BlackRock World Mining Trust Plc - Half-year Report
LEI: LNFFPBEUZJBOSR6PW155
Condensed Half Yearly Financial Report
Performance record
As at As at
30 June 31 December
2024
2023
Net assets (£’000)1 1,093,972 1,160,051
Net asset value per ordinary share (NAV) (pence) 572.21 606.78
Ordinary share price (mid-market) (pence) 569.00 587.00
Reference index2 – net total return 6,041.29 6,002.54
Discount to net asset value3 (0.6)% (3.3)%
========= =========
For the For the
six months year
ended ended
30 June 31 December
2024 2023
Performance (with dividends reinvested)
Net asset value per share3 -1.9% -6.2%
Ordinary share price3 +1.1% -10.4%
Reference index2 +0.6% +2.4%
--------------- ---------------
Performance since inception (with dividends
reinvested)
Net asset value per share3 +1,291.6% +1,319.4%
Ordinary share price3 +1,381.5% +1,365.9%
Reference index2 +1,012.4% +1,005.2%
========= =========
For the For the
six months six months
ended ended Change
30 June 2024 30 June 2023 %
Revenue
Net revenue profit after 22,848 31,767 -28.1
taxation (£’000)
Revenue return per ordinary 11.95 16.73 -28.6
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 –
========= ========= =========
1 The change in net assets reflects portfolio movements, dividends paid and the reissue of ordinary shares from treasury during the period.
2
MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return). With effect from
3 Alternative Performance Measures, see Glossary contained within the Half Yearly Financial Report.
Chairman’s Statement
Following the Annual General Meeting in May, I assumed the role as Chairman of your Company. I am delighted to present the Half Yearly Financial Report to shareholders.
Market overview
Markets have experienced heightened volatility shaped by continued geopolitical and macroeconomic drivers. Interest rate policy and inflation have remained top of mind amid elevated public debt and weaker growth relative to the pre-pandemic era. The US-China trade war and geopolitical tensions, including the
It was a mixed period for the mining sector with a new all-time high price set for copper and gold and a pick-up in merger and acquisition (M&A) activity. This was offset by weakness across the bulk commodities as property related demand in
Performance
Against this backdrop, for the six month period ending
Since the period end and up to the close of business on
Revenue return and dividends
Over the six month period to
The first quarterly dividend of 5.50p per share was paid on
Management of share rating
For the period under review, the Company’s ordinary shares have traded at an average discount to NAV of 4.6% and were trading at a discount of 3.1% on a cum income basis as at
The Directors recognise the importance to investors that the Company’s share price does not trade at a significant premium or discount to NAV. Accordingly, the Directors monitor the share price closely and, in the context of wider market conditions, with investor sentiment and premiums/discounts being influenced by various external factors, will consider the issue of shares at a premium or the repurchase at a discount to help balance demand and supply in the market.
Gearing
One of the advantages of the investment trust structure is that the Company can use gearing with the objective of increasing portfolio returns over the longer term. The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 25% of the net assets of the Company and its subsidiary. Gearing at
Board composition
I am delighted to welcome
As previously advised in last year’s Annual Report,
I am pleased to report that the Board is compliant with the recommendations of the Parker Review and the FTSE Women Leaders Review. In accordance with the Listing Rules, we have also disclosed the ethnicity of the Board and our policy on matters of diversity. This disclosure can be found on pages 70 and 71 of the Company’s Annual Report.
Market outlook
Looking ahead, market volatility is unlikely to abate. 2024 marks a significant year for elections worldwide bringing uncertainty on the policy and geopolitical front.
However, there are reasons for optimism for the commodities sector. The mining industry is key to delivering the materials required for infrastructure investment, including the investment required to support the transition to a low carbon energy environment. This transition is expected to drive materials demand for many years to come. Artificial intelligence (AI) systems depend on minerals and metals in several ways and the investment in AI data centres and power grids is also set to bolster metals demand. Despite the pick-up in M&A activity, we are pleased to see mining companies continue to show strong capital discipline, which should ensure that there is an appropriate split of available cash flow between shareholder distributions and growth.
Chairman
Investment Manager’s Report
The first half of 2024 has been frustrating as the generally positive tone to the sector was not reflected in a more positive total return for the period. During the period, base and precious metal prices were buoyant with some breaking out to new all-time highs. On the other hand, the prices of iron ore, lithium and thermal coal moved lower on weaker demand or supply threats (in the lithium market) that threatened long-term price assumptions. On the whole, the blend of factors should have been supportive for share prices, particularly when combined with increased merger and acquisition (M&A) activity. It seems that rising interest rates, ongoing economic challenges in
Looking deeper into the fundamentals, the outlook remains positive. Companies are cautious on committing to large scale projects and, as such, the supply picture for most commodities is as constrained as in prior years. In fact, the pick-up in M&A suggests that companies see more value in buying assets rather than building them even after having to pay premiums for control. Tightness in commodity markets persists and despite Chinese weakness, the overall demand picture is robust, especially in the US.
Over the period the NAV of the Company returned -1.9% and the share price returned +1.1%. This compares to the
Tug of war
The global battle against inflation continued during the first half of the year. In most countries economic data moved in the right direction with large falls in the rate of inflation, but as yet not sufficient to trigger easing by the leading central banks. As a result of this markets have gyrated back and forth like a tug of war between interest rate expectations and the ongoing dominance of everything technology related, in particular the boom in artificial intelligence (AI) related equities. The AI theme within stock markets has grown to levels similar to that in previous tech booms so it will be interesting to see how this plays out especially when so much of the growth requires huge investment in basic infrastructure for it to be delivered.
Geopolitics has, sadly, not improved. The ongoing battle in
ESG and the social license to operate
For the last few years this report has continued to emphasise the importance of ESG when managing risk within mining related investments.
ESG (Environmental, Social and Governance) is highly relevant to the mining sector and we seek to understand the ESG risks and opportunities facing companies and industries in the portfolio. As an extractive industry, the mining sector naturally faces a number of ESG challenges given its dependence on water, carbon emissions and geographical location of assets. However, we consider that the sector can provide critical infrastructure, taxes and employment to local communities, as well as materials essential to technological development that will enable the carbon transition.
We consider ESG insights and data within the total set of information in our research process and make a determination as to the materiality of such information as part of the investment process used to build and manage the portfolio. ESG insights are not the sole consideration when making investment decisions but, in most cases, the Company will not invest in companies which have high ESG risks (risks that affect a company’s financial position or operating performance) and which have no plans to address existing deficiencies or controversies in an appropriate way.
- We take a long-term approach, focused on engaging with portfolio company boards and executive leadership to understand the drivers of risk and financial value creation in companies’ business models, including material sustainability-related risks and opportunities, as appropriate.
- There will be cases where a serious event has occurred, for example an accident at a mine site and, in that case, we will assess whether the relevant portfolio company is taking appropriate action to resolve matters before deciding what to do.
- There will be companies which have derated (the downward adjustment of multiples) as a result of an adverse ESG event or generally due to poor ESG practices where there may be opportunities to invest at a discounted price. However, the Company will only invest in these value-based opportunities if we are satisfied that there is real evidence that the relevant company’s culture has changed and that better operating practices have been put in place.
