REG-BlackRock World Mining Trust Plc: Half-year Report
24/08/2023 14:30
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 index 2 – net total return 5,546.55 5,863.32
(Discount)/premium to net asset value 3 (2.2%) 1.3%
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For the For the
six months year
ended ended
30 June 31 December
2023 2022
Performance (with dividends reinvested)
Net asset value per ordinary share 3 -7.1% +17.7%
Ordinary share price 3 -10.3% +26.0%
Reference index 2 -5.4% +11.5%
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For the For the Change
six months six months %
ended ended
30 June 2023 30 June 2022
Revenue
Net revenue profit on ordinary activities after taxation (£’000) 31,767 37,148 -14.5
Revenue earnings per ordinary share (pence) 3 16.73 20.07 -16.6
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 –
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1 The change in net assets reflects portfolio movements, dividends paid and
the reissue of ordinary shares from treasury during the period.
2 With 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.
3 Alternative 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% fines) US$/t 114 -3.4% -15.3%
Thermal Coal (Newcastle) US$/t 159 -42.0% 12.0%
Metallurgical Coal US$/t 230 -14.0% -8.0%
Lithium (Battery Grade China) US$/kg 106.2 -44.5% -21.2%
West Texas Intermediate Oil (Cushing) US$/barrel 70.6 -12.0% -26.4%
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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 10 million
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.
1 Includes fixed income securities.
2 Includes 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 Debentures* # ^ Global 32,079
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-McMoRan Global 50,113 3.9
First Quantum Minerals* Global 45,866 3.6
Ivanhoe Electric United States 24,125 } 2.8
I-Pulse* United States 12,171
Jetti Resources # Global 28,264 2.2
Ivanhoe Mines Other Africa 27,768 2.2
BHP Brazil Royalty #~ Latin America 19,350 1.5
Sociedad Minera Cerro Verde Latin America 16,107 1.3
Develop Global Australasia 15,432 1.2
Lundin Mining Global 10,197 0.8
Ero Copper Latin America 8,805 0.7
Solaris Resources Latin America 7,823 0.6
CSA Cobar Mine # Australasia 6,852 0.5
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 Shares # Australasia 347 –
--------------- ---------------
296,160 23.1
========= =========
Gold
Newmont Corporation Global 40,518 3.2
Wheaton Precious Metals Global 39,577 3.1
Newcrest Mining Australasia 30,243 2.4
Franco-Nevada Global 28,470 2.2
Barrick Gold Global 26,708 2.1
Northern Star Resources Australasia 17,663 1.4
Endeavour Mining Other Africa 9,675 0.8
Agnico Eagle Mines Canada 5,992 0.5
Polymetal International United Kingdom 1,842 0.1
Polyus Russia – –
--------------- ---------------
200,688 15.8
========= =========
Industrial Minerals
Sigma Lithium Latin America 21,826 1.7
Albemarle Global 21,182 1.6
Mineral Resources Australasia 16,236 1.3
Iluka Resources Australasia 12,963 1.0
Chalice Mining Australasia 8,298 0.6
Lynas Rare Earths Australasia 8,247 0.6
Sociedad Quimica y Minera ADR Latin America 8,153 0.6
Sheffield Resources Australasia 5,463 0.4
--------------- ---------------
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 Holdings Canada 6,989 0.5
--------------- ---------------
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 Platinum Global 3,456 0.3
Impala Platinum South Africa 2,170 0.2
Sibanye Stillwater South Africa 1,169 0.1
--------------- ---------------
28,620 2.3
========= =========
Iron Ore
Labrador Iron Canada 12,994 1.0
Champion Iron Canada 10,238 0.8
Deterra Royalties Australasia 4,852 0.4
Equatorial Resources Other Africa 259 –
--------------- ---------------
28,343 2.2
========= =========
Uranium
Cameco Canada 14,083 1.1
--------------- ---------------
14,083 1.1
========= =========
Mining Services
Woodside Energy Group Australasia 7,819 0.6
Epiroc Global 6,082 0.5
--------------- ---------------
13,901 1.1
========= =========
Nickel
Nickel Industries Indonesia 11,679 0.9
Bindura Nickel Global 40 –
Lifezone SPAC Commitment # Global – –
--------------- ---------------
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%
1 Based 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 Exposure 1 2023
Global 65.6%
Australasia 10.4%
Latin America 9.0%
Other 2 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%
Other 2 7.1%
Canada 4.1%
Other Africa (ex South Africa) 2.4%
South Africa 0.7%
1 Based on the principal commodity exposure and place of operation of each
investment.
