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BlackRock World Mining—2023 results and dividend. (Stop Press: Yesterday, the chairman of Serica bought another 20,462 shares at 180p)



BlackRock World Mining Trust: (BRWM.L, FTSE 250 Index, Market Cap £988m, 515p, 4.8% of JIC Portfolio (target 5.0%) and 4.6% of JIC Funds Portfolio (target 5.0%).

 

Results for the year ended 31st December 2023. The full statement can be found HERE

 

Conclusion: It was a poor year on the performance front, hence the decision to put it in context by showing 2022’s excellent performance. In 2023, the NAV return lagged the benchmark by 8.6% and, in share price terms, by 12.8% due to a widening of the discount to NAV. The manager explains this underperformance in its report. It is to be hoped that its confidence in the future, driven by lower inflation and interest rates, stimulus in China and the energy transition, come to fruition in 2024. The final dividend is 17.0p, totalling 33.5p for the year, down 16.3% on 2022’s blockbuster payout. The reduced pay-out reflects the lower revenue received as many of the companies in which it is invested paid lower dividends. Whereas in 2022, bumper conditions led to special dividends, lower commodity prices in 2023 hit cash flows. 33.5p gives a 2023 yield of 6.5%, and the final dividend alone yields 3.3%. The shares currently stand on a 4.5% discount to NAV. I’m at close to 5.0% in both Portfolios, having reduced in January. As I hinted yesterday in my diary entry, “observations” it might just be bouncing along the bottom. It's difficult to see a situation where I would reduce the position further, given the longer-term positive drivers.



Overview

After a solid year of performance in 2022, the last 12 months to 31 December 2023 have proved more difficult for the mining sector. The sector performed strongly at the start of the financial year with mined commodity prices up almost across the board, supported by the pace of China's reopening following COVID-19 and expectations for a pick-up in demand. However, the mining sector soon pulled back as improvements in Chinese economic data were slower than had been hoped for and, as we progressed through the year, there were concerns about the demand outlook in major Western economies as well. Increased geopolitical tensions in the Middle East and expectations that higher interest rates would persist for longer than initially anticipated also contributed to a challenging time for the sector. As we entered the final part of the Company's financial year, signs of moderating inflation and easing interest rate expectations led to positive market sentiment for both the mining sector and broader equity markets.


Performance

Over the twelve months to 31 December 2023, the Company's net asset value per share (NAV) returned -6.2%1 and the share price returned -10.4%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 +2.4%, the FTSE All-Share Index returned +7.9% and the UK Consumer Price Index increased by 4.0%.

Our portfolio managers provide a more detailed explanation on the Company's performance and the factors that contributed to, or detracted from, performance during the year in their Investment Manager's Report that follows. They also provide more insight into the positioning of the portfolio and their views on the outlook for the coming year.


Revenue return and dividendsThe Company's revenue return per share for the year amounted to 33.95p, a 16.6% decrease compared with the prior year revenue return per share of 40.68p. Lower commodity prices, higher all in costs and a weakening US Dollar (as many commodity company dividends are paid in US Dollars) contributed to the reduction in earnings, leading to lower returns for shareholders.


During the year, three quarterly interim dividends of 5.50p per share were paid on 5 May 2023, 6 October 2023 and 24 November 2023. The Board is proposing a final dividend payment of 17.00p per share for the year ended 31 December 2023. This, together with the quarterly interim dividends, makes a total of 33.50p per share (2022: 40.00p per share) representing a decrease of 16.3% on payments made in the previous financial year.

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 14 May 2024 to shareholders on the Company's register on 22 March 2024, the ex-dividend date being 21 March 2024. It remains the Board's intention to seek to distribute substantially all of the Company's available income along similar lines in the future.

GearingThe Company operates a flexible gearing policy which depends on prevailing market conditions. The Company may borrow up to 25% of the Group's net assets. The maximum level of gearing used during the year was 14.6% and the level of gearing at 31 December 2023 was 11.9%. Average gearing over the year to 31 December 2023 was 11.9%. For the calculations, please see the Glossary in the Annual Report and Financial Statements.


Outlook

Higher interest rates and greater volatility have resulted in a high level of uncertainty for markets and a remarkable dispersion in commodity price returns during 2023. There has also been a challenging geopolitical backdrop with little end in sight for the conflicts in both Eastern Europe and the Middle East, as well as structural competition between US and China. The number of volatile situations worldwide is the highest in decades and 2024 is set to be the biggest election year, with more than half the world's population voting.


However, against this backdrop, inflationary pressures are easing in the US and UK and inflation is expected to return towards target in 2024. Remaining COVID-19 pandemic era supply disruptions are also fading and the Chinese government has moved forward with a series of stimulus measures to turn round its ailing economy which should support commodity demand. The energy transition to a low carbon economy is also set to increase demand for materials in the supply chain for low carbon technologies, including copper, steel and lithium, which is a positive tailwind for selective parts of the mining sector.



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