TIDMBRWM
BlackRock World Mining Trust plc
LEI - LNFFPBEUZJBOSR6PW155
Condensed Half Yearly Financial Report 30 June 2023
PERFORMANCE RECORD
As at As at
30 June 31 December
2023 2022
Net assets (£'000)1 1,171,418 1,299,285
Net asset value per ordinary share (NAV) (pence) 612.72 688.35
Ordinary share price (mid-market) (pence) 599.00 697.00
Reference index2 - net total return 5,546.55 5,863.32
(Discount)/premium to net asset value3 (2.2%) 1.3%
======== ========
For the For the
six months year
ended ended
30 June 31 December
2023 2022
Performance (with dividends reinvested)
Net asset value per ordinary share3 -7.1% +17.7%
Ordinary share price3 -10.3% +26.0%
Reference index2 -5.4% +11.5%
======== ========
For the For the Change
six six months %
months ended
ended 30 June 2022
30 June
2023
Revenue
Net revenue profit on ordinary 31,767 37,148 -14.5
activities after taxation
(£'000)
Revenue earnings per ordinary 16.73 20.07 -16.6
share (pence)3
Dividend per ordinary share
(pence)
- 1st interim 5.50 5.50 -
- 2nd interim 5.50 5.50 -
-------- --------------- ---------------
-------
Total dividends paid and payable 11.00 11.00 -
======== ======== ========
1The change in net assets reflects portfolio movements, dividends paid and the
reissue of ordinary shares from treasury during the period.
2With 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.
3Alternative Performance Measures; further details are given in the Glossary
contained within the Half Yearly Financial Report.
CHAIRMAN'S STATEMENT
Overview
The global economy performed well at the start of the year, supported by factors
such as falling energy prices, strong consumer balance sheets and the reopening
of the Chinese economy. There was positive sentiment in the mining sector too
following China's reversal of its zero COVID-19 policies which initially led to
strong commodity demand and the majority of mined commodity prices performing
well. However, relatively quickly, positive momentum stalled as global
manufacturing activity receded and China's economy, historically a major demand
engine, delivered a disappointing rebound. By the end of the first half of the
year, most mined commodity prices had fallen below the levels where they
started.
Performance
Against this backdrop, over the six months ended 30 June 2023, the Company's net
asset value per share (NAV) returned -7.1% and the share price -10.3%. The
Company's reference index, the MSCI ACWI Metals & Mining 30% Buffer 10/40 Index,
returned -5.4% (all percentages calculated in Sterling terms with dividends
reinvested).
Since the period end and up to the close of business on 22 August 2023, the
Company's NAV has decreased by 5.2% compared to a fall of 3.2% (on a net return
basis) in 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 are set out
in the Investment Manager's Report below.
Revenue return and dividends
The Company's revenue return per share for the six-month period ended 30 June
2023 amounted to 16.73p per share, compared to 20.07p per share during the same
six-month period last year. This represents a decrease of 16.6% and reflects
reductions in dividends from many mining companies.
The first quarterly dividend of 5.50p per share was paid on 31 May 2023 and,
today, the Board has announced a second quarterly dividend of 5.50p per share
which will be paid on 6 October 2023 to shareholders on the register on 8
September 2023, the ex-dividend date being 7 September 2023. It remains the
Board's intention to distribute substantially all of the Company's available
income in the future.
Management of share rating
The Directors recognise the importance to investors that the Company's share
price should not trade at a significant premium or discount to NAV, and
therefore, in normal market conditions, may use the Company's share buyback and
share issuance powers to ensure that the share price is broadly in line with the
underlying NAV.
The discount of the Company's share price to the underlying NAV per share
finished the six months under review at 2.2% on a cum income basis, having stood
at a premium of 1.3% at the beginning of the period. At the close of business on
22 August 2023, the Company's shares were trading at a discount of 1.9% on a cum
income basis.
Over the six months to 30 June 2023, the Company's shares have traded at an
average premium of 0.2%, and within a range of a 4.2% discount to a 3.1%
premium. I am pleased to report that, during the first half of the year, the
Company reissued 2,430,000 ordinary shares from treasury at an average price of
644.44p per share for a total consideration of £15,691,000. All shares were
reissued at a premium to the prevailing NAV and were therefore accretive to
existing shareholders. The Company did not buy back any shares during the six
month period ended 30 June 2023. Since the period end and up to the date of this
report, no ordinary shares have been reissued or bought back.
Gearing
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 as at 30 June 2023 was 9.6%
and maximum gearing during the period was 14.6%.
Board composition
I am delighted to welcome Charles (Chip) Goodyear to the Board. Chip was
appointed today and brings a wealth of relevant industry knowledge and
experience and, subject to his re-election by shareholders, he is intended to
succeed me as Chairman immediately following the next Annual General Meeting. He
began his career at Kidder, Peabody & Co. where he participated in merger and
acquisition and financing activities for natural resources companies. Chip then
joined Freeport-McMoRan, one of the world's largest producers of copper and
gold, where he was promoted to executive vice president and chief financial
officer. In 1999 he joined BHP Billiton (now BHP), the world's largest
diversified resources company as chief financial officer and served in that role
until 2001 when he became chief development officer, a post he held until 2003
when he then became chief executive officer.
In October 2007 Chip retired from BHP and in 2009 served as CEO-designate of
Temasek Holdings, an investment company wholly owned by the Singapore Minister
for Finance. He also served on Temasek's board. He is currently the president of
Goodyear Capital Corporation and Goodyear Investment Company and a director of
several private companies. Chip has also been a member of the International
Council on Mining and Metals and the National Petroleum Council.
Market outlook
Central banks in most parts of the world have aggressively tightened monetary
policy to restrictive levels and the way forward remains uncertain as they try
to strike a delicate balance between fighting inflation and maintaining
financial stability. Headline inflation rates are currently falling in the
developed world, driven by lower energy prices and normalising supply chains.
However, core inflation, which excludes items frequently subject to volatile
prices like food and energy, does not appear likely to fall to many central
banks' 2.0% inflation target due to ongoing strength in wage growth.
Uncertainty on the interest rate path, reflecting inflation concerns, weighs on
the outlook for economic growth. However, there has never been greater demand
for metals and minerals and the mining sector must increase production to supply
businesses with the materials, such as lithium and copper, they need in enabling
the global economy to shift to a carbon-free future. The mining and metals
industry as a whole is also confident that it can reconcile rapid output growth
with sustainability goals.
Whilst near-term caution is warranted, the Board remains fully supportive of our
portfolio managers, the strength of the holdings in the portfolio and their
belief in the ability of our companies to navigate the upcoming environment.
David Cheyne
Chairman
24 August 2023
INVESTMENT MANAGERS' REPORT
The first half of 2023 finished worse than expected, despite a strong start to
the year. Commodity prices initially moved higher but by March started to fall,
finishing the period in negative territory on the back of fears of further
interest rate hikes and uncertainty on Chinese economic activity. The
combination of these two factors was able to overwhelm supportive supply side
constraints and growth from the energy transition related demand. Mining company
share prices fell in tandem with the aforementioned moves but were also
pressured by cost inflation that compressed margins.
Given the negative backdrop of the period, returns would historically have been
worse than what transpired due to weak balance sheets, overspending on growth
and falling margins. These factors have nearly always resulted in enlarging the
negative returns and driving the steep cyclicality most investors associate with
the sector, but once again the sector proved to be more resilient than in the
past. Mining companies have largely paid down debt, leaving balance sheets
supportive rather than the opposite. Disciplined capital spending has reduced
commitments to growth related capital expenditure and thus freed up cash to
spend on buybacks and dividends. If companies can hold to the capital allocation
frameworks outlined at last cycle's low point, 2016, then there is a strong
probability that once the near-term economic noise dissipates, the underlying
fundamentals should drive returns.
Over the period, the NAV of the Company was down by 7.1% with dividends
reinvested and the share price total return was down by 10.3%. This compares to
the FTSE 100 Index which was up by 3.2%, the Consumer Price Index (during the 12
months to 30 June 2023) which was up by 7.9% and the reference index (MSCI ACWI
Metals & Mining Index 30% Buffer 10/40 Index net total return) which was down by
5.4% (all total return numbers based in Sterling terms).
The old enemy - inflation
Central banks from the Federal Reserve, the Bank of England, the European
Central Bank and nearly all other regions sought to raise rates in a battle
against inflation. A near perfect storm of supply chain issues, strong consumer
balance sheets and tight labour markets drove inflation to levels not seen for
years. In addition, the stickiness of the data continually defied market
expectations that rates would peak in the near term.
Given the focus of governments, society and central banks on bringing inflation
under control, we consider that it is likely that rates will remain higher than
expected and for longer, especially if the consumer continues to spend down the
"personal balance sheet" built up during the COVID-19 pandemic. However, recent
data points are starting to show a reprieve in areas such as energy costs, raw
materials and food prices. Time will tell if these will result in a steep enough
fall in overall inflation data allowing central banks to pause rather than raise
interest rates again.
As shown in the chart on page 8 of the Half yearly Financial Report, rates are
now at a level where investors seem to be satisfied with the return available on
short-term deposit rates of 5% or more. The attractiveness of this creates a
significant burden for general equities given the higher volatility and lower
yields versus the simple return on cash. In addition, ongoing economic
uncertainty in certain parts of the world means that equity returns are likely
to remain divergent. The year to date moves in large cap technology companies
versus companies aligned to the broader economy is a case in point (as seen in
the chart on page 7 of the Half Yearly Financial Report).
ESG issues and the social licence to operate
ESG (Environmental, Social and Governance) issues are highly relevant to the
mining sector and we seek to understand the ESG risks and possible related
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, enabling the carbon transition through the production
of the metals required for the technology underpinning that transition.
We consider ESG insights and data, including sustainability risks, within the
total set of information in our research process and makes 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.
-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 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 focus during the period have been on decarbonisation plans. It
is increasingly clear how essential it is for resource producers to move away
from the carbon heavy processes that have been used for generations. New
technologies will be required to facilitate this transition, as well as
significant amounts of capital. It is also important that investors understand
that the journey will not be a straight line, as companies contend with both the
speed of decarbonisation and the importance of growing production to meet the
needs of customers. In order to monitor progress, it is hoped that some new
industry standards are implemented that will make assessing progress easier, as
happened when the sector focused on safety many years ago.
Another area of focus during the period has been on governance. Given the battle
to grow either by investing in new supply or via mergers and acquisitions, it is
important that management teams respect their fiduciary duty when dealing with
the latter. It is too easy for executives to shy away from opportunities by
retreating into the safety of their own structure rather than engaging to see
what might be possible. It is our hope that the positives delivered by increased
focus on capital discipline are not wasted when it comes to evaluating value
accretive opportunities.
Weaker prices
The first half of 2023 has seen markedly lower prices versus both the start of
the year and versus the average prices seen in the same period last year. Double
digit falls are commonplace across the industrial metals arena, with only
precious metals showing upwards moves. Despite the scale of the falls, current
prices continue to deliver strong margins for the producers and it is therefore
important to highlight the ongoing cash generation the sector is likely to
enjoy. In addition, inventory levels have fallen to record lows for a number of
metals meaning that when demand strength returns the impact on prices from
restocking could be dramatic.
