Half-year Report

BlackRock World Mining Trust plc

LEI: LNFFPBEUZJBOSR6PW155

Condensed Half Yearly Financial Report 30 June 2024

Performance record



 

As at 
30 June 
2024 

As at 
31 December 
2023 



 

Net assets (£’000)1

1,093,972 

1,160,051 

 

Net asset value per ordinary share (NAV) (pence)

572.21 

606.78 

 

Ordinary share price (mid-market) (pence)

569.00 

587.00 

 

Reference index2 – net total return

6,041.29 

6,002.54 

 

Discount to net asset value3

(0.6)% 

(3.3)% 

 

 

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For the 
six months 
ended 
30 June 
2024 

For the 
year 
ended 
31 December 
2023 





 

Performance (with dividends reinvested)

 

 

 

Net asset value per share3

-1.9% 

-6.2% 

 

Ordinary share price3

+1.1% 

-10.4% 

 

Reference index2

+0.6% 

+2.4% 

 

 

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Performance since inception (with dividends reinvested)

 

 

 

Net asset value per share3

+1,291.6% 

+1,319.4% 

 

Ordinary share price3

+1,381.5% 

+1,365.9% 

 

Reference index2

+1,012.4% 

+1,005.2% 

 

 

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For the 
six months 
ended 
30 June 2024 

For the 
six months 
ended 
30 June 2023 



Change 
% 

Revenue

 

 

 

Net revenue profit after taxation (£’000)

22,848 

31,767 

-28.1 

Revenue return per ordinary share (pence)3

11.95 

16.73 

-28.6 

 

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Dividend per ordinary share (pence)

 

 

 

– 1st interim

5.50 

5.50 

 

– 2nd interim

5.50 

5.50 

 

 

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Total dividends paid and payable

11.00 

11.00 

 

 

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1 The change in net assets reflects portfolio movements, dividends paid and the reissue of ordinary shares from treasury during the period.

2 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). With effect from 31 December 2019, the reference index changed to the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). Prior to 31 December 2019, the reference index was the EMIX Global Mining Index (net total return). The performance returns of the reference index since inception have been blended to reflect this change.

3 Alternative Performance Measures, see Glossary contained within the Half Yearly Financial Report.

Chairman’s Statement

Following the Annual General Meeting in May, I assumed the role as Chairman of your Company. I am delighted to present the Half Yearly Financial Report to shareholders.

Market overview
Markets have experienced heightened volatility shaped by continued geopolitical and macroeconomic drivers. Interest rate policy and inflation have remained top of mind amid elevated public debt and weaker growth relative to the pre-pandemic era. The US-China trade war and geopolitical tensions, including the Russia/Ukraine war and the conflict in the Middle East, have also increased the supply chain risk.

It was a mixed period for the mining sector with a new all-time high price set for copper and gold and a pick-up in merger and acquisition (M&A) activity. This was offset by weakness across the bulk commodities as property related demand in China continued to soften. Despite a number of positive drivers during the first half, concerns over the outlook for China’s economy negatively impacted the sector and the six month reporting period ended on a weak note as momentum faltered and most commodity prices declined.

Performance
Against this backdrop, for the six month period ending 30 June 2024, the Company’s net asset value per share (NAV) returned -1.9% and the share price returned +1.1%. The Company’s reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, returned +0.6% (all percentages calculated in Sterling terms with dividends reinvested).

Since the period end and up to the close of business on 21 August 2024, the Company’s NAV has decreased by 2.9% compared to a fall of 3.2% (on a net return basis) for the reference index (in Sterling terms with dividends reinvested). Further information on the Company’s performance and the factors that contributed to, or detracted from, performance during the six months is set out in the Investment Manager’s Report.

Revenue return and dividends
Over the six month period to 30 June 2024, the Company’s revenue return amounted to 11.95p per share, compared to 16.73p per share for the corresponding period in 2023. This represents a decrease of 28.6% and reflects reductions in dividends from many mining companies.

The first quarterly dividend of 5.50p per share was paid on 31 May 2024. Today, the Board has announced a second quarterly dividend of 5.50p per share which will be paid on 30 September 2024 to shareholders on the register on 6 September 2024 with the ex-dividend date being 5 September 2024. It remains the Board’s intention to distribute substantially all of the Company’s available income in the future.

Management of share rating
For the period under review, the Company’s ordinary shares have traded at an average discount to NAV of 4.6% and were trading at a discount of 3.1% on a cum income basis as at 21 August 2024, the latest practicable date prior to the issue of this report. The Company did not buy back or reissue any shares during the six month period ended 30 June 2024. Since the period end and up to the date of this report, no ordinary shares have been reissued or bought back.

The Directors recognise the importance to investors that the Company’s share price does not trade at a significant premium or discount to NAV. Accordingly, the Directors monitor the share price closely and, in the context of wider market conditions, with investor sentiment and premiums/discounts being influenced by various external factors, will consider the issue of shares at a premium or the repurchase at a discount to help balance demand and supply in the market.

Gearing
One of the advantages of the investment trust structure is that the Company can use gearing with the objective of increasing portfolio returns over the longer term. The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 25% of the net assets of the Company and its subsidiary. Gearing at 30 June 2024 was 10.5% and maximum gearing during the period was 14.7%.

Board composition
I am delighted to welcome Elisabeth Scott to the Board. She was appointed following the Annual General Meeting held on 9 May 2024. Elisabeth possesses a great deal of investment trust specific expertise and asset management experience, both through her executive career as an investment manager and in her current involvement with a number of complementary boards. Elisabeth also chaired the Association of Investment Companies from January 2021 until January 2024. Further information on her background and experience can be found on page 48 of the Half Yearly Financial Report.

As previously advised in last year’s Annual Report, David Cheyne, having completed nearly 12 years on the Board, retired following the 2024 Annual General Meeting. On behalf of the Board, I want to thank David for his many years of excellent service to the Company and its shareholders and we wish him the best for the future.

I am pleased to report that the Board is compliant with the recommendations of the Parker Review and the FTSE Women Leaders Review. In accordance with the Listing Rules, we have also disclosed the ethnicity of the Board and our policy on matters of diversity. This disclosure can be found on pages 70 and 71 of the Company’s Annual Report.

Market outlook
Looking ahead, market volatility is unlikely to abate. 2024 marks a significant year for elections worldwide bringing uncertainty on the policy and geopolitical front. China, one of the most important economies for commodity demand, has also fueled concerns for the growth outlook and there is the potential for mounting geopolitical risk, primarily in the Middle East. Although inflationary pressures are easing, a measured approach by each central bank would indicate potential interest rate cuts in Europe and Asia and an increasing likelihood of a rate cut in the US.

However, there are reasons for optimism for the commodities sector. The mining industry is key to delivering the materials required for infrastructure investment, including the investment required to support the transition to a low carbon energy environment. This transition is expected to drive materials demand for many years to come. Artificial intelligence (AI) systems depend on minerals and metals in several ways and the investment in AI data centres and power grids is also set to bolster metals demand. Despite the pick-up in M&A activity, we are pleased to see mining companies continue to show strong capital discipline, which should ensure that there is an appropriate split of available cash flow between shareholder distributions and growth.

CHARLES GOODYEAR
Chairman
23 August 2024

Investment Manager’s Report

The first half of 2024 has been frustrating as the generally positive tone to the sector was not reflected in a more positive total return for the period. During the period, base and precious metal prices were buoyant with some breaking out to new all-time highs. On the other hand, the prices of iron ore, lithium and thermal coal moved lower on weaker demand or supply threats (in the lithium market) that threatened long-term price assumptions. On the whole, the blend of factors should have been supportive for share prices, particularly when combined with increased merger and acquisition (M&A) activity. It seems that rising interest rates, ongoing economic challenges in China and a slower move to decarbonise the global economy overwhelmed the positives and derated valuations, most notably the large cap diversified companies. These factors had a negative impact on the net asset value (NAV) of the Company.

Looking deeper into the fundamentals, the outlook remains positive. Companies are cautious on committing to large scale projects and, as such, the supply picture for most commodities is as constrained as in prior years. In fact, the pick-up in M&A suggests that companies see more value in buying assets rather than building them even after having to pay premiums for control. Tightness in commodity markets persists and despite Chinese weakness, the overall demand picture is robust, especially in the US.

Over the period the NAV of the Company returned -1.9% and the share price returned +1.1%. This compares to the FTSE 100 Index which was up by 7.9%, the Consumer Price Index was up by 2.0% and the reference index (MSCI ACWI Metals & Mining Index 30% Buffer 10/40 Index (net total return)) increased by 0.6% (all performance data numbers based in Sterling terms with dividends reinvested).

Tug of war
The global battle against inflation continued during the first half of the year. In most countries economic data moved in the right direction with large falls in the rate of inflation, but as yet not sufficient to trigger easing by the leading central banks. As a result of this markets have gyrated back and forth like a tug of war between interest rate expectations and the ongoing dominance of everything technology related, in particular the boom in artificial intelligence (AI) related equities. The AI theme within stock markets has grown to levels similar to that in previous tech booms so it will be interesting to see how this plays out especially when so much of the growth requires huge investment in basic infrastructure for it to be delivered.