The main areas of engagement during the period have been on M&A, corporate decarbonisation plans and capital allocation. The latter two are somewhat interlinked given the healthy debate on how companies should allocate the cash generated by their operations. In the past, spending on decarbonisation was seen more as a choice but now this seems to have moved into a more core part of corporate strategy. In part we believe this is due to a need to do this but also the return on these investments seems to have improved. Although not at the same levels of brown field capacity growth, it does seem to compare favourably with greenfield growth investments. Another feature of this area has been to try and explore with executives the role that outside capital could play in helping to improve returns. The growth in infrastructure investing by financial markets seems to have opened up a range of new opportunities for companies to consider and these might easily challenge the long-term view that mining companies need to wholly own their own infrastructure.
When it comes to M&A, we stand by the view that companies should always seek to explore what might be in the best interests of all stakeholders. If value can be generated from combinations or sharing opportunities it is essential that these are discussed so that all parties can benefit, especially when synergies within the sector are so rare. Obviously, this does not mean that a company should not try to maximise its takeout share price, but, it should not be at the expense of losing out on a deal entirely. Given the high cost and risk of developing new assets, combined with the small size of the sector in the context of global markets, it is important that companies do not lose sight of remaining relevant when it comes to capital markets and M&A might help to deal with this threat.
Weaker prices
During the first half of the year there has been a significant dispersion of returns within the commodity sector. As can be seen in the table that follows the prices of gold, silver and tin were sharply higher year to date but also when compared to the same period last year. On the other side of the pricing for nickel, platinum and lithium were meaningfully lower. Within the overall moves there were a number of takeaways: gold and copper moved to new all time price highs during the period.
% Change % Change average price
Commodity 30 June 2024 year to date 1H24
1H24 vs 1H23
Gold US$/ounce (oz) 2,326.3 12.6% 14.1%
Silver US$/oz 29.3 20.7% 11.6%
Platinum US$/oz 1,012 0.6% -6.3%
Palladium US$/oz 972 -13.1% -35.2%
Copper US$/pound (lb) 4.29 11.7% 4.5%
Nickel US$/lb 7.73 4.1% -27.7%
Aluminium US$/lb 1.13 6.1% 1.3%
Zinc US$/lb 1.30 9.0% -6.8%
Lead US$/lb 0.99 7.0% -0.5%
Tin US$/lb 14.74 29.0% 11.4%
Uranium US$/lb 238 -17.6% 77.4%
Iron Ore (China 62% fines) 106 -25.4% -0.3%
US$/tonne (t)
Thermal Coal (Newcastle) 133.65 1.2% -22.6%
US$/t
Met Coal US$/t 238 -17.6% -0.6%
Lithium (Battery Grade 12.59 -7.3% -68.9%
China) US$/kilogram
WTI (Cushing) US$/barrel 82.8 15.2% 6.3%
========= ========= =========
1H24 – six months ended
1H23 – six months ended
Sources: LSEG Datastream and Bloomberg,
Within the portfolio the key commodity exposure is to copper on the base metals side and gold within precious metals. Prices for both of these commodities have been strong and key for performance will be how these translate into earnings for the companies. Too often higher prices end up being lost to the pressures of poor operating performance, inflation, taxation or consumed in reinvestment by the companies. It is our expectation that the management teams have the processes and skills to mitigate these negative impacts.
Animal spirits
The last 12 months have certainly seen a pick-up in M&A activity within the sector. This sudden surge in animal spirits seems to have been driven by a realisation that producing assets traded in the equity market were trading at a low valuation versus the replacement cost (which has risen as shown in the chart contained on page 10 of the Half Yearly Financial Report) even including the premiums required for a change of control. In 2023 Glencore moved to gain control of Teck Resources when it announced plans to transform itself into a metals business by divesting its coal assets. This process concluded with Glencore agreeing to buy the coal assets leaving Teck Resources to follow a strategy of metals related growth. The deal finally received the necessary regulatory approvals in early July.
Capital intensity of new assets rising in real terms
In
As the period drew to an end a number of media outlets reported that further transactions were being considered but as yet nothing tangible has come from these rumours. It is certainly the case that M&A is back and it is essential that companies remain disciplined when looking at opportunities given the poor historic industry track record in this space.
Base metals
It was a strong first half for the base metals with prices rising on improved demand, expected decline in interest rates, Chinese stimulus and financial interest as investors look to gain exposure to the AI data-centre theme. The copper price set a new all-time high in May and finished the first half up by 11.7%, with aluminium +6.1%, nickel +4.1% and zinc +9.0%.
Our favoured base metal, copper, saw positive demand growth in the first half of the year driven by investments into the grid, electric vehicles (EV), wind and solar power. We are increasingly seeing a change in China’s traditional demand drivers with property linked commodity demand declining, whilst investment into low carbon infrastructure and manufacturing is accelerating. Copper supply continues to remain tight with limited new tonnes entering the market. Smelters’ treatment and refining charges (TC/RC’s) an indication of tightness in the concentrate market, are at record low levels which benefit producer margins. A key near-term focus for the market is copper inventories which have not meaningfully decreased in
Global copper inventories
We see a tight supply picture for copper. Power availability in
Following our due diligence site visit to
The Company’s copper exposure was a key source of positive returns during the first half of the year. BHP’s approach for Anglo American highlighted the value in copper equity values, given the cost to develop and build new copper supply. Ivanhoe Mines (2.4% of the portfolio) continues to set the standard for operational performance with the ramp-up of Kamoa-Kakula in the DRC, with phase 1 and 2 of the mine delivered ahead of schedule and the phase 3 expansion completed in June nearly two quarters ahead of schedule. With the smelter completion before the end of the year, unit costs are expected to fall by 20%. With free cash flow increasing, we expect to see shareholder loans decline and increasing cash returns to Ivanhoe Mines, positioning them well to start paying dividends. Another notable copper outperformer includes Capstone which is currently ramping up its Manto Verde copper project in
The aluminium price finished the first half up by 6%, with the average price up 1.3% versus the corresponding period last year. Aluminium prices have been pressured over the last two years as energy prices have fallen which has deflated the cost curve. However, with alumina, a key input for producing aluminium, up over 40% year-to-date, rising cost pressure has pushed up the aluminium price as well. Aluminium demand has benefited from investments into solar power and the grid in recent years and we see it as a longer-term beneficiary of energy transition spend. With aluminium and copper substitutable for certain applications, they typically trade within a ratio of one another. It has been interesting to see the copper price to aluminium price ratio move up from a historical level of circa 3:1 to now circa 4:1. Longer term we see upside to aluminium prices as carbon costs begin to be incorporated into prices. The Company’s largest exposure to aluminium is via Hydro (3.6% of the portfolio) which is one of the lowest-carbon producers of aluminium by virtue of its access to hydro power in
It has been a difficult year for the nickel industry with the average nickel price down by 27.7% in the first half of 2024 versus the same period last year. While there was a modest rebound (+4%) in prices during the half, the industry is struggling to generate competitive margins at this price level. Significant growth in Indonesian nickel supply has structurally changed the market, with nickel pig iron producers rapidly growing production and adapting their facilities to allow the production of nickel matte and other intermediary products. This material is typically more carbon intensive and, should carbon pricing be incorporated into the cost curve, we would expect Indonesian supply to decline over time. The Company has two pure play exposures to nickel – the first Nickel Industries (0.6% of the portfolio) today a nickel pig iron producer which is transitioning towards LME grade nickel production which will improve earnings and margins. During the half, Nickel Industries increased its equity interest in the
