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Annual Results

BlackRock World Mining NAV up 92.9%

24 February 2017 07:52

BlackRock World Mining Trust's net asset value rose per share by 92.9% in the year to the end of December on a total return basis while the share price increased by 100.6%.

The company's benchmark, the Euromoney Global Mining Index, rose by 94.0% over the same period.

Chairman Ian Cockerill said: "In 2016 we witnessed a dramatic turnaround in the mining sector.

"After five challenging years, a result of slowing growth in China and falling prices, the cycle began to turn.

"This was driven by two key factors.

"The first was that bearishness on China troughed in early 2016 and the Chinese government’s stimulus package in spring of that year led to improved economic data points and increased property prices.

"Second, mining companies are delivering strong financial discipline by focusing on cost reduction, reducing debt and increasing productivity.

"Share prices of mining companies, whose revenues are derived in US dollars, have also benefited from the weakness in sterling following the UK’s referendum vote on 23 June 2016."

Cockerill said the outlook for the mining sector improved significantly during the year and remained largely positive for the longer term.

He continued: "Industry-wide trends toward increased free cash flow, upward earnings momentum and the potential to return excess capital to shareholders will aid mining stocks, although it is unlikely that we will see the same percentage increase in underlying share prices this year given that prices started 2017 significantly higher than they did in 2016.

"There are some risks hanging over the market, including US dollar strength, the threat of new supply, rising oil prices adding to costs, and a depreciation in China’s currency.

"However, global growth expectations appear to be picking up after an extended slide, encouraged by China’s stabilising growth and President Trump’s pledge to revise taxes and increase infrastructure spending in the US, which should support commodity demand.

"Overall, companies in the mining sector have stronger fundamentals than a year ago and the outlook appears promising."

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Related Company: BRWM

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