Geopolitics has, sadly, not improved. The ongoing battle in Ukraine has continued and it seems unlikely that common ground will be found for it to end in the near term. The tragic situation in Israel and Gaza rages on with little prospect for it to ease. Elsewhere elections have taken place across Europe with large swings playing into the hands of some of the more extreme parts of the political spectrum. The end outcome of this is still to reach a conclusion but the probability of political stalemate or worse has risen. Lastly the forthcoming US Presidential election continues to be too difficult to call.

ESG and the social license to operate
For the last few years this report has continued to emphasise the importance of ESG when managing risk within mining related investments.

ESG (Environmental, Social and Governance) is highly relevant to the mining sector and we seek to understand the ESG risks and opportunities facing companies and industries in the portfolio. As an extractive industry, the mining sector naturally faces a number of ESG challenges given its dependence on water, carbon emissions and geographical location of assets. However, we consider that the sector can provide critical infrastructure, taxes and employment to local communities, as well as materials essential to technological development that will enable the carbon transition.

We consider ESG insights and data within the total set of information in our research process and make a determination as to the materiality of such information as part of the investment process used to build and manage the portfolio. ESG insights are not the sole consideration when making investment decisions but, in most cases, the Company will not invest in companies which have high ESG risks (risks that affect a company’s financial position or operating performance) and which have no plans to address existing deficiencies or controversies in an appropriate way.

-          We take a long-term approach, focused on engaging with portfolio company boards and executive leadership to understand the drivers of risk and financial value creation in companies’ business models, including material sustainability-related risks and opportunities, as appropriate.

-          There will be cases where a serious event has occurred, for example an accident at a mine site and, in that case, we will assess whether the relevant portfolio company is taking appropriate action to resolve matters before deciding what to do.

-          There will be companies which have derated (the downward adjustment of multiples) as a result of an adverse ESG event or generally due to poor ESG practices where there may be opportunities to invest at a discounted price. However, the Company will only invest in these value-based opportunities if we are satisfied that there is real evidence that the relevant company’s culture has changed and that better operating practices have been put in place.

The main areas of engagement during the period have been on M&A, corporate decarbonisation plans and capital allocation. The latter two are somewhat interlinked given the healthy debate on how companies should allocate the cash generated by their operations. In the past, spending on decarbonisation was seen more as a choice but now this seems to have moved into a more core part of corporate strategy. In part we believe this is due to a need to do this but also the return on these investments seems to have improved. Although not at the same levels of brown field capacity growth, it does seem to compare favourably with greenfield growth investments. Another feature of this area has been to try and explore with executives the role that outside capital could play in helping to improve returns. The growth in infrastructure investing by financial markets seems to have opened up a range of new opportunities for companies to consider and these might easily challenge the long-term view that mining companies need to wholly own their own infrastructure.

When it comes to M&A, we stand by the view that companies should always seek to explore what might be in the best interests of all stakeholders. If value can be generated from combinations or sharing opportunities it is essential that these are discussed so that all parties can benefit, especially when synergies within the sector are so rare. Obviously, this does not mean that a company should not try to maximise its takeout share price, but, it should not be at the expense of losing out on a deal entirely. Given the high cost and risk of developing new assets, combined with the small size of the sector in the context of global markets, it is important that companies do not lose sight of remaining relevant when it comes to capital markets and M&A might help to deal with this threat.

Weaker prices
During the first half of the year there has been a significant dispersion of returns within the commodity sector. As can be seen in the table that follows the prices of gold, silver and tin were sharply higher year to date but also when compared to the same period last year. On the other side of the pricing for nickel, platinum and lithium were meaningfully lower. Within the overall moves there were a number of takeaways: gold and copper moved to new all time price highs during the period.


Commodity


30 June 2024 

% Change 
year to date 1H24 

% Change average price 
1H24 vs 1H23 

Gold US$/ounce (oz)

2,326.3 

12.6% 

14.1% 

Silver US$/oz

29.3 

20.7% 

11.6% 

Platinum US$/oz

1,012 

0.6% 

-6.3% 

Palladium US$/oz

972 

-13.1% 

-35.2% 

Copper US$/pound (lb)

4.29 

11.7% 

4.5% 

Nickel US$/lb

7.73 

4.1% 

-27.7% 

Aluminium US$/lb

1.13 

6.1% 

1.3% 

Zinc US$/lb

1.30 

9.0% 

-6.8% 

Lead US$/lb

0.99 

7.0% 

-0.5% 

Tin US$/lb

14.74 

29.0% 

11.4% 

Uranium US$/lb

238 

-17.6% 

77.4% 

Iron Ore (China 62% fines) US$/tonne (t)

106 

-25.4% 

-0.3% 

Thermal Coal (Newcastle) US$/t

133.65 

1.2% 

-22.6% 

Met Coal US$/t

238 

-17.6% 

-0.6% 

Lithium (Battery Grade China) US$/kilogram

12.59 

-7.3% 

-68.9% 

WTI (Cushing) US$/barrel

82.8 

15.2% 

6.3% 

 

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1H24 – six months ended 30 June 2024.
1H23 – six months ended 30 June 2023.
Sources: LSEG Datastream and Bloomberg, June 2024.

Within the portfolio the key commodity exposure is to copper on the base metals side and gold within precious metals. Prices for both of these commodities have been strong and key for performance will be how these translate into earnings for the companies. Too often higher prices end up being lost to the pressures of poor operating performance, inflation, taxation or consumed in reinvestment by the companies. It is our expectation that the management teams have the processes and skills to mitigate these negative impacts.

Animal spirits
The last 12 months have certainly seen a pick-up in M&A activity within the sector. This sudden surge in animal spirits seems to have been driven by a realisation that producing assets traded in the equity market were trading at a low valuation versus the replacement cost (which has risen as shown in the chart contained on page 10 of the Half Yearly Financial Report) even including the premiums required for a change of control. In 2023 Glencore moved to gain control of Teck Resources when it announced plans to transform itself into a metals business by divesting its coal assets. This process concluded with Glencore agreeing to buy the coal assets leaving Teck Resources to follow a strategy of metals related growth. The deal finally received the necessary regulatory approvals in early July.

Capital intensity of new assets rising in real terms
In April 2024, BHP surprised the market by making a hostile offer for Anglo American. This process continued for a month during which time multiple attempts were made by BHP to try and conclude a combination of the two businesses. Despite numerous higher offers the two parties were unable to reach agreement leaving Anglo American to pursue its own strategy of simplification. BHP is unable to make another offer for six months. It will be interesting to see how successful Anglo American is on its organic plans as many of the challenges they highlighted in relation to the bid by BHP might delay their own plans leaving room for others to take another look at the business.

As the period drew to an end a number of media outlets reported that further transactions were being considered but as yet nothing tangible has come from these rumours. It is certainly the case that M&A is back and it is essential that companies remain disciplined when looking at opportunities given the poor historic industry track record in this space.

Base metals
It was a strong first half for the base metals with prices rising on improved demand, expected decline in interest rates, Chinese stimulus and financial interest as investors look to gain exposure to the AI data-centre theme. The copper price set a new all-time high in May and finished the first half up by 11.7%, with aluminium +6.1%, nickel +4.1% and zinc +9.0%.

Our favoured base metal, copper, saw positive demand growth in the first half of the year driven by investments into the grid, electric vehicles (EV), wind and solar power. We are increasingly seeing a change in China’s traditional demand drivers with property linked commodity demand declining, whilst investment into low carbon infrastructure and manufacturing is accelerating. Copper supply continues to remain tight with limited new tonnes entering the market. Smelters’ treatment and refining charges (TC/RC’s) an indication of tightness in the concentrate market, are at record low levels which benefit producer margins. A key near-term focus for the market is copper inventories which have not meaningfully decreased in China which points to some softness in the physical market near term.

Global copper inventories
We see a tight supply picture for copper. Power availability in Zambia and the Democratic Republic of the Congo (DRC), along with some specific asset production downgrades in Chile and Peru has further reduced supply expectations this year. The key delta to supply over the next one-to-two years is First Quantum’s Cobre Panama mine, which was placed on care and maintenance at the end of last year. This asset has the potential to produce up to 400ktpa copper over time and will have a big impact to the forecast deficit in the market. At present the market is broadly assuming that the asset will resume production at the end of 2025, but there remains a lot of uncertainty around the timing of the restart. With the market forecast to be 500kt deficit this year, the timing of the return of Cobre Panama will have a significant impact on market balances in 2025 and 2026.

Following our due diligence site visit to Chile last year to see a range of copper projects, a clear takeaway is the increase in capital costs to develop and build new copper mines. Part of this is due to higher inflation for steel, equipment and labour, but there are structural increases to costs due to more challenging permitting requirements for desalinated water, higher altitudes, deeper orebodies and lower grades. As highlighted in the chart contained within the Half Yearly Financial Report, recent greenfield copper developments have had a capital intensity around US$30,000/t and this has risen considerably over the last decade. Our analysis suggests that in order for companies to generate a 15% post-tax internal rate of return on these investments they would require an incentive copper price of US$12,000/t. This, in our view, is an important structural driver for the copper price due to the need to incentivise new supply going forward.