Bulks and steel
It was a weak period for the bulk commodities, with iron ore prices down by 25.4%, metallurgical coal down by 17.6% and thermal coal prices up by 1.2%. Chinese steel production has remained at a similar level to last year of circa 1 billion tonnes. However, domestic demand has softened primarily due to property-linked weakness. As a result,
Iron ore has been a key area of strength in recent years supporting free cash flow and dividends for the large producers. While the spot price finished down by 25% during the half, average prices were actually flat versus the corresponding period in 2023 and are at a healthy level of
Over the last five years, the iron ore price has been well supported at
The Company’s exposure to iron ore is primarily via the diversified majors BHP, Vale and Rio Tinto. These companies generate strong margins and free cash flow from their iron ore businesses with that cash flow being returned to shareholders, or being reinvested into future facing commodities such as copper. In addition, the Company has exposure to two pure play high grade iron ore producers, Champion Iron and Labrador Iron. Champion Iron is ramping-up its
The coking coal market remains one of the more interesting commodity markets. Western world producers have been hesitant to add new supply, whilst demand continues to increase driven by steel producing countries such as
The thermal coal market has returned to a more balanced position this year with prices holding between
Precious metals
A new record all-time high price was set for gold at
Silver performed particularly well during the period, rising by 20.7% with the market recognising its relative price attractiveness versus gold, along with its industrial demand. Silver’s key industrial end market is solar which saw record installations in 2023 and continues to grow (albeit at a slower pace). Interestingly, we are seeing a rising silver usage in solar as installers move to TOPCon solar modules which have higher efficiency and importantly higher silver intensity.
The Company increased its exposure to precious metals companies during the first half of the year. This is a reflection of our positive outlook on gold and the expected improvement in earnings from the gold companies. The Company has maintained its preference for higher quality gold producers which have low operating costs and a strong resource base which improves their ability to generate stronger free cash flow through the cycle. Among our gold holdings, Agnico Eagle Mines (4.3% of the portfolio) a Canadian listed producer focused on operating in lower risk jurisdictions provided an update on its
In the platinum group metals (PGMs) platinum has performed better during the first half of 2024, increasing by 0.6%, compared to palladium which saw a 13.1% decrease over the first half of the year. A significant demand for PGMs comes from catalytic converters, which are used in internal combustion engine (ICE) vehicles to reduce carbon monoxide and nitrogen oxide emissions. However, this demand is facing a long-term structural challenge due to the declining demand for ICE vehicles due to the rise in popularity of EVs. While platinum has various applications in industry, for instance jewellery, and as an investment, palladium is particularly vulnerable to a lack of demand from ICE vehicles and has not yet found a stable price point. A key question going forward is PGMs use in hybrid electric vehicles and range extenders for EVs. As the metals are often mined together their supply can be less responsive to price decreases in just one of the PGMs.
The Company’s exposure to PGM producers slightly increased in the period to 2.2%, due to the positive performance from Bravo Mining. Bravo Mining, 1.6% of the portfolio, is a PGM and nickel exploration company in
Energy transition metals
Battery electric vehicle (BEV) sales continued to grow in 2024 and the
We continue to see a focus on geopolitics with efforts from Western politicians to decouple supply chains from
After lithium prices fell by 43% in 2023, the first half of 2024 has seen a tough market continue with the price down by another 69%. Despite growing strongly, demand for lithium from batteries did not meet optimistic expectations.
A critical component of the electric car is also the e-motor, which most commonly uses a Praseodymium-Neodymium (NdPr) magnet, an alloy of two rare earth elements (REE) which are commonly mined and processed in
2023 saw an increased recognition in the key role of nuclear energy in reaching net zero with a declaration at the 28th Conference of the Parties to triple nuclear energy capacity by 2050. The strategic importance of uranium was again highlighted in the first half of 2024 with the
Royalty and unquoted investments
Over the last three years the Company has generated significant returns from the unquoted section of the portfolio. This includes the IPOs of two private investments, Ivanhoe Electric and Bravo Mining, at substantial premiums to their purchase price.
As mentioned in previous reports, the focus of the unquoted investments is to generate both capital growth and income to deliver the superior total return goal for the portfolio. The Company continues to evaluate new opportunities as it believes that they can provide an opportunity to generate superior returns and maximise the return opportunities available in the mining sector.
As of
BHP Brazil Royalty Contract (1.7% of the portfolio)
In
In 2018 we were delighted to report that Avanco Minerals was acquired by OZ Minerals, an Australian based copper and gold producer for
We are pleased to report that production at Pedra Branca has normalised following a geotechnical event in the second half of 2023. Recent results have confirmed the asset is producing at steady state levels and after a successful technical review from BHP we have confidence that the operational issues have been resolved.
Vale Debentures (2.6% of the portfolio)
At the beginning of 2019, the Company completed a significant transaction to increase its holding in Vale Debentures. The Debentures consist of a 1.8% net revenue royalty over Vale’s Northern System and Southeastern System iron ore assets in
Dividend payments are expected to grow once royalty payments commence on the Southeastern System in 2025 and volumes from S11D and
The Debentures offer an attractive yield in excess of 10% based on the 2023 dividend. This is an appealing yield for a royalty investment, with this value opportunity recognised by other listed royalty producers, Franco Nevada and Sandstorm Gold Royalties, which have both acquired stakes in the Debentures since the sell-down occurred in 2021.
Whilst the Vale Debentures are a royalty, they are also a listed security on the Brazilian National Debentures System. As we have highlighted in previous reports, shareholders should be aware that historically there has been a low level of liquidity in the Debentures and price volatility is to be expected. We continue to actively look for opportunities to grow royalty exposure given it provides an effective mechanism to lock-in long-term income which further diversifies the Company’s revenues.
Jetti Resources (2.1% of the portfolio)
In early 2022, the Company made an investment into mining technology company Jetti Resources (Jetti) which has developed a new catalyst that improves copper recovery from primary copper sulphides (specifically copper contained in chalcopyrite, which is often uneconomic) under conventional leach conditions. Jetti is currently in negotiation with a number of mining companies to trial their technology where they will look to integrate their catalyst into existing help leach SX-EW mines to improve recoveries at a low capital cost. The technology has been demonstrated to work at Capstone’s
During the second half of 2022 Jetti completed its Series D financing to raise
Derivatives activity
The Company from time to time enters into derivatives contracts, mostly involving the sale of “puts” and “calls”. These are taken to revenue and are subject to strict Board guidelines which limit their magnitude to an aggregate 10% of the portfolio. In the first half of 2024 income generated from options was £4.3 million. During the period the Company was able to take advantage of a number of specific events where volatility seemed to be mis-priced versus the underlying risks. This was a key driver behind the overall performance for the first half of the year. At the end of the period the Company had 0.1% of net assets exposed to derivatives and the average exposure to derivatives during the period was less than 5% of net assets.
