BlackRock World Mining Trust plc LEI – LNFFPBEUZJBOSR6PW155
Annual Results Announcement (Article 4 Transparency Directive, DTR 4.1)
for the year ended 31 December 2021
PERFORMANCE RECORD
| 31 December 2021 |
31 December 2020 |
|
|
| Net assets (£000)¹ | 1,142,874 | 930,825 | |
| Net asset value per ordinary share (NAV) (pence) | 622.21 | 536.34 | |
| Ordinary share price (mid-market) (pence) | 589.00 | 522.00 | |
| Reference Index2 – net total return | 5,258.16 | 4,566.93 | |
| Discount to net asset value 3 | 5.3% | 2.7% | |
| ————— | ————— | ||
| Performance (with dividends reinvested) | |||
| Net asset value per share3 | +20.7% | +31.8% | |
| Ordinary share price3 | +17.5% | +46.7% | |
| Reference Index2 | +15.1% | +20.6% | |
| ========= | ========= |
|
|
Year ended 31 December 2021 |
Year ended 31 December 2020 |
Change % |
| Revenue | |||
| Net revenue profit after taxation (£000) | 78,910 | 35,451 | +122.6 |
| Revenue return per ordinary share (pence)4 | 43.59 | 20.40 | +113.7 |
| ————— | ————— | ————— | |
| Dividends per ordinary share (pence) | |||
| – 1st interim | 4.50 | 4.00 | +12.5 |
| – 2nd interim | 5.50 | 4.00 | +37.5 |
| – 3rd interim | 5.50 | 4.00 | +37.5 |
| – Final | 27.00 | 8.30 | +225.3 |
| Total dividends paid and payable | 42.50 | 20.30 | +109.4 |
| ========= | ========= | ========= |
1 The change in net assets reflects market movements, dividends paid and the buyback and reissue of ordinary shares during the year.
2 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
3 Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.
4 Further details are given in the Glossary in the Annual Report and Financial Statements.
CHAIRMAN’S STATEMENT
HIGHLIGHTS
- Record total dividend +109.4%
- NAV per share total return +20.7%1
- Share price total return +17.5%1
PERFORMANCE
I am delighted to be able to report on another excellent year for your Company.
Over the twelve months to 31 December 2021, the Company’s net asset value per share (NAV) returned +20.7%1 (31 December 2020: 31.8%1) and the share price +17.5%1 (31 December 2020: 46.7%1). In comparison, over the same period the Company’s Reference Index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return), returned +15.1%, the FTSE All-Share Index returned +18.3% and the UK Consumer Price Index (CPI) increased by 5.4%.
The average prices achieved for almost all commodities during the year, and base metals in particular, were substantially ahead of 2020’s levels and these helped drive this year’s exceptional growth in revenue. This was the standout feature of the year and has resulted in total dividends increasing by 176.3% compared to last year.
NAV growth, after a strong first half, was more subdued in the final two quarters, largely reflecting a deceleration in economic growth in China and concerns surrounding elements of the property development sector there.
A detailed commentary on the portfolio’s performance, its positioning, and how Environmental Social and Governance (ESG) factors impact on investment selection, can be found in the Investment Manager’s Report, alongside the investment outlook for the forthcoming year. Since the year end and up until the close of business on 2 March 2022, the Company’s NAV has increased by 20.2% and the share price has increased by 28.7%.
OVERVIEW
The themes which have characterised the sector in recent years continue to apply. Strong capital discipline has limited new supply at a time when government stimulus, including through infrastructure spending in the US and Europe, has boosted demand. In many sectors of the economy, increased demand has been met with bottlenecks, as post lockdown activity has picked up, leading to disruptions in supply chains and, often, higher prices.
In the mining sector the dynamic looks more structural. The obstacles to bringing on new supply have increased, with greater focus on the environmental and social impact of new mining activity, including factors such as water availability and usage. These increase the return hurdles required to justify new investment. In addition, the grades from existing mines have often continued to decline as the mines mature and forecasts of production output in recent years have also generally been too optimistic. On the demand side, the pressing need to decarbonise economic activity in forthcoming decades will create further pressure on all commodities associated with the electrification of energy production and transportation, such as copper, nickel, lithium and cobalt.
Progress has also been made this year in how leading mining companies have responded to the challenge of improving their ESG credentials and your Investment Manager addresses this in their report.
REVENUE RETURN AND DIVIDENDS
The Company’s revenue return per share for the year amounted to 43.59p compared with 20.40p for the previous year, representing an increase of 113.7%.
During the year, three quarterly interim dividends of 4.50p, 5.50p and 5.50p per share were paid on 25 June 2021, 24 September 2021 and 24 December 2021. The Board is proposing a final dividend payment of 27.00p per share for the year ended 31 December 2021. This, together with the quarterly interim dividends, makes a total of 42.50p per share (2020: 20.30p per share) representing an increase of 109.4% on payments made in the previous financial year and, as in past years, all dividends are fully covered by income. In accordance with the Board’s stated policy, the total dividends represent substantially all of the year’s available income.
Subject to approval at the Annual General Meeting, the final dividend will be paid on 19 May 2022 to shareholders on the Company’s register on 18 March 2022, the ex-dividend date being 17 March 2022.
It has been an exceptional year for dividend receipts. The Company’s income is highly dependent on the dividends paid by the companies it invests in. It should not be assumed that the very high level of these dividends will continue this year or that the Company’s revenue return, and accordingly the Company’s total dividends, will be at the same level as last year. It remains the Board’s intention to seek to distribute substantially all of the Company’s available income in the future.