The Company’s copper exposure was a key source of positive returns during the first half of the year. BHP’s approach for Anglo American highlighted the value in copper equity values, given the cost to develop and build new copper supply. Ivanhoe Mines (2.4% of the portfolio) continues to set the standard for operational performance with the ramp-up of Kamoa-Kakula in the DRC, with phase 1 and 2 of the mine delivered ahead of schedule and the phase 3 expansion completed in June nearly two quarters ahead of schedule. With the smelter completion before the end of the year, unit costs are expected to fall by 20%. With free cash flow increasing, we expect to see shareholder loans decline and increasing cash returns to Ivanhoe Mines, positioning them well to start paying dividends. Another notable copper outperformer includes Capstone which is currently ramping up its Manto Verde copper project in Chile. During the quarter Lundin Mining announced that it will exercise their option to acquire an additional 19% stake in the Caserones copper mine for US$350 million.

The aluminium price finished the first half up by 6%, with the average price up 1.3% versus the corresponding period last year. Aluminium prices have been pressured over the last two years as energy prices have fallen which has deflated the cost curve. However, with alumina, a key input for producing aluminium, up over 40% year-to-date, rising cost pressure has pushed up the aluminium price as well. Aluminium demand has benefited from investments into solar power and the grid in recent years and we see it as a longer-term beneficiary of energy transition spend. With aluminium and copper substitutable for certain applications, they typically trade within a ratio of one another. It has been interesting to see the copper price to aluminium price ratio move up from a historical level of circa 3:1 to now circa 4:1. Longer term we see upside to aluminium prices as carbon costs begin to be incorporated into prices. The Company’s largest exposure to aluminium is via Hydro (3.6% of the portfolio) which is one of the lowest-carbon producers of aluminium by virtue of its access to hydro power in Norway.

It has been a difficult year for the nickel industry with the average nickel price down by 27.7% in the first half of 2024 versus the same period last year. While there was a modest rebound (+4%) in prices during the half, the industry is struggling to generate competitive margins at this price level. Significant growth in Indonesian nickel supply has structurally changed the market, with nickel pig iron producers rapidly growing production and adapting their facilities to allow the production of nickel matte and other intermediary products. This material is typically more carbon intensive and, should carbon pricing be incorporated into the cost curve, we would expect Indonesian supply to decline over time. The Company has two pure play exposures to nickel – the first Nickel Industries (0.6% of the portfolio) today a nickel pig iron producer which is transitioning towards LME grade nickel production which will improve earnings and margins. During the half, Nickel Industries increased its equity interest in the ENC Project by 16.5% to 44%. This high-pressure acid leach project will see them produce battery grade nickel and cobalt and will also reduce the company’s carbon footprint. The second investment was done via a “PIPE” deal in 2022 into Lifezone Metals which has traded as a public company since the end of June 2023. Lifezone Metals, in conjunction with BHP, owns the Kabanga project in Tanzania which is one of the world’s largest undeveloped nickel sulphide deposits.

Bulks and steel
It was a weak period for the bulk commodities, with iron ore prices down by 25.4%, metallurgical coal down by 17.6% and thermal coal prices up by 1.2%. Chinese steel production has remained at a similar level to last year of circa 1 billion tonnes. However, domestic demand has softened primarily due to property-linked weakness. As a result, China has returned to a high level of steel exports which annualised more than 100 million tonnes per annum (mtpa). This has put significant pressure on European steel prices, with production curtailed to protect margins during the six month period. With China looking to re-impose steel production caps to reduce carbon emissions and improve the profitability of the steel industry, we would expect to see exports decline and prices to stabilise. The other notable steel market that the Company has exposure to is the US. Steel prices have returned to a more normalised level versus two to three years ago. We remain positive on the outlook for the US steel industry as the Government looks to commence its infrastructure rebuilding programs.


Iron ore has been a key area of strength in recent years supporting free cash flow and dividends for the large producers. While the spot price finished down by 25% during the half, average prices were actually flat versus the corresponding period in 2023 and are at a healthy level of US$118/t. Iron ore has benefited from China’s high blast furnace utilisation rates, with electric arc furnaces (EAF’s), which rely on scrap, struggling to grow market share given the lack of available steel scrap supply and high electricity prices. Longer term, as China looks to reduce the carbon intensity of its steel industry, we would expect to see growth in EAF supply and also higher demand for high grade iron ore.

Over the last five years, the iron ore price has been well supported at US$90/t which appears to be the breakeven price for high-cost producers and has provided a floor to the price. Supply discipline from the iron ore producers has kept the iron ore market tight as they have pursued a “value over volume” strategy. From 2025/2026 we see meaningful new supply entering the market, primarily via the China controlled Simandou project being built in conjunction with Rio Tinto. This is a high-grade ore body which has the potential to reach 150mtpa which is expected to have a material impact on overall iron ore supply.

The Company’s exposure to iron ore is primarily via the diversified majors BHP, Vale and Rio Tinto. These companies generate strong margins and free cash flow from their iron ore businesses with that cash flow being returned to shareholders, or being reinvested into future facing commodities such as copper. In addition, the Company has exposure to two pure play high grade iron ore producers, Champion Iron and Labrador Iron. Champion Iron is ramping-up its Bloom Lake operation in Canada and targeting the production of high grade (69% Fe) iron ore which is a key component of low carbon steel production.

The coking coal market remains one of the more interesting commodity markets. Western world producers have been hesitant to add new supply, whilst demand continues to increase driven by steel producing countries such as India. Having banned the import of Australian coking coal, we are seeing China reverse the ban and return to imports again. Supply appears much more inelastic, with limited new supply growth hitting the market ex-China. On the corporate front, Glencore made an offer to Teck Resources to acquire its coking coal business which was subsequently approved and completed in July 2024.

The thermal coal market has returned to a more balanced position this year with prices holding between $120-140/t. India remains a significant force on the import market, in line with the rapid economic growth within the country. As we have seen in recent years, many western world thermal coal producers have reduced growth spending and have committed to responsibly reduce production over time. This has left the thermal coal market generally tight and vulnerable to price spikes associated with spikes in energy demand. The Company’s thermal coal exposure is via our 8.2% position in Glencore which has used elevated thermal coal prices in recent years to deleverage the business and buy back shares. Shortly after the end of the first six month period, Glencore completed the acquisition of the Teck Resources coking coal business which gives them a leading position in the Atlantic basin for coking coal. Glencore announced at their results on 7 August 2024 that they will retain the coal business and maintain their strategy of responsible run-off for the thermal coal business. Should they decide to retain the business, we would expect to see Glencore lift their net debt target back to their previous level of US$10 billion which paves the way for additional shareholder returns in the second half of the year. After the reporting period Glencore confirmed at its half year results that they will retain the coal business following engagement with its shareholders.

Precious metals
A new record all-time high price was set for gold at US$2,427/oz during the first half of 2024 with the price finishing the period at US$2,326/oz, up by 12.6%. This is a notable step change from the US$1,800/oz trading range that gold has largely held over recent years and leaves gold companies in a good position to translate the higher gold price into stronger returns. A notable feature of the gold market in 2024 has been central bank purchases of gold, particularly from China. Whilst central banks have shown appetite for gold, retail investors appear more cautious with gold exchange-traded fund (ETF) holdings declining over the period. We find this perplexing. Gold has delivered its role as a safe haven asset and portfolio diversifier and we see a number of reasons for investors to continue to allocate to gold.

Silver performed particularly well during the period, rising by 20.7% with the market recognising its relative price attractiveness versus gold, along with its industrial demand. Silver’s key industrial end market is solar which saw record installations in 2023 and continues to grow (albeit at a slower pace). Interestingly, we are seeing a rising silver usage in solar as installers move to TOPCon solar modules which have higher efficiency and importantly higher silver intensity.

The Company increased its exposure to precious metals companies during the first half of the year. This is a reflection of our positive outlook on gold and the expected improvement in earnings from the gold companies. The Company has maintained its preference for higher quality gold producers which have low operating costs and a strong resource base which improves their ability to generate stronger free cash flow through the cycle. Among our gold holdings, Agnico Eagle Mines (4.3% of the portfolio) a Canadian listed producer focused on operating in lower risk jurisdictions provided an update on its Detour Lake operation which is on track to become a 1 million ounce gold producer by the end of the decade making it a top five gold mine. Newmont Corporation (Newmont) which has underperformed gold peers following the acquisition of Newcrest Mining in 2023, provided an update on its strategy to create a Focused Tier 1 Portfolio of assets to produce 6.7 million oz of gold by 2028. Newmont has a series of non-core assets to sell as part of this process and will also buy back US$1 billion in shares outstanding over the next 24 months. The Company took the opportunity to increase its exposure to Newmont on the expectation that it claws back its underperformance as it executes on its strategy.

In the platinum group metals (PGMs) platinum has performed better during the first half of 2024, increasing by 0.6%, compared to palladium which saw a 13.1% decrease over the first half of the year. A significant demand for PGMs comes from catalytic converters, which are used in internal combustion engine (ICE) vehicles to reduce carbon monoxide and nitrogen oxide emissions. However, this demand is facing a long-term structural challenge due to the declining demand for ICE vehicles due to the rise in popularity of EVs. While platinum has various applications in industry, for instance jewellery, and as an investment, palladium is particularly vulnerable to a lack of demand from ICE vehicles and has not yet found a stable price point. A key question going forward is PGMs use in hybrid electric vehicles and range extenders for EVs. As the metals are often mined together their supply can be less responsive to price decreases in just one of the PGMs.