Gearing
At
Outlook
After a frustrating first half to the year where much of the positive news did not translate into a more optimistic outcome, it is easy to think that things will improve for the remainder of the year. As things stand, it certainly looks that way with copper, gold and silver prices moving higher once again and iron ore remaining resolutely above the psychological
Despite these risks, shareholders should expect the portfolio to remain fully invested with a focus on stock specific outcomes rather than just market related factors such as commodity price sensitivity. This approach has delivered excellent results over the last few years and the current mix of holdings has a high degree of exposure to similar dynamics boding well for the future.
In addition, the Company will continue to seek out opportunities to maximise income during the balance of the year in order to try and offset what looks to be the lagged impact of dividend cuts from the results in the second half of 2023. Achieving this remains integral to the goal of delivering a superior total return for shareholders through the cycle.
EVY HAMBRO AND
Ten largest investments
Together, the ten largest investments represented 53.8% of total investments of the Company’s portfolio as at
1
▲
Glencore
(2023: 3rd)
Diversified mining group
Market value: £98,576,000
Share of investments: 8.2%
(2023: 8.3%)
One of the world’s largest globally diversified natural resources groups. The group’s operations include approximately 150 mining and metallurgical sites and oil production assets. Glencore’s mined commodity exposure includes copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, thermal coal, iron ore, gold and silver.
2
▼
BHP
1,2
(2023: 1st)
Diversified mining group
Market value: £93,667,000
Share of investments: 7.8% comprising equity of 6.1% and mining royalty of 1.7%
(2023: 10.1%)
The world’s largest diversified mining group by market capitalisation. The group is an important global player in a number of commodities including iron ore, copper, thermal and metallurgical coal, manganese, nickel and silver.
3
▲
Rio Tinto
3
(2023: 4th)
Diversified mining group
Market value: £74,688,000
Share of investments: 6.2%
(2023: 7.3%)
One of the world’s leading mining groups. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products.
4
▲
Anglo American
3
(2023: 17th)
Diversified mining group
Market value: £67,258,000
Share of investments: 5.6%
(2023: 1.9%)
A global diversified mining company with a portfolio that includes diamonds, platinum, copper and iron ore. The company operates mines in
5
►
Freeport-McMoRan
3
(2023: 5th)
Copper producer
Market value: £60,582,000
Share of investments: 5.0%
(2023: 5.0%)
A global mining group which operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum.
6
►
Newmont Corporation
(2023: 6th)
Gold producer
Market value: £57,491,000
Share of investments: 4.8%
(2023: 3.6%)
The world’s largest gold producer by market capitalisation. The group has gold and copper operations on five continents, with active gold mines in
7
▼
Vale
2,3,4
(2023: 2nd)
Diversified mining group
Market value: £55,473,000
Share of investments: 4.6% comprising equity of 2.0% and debentures of 2.6%
(2023: 9.6%)
One of the largest mining groups in the world, with operations in 30 countries. Vale is the world’s largest producer of iron ore and iron ore pellets and the world’s largest producer of nickel. The group also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver and cobalt.
8
▲
Agnico Eagle Mines
(2023: 19th)
Gold producer
Market value: £51,568,000
Share of investments: 4.3%
(2023: 1.6%)
A Canadian-based senior gold producer with operations in
9
▲
Teck Resources
(2023: 10th)
Diversified mining group
Market value: £45,179,000
Share of investments: 3.7%
(2023: 2.3%)
A diversified mining group headquartered in
10
▼
Hydro
(2023: 9th)
Aluminium producer
Market value: £43,887,000
Share of investments: 3.6%
(2023: 2.6%)
A Norwegian aluminium and renewable energy company, headquartered in
1 Includes mining royalty contract.
2 Includes investments held at Directors’ valuation.
3 Includes options.
4 Includes fixed income securities.
All percentages reflect the value of the holding as a percentage of total investments. For this purpose, where more than one class of securities is held, these have been aggregated.
Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at
Percentages in brackets represent the value of the holding as at
Investments as at
Main Market
geographical value % of
exposure £’000 investments
Diversified
Glencore Global 98,576 8.2
Rio Tinto Global 75,020
} 6.2
Rio Tinto Put Option 19/07/24 Global (332)
£52.00
BHP Global 73,732 6.1
Anglo American Global 67,750
} 5.6
Anglo American Call Option Global (492)
19/07/24 £25.00
Vale Debentures1, 2, 4 Global 31,295
Vale Global 24,343 } 4.6
Vale Call Option July 24 BRL11.5 Global (165)
Teck Resources Global 45,179 3.7
--------------- ---------------
414,906 34.4
========= =========
Copper
Freeport-McMoRan Global 60,989
} 5.0
Freeport-McMoRan Put Option Global (407)
19/07/24 US$49.00
Ivanhoe Mines Other Africa 29,363 2.4
Jetti Resources2 Global 25,207 2.1
Ivanhoe Electric United States 24,449 2.0
Sociedad Minera Cerro Verde Latin America 21,321 1.8
Lundin Mining Global 20,441 1.7
BHP Brazil Royalty2, 3 Latin America 19,935 1.7
Southern Copper Corporation Latin America 19,668 1.6
Metals Acquisition Australasia 13,193 1.1
Capstone Mining United States 12,904 1.1
Foran Mining Canada 10,937 0.9
Develop Global Australasia 10,705 0.9
First Quantum Minerals Global 10,089 0.8
MCC Mining2 Latin America 10,011 0.8
Filo Corp Latin America 4,070 0.3
Hudbay Global 3,631 0.3
Solaris Resources Latin America 3,557 0.3
Antofagasta Latin America 3,297 0.3
--------------- ---------------
303,360 25.1
========= =========
Gold
Newmont Corporation Global 57,491 4.8
Agnico Eagle Mines Canada 51,568 4.3
Wheaton Precious Metals Global 39,307 3.2
Barrick Gold Global 31,011 2.6
Franco-Nevada Global 19,095 1.6
Northern Star Resources Australasia 12,967 1.1
Kinross Gold Global 12,057 1.0
Endeavour Mining Other Africa 8,566 0.7
Allied Gold1 Other Africa 7,900 0.6
AngloGold Ashanti Global 3,702 0.3
Firefly Metals Canada 3,595 0.3
Polyus Russia – –
--------------- ---------------
247,259 20.5
========= =========
Steel
Nucor United States 28,052 2.3
Steel Dynamics United States 13,571 1.1
ArcelorMittal Global 13,092 1.1
Stelco Holdings Canada 5,898 0.5
--------------- ---------------
60,613 5.0
========= =========
Industrial Minerals
Albemarle Global 9,431 0.8
Iluka Resources Australasia 9,090 0.8
Lynas Rare Earths Australasia 7,214 0.6
Sigma Lithium Latin America 6,408 0.5
Mineral Resources Australasia 6,173 0.5
Sheffield Resources Australasia 4,046 0.3
Pilbara Minerals Australasia 4,017 0.3
Chalice Mining Australasia 1,900 0.2
--------------- ---------------
48,279 4.0
========= =========
Aluminium
Hydro Global 43,887 3.6
--------------- ---------------
43,887 3.6
========= =========
Iron Ore
Labrador Iron Canada 11,816 1.0
Champion Iron Canada 10,683 0.9
Deterra Royalties Australasia 3,265 0.3
Equatorial Resources Other Africa 214 –
--------------- ---------------
25,978 2.2
========= =========
Platinum Group Metals
Bravo Mining Latin America 19,811 1.6
Northam Platinum Global 2,392 0.2
Impala Platinum South Africa 1,635 0.1
--------------- ---------------
23,838 1.9
========= =========
Uranium
Cameco Canada 19,466 1.6
--------------- ---------------
19,466 1.6
========= =========
Nickel
Nickel Industries Indonesia 6,778 0.6
Lifezone Metals Global 6,068 0.5
Bindura Nickel Global 31 –
--------------- ---------------
12,877 1.1
========= =========
Mining Services
Woodside Energy Group Australasia 6,463 0.5
--------------- ---------------
6,463 0.5
========= =========
Zinc
Titan Mining United States 911 0.1
--------------- ---------------
911 0.1
========= =========
Comprising: 1,207,837 100.0
========= =========
– Investments 1,209,233 100.1
– Options (1,396) (0.1)