Commodity price moves
Commodity 30 June 2023 % change % change average price
YTD in 1H 23 1H23 vs 1H22
Gold US$/oz 1,916 5.5% 3.1%
Silver US$/oz 22.76 -4.2% 0.1%
Platinum US$/oz 897 -15.8% 1.7%
Palladium US$/oz 1,254 -29.9% -31.8%
Copper US$/lb 3.77 -0.5% -10.9%
Nickel US$/lb 9.23 -31.9% -15.4%
Aluminium US$/lb 0.96 -10.3% -23.9%
Zinc US$/lb 1.08 -20.6% -26.0%
Lead US$/lb 0.97 -8.5% -5.9%
Tin US$/lb 12.46 11.0% -34.6%
Iron Ore (China 62% 114 -3.4% -15.3%
fines) US$/t
Thermal Coal (Newcastle) 159 -42.0% 12.0%
US$/t
Metallurgical Coal US$/t 230 -14.0% -8.0%
Lithium (Battery Grade 106.2 -44.5% -21.2%
China) US$/kg
West Texas Intermediate 70.6 -12.0% -26.4%
Oil (Cushing) US$/barrel
======== ======== ========
Sources: Datastream and Bloomberg, June 2023.
The key exposures for the Company are to producers of iron ore and copper.
Average prices for these two commodities were lower in the first half of 2023
versus the first half of 2022 with iron ore down by 15% and copper down by 10%.
What is interesting is that the actual year to date return for copper is flat,
highlighting the volatility during the period. Inventories are now at levels
rarely seen before, leaving consumers heavily exposed to price risk when they
decide to rebuild stocks.
It is not just metals prices that have suffered during the period but also
prices for other commodities such as oil and agricultural crops. During the
period, OPEC (Organisation of Petroleum Exporting Countries) has had to step
into the market to cut supply twice this year in order to protect prices in the
face of lower economic activity. On the other side of the equation, sales of oil
from the US Strategic Petroleum Reserve have moderated and the US Government has
said they would look to restock at around US$70/bbl which is not far from
current levels.
Capital allocation
It is now seven years since companies started to introduce changes to their
capital allocation frameworks. The focus on value over volume, balance sheet
risk, looking through the cycle, flexibility, improved payments to shareholders
etc. have entrenched a culture of discipline which has steadied the ship during
volatile times. It is great to see ongoing support for these plans and it is
clear from the reduced share price volatility in periods like the first half of
2023 that they are working.
Many of the historic return plans continue to drive support for the sector. It
is noteworthy the scale of delivery and ongoing ambition around share buyback
plans that continue to erode the number of shares in issue for various
companies. For example, ArcelorMittal has reduced its share count by 31.0%,
Glencore by 5.2% and Vale by 7.4%. The full impact of deploying capital in this
way is yet to be felt during an upswing in markets and time will tell just how
much value can be generated from them but the potential is very exciting.
In regard to dividends, it is clear that based on current levels of
profitability and existing pay-out policies, dividends to shareholders are
likely to be lower and in some cases significantly lower in 2023 than the prior
year. This is to be expected but what should not be ignored is just how
competitive the forecast yields continue to be versus the broader market e.g.
the reference index has a dividend yield of 4.1% versus the MSCI All Country
World Index at 2.2%.
Decarbonisation a multi decade driver for the sector
The low carbon transition is one of the most encouraging structural
opportunities that we see in the market and creates a compelling growth
opportunity for those companies supplying the materials that enable the
transition. In 2022 global battery electric vehicle sales reached 10million
units, with the International Energy Agency (IEA) forecasting this to increase
to 13 million units in 2023. Energy storage systems doubled in 2022 compared
with 2021 and are on track to double again in 2023. We also saw record spending
on renewable energy in 2022 at almost US$600 billion, with China alone adding
100GW of solar capacity (+70% versus 2021) where they are looking to increase
this to 150GW in 2023.
Policy continues to be supportive of this trend where we have seen an
acceleration in legislation to support the transition to a low-carbon economy
over the last 12 months. The US Inflation Reduction Act (IRA), passed in August
2022, contains a range of measures to support the transition with nearly US$400
billion of public spending in the form of tax incentives, rebates and loans. The
IRA has contributed to a doubling of real manufacturing construction spending
since late 2021. In Europe, the Green Deal Industrial Plan has earmarked more
than EUR 600 billion in public sector investment to incentivise European
production of clean technology and critical raw materials to ensure Europe
remains competitive in the global race to net-zero.
Base metals
It was a difficult half year for the base metals as concerns around global
growth, the strength of the recovery in China and higher interest rates
depressed demand. Base metal prices for the first half of 2023 were between 11%
to 26% lower than the corresponding period last year. While physical markets
remain robust, particularly in the case of copper, the impact of using higher
rates to stem inflation overwhelmed prices in the first six months.
Encouragingly, as we approached the end of the period, China's two most senior
politicians sought to allay concerns around China's growth and have indicated
that they will look to stimulate parts of the economy to support growth.
Copper has been caught in the crossfires of a macro versus micro debate this
year. The fundamentals of the copper market look robust - inventory levels are
low and drawing down and China's apparent consumption is strong (copper imports
into China reached a record level in May 2023). However, concerns around the
growth outlook in China and the rest of the world depressed the price, with
copper finishing the first half of the year flat (-0.5%) versus the beginning of
the year. The copper price has benefited over the last two years from a number
of project delays and supply downgrades. Whilst we do not see a wall of new
supply entering the market, we will begin to see delayed production from assets
such as Anglo American's Quelleveco mine in Peru and Teck Resources' QB2 project
in Chile which began ramping up production this year.
With the long-term fundamentals of the copper market remaining robust, in
particular copper's role in enabling the energy transition, we continue to
remain positively exposed to copper producers within the Company. Encouragingly,
we saw a better performance from copper equities versus the underlying copper
price during the period. A number of mid-cap and development companies performed
particularly well. Lundin Mining (0.8% of the portfolio) delivered improved
operational performance and acquired a 51% stake in the Casserone's copper mine
in Chile. This is located close to the undeveloped Josemaria project and
provides Lundin Mining with a strong presence in the Vicuna district of Chile
which is also home to the world class Filo del Sol project owned by Filo Mining,
another Lundin Group company. Ivanhoe Mines (2.2% of the portfolio) continues to
deliver as they ramp-up their Komoa-Kakula asset in the Democratic Republic of
the Congo. Ivanhoe Electric (2.8% of the portfolio) announced a concurrent
equity investment and 50/50 exploration joint venture with Ma'aden (Saudi
Arabia's leading mining company) to explore minerals in the Middle Eastern
country which will see them invest US$126 million for a 9.9% stake in the
company. This formerly private investment has continued to perform well now that
it is listed on the New York Stock Exchange.
The aluminium price was down 13% compared with last year but has largely traded
around its cost curve, which is used to estimate its price support level. This
is a function of the move down in energy prices which are the largest cost
component of producing aluminium. There have been risks to China's aluminium
supply base with production restrictions imposed in Yunnan due to low hydro
levels, but overall supply and demand have been reasonably well balanced in
China. While the demand for "green" or low-carbon aluminium continues to grow,
we have seen an element of aluminium de-stocking year-to-date. The Company's
largest exposure to aluminium is via Norsk Hydro (2.4% of the portfolio) which
is one of the lowest-carbon producers of aluminium by virtue of its access to
hydro power in Norway and it continues to pursue its strategy of growing the low
-carbon product mix via recycling and investing into renewable energy.
The nickel market was particularly challenged in 2023 as stainless steel
production, its key source of demand, declined year-on-year. With Indonesian
nickel pig iron supply continuing to grow, a substantial surplus has built up
which caused the nickel price to decline 32% during the first half of the year.
Nickel pig iron (NPI) producers are increasingly looking to adapt their
facilities allowing production of nickel matte and other intermediary products.
This move allows them to sell into the market for Class 1 battery grade nickel
where demand is likely to remain high and could command a premium over time. The
Company has two pure play* exposures to nickel - the first is Nickel Industries
(0.9% of the portfolio), today a NPI producer which is transitioning towards LME
grade nickel production which will improve earnings and margins. The second
investment was done via a "PIPE" deal in 2022 that has now taken Lifezone Metals
from private into a public company at the end of June. Lifezone Metals, in
conjunction with BHP, owns the Kabanga project in Tanzania which is one of the
world's largest undeveloped nickel sulphide deposits. As at the end of July,
Lifezone Metals was trading 19.7% above the capital raising entry price of US$10
per share.
*Companies with significant revenue exposure to the commodity.
Bulk commodities and steel
The outlook for the iron ore market at the end of last year was largely positive
with most investors expecting to see a recovery in construction activity,
particularly in China, leading to better prices during the first half of the
year. To a large extent this proved correct with the iron ore price reaching
US$125/t in Q1 and averaging US$112/t for the first half of the year. While this
iron ore price does not support the record levels of dividends paid by the iron
ore exposed diversified miners in 2021 and 2022 it is a very attractive price
for these low-cost producers.
The Company's exposure to iron ore is via the diversified majors BHP (8.9% of
the portfolio), Vale (9.1% of the portfolio) and Rio Tinto (2.6% of the
portfolio). Whilst iron ore prices have softened versus the prior year, so too
have the share prices and the companies continue to offer an attractive and well
supported dividend yield. In addition, the Company has exposure to two pure play
high grade iron ore producers, Champion Iron and Labrador Royalty Company.
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.
China's domestic steel mills are currently operating at break-even margins, with
the steel price largely tracking moves in its key cost inputs, iron ore and
coking coal. As we look into the second half of the year, we would expect to see
a moderation in steel production rates in China given the government's goal of
maintaining to reducing steel production year-on-year. During the first half of
the year, China's steel output was annualising at 1,050Mt versus their capacity
target of around 1,000Mt. Addressing oversupply and measuring the carbon
intensity of production in the Chinese steel market is positive for those
producers (namely European) who compete against Chinese imports.
The US has remained a bastion of relative strength for steel, supported by
domestic construction, government policy and a recovery in automotive demand
from the chip-impacted production in 2020-2022. As we look forward there is an
increasingly positive outlook for steel in the US with higher infrastructure and
re-shoring investment. The energy transition is also supportive of steel demand,
with steel intensity of certain renewable power more steel intensive than a
natural gas fired power plant, such as onshore wind at 3.4x for the same level
of energy generation.
The Company's exposure to steel is focused on companies with a track record of
capital returns through share buybacks and dividends, as well as disciplined
growth and an industry leading approach to decarbonisation. Our preference in
the Company is to have exposure to low carbon producers, such as the US EAF
producers including Nucor and Steel Dynamics, or to be invested in those
producers who might be carbon intensive today, but have credible plans to
decarbonise their production as is the case with ArcelorMittal. During the first
half, we saw Nucor (1.6% holding in the portfolio) announce a new US$4 billon
share buyback plan in May - since 2020 Nucor has reduced its share count by 17%,
with the newly announced buyback compressing this further. ArcelorMittal and
Steel Dynamics (2.7% and 1.8% holdings respectively) have also reduced their
share count by 27% and 20% respectively since the end of 2020 and we expect this
trend to continue.
Coal markets have been some of the most interesting commodity markets over the
last couple of years with record prices achieved for both metallurgical and
thermal coal during 2022. While coal markets have continued to be interesting,
the price performance has been the worst among the commodities, primarily due to
an elevated starting point and lower demand due to a warmer than expected
northern hemisphere winter. With coal demand in Europe, Japan and South Korea
relatively muted year-to-date, China has been dominating imports with their coal
burn up 16% year-on-year in May. From here, the outlook for coal is largely
weather dependent. If the northern hemisphere winter is colder than average,
inventories will need to be replenished which should be supportive of prices.
