounted to
£163,000 and £149,000, respectively for the period ended 30 June 2010 (six
months ended 30 June 2009: £349,000 and £174,000; year ended 31 December 2009:
£442,000 and £403,000).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2010
30 June 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair
value through profit or loss 1,144,804 773,925 1,221,734
Current assets
Cash and cash equivalents - 9,125 -
Other receivables 2,214 2,487 1,259
Amounts due from brokers 5,060 7,297 -
--------- ------- ---------
7,274 18,909 1,259
--------- ------- ---------
Total assets 1,152,078 792,834 1,222,993
Current liabilities
Other payables (4,218) (2,902) (4,230)
Amounts due to brokers - (10,747) -
Bank loans (26,068) - (24,151)
Bank overdrafts (1,269) - (17,799)
--------- ------- ---------
(31,555) (13,649) (46,180)
--------- ------- ---------
Net assets 1,120,523 779,185 1,176,813
========= ======= =========
Equity attributable to
equity holders
Ordinary share capital 7 9,651 9,651 9,651
Share premium account 127,155 127,155 127,155
Special reserve 119,578 119,578 119,578
Capital redemption reserve 22,779 22,779 22,779
Capital reserves 814,466 474,601 869,608
Revenue reserve 26,894 25,421 28,042
--------- ------- ---------
Total equity 1,120,523 779,185 1,176,813
========= ======= =========
Net asset value per ordinary
share 6 630.35p 438.33p 662.02p
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2010
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash inflow/(outflow) from
operating activities before financing 26,994 24,568 (27,018)
------- ------- -------
Financing activities
Purchase of ordinary shares - (1,480) (1,480)
Exercise of warrants - 8 8
Drawdown of loan - - 24,151
Dividend paid (8,444) (9,777) (9,777)
------- ------- -------
Net cash (outflow)/inflow from
financing (8,444) (11,249) 12,902
------- ------- -------
Increase/(decrease) in cash and
cash equivalents 18,550 13,319 (14,116)
Effect of foreign exchange rate
changes (2,020) (1,090) (579)
------- ------- -------
Change in cash and cash
equivalents 16,530 12,229 (14,695)
Cash and cash equivalents at
start of period (17,799) (3,104) (3,104)
------- ------- -------
Cash and cash equivalents and
bank overdrafts at end of
period (1,269) 9,125 (17,799)
====== ===== =======
RECONCILIATION OF NET INCOME BEFORE FINANCE COSTS AND TAXATION TO NET CASH
FLOW FROM OPERATING ACTIVITIES
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
(Loss)/profit before taxation (47,253) 199,580 597,578
Add back interest paid 329 - 23
Losses/(gains) on investments held
at fair value through profit or
loss including transaction costs 51,205 (194,504) (589,000)
Net movement on foreign exchange 3,937 1,090 579
Net sales of current asset
investments by subsidiary - 315 316
Sales of investments held at fair
value through profit or loss 72,763 145,125 225,437
Purchases of investments held at
fair value through profit or loss (47,038) (142,848) (276,473)
Increase in other receivables (998) (1,822) (626)
(Increase)/decrease in amounts due
from brokers (5,060) 6,614 13,911
Increase in amounts due to brokers - 10,747 -
(Decrease)/increase in other
payables (12) 555 2,003
Dealing losses - (35) (36)
------ ------ -------
Net cash inflow/(outflow) from
operating activities before interest
and taxation 27,873 24,817 (26,288)
------ ------ -------
Interest paid (329) - (23)
Taxation paid - (134) (222)
Taxation on overseas income (550) (115) (485)
------ ------ -------
Net cash inflow/(outflow) from
operating activities 26,994 24,568 (27,018)
====== ====== =======
NOTES TO THE HALF YEARLY FINANCIAL STATEMENTS
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of sub-sections 1158 - 1165 of the Corporation Tax Act 2010.
The principal activity of its subsidiary, BlackRock World Mining Investment
Company Limited, is investment dealing. The other subsidiary, BlackRock Gold
Limited, is no longer trading.
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Company's Annual Report and Financial
Statements for the year ended 31 December 2009 (which were prepared in
accordance with IFRS as adopted in the EU and the Companies Act 2006) and in
accordance with International Accounting Standard 34. The taxation charge has
been calculated by applying the estimate of the annual effective tax rate to
any profit for the period.
