Performance at month end with net income reinvested

One

Three

One

Three

Five

Month

Months

Year

Years

Years

Net asset value

-6.4%

1.6%

-1.0%

11.3%

72.4%

Share price

-3.6%

11.1%

1.0%

  12.7%

105.2%

MSCI ACWI Metals & Mining 30% Buffer 10/40 Index (Net)*

-4.4%

1.1%

8.9%

13.6%

59.9%

* (Total return)

Sources: BlackRock, MSCI ACWI Metals & Mining 30% Buffer 10/40 Index, Datastream

Net asset value (including income)1:

572.23p

Net asset value (capital only):

565.60p

Share price:

569.00p

Discount to NAV2:

0.6%

Total assets:

£1,228.5m

Net yield3:

5.9%

Net gearing:

10.4%

Ordinary shares in issue:

191,183,036

Ordinary shares held in Treasury:

1,828,806

Ongoing charges4:

0.91%

Ongoing charges5:

0.81%

Country Analysis

Total
Assets (%)

Global

62.7

Canada

9.3

Latin America

8.6

Australasia

6.6

United States

6.5

Other Africa

3.7

Indonesia

0.5

South Africa

0.4

Net Current Assets

1.7

-----

100.0

=====

Sector Analysis

Total
Assets (%)

Diversified

33.8

Copper

24.7

Gold

20.1

Steel

4.9

Industrial Minerals

3.9

Aluminium

3.6

Iron Ore

2.1

Platinum Group Metals

1.9

Uranium

1.6

Nickel

1.1

Mining Services

0.5

Zinc

0.1

Net Current Assets

1.7

-----

100.0

=====

Ten largest investments

Company

Total Assets %

Glencore

8.0

BHP:

    Equity

6.0

    Royalty

1.6

Rio Tinto

6.1

Anglo American

5.5

Freeport-McMoRan

5.0

Newmont

4.7

Vale:

    Debenture

2.5

    Equity

2.0

Agnico Eagle Mines

4.2

Teck Resources

3.7

Norsk Hydro ASA

3.6

Asset Analysis

Total Assets (%)

Equity

95.4

Bonds

1.6

Preferred Stock

0.8

Convertible Bond

0.6

Option

-0.1

Net Current Assets

1.7

-----

100.0

=====

Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:

Performance

The Company’s NAV declined by 6.4% in June, underperforming its reference index, the MSCI ACWI Metals and Mining 30% Buffer 10/40 Index (net return), which fell by 4.4% (performance figures in GBP).

It was a difficult month for the mining sector, particularly relative to broader equity markets as the MSCI ACWI TR Index returned +1.4%. Most mined commodity prices posted declines through June, with iron ore (62% fe), copper and gold prices falling by 10.9%, 8.9% and 1.3% respectively.

Economic data from China was weak, with its manufacturing PMI below 50 indicating contraction, whilst average house prices recorded the largest year-on-year decline since 2015. Meanwhile, US dollar strength provided an additional headwind for commodities, with the DXY Index rising from 104.7 to 105.9. Interest rate expectations declined modestly, with the US 5-year yield falling from 4.5% to 4.3% which supported the performance of growth sectors such as technology over value sectors like mining.

Strategy and Outlook

Constrained mined commodity supply, an evolving demand picture, strong balance sheets and valuations below historic averages make us optimistic about the outlook for the sector.

Mining companies have focused on capital discipline in recent years, meaning they have opted to pay down debt, reduce costs and return capital to shareholders, rather than investing in production growth. This is limiting new supply coming online and there is unlikely to be a quick fix, given the time lags involved in investing in new mining projects. The cost of new projects has also risen significantly and recent M&A activity in the sector suggests that, like us, strategic buyers see an opportunity in existing assets in the listed market, currently trading well below replacement costs. Other issues restricting supply include cases of governments closing mines, permitting issues and a general lack of shovel-ready projects.

Meanwhile, the demand side of the equation appears to be evolving. The commodity super-cycle (2002 – 2011) was all about China’s extraordinary demand growth. Today, China remains the most important individual economy for mining, but we are expecting this importance to gradually decline through to the end of the decade. We expect global infrastructure spending to drive the next wave of demand, with low carbon transition-related infrastructure particularly meaningful. Offshore wind, for example, requires 5.4x more steel and 2.9x more copper per megawatt of power capacity when compared with gas (source: BHP analysis, Hatch, ArcelorMittal, August 2023). The other area gaining attention is the implications for materials from the build out of AI-related data centres, both for the centres themselves but also for the increased power infrastructure required.

23 July 2024

Latest information is available by typing www.blackrock.com/uk/brwm on the internet. 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.