The Company's thermal coal exposure is via our 8.0% position in Glencore which
is using elevated thermal coal prices to deleverage the business and remains
focused on decreasing its coal exposure over time. During the first half of
2023, Glencore made a proposal to Teck Resources to merge their two businesses
and subsequently demerge the combined coal business to create two separate
companies - a metals business and a coal business. While the Teck Resources
board has not accepted the proposal from Glencore, Glencore is separately
pursuing an acquisition of Teck Resources' coking coal business that they have
indicated will allow them to separate coal from the rest of the business over
time. As a reminder, the Company has no exposure to pure play thermal coal
producers.
A consistent feature of the metallurgical coal market has been its
susceptibility to upside price surprises due to seasonal weather effects during
the first half of the year. This has resulted in prices spiking to over US$600/t
in recent years when Queensland, Australia's key coking coal region, was heavily
impacted by extreme flooding. While not to the same extreme, volatility has been
a feature of the hard coking coal market this year with prices reaching close to
US$400/t in February as exports from Australia hit 6-year lows, to subsequently
decline to around US$230-250/t at present as supply recovered. Limited
investment into new supply and ongoing supply side risks are likely to keep this
market well supported over the medium term. The Company's exposure to
metallurgical coal remains in the two leading producers, BHP and Teck Resources,
which have been able to generate very strong levels of free cash flow from their
coking coal businesses to support returns to shareholders in recent years.
Precious metals
The last three years have seen a range bound environment for gold with the
average annual price in a range of circa 10%. Whilst the price in US Dollar
terms has been relatively stable, the performance of gold in non-US Dollar terms
has been far stronger. In 2023 gold has traded at the top-end of its recent
trading range surpassing US$2,000/oz, supported by persistent inflation
concerns, heightened geopolitical tension and currency debasement. As we look to
the remainder of the year, the performance of gold will be likely dictated by
the outlook for inflation and in turn rates. If inflation proves to be more
persistent than expected, yet central banks choose to pause on interest rate
hikes, we will see real yields compress and a positive gold price environment
emerge.
The silver price has modestly underperformed gold when looking at average prices
during the first half of 2023 versus the same period last year. Longer term we
see upside potential from greater solar penetration (the greater proportion of
solar within the energy mix) and increasing usage of semi-conductors.
An encouraging feature of the gold equity market over recent years has been the
increased focus on shareholder returns, free cash flow and dividends. Cost
inflation has been a challenge for the gold producers over the last couple of
years. However signs are suggesting the cost inflation is reaching a peak and
the move up in gold prices is also supporting margins.
The Company has modestly increased its exposure to gold producers during the six
-month period given the improved outlook. However, we have maintained our
strategy of focusing on high quality producers which have an attractive
operating margin and solid production profile and resource base. This includes
the Company's exposure to the royalty companies Franco-Nevada (2.2% of the
portfolio) and Wheaton Precious Metals (3.1% of the portfolio) which have
generally outperformed the gold equities during the year given their stronger
margins and lack of exposure to cost inflation. We have also seen further
consolidation in the sector with the Newcrest Mining (2.4% of the portfolio)
board recommending Newmont Corporation's (3.2% of the portfolio) proposal to
acquire Newcrest Mining to create the world's largest gold producer.
It was a torrid period for the platinum group metals (PGMs) with destocking
driving prices significantly lower during the first half, with the platinum
price down by 16%, palladium down by 30% and rhodium falling a spectacular 65%
during the half given the elevated price levels over the last 18 months. It has
been a challenging period for the PGMs with global auto production still
tracking circa 15% below pre-COVID-19 levels, with Battery Electric Vehicles
(BEV) continuing to take market share from Internal Combustion Engine (ICE)
vehicles. We expect to see a modest recovery in auto sales in 2023 as chip
shortages begin to ease, but an environment of rising inflation and interest
rates is challenging for auto demand.
Among the PGMs, platinum has fared better than palladium which faces the
structural challenge of declining diesel vehicle demand. Platinum continues to
see autocatalyst demand growth, with increasing emissions standards requiring
more platinum loading for autocatalysts in China. While the demand outlook has
well recognised challenges, the supply of PGMs has come under significant
pressure in recent years due to the lack of reinvestment and operating
challenges (mainly power related) in South Africa. A key question for global PGM
supply is whether sanctions are placed on Russian materials, which would
significantly tighten the market.
As at the end of the period, the Company had a combined exposure of 2.3% to PGM
producers through Bravo Mining, Impala Platinum, Northam Platinum and Sibanye
Stillwater versus 2.0% at the same time last year. In addition, the Company has
reduced its exposure to Anglo American (2.4% of the portfolio) which owns 79% of
Anglo American Platinum. The clear bright spot for the Company's PGM exposure
was from Bravo Mining, a Brazilian-based PGM exploration and development company
which the Company invested in pre-IPO in April 2022 at US$0.50/share due to our
belief in the assets and management's potential. Since our initial investment
the company has successfully done an IPO and as at 30 June 2023 was trading at
C$4/share, which represents a 500% return on our initial investment. They
continue to have great success with the initial exploration phase confirming the
occurrence of rhodium in the orebody, along with the potential for nickel
sulphide.
Energy transition metals
It was a volatile half for lithium, a critical component of batteries, with the
prices beginning the year at elevated levels and subsequently falling by 60%
between January and April, due to de-stocking along the battery supply chain.
Lithium demand is expected to remain solid this year at +20%, with the market to
remain in balance which should support the recent rally in prices. Much has been
said around the potential for meaningful supply growth in lithium. However,
project delays have become a feature of this market in recent years. Concerns
around the future availability of lithium has seen a number of OEM's (Original
Equipment Manufacturers) including Ford and General Motors look to fund lithium
projects and producers through a combination of equity investments, off-takes
(the amount of goods purchased during a given period) and loans. Following the
pullback in lithium equities alongside the fall in spot prices during Q1, the
Company added to its lithium holdings through Albemarle (1.6% of the portfolio)
and Mineral Resources (1.3% of the portfolio). The Company's lithium holdings
constitute 7.8% of the portfolio.
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 (REEs). REEs are commonly mined and processed in China and have been
deemed of strategic importance by both Europe and the USA. The Company has
exposure to REEs through Lynas Rare Earths, a REE miner and processor crucially
based in Malaysia and Australia, as well as through Iluka Resources which is
building a rare earths conversion facility in Western Australia to process its
Eneabba rare earths concentrate. It has been a challenging first half for Lynas
Rare Earths, with the Malaysian Government confirming that no cracking and
leaching of rare earths will be allowed at their facility in Malaysia from 1
January 2024. While Lynas Rare Earths is building a cracking and leaching plant
in Western Australia, there was hope that both cracking and leaching assets
could operate in both Malaysia and Western Australia, allowing Lynas Rare Earths
to further grow volumes.
Other metals with uses in support of the energy transition include cobalt, where
prices are down by 65% from their June 2022 peak. Demand has been challenged,
with higher cobalt battery chemistries the slowest growth among the battery
chemistries, but still up by 28% year-on-year. From a supply perspective, the
market looks well supplied with China Molybdenum increasing both production and
the processing of stockpiles. Supply growth is also set to continue, with cobalt
being a by-product of many of the Indonesian Nickel projects announced. The
Company's only exposure to cobalt is via Glencore.
Royalty and unquoted investments
Over the last year the Company has enjoyed a number of successes from the
unquoted part of the portfolio with two private holdings, Ivanhoe Electric and
Bravo Mining, going public at a substantially higher level than the Company's
initial investment. The Company's long-standing Brazilian copper and gold
royalty previously operated by OZ Minerals was transferred to BHP following its
acquisition of OZ Minerals in 2023. Jetti Resources, a copper leaching company,
completed a US$100 million fund raising at a substantially higher level than the
Company's initial investment and finally two PIPE investments completed their
business combinations and are trading above our entry price.
As at the end of the first half of 2023, the unquoted investments in the
portfolio amounted to 6.9% of the portfolio and consist of the BHP Brazil
Royalty, the Vale Debentures, Jetti Resources and MCC Mining. 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 in the 2022 Annual Report.
BHP Brazil Royalty Contract (1.5% of the portfolio)
In July 2014 the Company signed a binding royalty agreement with Avanco
Minerals. The Company invested US$12 million in return for Net Smelter Return
(net revenue after deductions for freight, smelter and refining charges) royalty
payments comprising 2% on copper, 25% on gold and 2% on all other metals
produced from mines built on Avanco Minerals' Antas North and Pedra Branca
licences. In addition, there is a flat 2% royalty over all metals produced from
any other discoveries within Avanco Minerals' licence area as at the time of the
agreement.
In 2018 we were delighted to report that Avanco Minerals was successfully
acquired by OZ Minerals, an Australian based copper and gold producer, for A$418
million. We are now equally pleased to report that OZ Minerals was acquired by
the world's largest mining company, BHP, in early 2023, with BHP now operating
the assets underlying the royalty. Since our initial US$12 million investment
was made, we have received US$27.1 million in royalty payments, with the royalty
achieving full payback on the initial investment in 3½ years. As at the end of
June 2023, the royalty was valued at £19.4 million (1.5% of the portfolio) which
equates to a 330.8% cash return on the initial US$12 million invested.
In 2021, OZ Minerals achieved a significant milestone and commenced mining of
Pedra Branca ore. Since then we have seen production at Pedra Branca increase,
with the company targeting production of 13kt-16kt of copper and 11koz-13koz of
gold production in 2023 (Source: 2023 guidance, as at end 2022). We continue to
remain optimistic on the longer-term optionality provided by the royalty via the
development of Pedra Branca West, as well as greenfield exploration over the
licence area. Following BHP's acquisition of OZ Minerals in early 2023, BHP is
now the operator of the royalty. BHP's strong operating focus, balance sheet
strength and ESG credentials leaves the Brazilian operations in a very strong
set of hands.
Vale Debentures (2.5% 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.
We currently expect dividend payments to grow once royalty payments commence on
the Southeastern System in 2024 and volumes from S11D and Serra Norte in the
Northern System improve later in 2023 where project ramp-ups have been
challenged in 2022 by licensing. In December, Vale reduced its longer-term iron
ore production profile in light of licensing challenges and also a greater focus
on high grade material. This now sees Vale target modest volume growth from the
Northern System out to 2026. However, the improvement in grade will aid received
pricing which the royalty will benefit from.
The Debentures continue to offer an attractive yield of circa 10.2% based on the
1H-2023 annualised dividend. This is an attractive yield for a royalty
investment, with this value opportunity recognised by other listed royalty
producers Franco-Nevada and Sandstorm 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 is
a key differentiator of the Company and an effective mechanism to lock-in long
-term income which further diversifies the Company's revenues.
Jetti Resources (2.2% 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 trialling their technology across a number of mines where
they will look to integrate their catalyst into existing heap leach SX-EW
(solvent extraction and electrowinning) mines to improve recoveries at a low
capital cost. The technology has been demonstrated to work at scale at
Capstone's Pinto Valley copper mine, as well as Freeport-McMoRan's Bagdad and El
Abra 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 we were pleased to report that Jetti completed
its Series D financing to raise US$100 million and a substantially higher
valuation than when our investment was made at the beginning of 2022. This sees
the company fully financed to execute on their expected growth plans in the
years ahead.