--------------- ---------------
1,207,837 100.0
========= =========
1 Includes fixed income securities.
2 Includes investments held at Directors’ valuation.
3 Includes mining royalty contract.
4
The investment in the Vale Debentures is illiquid and has been valued using secondary market pricing information provided by the
All investments are in equity shares unless otherwise stated.
The total number of investments as at
As at
Portfolio analysis as at
Commodity Exposure 1
_______________________________________________________________________ | |2024 |2023 |2024 | | |portfolio (%)|portfolio (%)2|reference index (%)3| |_____________________|_____________|______________|____________________| |Diversified |34.4 |38.4 |33.1 | |_____________________|_____________|______________|____________________| |Copper |25.1 |21.8 |14.3 | |_____________________|_____________|______________|____________________| |Gold |20.5 |15.2 |21.9 | |_____________________|_____________|______________|____________________| |Steel |5.0 |7.3 |18.9 | |_____________________|_____________|______________|____________________| |Industrial Minerals |4.0 |5.5 |1.3 | |_____________________|_____________|______________|____________________| |Aluminium |3.6 |3.3 |3.2 | |_____________________|_____________|______________|____________________| |Iron Ore |2.2 |2.5 |4.2 | |_____________________|_____________|______________|____________________| |Platinum Group Metals|1.9 |1.6 |1.2 | |_____________________|_____________|______________|____________________| |Uranium |1.6 |2.3 |0 | |_____________________|_____________|______________|____________________| |Nickel |1.1 |1.0 |0 | |_____________________|_____________|______________|____________________| |Mining Services |0.5 |1.0 |0 | |_____________________|_____________|______________|____________________| |Zinc |0.1 |0.1 |0.3 | |_____________________|_____________|______________|____________________| |Energy Minerals |0 |0 |0 | |_____________________|_____________|______________|____________________| |Other4 |0 |0 |1.6 | |_____________________|_____________|______________|____________________|
1 Based on index classifications
2
Represents exposure at
3 MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (net total return).
4 Represents a very small exposure.
Geographic Exposure 1
____________________________________ | |2024 | |______________________________|_____| |Global |64.0%| |______________________________|_____| |Canada |9.5% | |______________________________|_____| |Latin America |8.9% | |______________________________|_____| |Other2 |7.2% | |______________________________|_____| |Australasia |6.6% | |______________________________|_____| |Other Africa (exSouth Africa )|3.7% | |______________________________|_____| |South Africa |0.1% | |______________________________|_____|
____________________________________ | |2023 | |______________________________|_____| |Global |67.4%| |______________________________|_____| |Canada |7.5% | |______________________________|_____| |Latin America |7.4% | |______________________________|_____| |Australasia |7.3% | |______________________________|_____| |Other2 |7.0% | |______________________________|_____| |Other Africa (exSouth Africa )|3.2% | |______________________________|_____| |South Africa |0.2% | |______________________________|_____|
1 Based on the principal commodity exposure and place of operation of each investment.
2
Consists of
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Manager’s Report above give details of the important events which have occurred during the period and their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Group can be divided into various areas as follows:
- Market;
- Investment performance;
- Operational;
- Legal and regulatory compliance; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the Group in the Annual Report and Financial Statements for the year ended
In the view of the Board, there have not been any changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Going concern
The Directors, having considered the nature and liquidity of the portfolio, the Group’s investment objective and the Group’s projected income and expenditure, are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board is mindful of the continuing uncertainty surrounding the current environment of heightened geopolitical risk given the war in
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
Related party disclosure and transactions with the Manager
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
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
- the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority Disclosure Guidance and Transparency Rules.
