Source - PRN
All information is at 31 August 2016 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -6.9% 27.4% 40.4% -25.4% -52.3%
Share price -3.3% 26.3% 37.8% -28.2% -48.2%
Euromoney Global Mining Index -6.7% 27.3% 41.9% -11.8% -42.5%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income*: 323.44p
Net asset value capital only: 318.72p
*Includes net revenue of 4.72p
Share price: 281.00p
Discount to NAV**: 13.1%
Total assets: £660.4m
Net yield***: 6.4%
Net gearing: 16.0%
Ordinary shares in issue: 176,455,242
Ordinary shares held in treasury: 16,556,600
Ongoing charges****: 1.2%
** Discount to NAV including income.
*** Based on an interim dividend of 4.00p in respect of the year ending 31 December 2016 and a final dividend of 14.00p in respect of the year ended 31 December 2015.
**** Calculated as a percentage of average net assets and using expenses, excluding finance costs for the year ended 31 December 2015.
Sector % Total  Country Analysis % Total 
Assets  Assets 
Diversified 35.8  Global 53.6 
Gold 22.8  Latin America 14.8 
Copper 19.0  Australasia 9.6 
Silver & Diamonds 15.1  Other Africa 8.2 
Industrial Minerals 3.9  Canada 8.0 
Nickel 3.2  Emerging Europe 3.4 
Zinc 0.4  South Africa 2.1 
Iron ore 0.1  Indonesia 0.3 
Other 0.0  Tanzania 0.3 
Net current liabilities (0.3) Net current liabilities (0.3)
-----  ----- 
100.0  100.0 
=====  ===== 
Ten Largest Investments

% Total
BHP Billiton 10.0
Rio Tinto 8.2
First Quantum Minerals 8.1
Lundin Mining 4.8
Fresnillo 4.7
Glencore 3.8
Newmont Mining 3.4
Newcrest Mining 3.4
Sociedad Minera Cerro Verde 3.4
Norilsk Nickel 3.3


Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
The mining sector came under pressure during the month mainly driven by a sell-off in precious metals equities as they gave back some of their extraordinary year-to-date gains. This outweighed the positive effect from Chinese economic data points exceeding expectations, with manufacturing PMI coming in at 50.4 (indicating expansion) and property prices recording month-on-month increases. The gold price declined -3.1% over the month, finishing at $1,319/oz, as better-than-expected US economic data and relatively hawkish comments from Fed Chair Janet Yellen acted as headwinds. Having held up relatively well during previous temporary dips in the gold price this year, gold equities delivered leverage to the downwards move, with the FTSE Gold Mines Index falling -17.3%. The other precious metals followed gold with silver, platinum and palladium prices down -7.9%, -8.1% and -4.7% respectively.
Base metal performance continued to be mixed, with copper and nickel prices declining -6.3% and -8.3% respectively and zinc gaining +3.4%. The underperformance of copper versus the wider mined commodity space year-to-date (the metal’s price is currently down -1.9%) has reflected inventory builds, supply growth with the market expecting a number of meaningful projects to come online later this year, as well as supply disruptions running below the long-term average. In contrast, the iron ore (62% fe) price has continued to hold up well, gaining +0.3% in August to finish the month at $59/tonne. Iron ore has performed particularly strongly this year (up +37.5%) as China’s steel production has exceeded expectations following stimulus at the beginning of the year and government reforms to curtail loss-making domestic production.
The Company’s quality bias in both the gold and base metals sector aided relative performance this month during general equity market weakness. The Company continues to have a quality bias through exposure to companies with tier 1 assets, as well as management teams with strong track records.
During the month, the Company increased its exposure to iron ore producer Vale on the back of strengthening iron ore prices and the potential for further asset sales to be announced. The Company also reduced its debt holdings after strong performance in these bonds year-to-date, driven by company actions and rising commodity prices strengthening balance sheets.
Amongst the Company’s unquoted investments, the Company received its first royalty payment from Avanco Resources just after the month end on 2 September. This payment was equivalent to 25% of the gold revenue and 2% of the copper revenue in the quarter ended 30 June 2016.
Strategy and Outlook
Price moves in the mining sector year to date, albeit off an unsustainably low base, have been reminiscent of the times of strong global demand growth and raw material constraints, neither of which have been a feature of present market conditions. Weaker growth in the developed economies, poor figures from some emerging markets and continuing oversupply in the mined commodities appeared to catch up with this recent rally, ultimately leading to a pull-back.
However, the miners have continued to make progress and whilst supply can be sticky for a number of reasons a cash negative operation cannot persist indefinitely. We have seen the first of the long-awaited supply cuts announced but mined commodity prices will need to remain at current levels or move lower before we see real momentum in cuts. In light of this, we expect to see companies further reduce capital spending and operating costs in the second half in order to bolster their balance sheets.
All data points are in US dollar terms unless stated otherwise
15 September 2016
Latest information is available by typing on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).  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.

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