2 Consists 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 MONTHS ENDED 30
JUNE 2023
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income from investments held at fair value through profit or loss 3 34,111 630 34,741 39,251 – 39,251 78,087 811 78,898
Other income 3 2,891 – 2,891 2,472 – 2,472 7,909 – 7,909
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------
Total revenue 37,002 630 37,632 41,723 – 41,723 85,996 811 86,807
========= ======== ======== ========= ======== ======== ======== ======== ========
Net (loss)/profit on investments held at fair value through profit or loss – (123,495) (123,495) – (30,608) (30,608) – 152,937 152,937
Net profit/(loss) on foreign exchange – 8,301 8,301 – (16,160) (16,160) – (17,645) (17,645)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------
Total 37,002 (114,564) (77,562) 41,723 (46,768) (5,045) 85,996 136,103 222,099
======== ======== ======== ======== ======== ======== ======== ======== ========
Expenses
Investment management fee 4 (1,171) (3,622) (4,793) (1,279) (3,949) (5,228) (2,615) (8,031) (10,646)
Other operating expenses 5 (644) (11) (655) (532) (7) (539) (1,037) (28) (1,065)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------
Total operating expenses (1,815) (3,633) (5,448) (1,811) (3,956) (5,767) (3,652) (8,059) (11,711)
========= ======== ======== ========= ======== ======== ======== ======== ========
Net profit/(loss) on ordinary activities before finance costs and taxation 35,187 (118,197) (83,010) 39,912 (50,724) (10,812) 82,344 128,044 210,388
Finance costs 6 (1,121) (3,432) (4,553) (306) (891) (1,197) (1,182) (3,520) (4,702)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------
Net profit/(loss) on ordinary activities before taxation 34,066 (121,629) (87,563) 39,606 (51,615) (12,009) 81,162 124,524 205,686
Taxation (charge)/credit (2,299) 1,212 (1,087) (2,458) 804 (1,654) (5,149) 1,883 (3,266)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------
Net profit/(loss) on ordinary activities after taxation 8 31,767 (120,417) (88,650) 37,148 (50,811) (13,663) 76,013 126,407 202,420
========= ======== ======== ========= ======== ======== ======== ======== ========
Earnings/(loss) per ordinary share (pence) – basic and diluted 8 16.73 (63.40) (46.67) 20.07 (27.45) (7.38) 40.68 67.64 108.32
========= ======== ======== ========= ======== ======== ======== ======== ========
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 MONTHS ENDED 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 December 2022 9,651 148,107 22,779 180,736 868,837 69,175 1,299,285
Total comprehensive income:
Net (loss)/profit for the period – – – – (120,417) 31,767 (88,650)
Transactions with owners, recorded directly to equity:
Ordinary shares reissued from treasury – 3,386 – 12,305 – – 15,691
Share reissue costs – – – (31) – – (31)
Dividends paid 1 7 – – – – – (54,877) (54,877)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 June 2023 9,651 151,493 22,779 193,010 748,420 46,065 1,171,418
========= ========= ========= ========= ========= ========= =========
For the six months ended 30 June 2022 (unaudited)
At 31 December 2021 9,651 138,818 22,779 155,123 742,430 74,073 1,142,874
Total comprehensive income:
Net (loss)/profit for the period – – – – (50,811) 37,148 (13,663)
Transactions with owners, recorded directly to equity:
Ordinary shares reissued from treasury – 8,752 – 21,708 – – 30,460
Share reissue costs – – – (61) – – (61)
Dividends paid 2 7 – – – – – (60,148) (60,148)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 June 2022 9,651 147,570 22,779 176,770 691,619 51,073 1,099,462
========= ========= ========= ========= ========= ========= =========
For the year ended 31 December 2022 (audited)
At 31 December 2021 9,651 138,818 22,779 155,123 742,430 74,073 1,142,874
Total comprehensive income:
Net profit for the year – – – – 126,407 76,013 202,420
Transactions with owners, recorded directly to equity:
Ordinary shares reissued from treasury – 9,289 – 25,683 – – 34,972
Share reissue costs – – – (70) – – (70)
Dividends paid 3 7 – – – – – (80,911) (80,911)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 December 2022 9,651 148,107 22,779 180,736 868,837 69,175 1,299,285