MCC Mining (0.4% of the portfolio)
MCC Mining operates as a mineral exploration company focused on exploring for
copper in Colombia. The company has several large porphyry targets which we
believe could have significant potential. Shareholders include other mid to
large cap copper miners, which is another indication of the strategic value of
the company. The valuation of the Company is based on the US$170.7 million
equity value implied by the April 2022 equity raise. The money they raised will
fund a drilling campaign, which commenced in Q4 2022 at their Comita project, a
joint venture with Rio Tinto, with drilling on two other projects (Urrao and
Pantanos) commencing during the first half of 2023. Whilst it is still very
early days, initial drilling looks encouraging. Importantly, MCC's three
projects are located in the Forestry Reserve in Colombia which allows for
exploration drilling in the forestry reserve based on new regulations introduced
in Colombia in early 2022.
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 2023 income generated from options
was £2.5 million. Volatility levels for most of the period were lower, making
option writing less value accretive to the Company, but nonetheless a number of
opportunities presented themselves allowing healthy levels of income to be
earned. At the end of the period the Company had 0% of the 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 2023 the Company had £150.2 million of net debt, with a gearing level
of 9.6%. 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 reviewed the use of gearing given the sharp increase in rates, which had
an impact on the returns for using debt to make investments. Less debt was used
during the period than in prior years, which softened the impact of the negative
drag on returns during the six months. At present we remain optimistic that, as
some of the 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 the revolving credit facility and £30 million for the
overdraft. The current total cost of debt for the Company remains low at 5.99%
and is linked to SONIA following the demise of LIBOR.
Outlook
The first half of the year was weaker than expected both in absolute terms and
versus the broader market. Valuation multiples compressed alongside lower than
forecast metal prices leading to reduced levels of profitability. As mentioned
previously, we believe these poor returns are due both to the short-term focus
on interest rates and to Chinese economic data. The energy transition appears to
be happening faster than expected with EV car sales beating estimates,
deployment of renewable infrastructure accelerating and corporate
decarbonisation spending becoming mainstream. Supply of materials remains
constrained and growth projects seem to be taking longer and costing more.
In this environment, 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 strong
results over the last few years and the current mix of holdings has a high
degree of exposure to similar dynamics, which we consider bodes 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 to offset recent
reductions to dividends from core holdings. Achieving this is 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
24 August 2023
TEN LARGEST INVESTMENTS
1 ? Vale1,2 (2022: 2nd)
Diversified mining group
Market value: £117,277,000
Share of investments: 9.1% (2022: 9.1%) comprising equity 6.6% and debentures
2.5%
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.
2 ? BHP (2022: 1st)
Diversified mining group
Market value: £113,843,000
Share of investments: 8.9% (2022: 9.5%)
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, silver and diamonds.
3 ? Glencore (2022: 3rd)
Diversified mining group
Market value: £102,143,000
Share of investments: 8.0% (2022: 7.7%)
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.
4 ? Teck Resources (2022: 9th)
Diversified mining group
Market value: £57,999,000
Share of investments: 4.5% (2022: 3.6%)
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, zinc, metallurgical coal and
energy.
5 ? Freeport-McMoRan (2022: 8th)
Copper producer
Market value: £50,113,000
Share of investments: 3.9% (2022: 4.0%)
A global mining group which operates large, long-lived, geographically diverse
assets with significant proven and probable reserves of copper, gold and
molybdenum.
6 ?First Quantum Minerals1 (2022: 6th)
Copper producer
Market value: £45,866,000
Share of investments: 3.6% (2022: 4.1%) comprising equity 2.8% and bonds 0.8%
A Canadian-based mining and metals group with principal activities that include
mineral exploration, development and mining. Its main product is copper.
7 ? Newmont Corporation (2022: 18th)
Gold producer
Market value: £40,518,000
Share of investments: 3.2% (2022: 1.9%)
Following the acquisition of Goldcorp in the first half of 2019, Newmont
Corporation is 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.
8 ? Wheaton Precious Metals (2022: 14th)
Gold producer
Market value: £39,577,000
Share of investments: 3.1% (2022: 2.3%)
One of the world's largest precious metals streaming companies. The company
purchases silver and gold production from mines that it does not own and
operate. The company has streaming agreements with 19 operating mines and 13
development projects worldwide.
9 ? Ivanhoe Electric/I-Pulse1 (2022: 11th)
Copper producer
Market value: £36,296,000
Share of investments: 2.8% (2022: 2.4%) comprising equity 1.9% and bonds 0.9%
An American minerals exploration and development company focused on advancing
their portfolio of electric metals projects located primarily in the United
States. Ivanhoe Electric has a specific focus on sources of electric metals such
as copper, gold, silver and nickel. These metals are essential for the world's
revolutionary transition to an electrified economy. I-Pulse is the former parent
company of Ivanhoe Electric and today retains a minority shareholding interest
in Ivanhoe Electric which was spun-out from the I-Pulse group in 2021.
10 ? ArcelorMittal (2022: 7th)
Steel producer
Market value: £35,172,000
Share of investments: 2.7% (2022: 4.0%)
A multinational steel manufacturing group, with a focus on producing safe `lower
carbon' steel. The group has operations across the globe and is the largest
steel manufacturer in North America, South America and Europe.
1Includes fixed income securities.
2Includes investments held at Directors' valuation.
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.
Together, the ten largest investments represented 49.8% of total investments of
the Company's portfolio as at 30 June 2023 (ten largest investments as at 31
December 2022: 54.3%).
INVESTMENTS AS AT 30 JUNE 2023
Main Market % of
geographical value investments
exposure £'000
Diversified
Vale Global 85,198 } 9.1
Vale Global 32,079
Debentures*#^
BHP Global 113,843 8.9
Glencore Global 102,143 8.0
Teck Resources Global 57,999 4.5
Rio Tinto Global 33,766 2.6
Anglo American Global 30,267 2.4
Trident Global 5,214 0.4
--------------- ---------------
460,509 35.9
========= =========
Copper
Freeport Global 50,113 3.9
-McMoRan
First Quantum Global 45,866 3.6
Minerals*
Ivanhoe United States 24,125 } 2.8
Electric
I-Pulse* United States 12,171
Jetti Global 28,264 2.2
Resources#
Ivanhoe Mines Other Africa 27,768 2.2
BHP Brazil Latin America 19,350 1.5
Royalty#
Sociedad Latin America 16,107 1.3
Minera Cerro
Verde
Develop Global Australasia 15,432 1.2
Lundin Mining Global 10,197 0.8
Ero Copper Latin America 8,805 0.7
Solaris Latin America 7,823 0.6
Resources
CSA Cobar Australasia 6,852 0.5
Mine#
Foran Mining# Canada 5,876 0.5
MCC Mining# Latin America 5,506 0.4
Aurubis Global 5,095 0.4
Filo Mining# Latin America 4,179 0.3
Antofagasta Latin America 2,284 0.2
MTAL Founders Australasia 347 -
Shares#
--------------- ---------------
296,160 23.1
========= =========
Gold
Newmont Global 40,518 3.2
Corporation
Wheaton Global 39,577 3.1
Precious
Metals
Newcrest Australasia 30,243 2.4
Mining
Franco-Nevada Global 28,470 2.2
Barrick Gold Global 26,708 2.1
Northern Star Australasia 17,663 1.4
Resources
Endeavour Other Africa 9,675 0.8
Mining
Agnico Eagle Canada 5,992 0.5
Mines
Polymetal United Kingdom 1,842 0.1
International
Polyus Russia - -
--------------- ---------------
200,688 15.8
========= =========
Industrial
Minerals
Sigma Lithium Latin America 21,826 1.7
Albemarle Global 21,182 1.6
Mineral Australasia 16,236 1.3
Resources
Iluka Australasia 12,963 1.0
Resources
Chalice Mining Australasia 8,298 0.6
Lynas Rare Australasia 8,247 0.6
Earths
Sociedad Latin America 8,153 0.6
Quimica y
Minera ADR
Sheffield Australasia 5,463 0.4
Resources
--------------- ---------------
102,368 7.8
========= =========
Steel
ArcelorMittal Global 35,172 2.7
Steel Dynamics United States 23,507 1.8
Nucor United States 20,668 1.6
Stelco Canada 6,989 0.5
Holdings
--------------- ---------------
86,336 6.6
========= =========
Aluminium
Norsk Hydro Global 30,431 2.4
Alcoa Global 9,033 0.7
--------------- ---------------
39,464 3.1
========= =========
Platinum Group
Metals
Bravo Mining Latin America 21,825 1.7
Northam Global 3,456 0.3
Platinum
Impala South Africa 2,170 0.2
Platinum
Sibanye South Africa 1,169 0.1
Stillwater
--------------- ---------------
28,620 2.3
========= =========
Iron Ore
Labrador Iron Canada 12,994 1.0
Champion Iron Canada 10,238 0.8
Deterra Australasia 4,852 0.4
Royalties
Equatorial Other Africa 259 -
Resources
--------------- ---------------
28,343 2.2
========= =========
Uranium
Cameco Canada 14,083 1.1
--------------- ---------------
14,083 1.1
========= =========
Mining
Services
Woodside Australasia 7,819 0.6
Energy Group
Epiroc Global 6,082 0.5
--------------- ---------------
13,901 1.1
========= =========
Nickel
Nickel Indonesia 11,679 0.9
Industries
Bindura Nickel Global 40 -
Lifezone SPAC Global - -
Commitment#
--------------- ---------------
11,719 0.9
========= =========
Zinc
Titan Mining United States 1,667 0.1
--------------- ---------------
1,667 0.1
--------------- ---------------
Comprising: 1,283,858 100.0
========= =========
- Investments 1,283,858 100.0
--------------- ---------------
1,283,858 100.0
========= =========
*Includes fixed income securities.
#Includes investments held at Directors' valuation.
Includes mining royalty contract.
^The investment in the Vale debenture 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 2023 (including options classified
as liabilities on the balance sheet) was 66 (31 December 2022: 68).
As at 30 June 2023 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 2023
Commodity Exposure1
+---------------------+---------+----------+----------------+
| |2023 |2022 |2023 |
| |portfolio|portfolio#|reference index*|
+---------------------+---------+----------+----------------+
|Diversified |35.9% |40.0% |34.2% |
+---------------------+---------+----------+----------------+
|Copper |23.1% |22.0% |11.6% |
+---------------------+---------+----------+----------------+
|Gold |15.6% |13.0% |22.2% |
+---------------------+---------+----------+----------------+
|Industrial Minerals |8.0% |6.5% |2.1% |
+---------------------+---------+----------+----------------+
|Steel |6.7% |8.1% |19.6% |
+---------------------+---------+----------+----------------+
|Aluminium |3.1% |3.3% |3.1% |
+---------------------+---------+----------+----------------+
|Platinum Group Metals|2.2% |2.0% |1.6% |
+---------------------+---------+----------+----------------+
|Iron Ore |2.2% |3.1% |3.9% |
+---------------------+---------+----------+----------------+
|Uranium |1.1% |0.4% |0.0% |
+---------------------+---------+----------+----------------+
|Mining Services |1.1% |0.4% |0.1% |
+---------------------+---------+----------+----------------+
|Nickel |0.9% |0.8% |0.1% |
+---------------------+---------+----------+----------------+
|Zinc |0.1% |0.1% |0.3% |
+---------------------+---------+----------+----------------+
|Other& |0.0% |0.3% |1.2% |
+---------------------+---------+----------+----------------+
1Based on index classifications.
#Represents exposure at 31 December 2022.
*MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
&Represents a very small exposure.
+------------------------------+-----+
|Geographic Exposure1 |2023 |
+------------------------------+-----+
|Global |65.6%|
+------------------------------+-----+
|Australasia |10.4%|
+------------------------------+-----+
|Latin America |9.0% |
+------------------------------+-----+
|Other2 |7.3% |
+------------------------------+-----+
|Canada |4.4% |
+------------------------------+-----+
|Other Africa (ex South Africa)|3.0% |
+------------------------------+-----+
|South Africa |0.3% |
+------------------------------+-----+
+------------------------------+-----+
| |2022 |
+------------------------------+-----+
|Global |69.2%|
+------------------------------+-----+
|Australasia |9.0% |
+------------------------------+-----+
|Latin America |7.5% |
+------------------------------+-----+
|Other2 |7.1% |
+------------------------------+-----+
|Canada |4.1% |
+------------------------------+-----+
|Other Africa (ex South Africa)|2.4% |
+------------------------------+-----+
|South Africa |0.7% |
+------------------------------+-----+
1Based on the principal commodity exposure and place of operation of each
investment.
2Consists of Indonesia, Russia, United Kingdom 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:
-Counterparty;
-Investment performance;
-Legal and regulatory compliance;
-Market;
-Political;
-Operational; 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
2022. A detailed explanation can be found in the Strategic Report on pages 43 to
46 and note 18 on pages 113 to 131 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
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 2022 were approximately 0.95% 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.
This Condensed Half Yearly Financial Report has been reviewed by the Company's
auditors and their report is set out in the Half Yearly Financial Report.
The Condensed Half Yearly Financial Report was approved by the Board on 24
August 2023 and the above responsibility statement was signed on its behalf by
the Chairman.
David Cheyne
For and on behalf of the Board
24 August 2023
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHSED 30 JUNE
2023
Six months Six months
Year
ended ended
ended
30 June 30 June
31
2023 2022
December
(unaudited) (unaudited)
2022
(audited)
Notes Revenue Capital Total Revenue Capital
Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000
£'000 £'000 £'000 £'000
Income from 3 34,111 630 34,741 39,251 -
39,251 78,087 811 78,898
investments
held
at fair
value
through
profit or
loss
Other 3 2,891 - 2,891 2,472 -
2,472 7,909 - 7,909
income
----------- --------- --------- ----------- -------- -
------- --------- -------- --------
---- ------ ------ ---- ------- -
------ ------ ------- ------
Total 37,002 630 37,632 41,723 -
41,723 85,996 811 86,807
revenue
========= ======== ======== ========= ========
======== ======== ======== ========
Net - (123,495) (123,495) - (30,608)
(30,608) - 152,937 152,937
(loss)/profi
t
on
investments
held
at fair
value
through
profit or
loss
Net - 8,301 8,301 - (16,160)
(16,160) - (17,645) (17,645)
profit/(loss
)
on foreign
exchange
----------- --------- --------- ----------- -------- -
------- --------- -------- --------
---- ------ ------ ---- ------- -
------ ------ ------- ------
Total 37,002 (114,564) (77,562) 41,723 (46,768)
(5,045) 85,996 136,103 222,099
======== ======== ======== ======== ========
======== ======== ======== ========
Expenses
Investment 4 (1,171) (3,622) (4,793) (1,279) (3,949)
(5,228) (2,615) (8,031) (10,646)
management
fee
Other 5 (644) (11) (655) (532) (7)
(539) (1,037) (28) (1,065)
operating
expenses
----------- --------- --------- ----------- -------- -
------- --------- -------- --------
---- ------ ------ ---- ------- -
------ ------ ------- ------
Total (1,815) (3,633) (5,448) (1,811) (3,956)
(5,767) (3,652) (8,059) (11,711)
operating
expenses
========= ======== ======== ========= ========
======== ======== ======== ========
Net 35,187 (118,197) (83,010) 39,912 (50,724)
(10,812) 82,344 128,044 210,388
profit/(loss
)
on ordinary
activities
before
finance
costs and
taxation
Finance 6 (1,121) (3,432) (4,553) (306) (891)
(1,197) (1,182) (3,520) (4,702)
costs
----------- --------- --------- ----------- -------- -
------- --------- -------- --------
---- ------ ------ ---- ------- -
------ ------ ------- ------
Net 34,066 (121,629) (87,563) 39,606 (51,615)
(12,009) 81,162 124,524 205,686
profit/(loss
)
on ordinary
activities
before
taxation
Taxation (2,299) 1,212 (1,087) (2,458) 804
(1,654) (5,149) 1,883 (3,266)
(charge)/cre
dit
----------- --------- --------- ----------- -------- -
------- --------- -------- --------
---- ------ ------ ---- ------- -
------ ------ ------- ------
Net 8 31,767 (120,417) (88,650) 37,148 (50,811)
(13,663) 76,013 126,407 202,420
profit/(loss
)
on ordinary
activities
after
taxation
========= ======== ======== ========= ========
======== ======== ======== ========
Earnings/(lo 8 16.73 (63.40) (46.67) 20.07 (27.45)
(7.38) 40.68 67.64 108.32
ss)
per
ordinary
share
(pence) -
basic
and diluted
========= ======== ======== ========= ========
======== ======== ======== ========
The total columns of this statement represent the Group's Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards (IASs). 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 2022:
£nil; 31 December 2022: £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 MONTHSED 30 JUNE
2023
Note Called Share Capital Special Capital
Revenue Total
up share premium redemption reserve reserves
reserve £'000
capital account reserve £'000 £'000
£'000
£'000 £'000 £'000
For the six
months ended
30
June 2023
(unaudited)
At 31 9,651 148,107 22,779 180,736 868,837
69,175 1,299,285
December 2022
Total
comprehensive
income:
Net - - - - (120,417)
31,767 (88,650)
(loss)/profit
for the
period
Transactions
with owners,
recorded
directly to
equity:
Ordinary - 3,386 - 12,305 - -
15,691
shares
reissued
from treasury
Share reissue - - - (31) - -
(31)
costs
Dividends 7 - - - - -
(54,877) (54,877)
paid1
--------- --------- ---------- --------- --------- ---
------ ---------
------ ------ ----- ------ ------ ---
--- ------
At 30 June 9,651 151,493 22,779 193,010 748,420
46,065 1,171,418
2023
========= ========= ========= ========= =========
========= =========
For the six
months ended
30
June 2022
(unaudited)
At 31 9,651 138,818 22,779 155,123 742,430
74,073 1,142,874
December 2021
Total
comprehensive
income:
Net - - - - (50,811)
37,148 (13,663)
(loss)/profit
for the
period
Transactions
with owners,
recorded
directly to
equity:
Ordinary - 8,752 - 21,708 - -
30,460
shares
reissued
from treasury
Share reissue - - - (61) - -
(61)
costs
Dividends 7 - - - - -
(60,148) (60,148)
paid2
--------- --------- ---------- --------- --------- ---
------ ---------
------ ------ ----- ------ ------ ---
--- ------
At 30 June 9,651 147,570 22,779 176,770 691,619
51,073 1,099,462
2022
========= ========= ========= ========= =========
========= =========
For the year
ended 31
December 2022
(audited)
At 31 9,651 138,818 22,779 155,123 742,430
74,073 1,142,874
December 2021
Total
comprehensive
income:
Net profit - - - - 126,407
76,013 202,420
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary - 9,289 - 25,683 - -
34,972
shares
reissued
from treasury
Share reissue - - - (70) - -
(70)
costs
Dividends 7 - - - - -
(80,911) (80,911)
paid3
--------- --------- ---------- --------- --------- ---
------ ---------
------ ------ ----- ------ ------ ---
--- ------
At 31 9,651 148,107 22,779 180,736 868,837
69,175 1,299,285
December 2022
========= ========= ========= ========= =========
========= =========
1The 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.
2The final dividend for the year ended 31 December 2021 of 27.00p per share,
declared on 8 March 2022 and paid on 19 May 2022, and 1st quarterly interim
dividend for the year ended 31 December 2022 of 5.50p per share, declared on 6
May 2022 and paid on 30 June 2022.
3The final dividend of 27.00p per share for the year ended 31 December 2021,
declared on 8 March 2022 and paid on 19 May 2022; 1st quarterly interim dividend
of 5.50p per share for the year ended 31 December 2022, declared on 6 May 2022
and paid on 30 June 2022; 2nd quarterly interim dividend of 5.50p per share for
the year ended 31 December 2022, declared on 23 August 2022 and paid on 30
September 2022; and 3rd quarterly interim dividend of 5.50p per share for the
year ended 31 December 2022, declared on 16 November 2022 and paid on 22
December 2022.
For information on the Company's distributable reserves, please refer to note 11
below.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023
Notes 30 June 30 June 31
2023 2022 December
(unaudited) (unaudited) 2022
£'000 £'000 (audited)
£'000
Non current assets
Investments held 12 1,283,858 1,232,361 1,424,844
at fair value
through profit or
loss
Current assets
Current tax asset 1,036 490 821
Other receivables 3,512 5,560 4,431
Cash collateral - 2,651 6,795
held with brokers
Cash and cash 42,207 52,255 29,492
equivalents
----------- ----------- ---------
---- ---- ------
Total current 46,755 60,956 41,539
assets
========= ========= =========
Total assets 1,330,613 1,293,317 1,466,383
========= ========= =========
Current
liabilities
Current tax (353) (281) (373)
liability
Other payables (8,326) (15,135) (6,155)
Derivative 12 - (550) (1,227)
financial
liabilities held
at fair value
through profit or
loss
Bank overdraft - (177) -
Bank loans (150,234) (177,273) (158,783)
----------- ----------- ---------
---- ---- ------
Total current (158,913) (193,416) (166,538)
liabilities
========= ========= =========
Total assets less 1,171,700 1,099,901 1,299,845
current
liabilities
========= ========= =========
Non current
liabilities
Deferred taxation (282) (439) (560)
liability
----------- ----------- ---------
---- ---- ------
Net assets 1,171,418 1,099,462 1,299,285
========= ========= =========
Equity
attributable to
equity holders
Called up share 9 9,651 9,651 9,651
capital
Share premium 151,493 147,570 148,107
account
Capital redemption 22,779 22,779 22,779
reserve
Special reserve 193,010 176,770 180,736
Capital reserves 748,420 691,619 868,837
Revenue reserve 46,065 51,073 69,175
----------- ----------- ---------
---- ---- ------
Total equity 1,171,418 1,099,462 1,299,285
========= ========= =========
Net asset value 8 612.72 584.92 688.35
per ordinary share
(pence)
========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHSED 30 JUNE 2023
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Net (loss)/profit on (87,563) (12,009) 205,686
ordinary activities before
taxation
Add back finance costs 4,553 1,197 4,702
Net loss/(profit) on 123,495 30,608 (152,937)
investments and options
held at fair value through
profit or loss (including
transaction costs)
Net (profit)/loss on (8,301) 16,160 17,645
foreign exchange
Net amount for capital (535) - -
special dividends received
Sales of investments and 343,438 266,982 489,236
derivatives held at fair
value through profit or
loss
Purchases of investments (326,545) (273,507) (503,782)
and derivatives held at
fair value through profit
or loss
Decrease/(increase) in 918 (203) 13
other receivables
Increase in other payables 2,026 540 1,025
Decrease/(increase) in 1 (148) 243
amounts due from brokers
Increase in amounts due to - 9,412 -
brokers
Net movement in cash 6,795 (2,071) (6,215)
collateral held with
brokers
--------------- --------------- ---------------
Net cash inflow from 58,282 36,961 55,616
operating activities before
taxation
========= ========= =========
Taxation paid - (261) (432)
Taxation on investment (1,437) (1,733) (3,210)
income included within
gross income
--------------- --------------- ---------------
Net cash inflow from 56,845 34,967 51,974
operating activities
========= ========= =========
Financing activities
Drawdown of loans - 22,359 2,359
Interest paid (4,665) (1,362) (4,720)
Net proceeds from ordinary 15,660 30,399 34,902
shares reissued from
treasury
Dividends paid (54,877) (60,148) (80,911)
--------------- --------------- ---------------
Net cash outflow from (43,882) (8,752) (48,370)
financing activities
========= ========= =========
Increase in cash and cash 12,963 26,215 3,604
equivalents
Cash and cash equivalents 29,492 25,976 25,976
at start of the period
Effect of foreign exchange (248) (113) (88)
rate changes
--------------- --------------- ---------------
Cash and cash equivalents 42,207 52,078 29,492
at end of the period
========= ========= =========
Comprised of:
Cash and cash equivalents 42,207 52,255 29,492
Bank overdraft - (177) -
--------------- --------------- ---------------
42,207 52,078 29,492
========= ========= =========
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHSED 30 JUNE 2023
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 2023
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 2022,
which have been prepared in accordance with UK-adopted International Accounting
Standards (IASs) 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 IASs, the financial statements have been prepared in accordance with
guidance set out in the SORP.
