Blackrock Smaller Companies Trust PLC · LSE:BRSC
Blackrock Smaller Companies Trust — Merrill Lynch World Mining Trust — Shareholder Meeting (March 2002)
26 slides from Blackrock Smaller Companies Trust's shareholder meeting presentation, Mar 27, 2002
Slide 1: Merrill Lynch World Mining Trust AGM
Merrill Lynch World Mining Trust AGM Graham Birch 27 March 2002
Slide 2: AGM 2002 Agenda
AGM 2002 Agenda 1. Review of the mining sector 2. Review of the gold sector 3. Portfolio construction 4. Summary PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 2
Slide 3: 1. Review of the Mining Sector
1. Review of the Mining Sector
Slide 4: Review of 2001
Review of 2001 • 2001: “counter-intuitive” year for mining equities • Industry consolidation continued • Metal consumption weak • PGM prices fell sharply, but excellent dividends from Impala and Anglo Platinum • Sector has extended run of outperformance relative to general equity markets as well as
Slide 5: Share Price and Net Asset Value
Share Price and Net Asset Value 160 140 Pence 120 100 80 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 NAV Share Price Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 5
Slide 6: Discount to Assets
Discount to Assets -10 -12 -14 % -16 -18 -20 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 Discount to NAV Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 6
Slide 7: Relative Performance
Relative Performance 108 106 104 Indexed at 100 102 100 98 96 94 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 NAV vs. HSBC Global Mining Index (sterling adjusted) Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 7
Slide 8: Mining Equities relative to World Equities
Mining Equities relative to World Equities 140 120 Indexed at 100 100 80 60 40 20 1989 1991 1993 1995 1997 1999 2001 HSBC Global Mining Index vs. MSCI World Index Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 8
Slide 9: Improving Capital Discipline
Improving Capital Discipline 30 30 25 25 20 20 US$lb % 15 15 10 10 5 5 90 91 92 93 94 95 96 97 98 99 00 01 02* 03* ROIC (LH Scale) Capex (R H Scale) Source: UBS Warburg. *Estimate PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 9
Slide 10: 2001 - another busy year for merchant bankers
2001 - another busy year for merchant bankers • Numerous deals in 2001 and gold has started to feature • More deals likely, resulting in increased supply concentration 1998 (%) 2000 (%) 2001 (%) Aluminium 32 39 40 Copper 33 39 40 Iron Ore 46 62 73 Thermal Coal 27 35 40 Gold 16 18 24 • Fewer but bigg
Slide 11: Mining Equities and Base Metal Prices
Mining Equities and Base Metal Prices 170 280 150 240 130 200 US$ US$ 110 160 90 70 120 50 80 1986 1988 1990 1992 1994 1996 1998 2000 2002 HSBC Global Mining Index (LH Scale) MG Base Metal Price Index (RH Scale) Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 11
Slide 12: Economic Outlook
Economic Outlook 10 220 8 200 6 180 4 US$ 2 160 % 0 140 -2 120 -4 -6 100 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 OECD Leading Indicator (LH Scale) MG Base Metal Price Index (RH Scale) Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 12
Slide 13: LME Stocks and Base Metal Prices
LME Stocks and Base Metal Prices 5.0 200 4.5 190 4.0 180 3.5 170 Tonnes ‘000,000’s) 3.0 160 US$ 2.5 150 2.0 140 1.5 130 1.0 120 0.5 110 0.0 100 91 92 93 94 95 96 97 98 99 00 01 02 LME Stocks (L H Scale) MG Base Metal Price Index (R H Scale) Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 0
Slide 14: 2. Review of the Gold Sector
2. Review of the Gold Sector
Slide 15: Precious Metals - Gold
Precious Metals - Gold • Positive changes to supply-demand fundamentals • Uncertainty in financial markets focuses attention on gold - Enron etc • Short positions held by mining companies still to be covered • Inflation fears subdued • Corporate activity has picked up dramatically and set to continu
Slide 16: Gold Equities and Gold Prices
Gold Equities and Gold Prices 2.5 450 2.0 400 US$ ‘000’s US$/oz 1.5 350 1.0 300 0.5 250 1995 1997 1999 2001 FT Gold Mines Index (LH Scale) Gold Price Index (RH Scale) Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 16
Slide 17: Gold Equities
Gold Equities 200 180 160 Indexed at 100 140 120 100 80 2000 2001 2002 Gold in Rand Gold in A$ Gold in C$ Gold in US$ Source: Datastream PRS\MLWMT_Hard copy for GB Mtng 25 Mar 03.02 17
Slide 18: Gold Prices relative to US Equities
Gold Prices relative to US Equities Number of ounces of gold required to purchase 1 unit of the Dow Jones (Log Scale) 100 Gold INEXPENSIVE On average, 8 relative to US ounces of gold are required to buy 1 unit of 10 Gold EXPENSIVE 1 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Sources: Int
Slide 19: Platinum Group Metals (PGMs)
Platinum Group Metals (PGMs) • Platinum and palladium prices fell in 2001 but remain attractive • Longer term consumption growth driven by: – Fuel Cell technology – Auto catalysts • Producers have fantastic investment arithmetic - underpinned the Trust’s special dividend PRS\MLWMT_Hard copy for GB M
Slide 20: 3. Portfolio Construction
3. Portfolio Construction
Slide 21: Portfolio Construction - Asset Allocation
Portfolio Construction - Asset Allocation Geography Commodity Russia Nickel 1% 1% China 2% Metals 4% Other 5% Copper 5% USA 5% Coal 5% Gold Europe 6% South 27% Iron Ore 5% Africa Australia 32% Diamonds 8% 5% Platinum Global 14% 13% Latin America Diversified 15% 19% Canada Aluminium 14% 14% Source: I
Slide 22: Portfolio Construction - Top Holdings
Portfolio Construction - Top 10 Holdings Company Commodity % NAV vs End December Gold Fields Gold 9.5 £ Impala Platinum 8.5 Buenaventura Gold 7.1 BHP Billiton Diversified 6.8 ¤ Harmony Gold 5.7 £ Pechiney Aluminium 5.5 ¤ Aber Diamonds Diamonds 5.4 New Anglo Platinum Platinum 4.8 CVRD Iron Ore 4.5 Al
Slide 23: 4. Summary
4. Summary
Slide 24: Outlook - Mining
Outlook - Mining • Mining sector offers “safe haven” relative to prevailing market • Signs of recovery in 2H02 starting to show through • Metal prices yet to rally significantly but cycle lows have passed • Consolidation to continue • Vastly improved returns on capital and returns to shareholders •
Slide 25: Notes to be read with the attached report
The following notes should be read in conjunction with the attached report: 1. The value of investments and the income from them may fluctuate and are not guaranteed. Investors may not get back the amount invested. Past performance is not necessarily a guide to future performance. Changes in rates o
Slide 26: Merrill Lynch Investment Managers
OS merrill Lynch = [nvestment Managers
Merrill Lynch World Mining Trust — Shareholder Meeting (March 2002) on 6ix