The Company’s exposure to PGM producers slightly increased in the period to 2.2%, due to the positive performance from Bravo Mining. Bravo Mining, 1.6% of the portfolio, is a PGM and nickel exploration company in Brazil, developing the Luanga PGM deposit. The company’s value increased by 19.5% during the first half of 2024 following the discovery of copper-gold mineralisation east of its Luanga deposit. Although it is still in the early stages of this exploration program, the drill results so far suggest a promising opportunity for Bravo. The Company invested in a pre-IPO in April 2022 at C$0.50/share due our belief in the assets and management’s potential. Since our initial investment, the company has successfully had an IPO and as at 30 June 2024 was trading at C$3.80/share.

Energy transition metals
Battery electric vehicle (BEV) sales continued to grow in 2024 and the International Energy Agency (IEA) expects global electric car sales to remain robust in 2024, reaching around 17 million by the end of the year, from around 14 million in 2023. BloombergNEF’s (BNEF) Long-Term Electric Vehicle Outlook indicated that rapidly falling battery prices, advancements in next-generation battery technology and improving economics of EVs continue to underpin long-term EV growth globally. Passenger EV sales are expected to exceed 30 million in 2027 in BNEF’s base case scenario and grow to 73 million per year in 2040.

We continue to see a focus on geopolitics with efforts from Western politicians to decouple supply chains from China. The US announced an increase in import tariffs for Chinese produced goods across strategic sectors, including EVs and batteries. The European Commission notified carmakers that it would provisionally apply additional duties of between 17 and 38 per cent on imported Chinese EVs.

After lithium prices fell by 43% in 2023, the first half of 2024 has seen a tough market continue with the price down by another 69%. Despite growing strongly, demand for lithium from batteries did not meet optimistic expectations. China has seen a greater penetration of plug-in hybrid electric vehicles (PHEV) which often have smaller batteries containing less lithium. Sales also disappointed in the smaller markets of the US and Europe. The Company reduced its exposure to lithium and exited its position in Albemarle, a lithium producer, in the first half of the year. The Company’s position in Sigma Lithium negatively impacted performance during the six months after the strategic review process the company was undertaking failed to result in a sale of the company. The company is now focusing on its near-term expansion plans which include doubling production in 2025.

A critical component of the electric car is also the e-motor, which most commonly uses a Praseodymium-Neodymium (NdPr) magnet, an alloy of two rare earth elements (REE) which are commonly mined and processed in China and have been deemed of strategic importance by both Europe and the US. The Company has exposure to REEs through Lynas Rare Earths (Lynas), a REE miner and processor based in Malaysia and Australia. In the first half, Lynas’ equity fell by 17.2% during a period of weaker rare earth mineral pricing. In the six month period Lynas announced they would start selling separated heavy rare earths, widening their product offering from the mixed concentrate they currently produce.

2023 saw an increased recognition in the key role of nuclear energy in reaching net zero with a declaration at the 28th Conference of the Parties to triple nuclear energy capacity by 2050. The strategic importance of uranium was again highlighted in the first half of 2024 with the US Congress moving to prohibit Russian uranium imports. The Company’s holding in uranium producer Cameco rose by 14% in the six months, as the market continued to reward their position as a western supplier of nuclear fuel and engineering through their ownership interest in Westinghouse.

Royalty and unquoted investments
Over the last three years the Company has generated significant returns from the unquoted section of the portfolio. This includes the IPOs of two private investments, Ivanhoe Electric and Bravo Mining, at substantial premiums to their purchase price.

As mentioned in previous reports, the focus of the unquoted investments is to generate both capital growth and income to deliver the superior total return goal for the portfolio. The Company continues to evaluate new opportunities as it believes that they can provide an opportunity to generate superior returns and maximise the return opportunities available in the mining sector.

As of 30 June 2024, the unquoted investments in the portfolio amounted to 7.2% of the portfolio and consist of the BHP Brazil Royalty, the Vale Debentures, Jetti Resources, MCC Mining and Polyus ADRs. These, and any future investments, will be managed in line with the guidelines set by the Board as outlined to shareholders in the Strategic Report of the Company’s 2023 Annual Report.

BHP Brazil Royalty Contract (1.7% of the portfolio)
In July 2014 the Company signed a binding royalty agreement with Avanco Minerals. The Company provided US$12 million in return for a 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 produced from mines built on Avanco’s Antas North and Pedra Branca licences. In addition, there is a flat 2% royalty over all metals produced from any other discoveries within Avanco’s licence area as at the time of the agreement.

In 2018 we were delighted to report that Avanco Minerals was acquired by OZ Minerals, an Australian based copper and gold producer for A$418 million. We were equally pleased to report that in early 2023 OZ Minerals was acquired by BHP, the world’s largest mining company and now operating the assets underlying the royalty. Since our initial US$12 million investment was made, we have received US$28.6 in royalty payments with the royalty achieving full payback on the initial investment in 3½ years. As at the end of June 2024, the royalty was valued at £19.9 million (1.7% of the portfolio) which equates to a 365.3% cash return on the initial US$12 million invested.


We are pleased to report that production at Pedra Branca has normalised following a geotechnical event in the second half of 2023. Recent results have confirmed the asset is producing at steady state levels and after a successful technical review from BHP we have confidence that the operational issues have been resolved.

Vale Debentures (2.6% of the portfolio)
At the beginning of 2019, the Company completed a significant transaction to increase its holding in Vale Debentures. The Debentures consist of a 1.8% net revenue royalty over Vale’s Northern System and Southeastern System iron ore assets in Brazil, as well as a 1.25% royalty over the Sossego copper mine. The iron ore assets are world class given their grade, cost position, infrastructure and resource life which is well in excess of 50 years.

Dividend payments are expected to grow once royalty payments commence on the Southeastern System in 2025 and volumes from S11D and Serra Norte improve. At Vale’s Capital Markets Day in December, the company outlined 50Mt of iron ore growth to 2026 of which S11D is the largest component and an improved quality mix from which the royalty will benefit.

The Debentures offer an attractive yield in excess of 10% based on the 2023 dividend. This is an appealing yield for a royalty investment, with this value opportunity recognised by other listed royalty producers, Franco Nevada and Sandstorm Gold Royalties, which have both acquired stakes in the Debentures since the sell-down occurred in 2021.

Whilst the Vale Debentures are a royalty, they are also a listed security on the Brazilian National Debentures System. As we have highlighted in previous reports, shareholders should be aware that historically there has been a low level of liquidity in the Debentures and price volatility is to be expected. We continue to actively look for opportunities to grow royalty exposure given it provides an effective mechanism to lock-in long-term income which further diversifies the Company’s revenues.

Jetti Resources (2.1% of the portfolio)
In early 2022, the Company made an investment into mining technology company Jetti Resources (Jetti) which has developed a new catalyst that improves copper recovery from primary copper sulphides (specifically copper contained in chalcopyrite, which is often uneconomic) under conventional leach conditions. Jetti is currently in negotiation with a number of mining companies to trial their technology where they will look to integrate their catalyst into existing help leach SX-EW mines to improve recoveries at a low capital cost. The technology has been demonstrated to work at Capstone’s Pinto Valley copper mine and has been trialled at some of Freeport McMoRan’s copper operations. If Jetti’s technology is proven to work at scale, we see valuation upside with Jetti sharing in the economics of additional copper volumes recovered through the application of their catalyst.

During the second half of 2022 Jetti completed its Series D financing to raise US$100 million at a substantially higher valuation than when our investment was made at the beginning of 2022. Since then, we have seen a number of competing leaching technology companies enter the market placing pressure on economics and the share of profits Jetti would receive from recovering additional copper. Along with a more challenging market and slower roll out of its leaching technology across targeted assets, the Company has chosen to reduce the holding value of the asset by 7.3%. This remains 106.2% above the price when the Company initially purchased its holding in 2022. We continue to remain positive on the longer-term outlook for Jetti as it looks to deploy its copper leaching technology across a range of world class existing copper assets.

MCC Mining (0.8% of the portfolio)
MCC Mining (MCC) is a private company exploring for copper in Colombia. It is undertaking early-stage greenfield exploration and has strong geological potential to host multiple world class porphyry deposits. Shareholders include other mid-to large-cap copper miners, which is an indication of the strategic value of the company. Following new regulations in Colombia which allowed for the exploration drilling in the forestry reserve, the company commenced drilling at its Comita and Pantanos deposits in 2023. Drilling to date has been very encouraging. Over the last 18 months, MCC has drilled 38% of the Top-40 open-pit copper holes globally, with two porphyry deposits confirmed at Comita and Pantanos. The company successfully completed a US$50 million funding round at a 50% premium to our initial investment and we have been encouraged by the calibre of investors invested in the company.

Derivatives activity
The Company from time to time enters into derivatives contracts, mostly involving the sale of “puts” and “calls”. These are taken to revenue and are subject to strict Board guidelines which limit their magnitude to an aggregate 10% of the portfolio. In the first half of 2024 income generated from options was £4.3 million. During the period the Company was able to take advantage of a number of specific events where volatility seemed to be mis-priced versus the underlying risks. This was a key driver behind the overall performance for the first half of the year. At the end of the period the Company had 0.1% of net assets exposed to derivatives and the average exposure to derivatives during the period was less than 5% of net assets.