Relevant International Accounting Standards that have yet to be adopted:
IFRS 17 - Insurance contracts (effective 1 January 2023). This standard replaces
IFRS 4, which currently permits a wide range of accounting practices in
accounting for insurance contracts. IFRS 17 will fundamentally change the
accounting by all entities that issue insurance contracts and investment
contracts with discretionary participation features.
This standard is unlikely to have any impact on the Group as it does not issue
insurance contracts.
IAS 12 - Deferred tax related to assets and liabilities arising from a single
transaction (effective 1 January 2023). The International Accounting Standards
Board (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.
The amendment of this standard is unlikely to have any significant impact on the
Group.
None of the standards that have been issued but are not yet effective are
expected to have a material impact on the Group.
3. Income
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
UK dividends 5,150 9,575 17,536
UK special dividends - 2,167 2,167
Overseas dividends 17,281 19,768 45,094
Overseas special 6,269 1,670 3,808
dividends
Income from contractual 2,760 1,674 3,096
rights (BHP Brazil
Royalty)
Income from Vale 1,498 3,308 3,863
debentures
Income from fixed income 1,153 1,089 2,523
investments
--------------- --------------- ---------------
Total investment income 34,111 39,251 78,087
========= ========= =========
Other income:
Option premium income 2,483 2,371 7,297
Deposit interest 305 65 513
Broker interest received 49 - 18
Stock lending income 54 36 81
--------------- --------------- ---------------
2,891 2,472 7,909
========= ========= =========
Total income 37,002 41,723 85,996
========= ========= =========
During the period, the Group received option premium income in cash totalling
£2,525,000 (six months ended 30 June 2022: £2,035,000; year ended 31 December
2022: £7,541,000) 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 £2,483,000 (six months
ended 30 June 2022: £2,371,000; year ended 31 December 2022: £7,297,000) were
amortised to revenue.
At 30 June 2023 there were no open positions (30 June 2022: one; 31 December
2022: three) with an associated liability of £nil (30 June 2022: £550,000; 31
December 2022: £1,227,000).
Dividends and interest received in cash in the six months ended 30 June 2023
amounted to £27,716,000 and £3,080,000 (six months ended 30 June 2022:
£34,977,000 and £3,775,000; year ended 31 December 2022: £68,630,000 and
£5,918,000).
Special dividends of £630,000 have been recognised in capital for the six months
ended 30 June 2023 (six months ended 30 June 2022: £nil; year ended 31 December
2022: £811,000).
4. Investment management fee
Six months Six months
Year
ended ended
ended
30 June 30 June
31
2023 2022
December
(unaudited) (unaudited)
2022
(audited)
Revenue Capital Total Revenue Capital Total
Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
£'000 £'000 £'000
Investment 1,171 3,622 4,793 1,279 3,949 5,228
2,615 8,031 10,646
management
fee
----------- --------- --------- ----------- --------- ---------
--------- --------- ---------
---- ------ ------ ---- ------ ------
------ ------ ------
Total 1,171 3,622 4,793 1,279 3,949 5,228
2,615 8,031 10,646
========= ========= ========= ========= ========= =========
========= ========= =========
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, £4,793,000 (six months ended 30 June 2022:
£4,961,000; year ended 31 December 2022: £9,848,000) of the investment
management fee was generated from net assets and £nil (six months ended 30 June
2022: £267,000; year ended 31 December 2022: £798,000) 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 Quarterly Gearing effect
NAV per share increase/ on management
(pence) (decrease) % fees (£'000)
31 December 2021 622.21 - -
31 March 2022 769.58 +23.7 267
30 June 2022 584.86 -24.0 -
30 September 2022 602.65 +3.0 294
31 December 2022 688.35 +14.2 237
31 March 2023 664.51 -3.5 -
30 June 2023 612.72 -7.8 -
========= ========= =========
The daily average of the net assets under management during the period ended 30
June 2023 was £1,276,151,000 (six months ended 30 June 2022: £1,287,808,000;
year ended 31 December 2022: £1,232,043,000).
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 Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Allocated to
revenue:
Custody fee 55 59 101
Auditors'
remuneration:
- audit services 25 25 51
- non-audit 5 5 9
services1
Registrar's fee 41 40 86
Directors' 94 88 197
emoluments
AIC fees 10 10 21
Broker fees 12 12 24
Depositary fees 61 61 116
FCA fee 16 13 30
Directors' 11 11 23
insurance
Marketing fees 65 81 132
Stock exchange 26 18 37
fees
Legal and 82 20 35
professional fees
Bank facility 39 51 97
fees2
Printing and 29 28 47
postage costs
Write back of - (24) (55)
prior year
expenses3
Other 73 34 86
administrative
costs
--------------- --------------- ---------------
644 532 1,037
========= ========= =========
Allocated to
capital:
Custody 11 7 28
transaction
charges4
--------------- --------------- ---------------
655 539 1,065
========= ========= =========
1Fees paid to the auditor for non-audit services of £4,675 excluding VAT (six
months ended 30 June 2022: £4,500; year ended 31 December 2022: £8,925) relate
to the review of the Condensed Half Yearly Financial Report.
2There is a 4 basis point facility fee chargeable on the full loan facilities
whether drawn or undrawn.
3No expenses were written back during the six months ended 30 June 2023 (six
months ended 30 June 2022: Directors' expenses, miscellaneous fees and
professional services fees; year ended 31 December 2022: Directors' expenses,
miscellaneous fees, legal fees and professional services fees).
4For the six months ended 30 June 2023, expenses of £11,000 (six months ended 30
June 2022: £7,000; year ended 31 December 2022: £28,000) 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
£504,000 for the six months ended 30 June 2023 (six months ended 30 June 2022:
£488,000; year ended 31 December 2022: £828,000). Costs relating to the disposal
of investments amounted to £67,000 for the six months ended 30 June 2023 (six
months ended 30 June 2022: £106,000; year ended 31 December 2022: £238,000). All
transaction costs have been included within the capital reserves.
6. Finance costs
Six months Six months
Year
ended ended
ended
30 June 30 June
31
2023 2022
December
(unaudited) (unaudited)
2022
(audited)
Revenue Capital Total Revenue Capital Total
Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
£'000 £'000 £'000
Interest 1,118 3,423 4,541 304 885 1,189
1,177 3,505 4,682
payable -
bank
loans
Interest
payable -
bank
overdraft 3 9 12 2 6 8
5 15 20
----------- --------- --------- ----------- --------- ---------
--------- --------- ---------
---- ------ ------ ---- ------ ------
------ ------ ------
Total 1,121 3,432 4,553 306 891 1,197
1,182 3,520 4,702
========= ========= ========= ========= ========= =========
========= ========= =========
Finance costs are charged 25% to the revenue account and 75% to the capital
account of the Consolidated Statement of Comprehensive Income.
7. Dividends
The final dividend of 23.50p per share for the year ended 31 December 2022 was
paid on 26 April 2023. The Board has declared a first quarterly interim dividend
of 5.50p per share for the quarter ended 31 March 2023, paid on 31 May 2023 to
shareholders on the register on 5 May 2023.
The Board has declared a second quarterly interim dividend of 5.50p per share
for the quarter ended 30 June 2023 which will be paid on 6 October 2023 to
shareholders on the register on 8 September 2023. This dividend has not been
accrued in the financial statements for the six months ended 30 June 2023 as,
under IAS, interim dividends are not recognised until paid. Dividends are
debited directly to reserves.
Dividends on equity shares paid during the period were:
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Final dividend for the year 44,392 49,898 49,898
ended 31 December 2022 of
23.50p per share (2021:
27.00p)
1st quarterly interim 10,485 10,250 10,251
dividend for the year
ending 31 December 2023 of
5.50p per share (2022:
5.50p)
2nd quarterly interim - - 10,381
dividend for the year ended
31 December 2022 of 5.50p
per share (2021: 5.50p)
3rd quarterly interim - - 10,381
dividend for the year ended
31 December 2022 of 5.50p
per share (2021: 5.50p)
--------------- --------------- ---------------
54,877 60,418 80,911
========= ========= =========
8. Consolidated earnings and net asset value per ordinary share
Total revenue, capital earnings/(loss) and net asset value per ordinary share
are shown below and have been calculated using the following:
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
Net revenue profit 31,767 37,148 76,013
attributable to ordinary
shareholders (£'000)
Net capital (loss)/profit (120,417) (50,811) 126,407
attributable to ordinary
shareholders (£'000)
--------------- --------------- ---------------
Total (loss)/profit (88,650) (13,663) 202,420
attributable to ordinary
shareholders (£'000)
========= ========= =========
Equity shareholders' funds 1,171,418 1,099,462 1,299,285
(£'000)
The weighted average number 189,935,356 185,071,986 186,868,187
of ordinary shares in issue
during each period on which
the earnings per ordinary
share was calculated was:
The actual number of 191,183,036 187,968,036 188,753,036
ordinary shares in issue at
the period end on which the
net asset value per
ordinary share was
calculated was:
Earnings per ordinary share
Revenue earnings per share 16.73 20.07 40.68
(pence) - basic and diluted
Capital (loss)/earnings per (63.40) (27.45) 67.64
share (pence) - basic and
diluted
--------------- --------------- ---------------
Total (loss)/earnings per (46.67) (7.38) 108.32
share (pence) - basic and
diluted
========= ========= =========
As at As at As at
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Net asset value per 612.72 584.92 688.35
ordinary share
(pence)
Ordinary share price 599.00 573.00 697.00
(pence)
There were no dilutive securities at the period end.
9. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
in issue number number £'000
number
Allotted, called up and fully
paid share capital comprised:
Ordinary shares of 5 pence
each:
At 31 December 2022 188,753,036 4,258,806 193,011,842 9,651
Ordinary shares reissued from 2,430,000 (2,430,000) - -
treasury
----------- ----------- ----------- ---------
---- ---- ---- ------
At 30 June 2023 191,183,036 1,828,806 193,011,842 9,651
========= ========= ========= =========
During the six months ended 30 June 2023, the Company:
- did not buy back shares into treasury (six months ended 30 June 2022: no
shares were bought back into treasury; year ended 31 December 2022: no shares
were bought back into treasury).
