BlackRock World Mining Trust plc (BRWM) Earnings Call Transcript & Summary

I'm Evy Hambro, and I'm joined by Olivia Markham. And together, we co-manage the BlackRock World Mining Investment Trust. In this video, we're going to cover some of the highlights from our 2024 results and talk about our outlook for 2025 and beyond. 2024 was a challenging year for the mining sector and the trust wasn't immune with our net asset value declining by 10.6% and the share price finishing down 12.7%. Economic weakness in China, Europe and other parts of the world put downward pressure on commodity prices and reduced investor demand for mining shares. We saw a brief rally in September '24 on the news of stimulus measures in China that is ultimately underwhelmed investors.

[ Worker sector ] finished in negative territory due to the economic headwinds outlined by Evy and as the market focused on [ selective ] megacap technology stocks, performance of the underlying commodities was generally positive. The key performance during the year were gold and silver prices, which rose 27% and 22%, respectively. Industrial metals were also positive with the copper price, a key exposure within the company, up 8% when looking at year-on-year average price levels. However, the iron ore price was particularly challenged, falling 30% on account of its sensitivity to China and its struggling property market.

The company's revenue per share generated through 2024 was 23.09p, once again exceeding analyst estimates due to the diversified sources of income within the portfolio, but this was not enough to offset the overall headwinds within the sector. The decrease was primarily driven by lower dividend payments from a number of key mining companies on lower profitability and as they chose to invest into growth opportunities. Other sources of revenue for the company were comparable to prior years, helping to soften the fall in income from ordinary dividends. Royalty income was 10% of overall revenue. Option income increased due to favorable conditions from selling volatility, while income from fixed income securities declined in line with the strategy to focus elsewhere for revenues. As per the Board's policy of paying out substantially all income received, the trust paid a full year dividend of 23p, placing the trust on a yield of 4.5% using the share price at the time of filming, representing a healthy premium to broader equity markets and the underlying sector.

We continue to seek opportunities in unquoted investments, which as at the end of 2024 amounted to 8% of the portfolio. These consisted of a BHP Brazil royalty, Vale debentures, which are fixed income instruments that work like a royalty and 2 private companies, Jetti Resources and MCC Mining. Since our initial GBP 12 million investment into the BHP Brazil royalty in 2014, a royalty previously operated by OZ Minerals and by Avanco Resources before that, we have now received GBP 32 million in royalty payments. And as at the end of 2024, the royalty was valued at GBP 22.2 million. Income generated from options was GBP 10.2 million in 2024, which was higher than prior years. The increase was driven by a range of specific opportunities such as M&A, short-term spikes in volatility and greater breadth in the opportunity set. Meanwhile, gearing during the year averaged 11.6%.

In terms of our outlook from here, we remain confident that supportive demand trends, strong balance sheets, limited supply growth and low valuations are likely to underpin a recovery in share prices. However, for this to play out in the short term, this requires a catalyst to resolve fears around uncertainty in China and global trade tensions. Recent initiatives by the new Trump government could unlock some of these challenges, but it is too early to forecast this. In the medium term, key trends driving global markets such as the energy transition and artificial intelligence are likely to drive future growth well in excess of some of the near-term issues. In summary, with the fundamentals intact, low valuations and a positive outlook currently ignored by the broader market, it feels as though we are well positioned to capture returns when near-term concerns ease. Thank you for listening.