Gearing
At 30 June 2024, the Company had £134.5 million of net debt, with a gearing level of 10.5%. The debt is held principally in US Dollar rolling short-term loans and managed against the value of the portfolio as a whole. During the period the Company once again reviewed the use of gearing on the back of interest rates remaining higher than generally expected. Less debt was used during the period than in prior years but, with share prices generally flat to lower over the period as a whole, debt was a drag on returns during the six months. Looking back at the report from last year the outlook remains similar with a view that as macro risks fade opportunities will present themselves for gearing levels to rise back to normal levels even though the debt will have a higher cost. On the back of this, facilities were refreshed with our lenders and remain at £200 million for loans and £30 million for the overdraft.

Outlook
After a frustrating first half to the year where much of the positive news did not translate into a more optimistic outcome, it is easy to think that things will improve for the remainder of the year. As things stand, it certainly looks that way with copper, gold and silver prices moving higher once again and iron ore remaining resolutely above the psychological $100/t level. However, the macro picture is not without risk. The world’s largest commodity consumer, China, remains weak and until its domestic challenges are fixed it seems unlikely that it will drive commodity prices higher. Elsewhere, geopolitics remain an ever present threat. Tensions in the Middle East and Ukraine persist. Elections in Europe have raised the prospect of a shift in the political landscape and with the US Presidential election due in November it will be far from easy sailing ahead.

Despite these risks, shareholders should expect the portfolio to remain fully invested with a focus on stock specific outcomes rather than just market related factors such as commodity price sensitivity. This approach has delivered excellent results over the last few years and the current mix of holdings has a high degree of exposure to similar dynamics boding well for the future.

In addition, the Company will continue to seek out opportunities to maximise income during the balance of the year in order to try and offset what looks to be the lagged impact of dividend cuts from the results in the second half of 2023. Achieving this remains integral to the goal of delivering a superior total return for shareholders through the cycle.

EVY HAMBRO AND OLIVIA MARKHAM
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
23 August 2024

Ten largest investments

Together, the ten largest investments represented 53.8% of total investments of the Company’s portfolio as at 30 June 2024 (31 December 2023: 54.8%).

1 Glencore (2023: 3rd)
Diversified mining group
Market value: £98,576,000
Share of investments: 8.2% (2023: 8.3%)

One of the world’s largest globally diversified natural resources groups. The group’s operations include approximately 150 mining and metallurgical sites and oil production assets. Glencore’s mined commodity exposure includes copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, thermal coal, iron ore, gold and silver.

2 BHP1,2 (2023: 1st)
Diversified mining group
Market value: £93,667,000
Share of investments: 7.8% comprising equity of 6.1% and mining royalty of 1.7% (2023: 10.1%)

The world’s largest diversified mining group by market capitalisation. The group is an important global player in a number of commodities including iron ore, copper, thermal and metallurgical coal, manganese, nickel and silver.

3 Rio Tinto3 (2023: 4th)
Diversified mining group
Market value: £74,688,000
Share of investments: 6.2% (2023: 7.3%)

One of the world’s leading mining groups. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products.

4 Anglo American3 (2023: 17th)
Diversified mining group
Market value: £67,258,000
Share of investments: 5.6% (2023: 1.9%)

A global diversified mining company with a portfolio that includes diamonds, platinum, copper and iron ore. The company operates mines in Canada, Peru, Chile, Australia and a number of countries in Africa.

5 Freeport-McMoRan3 (2023: 5th)
Copper producer
Market value: £60,582,000
Share of investments: 5.0% (2023: 5.0%)

A global mining group which operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum.

6 Newmont Corporation (2023: 6th)
Gold producer
Market value: £57,491,000
Share of investments: 4.8% (2023: 3.6%)

The world’s largest gold producer by market capitalisation. The group has gold and copper operations on five continents, with active gold mines in Nevada, Australia, Ghana, Peru and Suriname.

7 Vale2,3,4 (2023: 2nd)
Diversified mining group
Market value: £55,473,000
Share of investments: 4.6% comprising equity of 2.0% and debentures of 2.6% (2023: 9.6%)

One of the largest mining groups in the world, with operations in 30 countries. Vale is the world’s largest producer of iron ore and iron ore pellets and the world’s largest producer of nickel. The group also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver and cobalt.

8 Agnico Eagle Mines (2023: 19th)
Gold producer
Market value: £51,568,000
Share of investments: 4.3% (2023: 1.6%)

A Canadian-based senior gold producer with operations in Canada, Finland, Australia and Mexico. The company also has exploration and development assets in the US.

9 Teck Resources (2023: 10th)
Diversified mining group
Market value: £45,179,000
Share of investments: 3.7% (2023: 2.3%)

A diversified mining group headquartered in Canada. The company is engaged in mining and mineral development with operations and projects in Canada, the US, Chile and Peru. The group has exposure to copper and zinc.

10 Hydro (2023: 9th)
Aluminium producer
Market value: £43,887,000
Share of investments: 3.6% (2023: 2.6%)

A Norwegian aluminium and renewable energy company, headquartered in Oslo. It is one of the largest aluminium companies worldwide. It has operations in some 50 countries around the world. The company is present throughout the aluminium value chain, from energy to bauxite mining and alumina refining, primary aluminium, aluminium extrusions and aluminium recycling.

1 Includes mining royalty contract.

2 Includes investments held at Directors’ valuation.

3 Includes options.

4 Includes fixed income securities.

All percentages reflect the value of the holding as a percentage of total investments. For this purpose, where more than one class of securities is held, these have been aggregated.

Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at 31 December 2023.

Percentages in brackets represent the value of the holding as at 31 December 2023.

Investments as at 30 June 2024



 

Main 
geographical 
exposure 

Market 
value 
£’000 



 


% of 
investments 

Diversified

 

 

 

 

Glencore

Global 

98,576 

 

8.2 

Rio Tinto

Global 

75,020 

}

6.2 

Rio Tinto Put Option 19/07/24 £52.00

Global 

(332)

BHP

Global 

73,732 

 

6.1 

Anglo American

Global 

67,750 

}

5.6 

Anglo American Call Option 19/07/24 £25.00

Global 

(492)

Vale Debentures1, 2, 4

Global 

31,295 

}

4.6 

Vale

Global 

24,343 

Vale Call Option July 24 BRL11.5

Global 

(165)

Teck Resources

Global 

45,179 

 

3.7 

 

 

--------------- 

 

--------------- 

 

 

414,906 

 

34.4 

 

 

========= 

 

========= 

Copper

 

 

 

 

Freeport-McMoRan

Global 

60,989 

}

5.0 

Freeport-McMoRan Put Option 19/07/24 US$49.00

Global 

(407)

Ivanhoe Mines

Other Africa 

29,363 

 

2.4 

Jetti Resources2

Global 

25,207 

 

2.1 

Ivanhoe Electric

United States 

24,449 

 

2.0 

Sociedad Minera Cerro Verde

Latin America 

21,321 

 

1.8 

Lundin Mining

Global 

20,441 

 

1.7 

BHP Brazil Royalty2, 3

Latin America 

19,935 

 

1.7 

Southern Copper Corporation

Latin America 

19,668 

 

1.6 

Metals Acquisition

Australasia 

13,193 

 

1.1 

Capstone Mining

United States 

12,904 

 

1.1 

Foran Mining

Canada 

10,937 

 

0.9 

Develop Global

Australasia 

10,705 

 

0.9 

First Quantum Minerals

Global 

10,089 

 

0.8 

MCC Mining2

Latin America 

10,011 

 

0.8 

Filo Corp

Latin America 

4,070 

 

0.3 

Hudbay

Global 

3,631 

 

0.3 

Solaris Resources

Latin America 

3,557 

 

0.3 

Antofagasta

Latin America 

3,297 

 

0.3 

 

 

--------------- 

 

--------------- 

 

 

303,360 

 

25.1 

 

 

========= 

 

========= 

Gold

 

 

 

 

Newmont Corporation

Global 

57,491 

 

4.8 

Agnico Eagle Mines

Canada 

51,568 

 

4.3 

Wheaton Precious Metals

Global 

39,307 

 

3.2 

Barrick Gold

Global 

31,011 

 

2.6 

Franco-Nevada

Global 

19,095 

 

1.6 

Northern Star Resources

Australasia 

12,967 

 

1.1 

Kinross Gold

Global 

12,057 

 

1.0 

Endeavour Mining

Other Africa 

8,566 

 

0.7 

Allied Gold1

Other Africa 

7,900 

 

0.6 

AngloGold Ashanti

Global 

3,702 

 

0.3 

Firefly Metals

Canada 

3,595 

 

0.3 

Polyus

Russia 

 

 

 

 

 

--------------- 

 

--------------- 

 

 

247,259 

 

20.5 

 

 

========= 

 

========= 

Steel

 

 

 

 

Nucor

United States 

28,052 

 

2.3 

Steel Dynamics

United States 

13,571 

 

1.1 

ArcelorMittal

Global 

13,092 

 

1.1 

Stelco Holdings

Canada 

5,898 

 

0.5 

 

 

--------------- 

 

--------------- 

 

 

60,613 

 

5.0 

 

 

========= 

 

========= 

Industrial Minerals

 

 

 

 

Albemarle

Global 

9,431 

 

0.8 

Iluka Resources

Australasia 

9,090 

 

0.8 

Lynas Rare Earths

Australasia 

7,214 

 

0.6 

Sigma Lithium

Latin America 

6,408 

 