========= ========= ========= ========= ========= ========= =========
1 The 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.
2 The 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.
3 The 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 December
2023 2022 2022
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Non current assets
Investments held at fair value through profit or loss 12 1,283,858 1,232,361 1,424,844
Current assets
Current tax asset 1,036 490 821
Other receivables 3,512 5,560 4,431
Cash collateral held with brokers – 2,651 6,795
Cash and cash equivalents 42,207 52,255 29,492
--------------- --------------- ---------------
Total current assets 46,755 60,956 41,539
========= ========= =========
Total assets 1,330,613 1,293,317 1,466,383
========= ========= =========
Current liabilities
Current tax liability (353) (281) (373)
Other payables (8,326) (15,135) (6,155)
Derivative financial liabilities held at fair value through profit or loss 12 – (550) (1,227)
Bank overdraft – (177) –
Bank loans (150,234) (177,273) (158,783)
--------------- --------------- ---------------
Total current liabilities (158,913) (193,416) (166,538)
========= ========= =========
Total assets less current liabilities 1,171,700 1,099,901 1,299,845
========= ========= =========
Non current liabilities
Deferred taxation liability (282) (439) (560)
--------------- --------------- ---------------
Net assets 1,171,418 1,099,462 1,299,285
========= ========= =========
Equity attributable to equity holders
Called up share capital 9 9,651 9,651 9,651
Share premium account 151,493 147,570 148,107
Capital redemption reserve 22,779 22,779 22,779
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 per ordinary share (pence) 8 612.72 584.92 688.35
========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 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 ordinary activities before taxation (87,563) (12,009) 205,686
Add back finance costs 4,553 1,197 4,702
Net loss/(profit) on investments and options held at fair value through profit or loss (including transaction costs) 123,495 30,608 (152,937)
Net (profit)/loss on foreign exchange (8,301) 16,160 17,645
Net amount for capital special dividends received (535) – –
Sales of investments and derivatives held at fair value through profit or loss 343,438 266,982 489,236
Purchases of investments and derivatives held at fair value through profit or loss (326,545) (273,507) (503,782)
Decrease/(increase) in other receivables 918 (203) 13
Increase in other payables 2,026 540 1,025
Decrease/(increase) in amounts due from brokers 1 (148) 243
Increase in amounts due to brokers – 9,412 –
Net movement in cash collateral held with brokers 6,795 (2,071) (6,215)
--------------- --------------- ---------------
Net cash inflow from operating activities before taxation 58,282 36,961 55,616
========= ========= =========
Taxation paid – (261) (432)
Taxation on investment income included within gross income (1,437) (1,733) (3,210)
--------------- --------------- ---------------
Net cash inflow from operating activities 56,845 34,967 51,974
========= ========= =========
Financing activities
Drawdown of loans – 22,359 2,359
Interest paid (4,665) (1,362) (4,720)
Net proceeds from ordinary shares reissued from treasury 15,660 30,399 34,902
Dividends paid (54,877) (60,148) (80,911)
--------------- --------------- ---------------
Net cash outflow from financing activities (43,882) (8,752) (48,370)
========= ========= =========
Increase in cash and cash equivalents 12,963 26,215 3,604
Cash and cash equivalents at start of the period 29,492 25,976 25,976
Effect of foreign exchange rate changes (248) (113) (88)
--------------- --------------- ---------------
Cash and cash equivalents at end of the period 42,207 52,078 29,492
========= ========= =========
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 MONTHS ENDED 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 dividends 6,269 1,670 3,808
Income from contractual rights (BHP Brazil Royalty) 2,760 1,674 3,096
Income from Vale debentures 1,498 3,308 3,863
Income from fixed income investments 1,153 1,089 2,523
