(Alliance News) - BlackRock World Mining Trust PLC on Tuesday said its net asset value rose in its most recent half due to its exposure to iron ore and Brazilian exploration and development firm Ero Copper.
The company's NAV per share as at June 30 was 440.97 pence, up 13% from 388.81p at the end of 2018.
The company's investment managers, Evy Hambro and Olivia Markham, said: "The strong positive return has come from our exposure to the diversified companies which have benefited from being exposed to iron ore and Ero Copper, an exploration and development company in Brazil, which has successfully delivered on its planned rejuvenation of historic assets."
The company did, however, underperform against its reference index. The NAV rose 17% over the six months ended June 30, while the EMIX Global Mining Index rose 21% on a net total return basis. This underperformance was due to not owning Fortescue Metals after the Brumadinho tailings
collapse back in January 2019.
The company has announced a second quarterly dividend of 4.00p per share, taking the total for the first half to 8.00p from 6.00p - a 33% increase.
Chair David Cheyne said: "Current low valuations in the sector appear to reflect investor caution about the outlook for global growth and therefore scepticism about current pricing. This sees the sector trading at a significant valuation discount to world markets, despite the improvement in balance sheets across the sector, strong levels of cash generation, and the scope to use surplus cash flow to enhance earnings per share through buy backs.
"Our portfolio managers believe that, notwithstanding the duration of the current economic cycle, there remains scope for economic growth to continue. With high and well covered dividend yields, the major diversified mining companies offer an attractive return from their dividend income alone, enhanced by the scope for capital appreciation when the strength and flexibility of their free cash flow becomes better appreciated by the market."
Shares in BlackRock World Mining closed flat in London at 353.00p on Tuesday.
BlackRock World Mining Trust plc (BRWM)