The Condensed Half Yearly Financial Report was approved by the Board on
FOR AND ON BEHALF OF THE BOARD
Consolidated Statement of Comprehensive Income for the six months ended
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income from
investments
held at fair 3 23,198 – 23,198 34,111 630 34,741 68,317 630 68,947
value through
profit or loss
Other income 3 4,821 – 4,821 2,891 – 2,891 6,827 – 6,827
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total revenue 28,019 – 28,019 37,002 630 37,632 75,144 630 75,774
========= ========= ========= ========= ========= ========= ========= ========= =========
Net loss on
investments and
options held at – (40,360) (40,360) – (123,495) (123,495) – (140,576) (140,576)
fair value
through profit
or loss
Net gains on
foreign – 424 424 – 8,301 8,301 – 9,018 9,018
exchange
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 28,019 (39,936) (11,917) 37,002 (114,564) (77,562) 75,144 (130,928) (55,784)
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment 4 (1,116) (3,446) (4,562) (1,171) (3,622) (4,793) (2,374) (7,317) (9,691)
management fees
Other operating 5 (611) (6) (617) (644) (11) (655) (1,278) (15) (1,293)
expenses
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating (1,727) (3,452) (5,179) (1,815) (3,633) (5,448) (3,652) (7,332) (10,984)
expenses
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/
(loss) on
ordinary
activities 26,292 (43,388) (17,096) 35,187 (118,197) (83,010) 71,492 (138,260) (66,768)
before finance
costs and
taxation
Finance costs 6 (1,148) (3,446) (4,594) (1,121) (3,432) (4,553) (2,375) (7,166) (9,541)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 25,144 (46,834) (21,690) 34,066 (121,629) (87,563) 69,117 (145,426) (76,309)
activities
before taxation
Taxation (2,296) 923 (1,373) (2,299) 1,212 (1,087) (4,426) 1,750 (2,676)
(charge)/credit
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 22,848 (45,911) (23,063) 31,767 (120,417) (88,650) 64,691 (143,676) (78,985)
activities
after taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings/(loss)
per ordinary
share (pence) – 8 11.95 (24.01) (12.06) 16.73 (63.40) (46.67) 33.95 (75.40) (41.45)
basic and
diluted
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Group’s Statement of Comprehensive Income, prepared in accordance with
The Group does not have any other comprehensive income/(loss) (
Consolidated Statement of Changes in Equity for the six months ended
Called Share Capital
up share premium redemption Special Capital Revenue
capital account reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
For the six
months ended
30 June 2024
(unaudited)
At 31 December 9,651 151,493 22,779 193,008 725,161 57,959 1,160,051
2023
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – – (45,911) 22,848 (23,063)
for the period
Dividends 7 – – – – – (43,016) (43,016)
paid1
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 June 9,651 151,493 22,779 193,008 679,250 37,791 1,093,972
2024
========= ========= ========= ========= ========= ========= =========
For the six
months ended
30 June 2023
(unaudited)
At 31 December 9,651 148,107 22,779 180,736 868,837 69,175 1,299,285
2022
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – – (120,417) 31,767 (88,650)
for the period
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – 3,386 – 12,305 – – 15,691
reissued from
treasury
Share reissue – – – (31) – – (31)
costs
Dividends 7 – – – – – (54,877) (54,877)
paid2
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 June 9,651 151,493 22,779 193,010 748,420 46,065 1,171,418
2023
========= ========= ========= ========= ========= ========= =========
For the year
ended 31
December 2023
(audited)
At 31 December 9,651 148,107 22,779 180,736 868,837 69,175 1,299,285
2022
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – – (143,676) 64,691 (78,985)
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – 3,386 – 12,305 – – 15,691
reissued from
treasury
Share reissue – – – (33) – – (33)
costs
Dividends 7 – – – – – (75,907) (75,907)
paid3
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 9,651 151,493 22,779 193,008 725,161 57,959 1,160,051
2023
========= ========= ========= ========= ========= ========= =========
1
The final dividend for the year ended
2
The final dividend for the year ended
3
The final dividend of 23.50p per share for the year ended
For information on the Company’s distributable reserves, please refer to note 11 below.
Consolidated Statement of Financial Position as at
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
Notes £’000 £’000 £’000
Non current assets
Investments held at fair
value through profit or 12 1,209,233 1,283,858 1,298,420
loss
Current assets
Current tax asset 1,515 1,036 1,276
Other receivables 6,827 3,512 3,592
Cash collateral held with 9,492 – 6,269
brokers
Cash and cash equivalents 16,032 42,207 10,612
--------------- --------------- ---------------
Total current assets 33,866 46,755 21,749
========= ========= =========
Total assets 1,243,099 1,330,613 1,320,169
========= ========= =========
Current liabilities
Current tax liability (367) (353) (352)
Other payables (12,322) (8,326) (8,052)
Derivative financial
liabilities held at fair 12 (1,396) – (1,401)
value through profit or
loss
Bank loans 10 (134,483) (150,234) (149,828)
--------------- --------------- ---------------
Total current liabilities (148,568) (158,913) (159,633)
========= ========= =========
Total assets less current 1,094,531 1,171,700 1,160,536
liabilities
========= ========= =========
Non current liabilities
Deferred taxation (559) (282) (485)
liability
--------------- --------------- ---------------
Net assets 1,093,972 1,171,418 1,160,051
========= ========= =========
Equity attributable to
equity holders
Called up share capital 9 9,651 9,651 9,651
Share premium account 151,493 151,493 151,493
Capital redemption reserve 22,779 22,779 22,779
Special reserve 193,008 193,010 193,008
Capital reserve 679,250 748,420 725,161
Revenue reserve 37,791 46,065 57,959
--------------- --------------- ---------------
Total equity 1,093,972 1,171,418 1,160,051
========= ========= =========
Net asset value per 8 572.21 612.72 606.78
ordinary share (pence)
========= ========= =========
Consolidated Cash Flow Statement for the six months ended
Six months Six months Year ended
ended ended 31 December
30 June 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net loss on ordinary activities (21,690) (87,563) (76,309)
after taxation
Add back finance costs 4,594 4,553 9,541
Net loss on investments and
options held at fair value 40,360 123,495 140,576
through profit or loss
(including transaction costs)
Net gains on foreign exchange (424) (8,301) (9,018)
Sales of investments held at
fair value through profit or 360,569 342,903 648,272
loss
Purchases of investments held at
fair value through profit or (309,667) (326,545) (662,250)
loss
(Increase)/decrease in other (719) 918 1,069
receivables
Increase in other payables 66 2,026 1,556
(Increase)/decrease in amounts (2,755) 1 (409)
due from brokers
Increase in amounts due to 4,216 – –
brokers
Net movement in cash collateral (3,223) 6,795 526
held with brokers
--------------- --------------- ---------------
Net cash inflow from operating 71,327 58,282 53,554
activities before taxation
========= ========= =========
Taxation paid – – (12)
Taxation on investment income (1,373) (1,437) (2,664)
included within gross income
--------------- --------------- ---------------
Net cash inflow from operating 69,954 56,845 50,878
activities
========= ========= =========
Financing activities
Repayment of loans (14,599) – –
Interest paid (4,532) (4,665) (9,571)
Net proceeds from ordinary – 15,660 15,658
shares reissued from treasury
Dividends paid (43,016) (54,877) (75,907)
--------------- --------------- ---------------
Net cash outflow from financing (62,147) (43,882) (69,820)
activities
========= ========= =========
Increase/(decrease) in cash and 7,807 12,963 (18,942)
cash equivalents
Effect of foreign exchange rate (2,387) (248) 62
changes
--------------- --------------- ---------------
Change in cash and cash 5,420 12,715 (18,880)
equivalents
Cash and cash equivalents at 10,612 29,492 29,492
start of period/year
--------------- --------------- ---------------
Cash and cash equivalents at end 16,032 42,207 10,612
of period/year
========= ========= =========
Comprised of:
Cash at bank 16,032 42,207 10,612
--------------- --------------- ---------------
16,032 42,207 10,612
========= ========= =========
Notes to the financial statements for the six months ended
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,
2. Basis of preparation
The Half Yearly Financial Statements for the six month period ended
Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the
Adoption of new and amended International Accounting Standards and interpretations:
IFRS 17 – Insurance contracts
(effective
This standard did not have any impact on the Company as it has no insurance contracts.
IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction
(effective
IAS 8 – Definition of accounting estimates
(effective
IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies
(effective
IAS 12 – International Tax Reform Pillar Two Model Rules
(effective
The amendment of these standards did not have any significant impact on the Company.
Relevant International Accounting Standards that have yet to be adopted:
IAS 1 – Classification of liabilities as current or non current
(effective
IAS 1 – Non current liabilities with covenants
(effective
None of the standards that have been issued, but are not yet effective, are expected to have a material impact on the Company.