0.5 

Mineral Resources

Australasia 

6,173 

 

0.5 

Sheffield Resources

Australasia 

4,046 

 

0.3 

Pilbara Minerals

Australasia 

4,017 

 

0.3 

Chalice Mining

Australasia 

1,900 

 

0.2 

 

 

--------------- 

 

--------------- 

 

 

48,279 

 

4.0 

 

 

========= 

 

========= 

Aluminium

 

 

 

 

Hydro

Global 

43,887 

 

3.6 

 

 

--------------- 

 

--------------- 

 

 

43,887 

 

3.6 

 

 

========= 

 

========= 

Iron Ore

 

 

 

 

Labrador Iron

Canada 

11,816 

 

1.0 

Champion Iron

Canada 

10,683 

 

0.9 

Deterra Royalties

Australasia 

3,265 

 

0.3 

Equatorial Resources

Other Africa 

214 

 

 

 

 

--------------- 

 

--------------- 

 

 

25,978 

 

2.2 

 

 

========= 

 

========= 

Platinum Group Metals

 

 

 

 

Bravo Mining

Latin America 

19,811 

 

1.6 

Northam Platinum

Global 

2,392 

 

0.2 

Impala Platinum

South Africa 

1,635 

 

0.1 

 

 

--------------- 

 

--------------- 

 

 

23,838 

 

1.9 

 

 

========= 

 

========= 

Uranium

 

 

 

 

Cameco

Canada 

19,466 

 

1.6 

 

 

--------------- 

 

--------------- 

 

 

19,466 

 

1.6 

 

 

========= 

 

========= 

Nickel

 

 

 

 

Nickel Industries

Indonesia 

6,778 

 

0.6 

Lifezone Metals

Global 

6,068 

 

0.5 

Bindura Nickel

Global 

31 

 

 

 

 

--------------- 

 

--------------- 

 

 

12,877 

 

1.1 

 

 

========= 

 

========= 

Mining Services

 

 

 

 

Woodside Energy Group

Australasia 

6,463 

 

0.5 

 

 

--------------- 

 

--------------- 

 

 

6,463 

 

0.5 

 

 

========= 

 

========= 

Zinc

 

 

 

 

Titan Mining

United States 

911 

 

0.1 

 

 

--------------- 

 

--------------- 

 

 

911 

 

0.1 

 

 

========= 

 

========= 

Comprising:

 

1,207,837 

 

100.0 

 

 

========= 

 

========= 

– Investments

 

1,209,233 

 

100.1 

– Options

 

(1,396)

 

(0.1)

 

 

--------------- 

 

--------------- 

 

 

1,207,837 

 

100.0 

 

 

========= 

 

========= 

1 Includes fixed income securities.

2 Includes investments held at Directors’ valuation.

3 Includes mining royalty contract.

4 The investment in the Vale Debentures is illiquid and has been valued using secondary market pricing information provided by the Brazilian Financial and Capital Markets Association (ANBIMA).

All investments are in equity shares unless otherwise stated.

The total number of investments as at 30 June 2024 (including options classified as liabilities on the balance sheet) was 67 (31 December 2023: 69).

As at 30 June 2024 the Company did not hold any equity interests in companies comprising more than 3% of a company’s share capital.

Portfolio analysis as at 30 June 2024

Commodity Exposure1

 

2024
portfolio (%)

2023
portfolio (%)2

2024
reference index (%)3

Diversified

34.4

38.4

33.1

Copper

25.1

21.8

14.3

Gold

20.5

15.2

21.9

Steel

5.0

7.3

18.9

Industrial Minerals

4.0

5.5

1.3

Aluminium

3.6

3.3

3.2

Iron Ore

2.2

2.5

4.2

Platinum Group Metals

1.9

1.6

1.2

Uranium

1.6

2.3

0

Nickel

1.1

1.0

0

Mining Services

0.5

1.0

0

Zinc

0.1

0.1

0.3

Energy Minerals

0

0

0

Other4

0

0

1.6

 

1 Based on index classifications

2 Represents exposure at 31 December 2023.

3 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).

4 Represents a very small exposure.

 

Geographic Exposure1

 

2024

Global

64.0%

Canada

9.5%

Latin America

8.9%

Other2

7.2%

Australasia

6.6%

Other Africa (ex South Africa)

3.7%

South Africa

0.1%

 

 

2023

Global

67.4%

Canada

7.5%

Latin America

7.4%

Australasia

7.3%

Other2

7.0%

Other Africa (ex South Africa)

3.2%

South Africa

0.2%

 

1 Based on the principal commodity exposure and place of operation of each investment.

2 Consists of Indonesia, Russia and United States.

 

Interim Management Report and Responsibility Statement

The Chairman’s Statement and the Investment Manager’s Report above 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 Group can be divided into various areas as follows:

-          Market;

-          Investment performance;

-          Operational;

-          Legal and regulatory compliance; and

-          Financial.

The Board reported on the principal risks and uncertainties faced by the Group in the Annual Report and Financial Statements for the year ended 31 December 2023. A detailed explanation can be found in the Strategic Report on pages 42 to 45 and note 18 on pages 116 to 133 of the Annual Report and Financial Statements which is available on the website maintained by BlackRock at www.blackrock.com/uk/brwm.

In the view of the Board, there have not been any changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.

Going concern
The Directors, having considered the nature and liquidity of the portfolio, the Group’s investment objective and the Group’s projected income and expenditure, are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board is mindful of the continuing uncertainty surrounding the current environment of heightened geopolitical risk given the war in Ukraine and conflict in the Middle East. The Board believes that the Group and its key third-party service providers have in place appropriate business continuity plans and these services have continued to be supplied without interruption.

The Group has a portfolio of investments which are predominantly readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Accounting revenue and expense forecasts are maintained and reported to the Board regularly and it is expected that the Group will be able to meet all its obligations. Borrowings under the overdraft and revolving credit facilities shall at no time exceed £230 million or 25% of the Group’s net asset value (whichever is the lower) and this covenant was complied with during the period.

Ongoing charges for the year ended 31 December 2023 were approximately 0.91% of net assets and this is unlikely to change significantly going forward. Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Related party disclosure and transactions with the Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management and marketing fees payable are set out in notes 4 and 5 respectively and note 13 below.

The related party transactions with the Directors are set out in note 14 below.

Directors’ responsibility statement
The Disclosure Guidance 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 Condensed Half Yearly Financial Report has been prepared in accordance with UK-adopted 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 Financial Conduct Authority Disclosure Guidance and Transparency Rules.

The Condensed Half Yearly Financial Report was approved by the Board on 23 August 2024 and the above responsibility statement was signed on its behalf by the Chairman.

CHARLES GOODYEAR
FOR AND ON BEHALF OF THE BOARD
23 August 2024

Consolidated Statement of Comprehensive Income for the six months ended 30 June 2024



 



 

Six months ended
30 June 2024
(unaudited)

Six months ended
30 June 2023
(unaudited)

Year ended
31 December 2023
(audited)


 


Notes 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Income from investments held at fair value through profit or loss

3 

23,198 

 

23,198 

34,111 

630 

34,741 

68,317 

630 

68,947 

Other income

3 

4,821 

 

4,821 

2,891 

 

2,891 

6,827 

 

6,827 

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Total revenue

 

28,019 

 

28,019 

37,002 

630 

37,632 

75,144 

630 

75,774 

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

Net loss on investments and options held at fair value through profit or loss

 

 

(40,360)

(40,360)

 

(123,495)

(123,495)

 

(140,576)

(140,576)

Net gains on foreign exchange

 

 

424 

424 

 

8,301 

8,301 

 

9,018 

9,018 

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Total

 

28,019 

(39,936)

(11,917)

37,002 

(114,564)

(77,562)

75,144 

(130,928)

(55,784)

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

Expenses

 

 

 

 

 

 

 

 

 

 

Investment management fees

4 

(1,116)

(3,446)

(4,562)

(1,171)

(3,622)

(4,793)

(2,374)

(7,317)

(9,691)

Other operating expenses

5 

(611)

(6)

(617)

(644)

(11)

(655)

(1,278)

(15)

(1,293)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Total operating expenses

 

(1,727)

(3,452)

(5,179)

(1,815)

(3,633)

(5,448)

(3,652)

(7,332)

(10,984)

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

Net profit/(loss) on ordinary activities before finance costs and taxation

 

26,292 

(43,388)

(17,096)

35,187 

(118,197)

(83,010)

71,492 

(138,260)

(66,768)

Finance costs

6 

(1,148)

(3,446)

(4,594)

(1,121)

(3,432)

(4,553)

(2,375)

(7,166)

(9,541)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Net profit/(loss) on ordinary activities before taxation

 

25,144 

(46,834)

(21,690)

34,066 

(121,629)

(87,563)

69,117 

(145,426)

(76,309)

Taxation (charge)/credit

 

(2,296)

923 

(1,373)

(2,299)

1,212 

(1,087)

(4,426)

1,750 

(2,676)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Net profit/(loss) on ordinary activities after taxation

 

22,848 

(45,911)

(23,063)

31,767 

(120,417)

(88,650)

64,691 

(143,676)

(78,985)

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

Earnings/(loss) per ordinary share (pence) – basic and diluted

8 

11.95 

(24.01)

(12.06)

16.73 

(63.40)

(46.67)

33.95 

(75.40)

(41.45)

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

 

The total columns of this statement represent the Group’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards (IAS). The supplementary revenue and capital accounts 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 period. All income is attributable to the equity holders of the Group.