- reissued 2,430,000 shares (six months ended 30 June 2022: 4,286,920
shares; year ended 31 December 2022: 5,071,920 shares) from treasury for a net
consideration after costs of £15,660,000 (six months ended 30 June 2022:
£30,399,000; year ended 31 December 2022: £34,902,000).
Since the period end and up to 24 August 2023, the Company has not reissued any
ordinary shares from treasury.
10. Reconciliation of liabilities arising from financing activities
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Bank loan and overdraft at 158,783 139,223 139,223
beginning of the
period/year
Cash flows:
Movement in overdraft - (179) (356)
Net drawdown of loan - 22,359 2,359
Non-cash flows:
Effects of foreign exchange (8,549) 16,047 17,557
(gain)/loss
Bank loan and overdraft at 150,234 177,450 158,783
end of the period/year
========= ========= =========
11. Reserves
Pursuant to a resolution of the Company passed at an Extraordinary General
Meeting on 13 January 1998 and following the Company's application to the Court
for cancellation of its share premium account, the Court approval was received
on 27 January 1999 and £157,633,000 was transferred from the share premium
account to a special reserve which is a distributable reserve.
The share premium account and capital redemption reserve are not distributable
reserves under the Companies Act 2006. In accordance with ICAEW Technical
Release 02/17BL on Guidance on Realised and Distributable Profits under the
Companies Act 2006, the special reserve and capital reserve of the Parent
Company may be used as distributable reserves for all purposes and, in
particular, the repurchase by the Parent Company of its ordinary shares and for
payments such as dividends. In accordance with the Company's Articles of
Association, the special reserve, capital reserve and revenue reserve may be
distributed by way of dividend. The Parent Company's capital gains of
£754,209,000 (six months ended 30 June 2022: capital gain of £697,303,000; year
ended 31 December 2022: gain of £874,567,000) comprise a gain on capital reserve
arising on investments sold of £494,063,000 (six months ended 30 June 2022:
£405,815,000; year ended 31 December 2022: £426,822,000), a gain on capital
reserve arising on revaluation of listed investments of £225,150,000 (six months
ended 30 June 2022: £280,362,000; year ended 31 December 2022: £409,037,000),
revaluation gains on unquoted investments of £27,706,000 (six months ended 30
June 2022: £3,941,000; year ended 31 December 2022: £31,477,000) and a
revaluation gain on the investment in the subsidiary of £7,290,000 (30 June
2022: £7,185,000; year ended 31 December 2022: £7,231,000). The capital reserve
arising on the revaluation of listed investments of £225,150,000 (six months
ended 30 June 2022: £280,362,000; year ended 31 December 2022: £391,896,000) is
subject to fair value movements and may not be readily realisable at short
notice; as such it may not be entirely distributable. The reserves of the
subsidiary company are not distributable until distributed as a dividend to the
Parent Company. The investments are subject to financial risks, as such capital
reserves (arising on investments sold) and the revenue reserve may not be
entirely distributable if a loss occurred during the realisation of these
investments.
12. Financial risks and valuation of financial instruments
The Company's investment activities expose it to the various types of risk which
are associated with the financial instruments and markets in which it invests.
The risks are substantially consistent with those disclosed in the previous
annual financial statements with the exception of those outlined below.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than those
arising from interest rate risk or currency risk), whether those changes are
caused by factors specific to the individual financial instrument or its issuer,
or factors affecting similar financial instruments traded in the market. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, recessions, climate change or
other events could have a significant impact on the Group and its investments.
The current environment of heightened geopolitical risk given the war in Ukraine
has undermined investor confidence and market direction. In addition to the
tragic and devastating events in Ukraine, the war has constricted supplies of
key commodities, pushing prices up and creating a level of market uncertainty
and volatility which is likely to persist for some time.
Liquidity risk
The Group has an overdraft facility of £30 million (six months ended 30 June
2022: £30 million; year ended 31 December 2022: £30 million) and a multi
-currency loan facility of £200 million (six months ended 30 June 2022: £200
million; year ended 31 December 2022: £200 million) which are updated and
renewed on an annual basis. Under the loan facility, the individual loan
drawdowns are taken with a three month maturity period.
At 30 June 2023, the Group had a US Dollar loan outstanding of US$191,000,000
which matures on 22 September 2023 (six months ended 30 June 2022: US Dollar
loan of US$191,000,000 which matured on 23 September 2022; year ended 31
December 2022: US Dollar loan of US$191,000,000 which matured on 17 March 2023).
The Group had no outstanding Pound Sterling loan at 30 June 2023 (six months
ended 30 June 2022: £20,000,000 which matured on 23 September 2022; year ended
31 December 2022: £nil).
As per the borrowing agreements, borrowings under the overdraft and loan
facilities shall at no time exceed £230 million or 25% of the Group's net asset
value (whichever is the lower) (six months ended 30 June 2022 and year ended 31
December 2022: £230 million or 25% of the Group's net asset value (whichever is
the lower)) and this covenant was complied with during the respective periods.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the
Consolidated Statement of Financial Position at their fair value (investments
and derivatives) or at an amount which is considered to be the fair value (due
from brokers, dividends and interest receivable, due to brokers, accruals, cash
at bank and bank overdrafts). IFRS 13 requires the Group to classify fair value
measurements using a fair value hierarchy that reflects the significance of
inputs used in making the measurements. The valuation techniques used by the
Group are explained in the accounting policies note 2(h), as set out in the
Group's Annual Report and Financial Statements for the year ended 31 December
2022. All investments are held at fair value through profit or loss. The
amortised cost amounts of due from brokers, dividends and interest receivable,
due to brokers, accruals, cash at bank, bank loans and bank overdrafts
approximate their fair value.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 - Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily available from an exchange, industry group, pricing service
or regulatory agency and those prices represent actual and regularly occurring
market transactions on an arm's length basis. The Group does not adjust the
quoted price for these instruments.
Level 2 - Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less active, or other valuation
techniques where all significant inputs are directly or indirectly observable
from market data.
Valuation techniques used for non-standardised financial instruments such as
options, currency swaps and other over-the-counter derivatives include the use
of comparable recent arm's length transactions, reference to other instruments
that are substantially the same, discounted cash flow analysis, option pricing
models and other valuation techniques commonly used by market participants
making the maximum use of market inputs and relying as little as possible on
entity specific inputs.
Over-the-counter derivative option contracts have been classified as Level 2
investments as their valuation has been based on market observable inputs
represented by the underlying quoted securities to which these contracts expose
the Group.
Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant impact
on the instrument's valuation.
This category includes instruments that are valued based on quoted prices for
similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary, and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement is
categorised in its entirety is determined on the basis of the lowest level input
that is significant to the fair value measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the Level 3
asset or liability including an assessment of the relevant risks including but
not limited to credit risk, market risk, liquidity risk, business risk and
sustainability risk. The determination of what constitutes `observable' inputs
requires significant judgement by the Investment Manager and these risks are
adequately captured in the assumptions and inputs used in measurement of Level 3
assets or liabilities.
Valuation process and techniques for Level 3 valuations
(a) BHP Brazil Royalty
The Directors engage a mining consultant, an independent valuer with a
recognised and relevant professional qualification, to conduct a periodic
valuation of the contractual rights and the fair value of the contractual rights
is assessed with reference to relevant factors. At the reporting date the income
streams from contractual rights have been valued on the net present value of the
pre-tax cash flows discounted at a rate the external valuer considers reflects
the risk associated with the project. The valuation model uses discounted cash
flow analysis which incorporates both observable and non-observable data.
Observable inputs include assumptions regarding current rates of interest and
commodity prices. Unobservable inputs include assumptions regarding production
profiles, price realisations, cost of capital and discount rates. In determining
the discount rate to be applied, the external valuer considers the country and
sovereign risk associated with the project, together with the time horizon to
the commencement of production and the success or failure of projects of a
similar nature. To assess the significance of a particular input to the entire
measurement, the external valuer performs a sensitivity analysis. The external
valuer has undertaken an analysis of the impact of using alternative discount
rates on the fair value of contractual rights.
This investment in contractual rights is reviewed regularly to ensure that the
initial classification remains correct given the asset's characteristics and the
Group's investment policies. The contractual rights are initially recognised
using the transaction price as it was indicative in this instance of the best
evidence of fair value at acquisition and are subsequently measured at fair
value, taking into consideration the relevant IFRS 13 requirements. In arriving
at their estimates of market values, the valuers have used their market
knowledge and professional judgement. The Group classifies the fair value of
this investment as Level 3.
Valuations are the responsibility of the Directors of the Company. In arriving
at a final valuation, the Directors consider the independent valuer's report,
the significant assumptions used in the fair valuation and the review process
undertaken by BlackRock's Pricing Committee. The valuation of unquoted
investments is performed on a quarterly basis by the Investment Manager and
reviewed by the Pricing Committee of the Manager. On a quarterly basis the
Investment Manager will review the valuation of the contractual rights and
inputs for significant changes. A valuation of contractual rights is performed
annually by an external valuer, SRK Consulting (UK) Limited, and reviewed by the
Pricing Committee of the Manager. The valuations are also subject to quality
assurance procedures performed within the Pricing Committee. On a semi-annual
basis, after the checks above have been performed, the Investment Manager
presents the valuation results to the Directors. This includes a discussion of
the major assumptions used in the valuations. There were no changes in valuation
techniques during the period.
(b) Other Level 3 investments
Jetti Resources and MCC Mining
The fair value of the investment equity shares of Jetti Resources and MCC Mining
were assessed by an independent valuer with a recognised and relevant
professional qualification. The valuation is carried out based on market
approach using earnings multiple and price of recent transactions. Changes in
assumptions about these factors could affect the reported fair value of
financial instruments in the Consolidated and Statements of Financial Position
and the level where the instruments are disclosed in the fair value hierarchy.
To assess the significance of a particular input to the entire measurement, the
external valuer performs a sensitivity analysis.
Fair values of financial assets and financial liabilities
For exchange listed equity investments the quoted price is the bid price.
Substantially all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market, such
prices are not required to be assessed or adjusted for any business related
risks, including climate risk, in accordance with the fair value related
requirements of the Group's financial reporting framework.
The table below sets out fair value measurements using the IFRS 13 fair value
hierarchy.