--------------- --------------- ---------------
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 ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 1,171 3,622 4,793 1,279 3,949 5,228 2,615 8,031 10,646
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
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 services 1 5 5 9
Registrar’s fee 41 40 86
Directors’ emoluments 94 88 197
AIC fees 10 10 21
Broker fees 12 12 24
Depositary fees 61 61 116
FCA fee 16 13 30
Directors’ insurance 11 11 23
Marketing fees 65 81 132
Stock exchange fees 26 18 37
Legal and professional fees 82 20 35
Bank facility fees 2 39 51 97
Printing and postage costs 29 28 47
Write back of prior year expenses 3 – (24) (55)
Other administrative costs 73 34 86
--------------- --------------- ---------------
644 532 1,037
========= ========= =========
Allocated to capital:
Custody transaction charges 4 11 7 28
--------------- --------------- ---------------
655 539 1,065
========= ========= =========
1 Fees 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.
2 There is a 4 basis point facility fee chargeable on the full loan
facilities whether drawn or undrawn.
3 No 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).
4 For 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 ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest payable – bank loans 1,118 3,423 4,541 304 885 1,189 1,177 3,505 4,682
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 ended 31 December 2022 of 23.50p per share (2021: 27.00p) 44,392 49,898 49,898
1st quarterly interim dividend for the year ending 31 December 2023 of 5.50p per share (2022: 5.50p) 10,485 10,250 10,251
2nd quarterly interim dividend for the year ended 31 December 2022 of 5.50p per share (2021: 5.50p) – – 10,381
3rd quarterly interim dividend for the year ended 31 December 2022 of 5.50p per share (2021: 5.50p) – – 10,381
--------------- --------------- ---------------
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 attributable to ordinary shareholders (£’000) 31,767 37,148 76,013
Net capital (loss)/profit attributable to ordinary shareholders (£’000) (120,417) (50,811) 126,407
--------------- --------------- ---------------
Total (loss)/profit attributable to ordinary shareholders (£’000) (88,650) (13,663) 202,420
========= ========= =========
Equity shareholders’ funds (£’000) 1,171,418 1,099,462 1,299,285
The weighted average number of ordinary shares in issue during each period on which the earnings per ordinary share was calculated was: 189,935,356 185,071,986 186,868,187
The actual number of ordinary shares in issue at the period end on which the net asset value per ordinary share was calculated was: 191,183,036 187,968,036 188,753,036
Earnings per ordinary share
Revenue earnings per share (pence) – basic and diluted 16.73 20.07 40.68
Capital (loss)/earnings per share (pence) – basic and diluted (63.40) (27.45) 67.64
--------------- --------------- ---------------
Total (loss)/earnings per share (pence) – basic and diluted (46.67) (7.38) 108.32
========= ========= =========
As at As at As at
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Net asset value per ordinary share (pence) 612.72 584.92 688.35
Ordinary share price (pence) 599.00 573.00 697.00
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 treasury 2,430,000 (2,430,000) – –
--------------- --------------- --------------- ---------------
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 beginning of the period/year 158,783 139,223 139,223
Cash flows:
Movement in overdraft – (179) (356)
Net drawdown of loan – 22,359 2,359
Non-cash flows:
Effects of foreign exchange (gain)/loss (8,549) 16,047 17,557
Bank loan and overdraft at end of the period/year 150,234 177,450 158,783
========= ========= =========
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 fair value through profit or loss as at 30 June 2023 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
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 fair value through profit or loss as at 30 June 2022 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