DISCOUNT CONTROL
The Board recognises the importance to investors that the market price of the Company’s shares should not trade at a significant discount to the underlying NAV. Accordingly, the Board monitors the Company’s discount to NAV and will look to buy back shares in normal market conditions if it is deemed to be in shareholders’ interests. During the year, a total of 69,698 shares were purchased at a price of 560.76p per share for a total cost of £393,000. All shares have been placed in treasury.
I am pleased to report that in the first half of the year the Company’s shares were trading at a premium and the Company was able to reissue 10,200,000 ordinary shares from treasury for a net consideration of £63,187,000 at an average price of 619.48p per share and an average 0.9% premium to NAV. Since the year end and up to 2 March 2022, a further 875,000 ordinary shares have been reissued from treasury for a total consideration net of costs of £6,281,000. As at 2 March 2022 the premium stood at 1.4%.
Resolutions to renew the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.
ESG INTEGRATION AND SOCIALLY RESPONSIBLE INVESTMENT
As a Board we are conscious that ESG criteria are increasingly at the forefront of investors’ minds. Given the nature of mining as an industry, your Board has a strong focus on ESG and believes that it is important that our Company’s investee companies operate in a responsible and sustainable way having regard to the interests of all their stakeholders, whether these are shareholders, employees, customers, regulators or suppliers. The Board is also aware that ESG issues and risks must be considered when investing in the Natural Resources sector and, as a general approach, the Company will not invest in companies which the Investment Manager considers to have high ESG risks and no plans to address existing deficiencies.
Our Manager, BlackRock, has an Investment Stewardship team which is responsible for protecting and enhancing the value of your Company’s investments through engagement with companies to encourage business and management practices that support sustainable financial performance over the long term. Further information can be found in the Strategic Report below.
ANNUAL GENERAL MEETING
The Company’s Annual General Meeting (AGM) will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Friday, 6 May 2022 at 11.30 a.m. Details of the business of the meeting are set out in the Notice of Meeting in the Annual Report and Financial Statements.
At present UK Government restrictions on public gatherings are no longer in force in connection with COVID-19 and the AGM can be held in the normal way with physical attendance by shareholders. However, shareholders should be aware that it is possible that such restrictions could be reimposed prior to the date of the AGM. In such event, these restrictions could mean that the AGM is required to be held as a closed meeting as happened last year with physical attendance limited to only a small number of attendees comprising the required quorum for the meeting and those persons whose attendance is necessary for the conduct of the meeting, and that any other persons will be refused entry. Accordingly, all shareholders are recommended to vote by proxy in advance of the AGM and to appoint the Chairman of the meeting as their proxy. This will ensure that shareholders’ votes will be counted even if they (or any appointed proxy) are not able to attend. All votes will be taken by poll so that all proxy votes are counted. Appointing a proxy does not prevent a shareholder attending the AGM in person.
The Company may impose entry restrictions on persons wishing to attend the AGM (including, if required, refusing entry) in order to secure the orderly conduct of the AGM and the safety of the attendees. All shareholders intending to attend should either be fully vaccinated or obtain a negative COVID-19 test result before entering the venue. Negative test results must be obtained no earlier than one day before entering the venue and fully vaccinated shareholders are also strongly encouraged to get tested. Shareholders who have recovered from COVID-19 for 90 days from the date of their infection are exempt from the above.
Attendees will also be required to wear a face covering at all times within the venue except when seated in the relevant meeting room. Shareholders are also requested not to attend the AGM if they have tested positive for COVID-19 in the 10 days prior to the AGM, are experiencing new or worsening COVID-19 related symptoms, have been in close contact with anyone who is experiencing symptoms or has contracted COVID-19 during the 10 days prior to the AGM or are required to self-isolate pursuant to UK Government guidance.
OUTLOOK
In the short term our Investment Manager is optimistic that the Chinese economy is now accelerating again after the dip seen in the second half of last year and metals and mining stocks have certainly made a strong start to 2022. Although the risk of further disruption from new COVID-19 variants cannot be ruled out, the most recent news on the milder impact of the Omicron variant has been encouraging. Last year’s exceptional growth in revenue is unlikely to be repeated, but our Investment Manager remains optimistic about the sector’s prospects in the medium term.
Much of the new demand for metals over the last two decades resulted from the urbanisation of the Chinese economy. It is possible that the drive to decarbonise economic activity will have a similar long-term structural impact. It may also be the case that the investment required to supply the raw materials for this transformation will sustain prices for longer than in previous cycles; higher prices will be needed to provide the incentive to invest to meet this demand.
Last year’s COP26 climate conference in Glasgow brought home the urgency of the need for radical action to tackle global warming. As your Investment Manager points out, the holdings in your Company will play a huge part in supplying the raw materials necessary for the world to transition to net zero by 2050. This imperative, and a return to sustainable economic growth following the pandemic, provide strong underpinning for your Company’s prospects.
At the time of writing geopolitical tensions remain very high following Russia's invasion of Ukraine. As at 3 March 2022, 0.1% of net assets (with a value of £1.7 million) was in securities with exposure to companies whose principal activities are in Russia. BlackRock also announced on Monday, 28 February 2022, that it had suspended the purchase of all Russian securities in its active and index funds.
The appalling humanitarian consequences of the war are already evident. It is too early to assess the long-term implications of these events but it seems inevitable that they will lead to higher volatility in commodity prices and likely that they will add to short-term concerns on inflation.