3. Income
Six months Six months Year ended
ended ended 31 December
30 June 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income:
UK dividends 5,469 5,150 8,647
Overseas dividends 12,616 17,281 33,457
Overseas special dividends 1,480 6,269 17,736
Income from contractual rights 756 2,760 4,186
(BHP Brazil Royalty)
Income from Vale Debentures 2,399 1,498 2,608
Income from fixed income 478 1,153 1,683
investments
--------------- --------------- ---------------
Total investment income 23,198 34,111 68,317
========= ========= =========
Other income:
Option premium income 4,336 2,483 5,964
Deposit interest 323 305 678
Broker interest received 79 49 104
Stock lending income 83 54 81
--------------- --------------- ---------------
4,821 2,891 6,827
========= ========= =========
Total income 28,019 37,002 75,144
========= ========= =========
During the period, the Group received option premium income in cash totalling £5,184,000 (six months ended
Option premium income is amortised evenly over the life of the option contract and, accordingly, during the period, option premiums of £4,336,000 (six months ended
At
Dividends and interest received in cash in the six months ended
Special dividends of £nil (six months ended
4. Investment management fee
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment
management 1,116 3,446 4,562 1,171 3,622 4,793 2,374 7,317 9,691
fee
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 1,116 3,446 4,562 1,171 3,622 4,793 2,374 7,317 9,691
========= ========= ========= ========= ========= ========= ========= ========= =========
The investment management fee (which includes all services provided by BlackRock) is 0.80% of the Company’s gross assets (subject to certain adjustments). During the period, £4,303,000 (six months ended
Cum income Quarterly Gearing effect
NAV per share increase/
Quarter end (decrease) % on management
(pence) fees (£’000)
31 December 2022 688.35
31 March 2023 664.51 -3.5 –
30 June 2023 612.72 -7.8 –
30 September 2023 601.47 -1.8 –
31 December 2023 606.78 +0.9 270
31 March 2024 568.07 -6.4 –
30 June 2024 572.21 +0.7 259
========= ========= =========
The daily average of the net assets under management during the period ended
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 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Custody fee 53 55 109
Auditors’ remuneration:
– audit services 33 25 55
– non-audit services1 – 5 9
Registrar’s fee 42 41 86
Directors’ emoluments 81 94 179
AIC fees 10 10 21
Broker fees 12 12 25
Depositary fees 52 61 116
FCA fee 21 16 40
Directors’ insurance 10 11 22
Marketing fees 61 65 144
Stock exchange fees 25 26 52
Legal and professional fees 67 82 147
Bank facility fees2 45 39 85
Printing and postage fees 22 29 55
Directors' search fees – – 25
Write back of prior year (7) – –
expenses3
Other administrative costs 84 73 108
--------------- --------------- ---------------
611 644 1,278
========= ========= =========
Allocated to capital:
Transaction charges4 6 11 15
--------------- --------------- ---------------
617 655 1,293
========= ========= =========
1
Fees paid to the auditors for non-audit services of £nil excluding VAT (six months ended
2 There is a 4 basis point facility fee chargeable on the full loan facilities whether drawn or undrawn.
3
Relates to legal and professional fees written back during the six months ended
4
For the six months ended
The transaction costs incurred on the acquisition of investments amounted to £586,000 for the six months ended
6. Finance costs
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest
paid on 1,134 3,404 4,538 1,118 3,423 4,541 2,370 7,151 9,521
bank
loans
Interest
paid on 14 42 56 3 9 12 5 15 20
bank
overdraft
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 1,148 3,446 4,594 1,121 3,432 4,553 2,375 7,166 9,541
========= ========= ========= ========= ========= ========= ========= ========= =========
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 17.00p per share for the year ended
The Board has declared a second quarterly interim dividend of 5.50p per share for the quarter ended
Dividends on equity shares paid during the period were:
Six months Six months Year ended
ended ended 31 December
30 June 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Final dividend for the year
ended 31 December 2023 of 17.00p 32,501 44,392 44,392
per share (2022: 23.50p)
1st quarterly interim dividend
for the year ending 31 December 10,515 10,485 10,485
2024 of 5.50p per share (2023:
5.50p)
2nd quarterly interim dividend
for the year ended 31 December – – 10,515
2023 of 5.50p per share (2022:
5.50p)
3rd quarterly interim dividend
for the year ended 31 December – – 10,515
2023 of 5.50p per share (2022:
5.50p)
--------------- --------------- ---------------
43,016 54,877 75,907
========= ========= =========
8. Consolidated earnings and net asset value per ordinary share
Total revenue, capital 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 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit
attributable to ordinary 22,848 31,767 64,691
shareholders (£’000)
Net capital loss
attributable to ordinary (45,911) (120,417) (143,676)
shareholders (£’000)
----------------- ----------------- -----------------
Total loss attributable to
ordinary shareholders (23,063) (88,650) (78,985)
(£’000)
========== ========== ==========
Equity shareholders’ funds 1,093,972 1,171,418 1,160,051
(£’000)
The weighted average
number of ordinary shares
in issue during the period 191,183,036 189,935,356 190,564,324
on which the earnings per
ordinary share was
calculated was:
The actual number of
ordinary shares in issue
at the end of the period 191,183,036 191,183,036 191,183,036
on which the net asset
value per ordinary share
was calculated was:
----------------- ----------------- -----------------
Earnings per ordinary
share
Revenue earnings per share
(pence) – basic and 11.95 16.73 33.95
diluted
Capital loss per share
(pence) – basic and (24.01) (63.40) (75.40)
diluted
----------------- ----------------- -----------------
Total loss per share
(pence) – basic and (12.06) (46.67) (41.45)
diluted
========== ========== ==========
As at As at As at
30 June 30 June 31 December
2024 2023
(unaudited) (unaudited) 2023
(audited)
Net asset value per ordinary share (pence) 572.21 612.72 606.78
Ordinary share price (pence) 569.00 599.00 587.00
========= ========= =========
There were no dilutive securities at the period end.
9. Called up share capital
Ordinary
shares Treasury Total Nominal
in issue shares shares value
(unaudited) number number number £’000
Allotted,
called up
and fully
paid share
capital
comprised:
Ordinary
shares of 5
pence each:
At 31
December 191,183,036 1,828,806 193,011,842 9,651
2023
----------------- ----------------- ----------------- -----------------
At 30 June 191,183,036 1,828,806 193,011,842 9,651
2024
========== ========== ========== ==========
During the six months ended
–
did not buy back any shares into treasury (six months ended
–
did not reissue any shares (six months ended
Since the period end and up to
10. Reconciliation of liabilities arising from financing activities
Six months Six months Year ended
ended ended 31 December
30 June 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Bank loan and overdraft at 149,828 158,783 158,783
beginning of the period/year
Cash flows:
Net drawdown of loan (14,599) – –
Non-cash flows:
Effects of foreign exchange (746) (8,549) (8,955)
gains
--------------- --------------- ---------------
Bank loan and overdraft at end 134,483 150,234 149,828
of the period/year
========= ========= =========
11. Reserves
Pursuant to a resolution of the Company passed at an Extraordinary General Meeting on
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 £685,258,000 (
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 the market price of its investments and could result in increased premiums or discounts to the Company’s net asset value.