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 – written options – (550) – (550)
--------------- --------------- --------------- ---------------
Total 1,124,566 66,488 40,757 1,231,811
========= ========= ========= =========
Financial assets/(liabilities) at fair value through profit or loss as at 31 December 2022 (audited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
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 – written options – (1,227) – (1,227)
--------------- --------------- --------------- ---------------
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 fair value through profit or loss Six months Six months Year ended
ended ended 31 December
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 bond to equity and transfer to Level 2 – (10,160) (10,160)
Transfer of equities and convertible bonds to Level 2 – (19,305) (19,305)
Transfer of equities from Level 1 to Level 3 – 2 2
Conversion of equity and transfer to Level 1 – – (2,546)
Total gains or losses included in net (loss)/profit on investments in the Consolidated Statement of Comprehensive Income:
– assets transferred to Level 1 during the period – – 169
– assets transferred to Level 2 during the period – 14,214 14,212
– assets held at the end of the period (3,430) 3,843 21,267
--------------- --------------- ---------------
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 weighted Reasonable Impact on fair
30 June technique input average inputs possible shift 1 value
2023 +/ -
£’000
Jetti Resources 28,264 Market approach Earnings multiple 6.22x 5.0% £0.6m
BHP Brazil Royalty 19,350 Discounted Discounted rate – 5.0% - 8.0% 1.0% £1.0m
cash flows weighted average
cost of capital
Average gold US$1,400 – US$1,600 10.0% £1.5m
prices per ounce
Average copper US$7,209 – US$8,510 10.0% £1.0m
prices per tonne
MCC Mining 5,506 Market Price of recent 5.0% £0.6m
approach transaction
Polyus ADRs – Listing
suspended
- valued at
nominal
US$0.01
---------------
Total 53,120
=========
Description As at Valuation Unobservable Range of weighted Reasonable Impact on fair
30 June technique input average inputs possible shift 1 value
2022 +/ -
£’000
BHP Brazil Royalty 20,194 Discounted Discount rate – 5.0% – 8.0% 1.0% £1.0m
cash flows weighted average
cost of capital
Average gold US$1,400 – US$1,600 10.0% £1.5m
prices per ounce
Average copper US$7,209 – US$8,510 10.0% £1.0m
prices per tonne
Jetti Resources 12,327 Market Earnings multiple 2.51x 5.0% £0.6m
approach
MCC Mining 5,764 Market Price of recent 5.0% £0.3m
approach transaction
Bravo Mining 2,470 Market Price of recent 5.0% £0.1m
approach transaction
Polyus ADRs 2 Listing
suspended
– valued
at nominal
US$0.01
---------------
Total 40,757
=========
Description As at Valuation Unobservable Range of weighted Reasonable Impact on fair
31 December technique input average inputs possible shift 1 value
2022 +/ -
£’000
BHP Brazil Royalty 21,199 Discounted Discounted rate – 5.0% – 8.0% 1.0% £1.0m
cash flows weighted average
cost of capital
Average gold US$1,400 – US$1,600 10.0% £1.5m
prices per ounce
Average copper US$7,209 - US$8,510 10.0% £1.0m
prices per tonne
Jetti Resources 29,873 Market Earnings multiple 5.93x 5.0% £0.6m
approach
MCC Mining 5,819 Market Price of recent 5.0% £0.3m
approach transaction
Lifezone Commitment –
Polyus ADRs – Listing
suspended
– valued
at nominal
US$0.01
---------------
Total 56,891
=========
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
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 Edey 1 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 Goodyear 2 n/a n/a n/a
========= ========= =========
1 Retired as a Director on 18 April 2023.
2 Appointed 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 shares held by Related BlackRock Funds Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc. Number of Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.
1.25 n/a n/a
As at 30 June 2022 Total % of shares held by Related BlackRock Funds Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc. Number of Significant 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
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