Source - PRN
All information is at 31 May 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -2.4% -8.3% 52.1% -6.1% -25.6%
Share price 0.2% -5.3% 55.2% -10.7% -22.9%
Euromoney Global Mining Index -1.6% -9.1% 46.2% 5.5% -11.2%
(Total return)
Sources: BlackRock, Euromoney Global Mining Index, Datastream
At month end
Net asset value including income1: 378.23p
Net asset value capital only: 370.20p
1 Includes net revenue of 8.03p
Share price: 337.00p
Discount to NAV2: 10.9%
Total assets: £762.9m
Net yield3: 3.6%
Net gearing: 15.0%
Ordinary shares in issue: 176,455,242
Ordinary shares held in treasury: 16,556,600
Ongoing charges4: 1.10%
2 Discount to NAV including income.
3 Based on a quarterly interim dividend of 3.00p per share declared on 4 May 2017 in respect of the year ending 31 December 2017 and a final dividend of 9.00p per share in respect of the year ended 31 December 2016.
4 Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2016.
Sector % Total  Country Analysis % Total 
Assets  Assets 
Diversified 44.6  Global 65.6 
Copper 20.6  Latin America 13.0 
Gold 18.4  Australasia 10.2 
Silver & Diamonds 10.1  Other Africa 6.5 
Industrial Minerals 5.1  Canada 3.8 
Iron Ore 1.2  South Africa 1.1 
Zinc 0.6  Kazakhstan 0.3 
Net current liabilities (0.6) Emerging Europe 0.1 
-----  Net current liabilities (0.6)
100.0  ----- 
=====  100.0 
Ten Largest Investments

% Total
Rio Tinto 11.0
First Quantum Minerals 8.9
Glencore 7.6
BHP Billiton 7.2
Vale 6.3
Lundin Mining 4.6
Sociedad Minera Cerro Verde 3.4
Teck Resources 3.4
Newmont Mining 3.3
Avanco Resources Royalty 2.6


Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
It was a difficult month for the bulk commodities, with iron ore coming under pressure and declining by 14.8% in May.  This was in keeping with market consensus that the iron ore price would roll and give back some of its gains, and follows strong performance in 2016 where the commodity increased by 84.7%.  For the base metals, performance was mixed with nickel, zinc and copper declining by 5.1%, 1.2% and 0.9% respectively, whilst the price of aluminium increased by 1.2%.  The decline in the nickel price was driven by anticipation that Indonesia, which had previously banned the export of nickel ore and bauxite, would begin to export a modest amount.
In the precious metals space, the price of gold bullion was broadly flat in May, ending at $1,268/oz on the back of relatively benign macro data points. Early in the month, the markets focused on the French election, however, the event had little impact on gold, as a Macron win was widely expected in the run up. Elsewhere, political risk remained elevated, with North Korea announcing it had successfully conducted missile testing, and speculation mounting around the potential for President Trump to be impeached in relation to conversations with the former Director of the FBI, James Comey, regarding the investigation into Michael Flynn.  These events helped the gold price as investors looked to the precious metal for its safe-haven qualities.
Strategy and Outlook
The mining sector has had a positive 2016 reporting season with deleveraging emerging as the key theme as improved commodity prices have allowed companies to significantly improve their balance sheets. For example, Rio Tinto and Glencore announced reductions in net debt of -30% over the last 12 months and -48% over the last 18 months respectively. Positively, the capital discipline story remained intact, with limited capex increases announced and management rhetoric still focusing on shareholder returns. Our view is that for now the pain of the recent down-cycle is too fresh and do not see companies falling back into old habits of poor capital discipline in the near-term.
Many of the miners are now trading on attractive free cash flow yields, for example, Glencore, Rio Tinto and Vale (the Company’s three largest mining positions) are all trading on free cash flow yields of between 9% and 11% at consensus pricing. The market does not appear to believe these yields are sustainable, with many still cautious of mining shares, but every day that commodity prices remain at current levels, the miners are growing cash on their balance sheets. BHP Billiton, Glencore and Rio Tinto all announced sizeable increases in their dividends in the recent reporting season, less than two years after being forced to cut them, showing cash is being returned to shareholders.
Looking ahead, we expect the mining sector’s performance to remain volatile but see the outlook as positive. The macroeconomic backdrop points to a stable to improving demand picture, whilst the underinvestment of recent years is constraining the supply side of the equation. Capital expenditure in the mining sector has fallen by two-thirds since the peak in 2012 and this is feeding through to production, with most mined commodities recording declines in 2016 versus 2015. China remains the key risk for investors in the mining sector and, should sentiment deteriorate significantly again, the sector would likely come under pressure.
All data points are in US dollar terms unless stated otherwise
20 June 2017
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.