BlackRock World Mining benefits over April as gold equities ‘catch up’

BlackRock World Mining’s (BRWM) NAV increased by 18.1% over the month of April (the shares were up 17%) – driven by gold.

BRWM’s portfolio, as at 30 April 2020, was as follows:

Exposure % Total
Diversified 32.0
Gold 30.9
Copper 16.8
Silver & Diamonds 4.9
Nickel 3.6
Industrial Minerals 3.4
Platinum Group Metals 2.1
Iron Ore 1.6
Aluminium 0.1
Zinc 0.1
Current Assets 4.5


Evy Hambro and Olivia Markham, representing BRWM’s manager, noted:

“Global equity markets started to recover in April, as a rebound in oil prices, encouraging early signs of covid-19 treatment trials and expectations of further government stimulus, helped to recover some of the losses experienced in February and March. For reference, the MSCI All Country World index rose by 10.6%.

China’s National Development and Reform Commission announced a step-up in infrastructure spending in the country to boost economic growth post covid-19, which improved sentiment towards mining. Most mined commodities’ prices rose over the month, with copper, nickel and gold prices up by 4.5%, 6.0% and 5.8% respectively. The iron ore (62% fe) price was flat over the month, albeit at a healthy level of $85/tonne, having held up well this year.

April was a spectacular month for gold equities in which they exhibited a high beta to the rise in the gold price. This reflected a ‘catch-up’ market move, in our view, after they had lagged the gold price through Q1 2020. Sentiment around equities in general improved in April on the back of coordinated central bank action. The gold price finished the month at $1,705/oz., the highest level since December 2012.”

Strategy and Outlook

“We see an attractive valuation opportunity in mining today. Mining companies have sold off in recent weeks in anticipation of a lower level of global economic growth in 2020. Global stimulus measures on infrastructure and carbon transition are likely to be commodity intensive.

The balance sheets of mining companies continue to be in strong shape and companies remain focused on capital discipline. Mining companies are therefore well positioned to continue to generate robust free cash flow and return capital to shareholders through dividends and buybacks. In a low-income environment this could be a catalyst for a rerating.

We expect most mined commodity prices to finish 2020 higher than the lows they have reached over the last few weeks. On the commodity demand side, we do not anticipate a hard-landing type event in China and we have been encouraged by stimulus measures beginning to feed through into improvements in some economic data points. On the commodity supply side, supply is tight in most mined commodity markets and, given the cuts in mining sector spending since 2012 (down ~66%), we expect it to remain so.”

BRWM: BlackRock World Mining benefits over April as gold equities ‘catch up’

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