Financial assets/(liabilities) at Level 1 Level 2 Level 3 Total
fair value through profit or loss £'000 £'000 £'000 £'000
as at 30 June 2023 (unaudited)
Assets:
Equity investments 1,164,070 12,860 33,770 1,210,700
Fixed income securities 9,558 44,250 - 53,808
Investment in contractual rights - - 19,350 19,350
--------- --------- --------- ---------
------ ------ ------ ------
Total assets 1,173,628 57,110 53,120 1,283,858
========= ========= ========= =========
Liabilities:
Derivative financial instruments - - - -
- written options
--------- --------- --------- ---------
------ ------ ------ ------
Total 1,173,628 57,110 53,120 1,283,858
========= ========= ========= =========
Financial assets/(liabilities) at Level 1 Level 2 Level 3 Total
fair value through profit or loss £'000 £'000 £'000 £'000
as at 30 June 2022 (unaudited)
Assets:
Equity investments 1,070,588 16,122 20,563 1,107,273
Fixed income securities 53,978 50,916 - 104,894
Investment in contractual rights - - 20,194 20,194
--------- --------- --------- ---------
------ ------ ------ ------
Total assets 1,124,566 67,038 40,757 1,232,361
========= ========= ========= =========
Liabilities:
Derivative financial instruments - (550) - (550)
- written options
--------- --------- --------- ---------
------ ------ ------ ------
Total 1,124,566 66,488 40,757 1,231,811
========= ========= ========= =========
Financial assets/(liabilities) at Level 1 Level 2 Level 3 Total
fair value through profit or loss £'000 £'000 £'000 £'000
as at 31 December 2022 (audited)
Assets:
Equity investments 1,250,984 9 35,692 1,286,685
Fixed income securities 68,894 48,066 - 116,960
Investment in contractual rights - - 21,199 21,199
--------- --------- --------- ---------
------ ------ ------ ------
Total assets 1,319,878 48,075 56,891 1,424,844
========= ========= ========= =========
Liabilities:
Derivative financial instruments - (1,227) - (1,227)
- written options
--------- --------- --------- ---------
------ ------ ------ ------
Total 1,319,878 46,848 56,891 1,423,617
========= ========= ========= =========
A reconciliation of fair value measurement in Level 3 is set out below.
Level 3 Financial assets at Six months Six months Year ended
fair value through profit ended ended 31 December
or loss 30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Opening fair value 56,891 33,413 33,413
Return of capital - royalty (341) (145) (267)
Additions at cost - 18,895 20,106
Conversion of convertible - (10,160) (10,160)
bond to equity and transfer
to Level 2
Transfer of equities and - (19,305) (19,305)
convertible bonds to Level
2
Transfer of equities from - 2 2
Level 1 to Level 3
Conversion of equity and - - (2,546)
transfer to Level 1
Total gains or losses
included in net
(loss)/profit on
investments in the
Consolidated Statement of
Comprehensive Income:
- assets transferred to - - 169
Level 1 during the period
- assets transferred to - 14,214 14,212
Level 2 during the period
- assets held at the end of (3,430) 3,843 21,267
the period
--------------- --------------- ---------------
Closing balance 53,120 40,757 56,891
========= ========= =========
The Level 3 investments as at 30 June 2023 in the table below relate to the BHP
Brazil Royalty, Jetti Resources and MCC Mining and, in accordance with IFRS 13,
these investments were categorised as Level 3. In arriving at the fair value of
these investments, the key inputs are the underlying commodity prices and
illiquidity discount. Ivanhoe Electric/I-Pulse went through an initial public
offering during the period ending 30 June 2022 and its shares were listed. As
the shares held by the Company were subject to a 180 day lock in period, a
discount was applied to the market value of the shares and therefore these were
transferred from Level 3 to Level 2 as the price was based on observable market
data during that period.
The Level 3 valuation process and techniques used by the Company are explained
in the accounting policies in notes 2(h) and 2(q) on pages 99 to 101 of the
Company's Annual Report and Financial Statements for the year ended 31 December
2022 and a detailed explanation of the techniques is also available on page 42
under "valuation process and techniques".
Quantitative information of significant unobservable inputs - Level 3 - Group
and Company
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy, together with an
estimated quantitative sensitivity analysis, as at 30 June 2023, 30 June 2022
and 31 December 2022 are as shown below.
Description As at Valuation Unobservable Range of Reasonable Impact
30 June technique input weighted possible on fair
2023 average shift1 value
£'000 inputs +/ -
Jetti 28,264 Market Earnings 6.22x 5.0% £0.6m
Resources approach multiple
BHP Brazil 19,350 Discounted Discounted 5.0% - 1.0% £1.0m
Royalty cash flows rate - 8.0%
weighted
average
cost of
capital
Average US$1,400 - 10.0% £1.5m
gold US$1,600
prices per ounce
Average US$7,209 - 10.0% £1.0m
copper US$8,510
prices per tonne
MCC Mining 5,506 Market Price of 5.0% £0.6m
approach recent
transaction
Polyus ADRs - Listing
suspended
- valued
at
nominal
US$0.01
---------
------
Total 53,120
=========
Description As at Valuation Unobservable Range of Reasonable Impact
30 June technique input weighted possible on fair
2022 average shift1 value
£'000 inputs +/ -
BHP Brazil 20,194 Discounted Discount 5.0% - 1.0% £1.0m
Royalty cash flows rate - 8.0%
weighted
average
cost of
capital
Average US$1,400 - 10.0% £1.5m
gold US$1,600
prices perounce
Average US$7,209 - 10.0% £1.0m
copper US$8,510
prices per tonne
Jetti 12,327 Market Earnings 2.51x 5.0% £0.6m
Resources approach multiple
MCC Mining 5,764 Market Price of 5.0% £0.3m
approach recent
transaction
Bravo 2,470 Market Price of 5.0% £0.1m
Mining approach recent
transaction
Polyus ADRs 2 Listing
suspended
- valued
at nominal
US$0.01
---------
------
Total 40,757
=========
Description As at Valuation Unobservable Range of Reasonable Impact
31 technique input weighted possible on fair
December average shift1 value
2022 inputs +/ -
£'000
BHP Brazil 21,199 Discounted Discounted 5.0% - 1.0% £1.0m
Royalty cash flows rate - 8.0%
weighted
average
cost of
capital
Average US$1,400 - 10.0% £1.5m
gold US$1,600
prices per ounce
Average US$7,209 - 10.0% £1.0m
copper US$8,510
prices per tonne
Jetti 29,873 Market Earnings 5.93x 5.0% £0.6m
Resources approach multiple
MCC Mining 5,819 Market Price of 5.0% £0.3m
approach recent
transaction
Lifezone -
Commitment
Polyus ADRs - Listing
suspended
- valued
at nominal
US$0.01
---------
------
Total 56,891
=========
1The sensitivity analysis refers to a percentage amount added or deducted from
the input and the effect this has on the fair value.
The sensitivity impact on fair value is calculated based on the sensitivity
estimates set out by the independent valuer in its report on the valuation of
contractual rights. Significant increases/(decreases) in estimated commodity
prices and discount rates in isolation would result in a significantly
higher/(lower) fair value measurement. Generally, a change in the assumption
made for the estimated value is accompanied by a directionally similar change in
the commodity prices and discount rates.
13. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months'
notice. 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)). Further details of the investment management
contract are disclosed in the Directors' Report on page 59 of the Annual Report
and Financial Statements for the year ended 31 December 2022.
The investment management fee due for the six months ended 30 June 2023 amounted
to £4,793,000 (six months ended 30 June 2022: £5,228,000; year ended 31 December
2022: £10,646,000). At the period end, £7,685,000 was outstanding in respect of
the management fee (six months ended 30 June 2022: £5,228,000; year ended 31
December 2022: £5,443,000).
In addition to the above services, BIM (UK) has provided the Group with
marketing services. The total fees paid or payable for these services for the
period ended 30 June 2023 amounted to £65,000 excluding VAT (six months ended 30
June 2022: £81,000; year ended 31 December 2022: £132,000). Marketing fees of
£81,000 were outstanding as at 30 June 2023 (30 June 2022: £134,000; 31 December
2022: £62,000).
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
14. Related party disclosure
Directors' emoluments
The Board consists of five non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of £49,350, the Chairman
of the Audit Committee receives an annual fee of £41,475 and each of the other
Directors receives an annual fee of £33,600.
As at 30 June 2023 an amount of £13,000 (30 June 2022: £15,000; 31 December
2022: £16,000) was outstanding in respect of Directors' fees.
At the period end members of the Board held ordinary shares in the Company as
set out below:
Directors 30 June 30 June 31 December
2023 2022 2022
Ordinary shares Ordinary shares Ordinary shares
David Cheyne (Chairman) 35,000 35,000 35,000
Russell Edey1 n/a 20,000 20,000
Jane Lewis 5,362 5,362 5,362
Judith Mosely 7,400 7,400 7,400
Srinivasan Venkatakrishnan 1,000 1,000 1,000
Charles Goodyear2 n/a n/a n/a
========= ========= =========
1Retired as a Director on 18 April 2023.
2Appointed as a Director on 24 August 2023.
Since the period end and up to the date of this report there have been no
changes in Directors' holdings.
Significant Holdings
The following investors are:
a.funds managed by the BlackRock Group or are affiliates of BlackRock, Inc.
(Related BlackRock Funds); or
b.investors (other than those listed in (a) above) who held more than 20% of the
voting shares in issue in the Company and are, as a result, considered to be
related parties to the Company (Significant Investors).
As at 30 June 2023 Total % of Number of Significant Investors who are not
shares held affiliates of BlackRock Group or BlackRock,
Total % of shares held by Inc.
by Related BlackRock Significant
Funds Investors
who are not
affiliates
of
BlackRock
Group or
BlackRock,
Inc.
1.25 n/a n/a
As at 30 June 2022 Total % of Number of Significant Investors who are not
shares held affiliates of BlackRock Group or BlackRock,
Total % of shares held by Inc.
by Related BlackRock Significant
Funds Investors
who are not
affiliates
of
BlackRock
Group or
BlackRock,
Inc.
1.66 n/a n/a
15. Capital commitments and contingent liabilities
The Group had one capital commitment at 30 June 2023 (30 June 2022: none; 31
December 2022: one). This was a US$10 million commitment in relation to the SPAC
PIPE commitment for investment in Lifezone SPAC. There were no contingent
liabilities at 30 June 2023 (30 June 2022: none; 31 December 2022: none).
On 6 July 2023 the Lifezone SPAC PIPE transaction was completed and the company
did a successful IPO. The Company received 1,000,000 shares in Lifezone Metals
Limited.
16. Publication of non-statutory accounts
The financial information contained in this Half Yearly Financial Report does
not constitute statutory accounts as defined in Section 435 of the Companies Act
2006. The financial information for the six months ended 30 June 2023 and 30
June 2022 has been reviewed by the Company's auditors.
The information for the year ended 31 December 2022 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies, unless otherwise stated. The report of the auditors on
those accounts contained no qualification or statement under Sections 498(2) or
(3) of the Companies Act 2006.
17. Annual results
The Board expects to announce the annual results for the year ending 31 December
2023 in February 2024.
Copies of the results announcement can be obtained from the Secretary on 020
7743 3000 or at cosec@blackrock.com. The Annual Report should be available by
the beginning of March 2024, with the Annual General Meeting being held in May
2024.
ENDS
The Condensed Half Yearly Financial Report will also be available on the
BlackRock website at www.blackrock.com/uk/brwm. Neither the contents of the
Manager's website nor the contents of any website accessible from hyperlinks on
the Manager's website (or any other website) is incorporated into, or forms part
of, this announcement.
For further information, please contact:
Sarah Beynsberger, Director - Closed End Funds, BlackRock Investment Management
(UK) Limited-
Tel: 020 7743 2639
Evy Hambro, Fund Manager, BlackRock Investment Management (UK) Limited -
Tel: 020 7743 3000
Emma Phillips, Media & Communications, BlackRock Investment Management (UK)
Limited - Tel: 020 7743 2922
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
12 Throgmorton Avenue
London EC2N 2DL
24 August 2023
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
August 24, 2023 09:15 ET (13:15 GMT)
Grafico Azioni Blackrock World Mining (LSE:BRWM)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Blackrock World Mining (LSE:BRWM)
Storico
Da Gen 2024 a Gen 2025