The Group does not have any other comprehensive income/(loss) (30 June 2023: £nil; 31 December 2023: £nil). The net profit/(loss) for the period disclosed above represents the Group’s total comprehensive income/(loss).

Consolidated Statement of Changes in Equity for the six months ended 30 June 2024




 




Note 

Called 
up share 
capital 
£’000 

Share 
premium 
account 
£’000 

Capital 
redemption 
reserve 
£’000 


Special 
reserve 
£’000 


Capital 
reserves 
£’000 


Revenue 
reserve 
£’000 



Total 
£’000 

For the six months ended 30 June 2024 (unaudited)

 

 

 

 

 

 

 

 

At 31 December 2023

 

9,651 

151,493 

22,779 

193,008 

725,161 

57,959 

1,160,051 

Total comprehensive (loss)/income:

 

 

 

 

 

 

 

 

Net (loss)/profit for the period

 

 

 

 

 

(45,911)

22,848 

(23,063)

Dividends paid1

7 

 

 

 

 

 

(43,016)

(43,016)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

At 30 June 2024

 

9,651 

151,493 

22,779 

193,008 

679,250 

37,791 

1,093,972 

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

For the six months ended 30 June 2023 (unaudited)

 

 

 

 

 

 

 

 

At 31 December 2022

 

9,651 

148,107 

22,779 

180,736 

868,837 

69,175 

1,299,285 

Total comprehensive (loss)/income:

 

 

 

 

 

 

 

 

Net (loss)/profit for the period

 

 

 

 

 

(120,417)

31,767 

(88,650)

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

 

 

Ordinary shares reissued from treasury

 

 

3,386 

 

12,305 

 

 

15,691 

Share reissue costs

 

 

 

 

(31)

 

 

(31)

Dividends paid2

7 

 

 

 

 

 

(54,877)

(54,877)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

At 30 June 2023

 

9,651 

151,493 

22,779 

193,010 

748,420 

46,065 

1,171,418 

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

For the year ended 31 December 2023 (audited)

 

 

 

 

 

 

 

 

At 31 December 2022

 

9,651 

148,107 

22,779 

180,736 

868,837 

69,175 

1,299,285 

Total comprehensive (loss)/income:

 

 

 

 

 

 

 

 

Net (loss)/profit for the year

 

 

 

 

 

(143,676)

64,691 

(78,985)

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

 

 

Ordinary shares reissued from treasury

 

 

3,386 

 

12,305 

 

 

15,691 

Share reissue costs

 

 

 

 

(33)

 

 

(33)

Dividends paid3

7 

 

 

 

 

 

(75,907)

(75,907)

 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

At 31 December 2023

 

9,651 

151,493 

22,779 

193,008 

725,161 

57,959 

1,160,051 

 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

1 The final dividend for the year ended 31 December 2023 of 17.00p per share, declared on 7 March 2024 and paid on 14 May 2024, and 1st quarterly interim dividend for the year ended 31 December 2024 of 5.50p per share, declared on 10 May 2024 and paid on 28 June 2024.

2 The final dividend for the year ended 31 December 2022 of 23.50p per share, declared on 3 March 2023 and paid on 26 April 2023, and 1st quarterly interim dividend for the year ended 31 December 2023 of 5.50p per share, declared on 18 April 2023 and paid on 31 May 2023.

3 The final dividend of 23.50p per share for the year ended 31 December 2022, declared on 3 March 2023 and paid on 26 April 2023; 1st interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 18 April 2023 and paid on 31 May 2023; 2nd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 24 August 2023 and paid on 6 October 2023 and 3rd interim dividend of 5.50p per share for the year ended 31 December 2023, declared on 11 October 2023 and paid on 22 December 2023.

For information on the Company’s distributable reserves, please refer to note 11 below.

Consolidated Statement of Financial Position as at 30 June 2024




 




Notes 

30 June 
2024 
(unaudited) 
£’000 

30 June 
2023 
(unaudited) 
£’000 

31 December 
2023 
(audited) 
£’000 

Non current assets

 

 

 

 

Investments held at fair value through profit or loss

12 

1,209,233 

1,283,858 

1,298,420 

Current assets

 

 

 

 

Current tax asset

 

1,515 

1,036 

1,276 

Other receivables

 

6,827 

3,512 

3,592 

Cash collateral held with brokers

 

9,492 

 

6,269 

Cash and cash equivalents

 

16,032 

42,207 

10,612 

 

 

--------------- 

--------------- 

--------------- 

Total current assets

 

33,866 

46,755 

21,749 

 

 

========= 

========= 

========= 

Total assets

 

1,243,099 

1,330,613 

1,320,169 

 

 

========= 

========= 

========= 

Current liabilities

 

 

 

 

Current tax liability

 

(367)

(353)

(352)

Other payables

 

(12,322)

(8,326)

(8,052)

Derivative financial liabilities held at fair value through profit or loss

12 

(1,396)

 

(1,401)

Bank loans

10 

(134,483)

(150,234)

(149,828)

 

 

--------------- 

--------------- 

--------------- 

Total current liabilities

 

(148,568)

(158,913)

(159,633)

 

 

========= 

========= 

========= 

Total assets less current liabilities

 

1,094,531 

1,171,700 

1,160,536 

 

 

========= 

========= 

========= 

Non current liabilities

 

 

 

 

Deferred taxation liability

 

(559)

(282)

(485)

 

 

--------------- 

--------------- 

--------------- 

Net assets

 

1,093,972 

1,171,418 

1,160,051 

 

 

========= 

========= 

========= 

Equity attributable to equity holders

 

 

 

 

Called up share capital

9 

9,651 

9,651 

9,651 

Share premium account

 

151,493 

151,493 

151,493 

Capital redemption reserve

 

22,779 

22,779 

22,779 

Special reserve

 

193,008 

193,010 

193,008 

Capital reserve

 

679,250 

748,420 

725,161 

Revenue reserve

 

37,791 

46,065 

57,959 

 

 

--------------- 

--------------- 

--------------- 

Total equity

 

1,093,972 

1,171,418 

1,160,051 

 

 

========= 

========= 

========= 

Net asset value per ordinary share (pence)

8 

572.21 

612.72 

606.78 

 

 

========= 

========= 

========= 

 

Consolidated Cash Flow Statement for the six months ended 30 June 2024





 

Six months 
ended 
30 June 2024 
(unaudited) 
£’000 

Six months 
ended 
30 June 2023 
(unaudited) 
£’000 

Year ended 
31 December 
2023 
(audited) 
£’000 

Operating activities

 

 

 

Net loss on ordinary activities after taxation

(21,690)

(87,563)

(76,309)

Add back finance costs

4,594 

4,553 

9,541 

Net loss on investments and options held at fair value through profit or loss (including transaction costs)

40,360 

123,495 

140,576 

Net gains on foreign exchange

(424)

(8,301)

(9,018)

Sales of investments held at fair value through profit or loss

360,569 

342,903 

648,272 

Purchases of investments held at fair value through profit or loss

(309,667)

(326,545)

(662,250)

(Increase)/decrease in other receivables

(719)

918 

1,069 

Increase in other payables

66 

2,026 

1,556 

(Increase)/decrease in amounts due from brokers

(2,755)

1 

(409)

Increase in amounts due to brokers

4,216 

 

 

Net movement in cash collateral held with brokers

(3,223)

6,795 

526 

 

--------------- 

--------------- 

--------------- 

Net cash inflow from operating activities before taxation

71,327 

58,282 

53,554 

 

========= 

========= 

========= 

Taxation paid

 

 

(12)

Taxation on investment income included within gross income

(1,373)

(1,437)

(2,664)

 

--------------- 

--------------- 

--------------- 

Net cash inflow from operating activities

69,954 

56,845 

50,878 

 

========= 

========= 

========= 

Financing activities

 

 

 

Repayment of loans

(14,599)

 

 

Interest paid

(4,532)

(4,665)

(9,571)

Net proceeds from ordinary shares reissued from treasury

 

15,660 

15,658 

Dividends paid

(43,016)

(54,877)

(75,907)

 

--------------- 

--------------- 

--------------- 

Net cash outflow from financing activities

(62,147)

(43,882)

(69,820)

 

========= 

========= 

========= 

Increase/(decrease) in cash and cash equivalents

7,807 

12,963 

(18,942)

Effect of foreign exchange rate changes

(2,387)

(248)

62 

 

--------------- 

--------------- 

--------------- 

Change in cash and cash equivalents

5,420 

12,715 

(18,880)

Cash and cash equivalents at start of period/year

10,612 

29,492 

29,492 

 

--------------- 

--------------- 

--------------- 

Cash and cash equivalents at end of period/year

16,032 

42,207 

10,612 

 

========= 

========= 

========= 

Comprised of:

 

 

 

Cash at bank

16,032 

42,207 

10,612 

 

--------------- 

--------------- 

--------------- 

 

16,032 

42,207 

10,612 

 

========= 

========= 

========= 

 

Notes to the financial statements for the six months ended 30 June 2024

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. Basis of preparation
The Half Yearly Financial Statements for the six month period ended 30 June 2024 have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with the UK-adopted International Accounting Standard 34 (IAS 34) Interim Financial Reporting. The Half Yearly Financial Statements should be read in conjunction with the Group’s Annual Report and Financial Statements for the year ended 31 December 2023, which have been prepared in accordance with UK-adopted International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the Association of Investment Companies (AIC) in October 2019 and updated in July 2022, is compatible with UK-adopted IAS, the financial statements have been prepared in accordance with guidance set out in the SORP.