2. Income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment income:
UK listed dividends 2,871 2,509 4,041
Overseas listed dividends 8,215 3,357 10,003
Overseas listed special
dividends 224 762 762
Fixed interest 3,283 309 1,591
------ ----- ------
14,593 6,937 16,397
------ ----- ------
Other operating income:
Option premiums 1,775 - -
Deposit interest 68 53 61
Dealing profits - 35 36
Underwriting commission 186 1,012 1,013
------ ----- ------
2,029 1,100 1,110
------ ----- ------
Interest on prior years' VAT - - 658
------ ----- ------
Total income 16,622 8,037 18,165
====== ===== ======
Dealing profits are presented after deducting transaction costs incurred on the
purchase and sale of investments.
3. Investment management fee
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment management fee 7,936 4,663 11,864
Write back of prior years' VAT - (3,108) (3,559)
----- ------ ------
7,936 1,555 8,305
===== ===== =====
The investment management fee is levied quarterly at a rate of 1.3% per annum,
based on the value of the gross assets on the last day of each quarter, and is
charged wholly to the revenue account.
4. Other expenses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Custody fee 266 104 256
Registrar's fees and other
administrative costs 152 162 325
Directors' emoluments 50 50 99
--- --- ---
468 316 680
=== === ===
5. Dividend
The Board has not declared an interim dividend, as dividends are considered and
paid annually in respect of each accounting period. The final dividend of 4.75p
per share for the year ended 31 December 2009 was paid on 28 April 2010.
6. Consolidated earnings and net asset value per ordinary share
Total revenue and capital returns per share are shown below and have been
calculated using the following:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2010 2009 2009
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 7,296 6,093 8,714
Net capital return attributable to
ordinary shareholders (£'000) (55,142) 193,414 588,421
--------- ------- ---------
Total return attributable to
ordinary shareholders (£'000) (47,846) 199,507 597,135
========= ======= =========
Equity shareholders' funds (£'000) 1,120,523 779,185 1,176,813
========= ======= =========
The weighted average number of
ordinary shares in issue during
each period, on which the return
per ordinary share was
calculated, was: 177,762,242 177,849,417 177,805,471
The actual number of ordinary
shares in issue at the end of
each period, on which the net
asset value was calculated, was: 177,762,242 177,762,242 177,762,242
Revenue return per share 4.10p 3.43p 4.90p
Capital return per share (31.02p) 108.75p 330.94p
------- ------- -------
Total earnings per share (26.92p) 112.18p 335.84p
======= ======= =======
Net asset value per share 630.35p 438.33p 662.02p
Share price 549.00p 384.25p 550.00p
The Company did not have any dilutive securities during any of the periods.
7. Share capital
Ordinary Treasury
shares shares
number number Total
(nominal) (nominal) shares £'000
Authorised share capital:
Ordinary shares of 5p each
----------- ---------- ----------- -----
At 1 January 2010 and
30 June 2010 177,762,242 15,249,600 193,011,842 9,651
=========== ========== =========== =====
8. Publication of non-statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts, as defined in the Companies Act 2006. The
financial information for the six months ended 30 June 2010 and 30 June 2009
has not been audited.
The information for the year ended 31 December 2009 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under either section 498(2) or (3) of the
Companies Act 2006.
9. Related party disclosure
The related party transaction with BlackRock is set out in note 3. The fee due
to the Investment Manager for the six months ended 30 June 2010 amounted to
£7,936,000 (six months ended 30 June 2009: £4,663,000 and year ended
31 December 2009: £11,864,000). At the period end, £3,608,000 was outstanding
in respect of the management fee (six months ended 30 June 2009: £2,505,000
and year ended 31 December 2009: £3,840,000).
10. Annual results
The Board expects to announce the annual results for the year ended
31 December 2010, in mid February 2011. Copies of the annual results announcement
can be obtained from the Secretary on 020 7743 3000. The annual report should be
available by the end of February 2011, with the Annual General Meeting being
held in May 2011.
11. Half Yearly Financial Report
Copies of the half yearly financial report will be posted to shareholders
on 24 August 2010. Copies will also be available to the public from the
Company's registered office at 33 King William Street, London EC4R 9AS and on
BlackRock Investment Management's website at www.blackrock.co.uk/its.
11 August 2010
33 King William Street
London EC4R 9AS
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