Liquidity risk
The Group has an overdraft facility of £30 million (
At
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) (
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
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 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
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
Jetti Resources and
The fair value of the investment equity shares of Jetti Resources and
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 £’000 £’000 £’000 £’000
through profit
or loss as at 30
June 2024
(unaudited)
Assets:
Equity 1,114,885 – 35,218 1,150,103
investments
Fixed income 7,900 31,295 – 39,195
securities
Investment in
contractual – – 19,935 19,935
rights
--------------- --------------- --------------- ---------------
Total assets 1,122,785 31,295 55,153 1,209,233
========= ========= ========= =========
Liabilities:
Derivative
financial – (1,396) – (1,396)
instruments –
written options
--------------- --------------- --------------- ---------------
Total 1,122,785 29,899 55,153 1,207,837
========= ========= ========= =========
Financial
assets/
(liabilities) at Level 1 Level 2 Level 3 Total
fair value £’000 £’000 £’000 £’000
through profit
or loss as at 30
June 2023
(unaudited)
Assets:
Equity 1,164,070 12,860 33,770 1,210,700
investments
Fixed income 9,558 44,250 – 53,808
securities
Investment in
contractual – – 19,350 19,350
rights
--------------- --------------- --------------- ---------------
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 £’000 £’000 £’000 £’000
through profit
or loss as at 31
December 2023
(audited)
Assets:
Equity 1,193,969 – 32,695 1,226,664
investments
Fixed income 16,924 36,516 – 53,440
securities
Investment in
contractual – – 18,316 18,316
rights
--------------- --------------- --------------- ---------------
Total assets 1,210,893 36,516 51,011 1,298,420
========= ========= ========= =========
Liabilities:
Derivative
financial – (1,401) – (1,401)
instruments –
written options
--------------- --------------- --------------- ---------------
Total 1,210,893 35,115 51,011 1,297,019
========= ========= ========= =========
A reconciliation of fair value measurement in Level 3 is set out below.
Six months Six months Year ended
ended ended 31 December
30 June 2024 30 June 2023 2023
(unaudited) (unaudited) (audited)
Level 3 Financial assets at fair £’000 £’000 £’000
value through profit or loss
Opening fair value 51,011 56,891 56,891
Return of capital – royalty (203) (341) (497)
Total profit or loss included in
net profit on investments in the
Consolidated Statement of
Comprehensive Income
– assets held at the end of the 4,345 (3,430) (5,383)
period/year
--------------- --------------- ---------------
Closing balance 55,153 53,120 51,011
========= ========= =========
The Level 3 valuation process and techniques used are explained in the accounting policies in note 2(h) on page 102 of the Company’s Annual Report and Financial Statements for the year ended
The Level 3 investments as at
In arriving at the fair value of the BHP Brazil Royalty, the key inputs are the underlying commodity prices and illiquidity discount. In arriving at the fair value of Jetti Resources,
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
As at Reasonable
30 June Unobservable Range of Impact
2024 Valuation weighted possible on fair
Description £’000 technique input average shift1
inputs +/ - value
Jetti 25,207 Market Earnings 5.50x 10.0% £2.5m
Resources approach multiple
Discount
BHP Brazil Discounted rate – 8.0% –
Royalty 19,935 cash flows weighted 10.0% 1.0% £1.0m
average cost
of capital
US$1,650
Average gold – US$ 10 .0% £1.5m
prices 2,314 per
ounce
Average US$7,700
copper – 10.0% £1.0m
prices US$10,000
per tonne
Market Price of
MCC Mining 10,011 approach recent 10.0% £1.0m
transaction
Listing
suspended
Polyus ADRs – – valued
at nominal
US$0.01
---------------
Total 55,153
=========
As at Reasonable
30 June Range of Impact
2023 Valuation Unobservable weighted possible on fair
Description £’000 technique shift1
input average +/ - value
inputs
Jetti 28,264 Market Earnings 6.22x 5.0% £1.1m
Resources approach multiple
Discount
BHP Brazil Discounted rate – 5.0% –
Royalty 19,350 cash flows weighted 8.0% 1.0% £1.0m
average cost
of capital
US$1,400
Average gold –
prices US$1,600 10.0% £1.5m
per
ounce
US$7,209
Average –
copper US$8,510 10.0% £1.0m
prices per
tonne
Market Price of
MCC Mining 5,506 approach recent 5.0% £0.3m
transaction
Listing
suspended
Polyus ADRs – - valued
at nominal
US$0.01
---------------
Total 53,120
=========
As at Reasonable
31 December Range of weighted Impact
2023 Valuation Unobservable possible on
Description £’000 technique input average inputs shift1 fair
+/- value
Discount
BHP Brazil 18,316 Discounted rate–weighted 5.0% - 8.0% 1.0% £1.0m
Royalty cash flows average cost
of capital
Average gold US$1,706-US$1,780 10.0% £1.8m
prices per ounce
Average US$8,397-US$8,469 10.0% £1.2m
copper prices per tonne
Jetti 27,204 Market Earnings 6.00x 5.0% £1.4m
Resources approach multiple
Market Price of
MCC Mining 5,491 approach recent 5.0% £0.3m
transaction
Listing
suspended
Polyus – – valued
at nominal
US$0.01
Delisted –
Polymetal – valued at
International nominal
US$0.01
---------------
Total 51,011
=========
1 The 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
The investment management fee due for the six months ended
In addition to the above services, BIM (
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
14. Related party disclosure
During the period ended
Directors’ shareholdings
At the period end members of the Board held ordinary shares in the Company as set out below:
30 June 30 June 31 December
2024 2023 2023
Directors Ordinary shares Ordinary shares Ordinary shares
Charles Goodyear (Chairman)1 60,000 n/a 60,000
Jane Lewis 7,000 5,362 5,362
Judith Mosely 7,400 7,400 7,400
Srinivasan Venkatakrishnan 2,000 1,000 2,000
Elisabeth Scott2 – n/a n/a
========= ========= =========
1
Appointed as a Director on
2
Appointed as a Director on
Since the period end and up to the date of this report there have been no changes in Directors’ holdings.
The following investors are:
a.
funds managed by the
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 (
Total % of shares Number of Significant
held by
Significant Investors Investors who are not
Total % of shares who are
held by not affiliates of affiliates of
Related BlackRock BlackRock BlackRock
Funds Group or BlackRock, Group or BlackRock,
Inc. Inc.
As at 30 June 2024 1.32 n/a n/a
As at 30 June 2023 1.25 n/a n/a
As at 31 December 1.29 n/a n/a
2023
========= ========= =========
15. Capital commitments and contingent liabilities
There was no capital commitment as at
There were no contingent liabilities at as
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
The information for the year ended
17. Annual results
The Board expects to announce the annual results for the year ending
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
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:
Tel: 020 7743 1869
Tel: 020 7743 3000
Press enquires:
Tel:
020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com
or
EdH@lansons.com
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