Adoption of new and amended International Accounting Standards and interpretations:
IFRS 17 – Insurance contracts (effective 1 January 2023). This standard replaced IFRS 4 and applies to all types of insurance contracts. IFRS 17 provides a consistent and comprehensive model for insurance contracts covering all relevant accounting aspects.

This standard did not have any impact on the Company as it has no insurance contracts.

IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction (effective 1 January 2023). The IASB has amended IAS 12 Income Taxes to require companies to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance, a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might have a significant impact on the preparation of financial statements by companies that have substantial balances of right-of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the recognition of additional deferred tax assets and liabilities.

IAS 8 – Definition of accounting estimates (effective 1 January 2023). The IASB has amended IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help distinguish between accounting policies and accounting estimates, replacing the definition of accounting estimates.

IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies (effective 1 January 2023). The IASB has amended IAS 1 Presentation of Financial Statements to help preparers in deciding which accounting policies to disclose in their financial statements by stating that an entity is now required to disclose material accounting policies instead of significant accounting policies.

IAS 12 – International Tax Reform Pillar Two Model Rules (effective 1 January 2023). The IASB has published amendments to IAS 12 Income Taxes to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two rules on the accounting for income taxes. The amendment is an exception to the requirements in IAS 12 that an entity does not recognise and does not disclose information about deferred tax assets as liabilities related to the OECD pillar two income taxes and a requirement that current tax expenses must be disclosed separately to pillar two income taxes.

The amendment of these standards did not have any significant impact on the Company.

Relevant International Accounting Standards that have yet to be adopted:
IAS 1 – Classification of liabilities as current or non current (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to clarify its requirement for the presentation of liabilities depending on the rights that exist at the end of the reporting period. The amendment requires liabilities to be classified as non current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights.

IAS 1 – Non current liabilities with covenants (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to introduce additional disclosures for liabilities with covenants within 12 months of the reporting period. The additional disclosures include the nature of covenants, when the entity is required to comply with covenants, the carrying amount of related liabilities and circumstances that may indicate that the entity will have difficulty complying with the covenants.

None of the standards that have been issued, but are not yet effective, are expected to have a material impact on the Company.

3. Income





 

Six months 
ended 
30 June 2024 
(unaudited) 
£’000 

Six months 
ended 
30 June 2023 
(unaudited) 
£’000 

Year ended 
31 December 
2023 
(audited) 
£’000 

Investment income:

 

 

 

UK dividends

5,469 

5,150 

8,647 

Overseas dividends

12,616 

17,281 

33,457 

Overseas special dividends

1,480 

6,269 

17,736 

Income from contractual rights (BHP Brazil Royalty)

756 

2,760 

4,186 

Income from Vale Debentures

2,399 

1,498 

2,608 

Income from fixed income investments

478 

1,153 

1,683 

 

--------------- 

--------------- 

--------------- 

Total investment income

23,198 

34,111 

68,317 

 

========= 

========= 

========= 

Other income:

 

 

 

Option premium income

4,336 

2,483 

5,964 

Deposit interest

323 

305 

678 

Broker interest received

79 

49 

104 

Stock lending income

83 

54 

81 

 

--------------- 

--------------- 

--------------- 

 

4,821 

2,891 

6,827 

 

========= 

========= 

========= 

Total income

28,019 

37,002 

75,144 

 

========= 

========= 

========= 

 

During the period, the Group received option premium income in cash totalling £5,184,000 (six months ended 30 June 2023: £2,525,000; year ended 31 December 2023: £6,724,000) for writing put and covered call options for the purposes of revenue generation.

Option premium income is amortised evenly over the life of the option contract and, accordingly, during the period, option premiums of £4,336,000 (six months ended 30 June 2023: £2,483,000; year ended 31 December 2023: £5,964,000) were amortised to revenue.

At 30 June 2024 there were four open positions (30 June 2023: none; 31 December 2023: three) with an associated liability of £1,396,000 (30 June 2023: £nil; 31 December 2023: £1,401,000).

Dividends and interest received in cash in the six months ended 30 June 2024 amounted to £19,507,000 and £2,746,000 (six months ended 30 June 2023: £27,716,000 and £3,080,000; year ended 31 December 2023: £59,542,000 and £5,159,000).

Special dividends of £nil (six months ended 30 June 2023: £630,000; year ended 31 December 2023: £630,000) have been recognised in capital for the six months ended 30 June 2024.

4. Investment management fee



 

Six months ended
30 June 2024
(unaudited)

Six months ended
30 June 2023
(unaudited)

Year ended
31 December 2023
(audited)


 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Revenue 
£’000 

Capital 
£’000 

Total 
£’000 

Investment management fee

1,116 

3,446 

4,562 

1,171 

3,622 

4,793 

2,374 

7,317 

9,691 

 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

--------------- 

Total

1,116 

3,446 

4,562 

1,171 

3,622 

4,793 

2,374 

7,317 

9,691 

 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

========= 

 

The investment management fee (which includes all services provided by BlackRock) is 0.80% of the Company’s gross assets (subject to certain adjustments). During the period, £4,303,000 (six months ended 30 June 2023: £4,793,000; year ended 31 December 2023: £9,421,000) of the investment management fee was generated from net assets and £259,000 (six months ended 30 June 2023: £nil; year ended 31 December 2023: £270,000) from the gearing effect on gross assets due to the quarter-on-quarter increase in the NAV per share for the period as set out below:



Quarter end

Cum income 
NAV per share 
(pence) 

Quarterly 
increase/ 
(decrease) % 

Gearing effect 
on management 
fees (£’000) 

31 December 2022

688.35 

 

 

31 March 2023

664.51 

-3.5 

 

30 June 2023

612.72 

-7.8 

 

30 September 2023

601.47 

-1.8 

 

31 December 2023

606.78 

+0.9 

270 

31 March 2024

568.07 

-6.4 

 

30 June 2024

572.21 

+0.7 

259 

 

========= 

========= 

========= 

 

The daily average of the net assets under management during the period ended 30 June 2024 was £1,100,397,000 (six months ended 30 June 2023: £1,276,151,000; year ended 31 December 2023: £1,203,977,000).

The fee is allocated 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income.

There is no additional fee for company secretarial and administration services.

5. Other operating expenses





 

Six months 
ended 
30 June 2024 
(unaudited) 
£’000 

Six months 
ended 
30 June 2023 
(unaudited) 
£’000 

Year ended 
31 December 
2023 
(audited) 
£’000 

Allocated to revenue:

 

 

 

Custody fee

53 

55 

109 

Auditors’ remuneration:

 

 

 

– audit services

33 

25 

55 

– non-audit services1

 

5 

9 

Registrar’s fee

42 

41 

86 

Directors’ emoluments

81 

94 

179 

AIC fees

10 

10 

21 

Broker fees

12 

12 

25 

Depositary fees

52 

61 

116 

FCA fee

21 

16 

40 

Directors’ insurance

10 

11 

22 

Marketing fees

61 

65 

144 

Stock exchange fees

25 

26 

52 

Legal and professional fees

67 

82 

147 

Bank facility fees2

45 

39 

85 

Printing and postage fees

22 

29 

55 

Directors' search fees

 

 

25 

Write back of prior year expenses3

(7)

 

 

Other administrative costs

84 

73 

108 

 

--------------- 

--------------- 

--------------- 

 

611 

644 

1,278 

 

========= 

========= 

========= 

Allocated to capital:

 

 

 

Transaction charges4

6 

11 

15 

 

--------------- 

--------------- 

--------------- 

 

617 

655 

1,293 

 

========= 

========= 

========= 

1 Fees paid to the auditors for non-audit services of £nil excluding VAT (six months ended 30 June 2023: £4,675; year ended 31 December 2023: £9,350) relate to the review of the Condensed Half Yearly Financial Report.

2 There is a 4 basis point facility fee chargeable on the full loan facilities whether drawn or undrawn.

3 Relates to legal and professional fees written back during the six months ended 30 June 2024 (six months ended 30 June 2023: none; year ended 31 December 2023: none).

4 For the six months ended 30 June 2024, expenses of £6,000 (six months ended 30 June 2023: £11,000; year ended 31 December 2023: £15,000) were charged to the capital account of the Statement of Comprehensive Income. These relate to transaction costs charged by the custodian on sale and purchase trades.

The transaction costs incurred on the acquisition of investments amounted to £586,000 for the six months ended 30 June 2024 (six months ended 30 June 2023: £504,000; year ended 31 December 2023: £1,055,000). Costs relating to the disposal of investments amounted to £137,000 for the six months ended 30 June 2024 (six months ended 30 June 2023: £67,000; year ended 31 December 2023: £182,000). All transaction costs have been included within the capital reserves.

6. Finance costs



 

Six months ended
30 June 2024
(unaudited)

Six months ended
30 June 2023
(unaudited)

Year ended
31 December 2023
(audited)


 

Revenue 
£’000 

Capital 
£’000