BlackRock World Mining Trust takes aim at missed opportunity for gold

The co-managers of the BlackRock World Mining Trust have taken aim at the failure of some big goldminers to convert soaring ­prices for the precious metal into higher margins.

BlackRock World Mining Trust co-manager Evy Hambro said goldminers should be printing cash with the price soaring to unprecedented levels.

The co-managers of the BlackRock World Mining Trust have taken aim at the failure of some big goldminers to convert soaring ­prices for the precious metal into higher margins.

Evy Hambro and Olivia Mark­ham singled out Agnico Eagle as the best-performed of the major gold producers and said some of its rivals hadn’t been able to deliver operationally in 2024.

Mr Hambro told a Fund­Calibre podcast that investors were right to gravitate towards gold and gold equity exchange traded funds last year. However, the ETFs had generally under­performed because of huge weightings towards big gold­miners that “haven’t been able to deliver what you had hoped they would be able to deliver”.

“A company like Agnico Eagle, which is a big position for us, has done incredibly well. They’ve been the kind of leader out of the larger gold producers,” he said.

“They’ve had this fantastic track record around being able to deliver. You compare that to some of the other large producers who have materially underperformed that company, and that’s because they haven’t delivered operationally. They haven’t converted those higher margins from the rising price.”

The BlackRock World Mining Trust’s 2024 results released last month showed it was hit by the two largest producers, Newmont Corporation and Barrick Gold, generating -7.9 per cent and -12.3 per cent returns respectively compared to a 23 per cent rise in the average gold price.

Mr Hambro said goldminers should be printing cash with the price soaring to unprecedented levels.

“We would hope this starts to come back to shareholders in terms of dividends,” he said.

Asked if he expected a pick-up in M&A if companies didn’t deliver, Mr Hambro said it was a constant in a sector that was much more fragmented than when he started in mining.

“A big gold company … 30 years ago might have been doing half a million ounces of gold a year. A big company today’s doing five million ounces of gold a year,” he said.

“That because they bought other businesses and so on, so there’s been massive consolidation. Is there room for more? I think it’s going to be much more targeted and focused … gold companies looking for specific assets they might want to build into a portfolio or specific exploration projects.”

The BlackRock bosses were speaking in the wake of a series of deals in the Australian gold sector since the start of December that saw Andrew Forrest-backed Greatland Gold acquire the Telfer mine and 70 per cent of the Havieron project it didn’t own from Newmont.

UBS tipped the M&A cycle ratchet up, especially on the Toronto exchange, this month as Northern Star forked out $6bn in scrip to swallow up De Grey and its undeveloped Hemi project in WA. And in March, Ramelius Resources and Spartan Resources committed to deal worth an estimated $2.4bn.

Originally published as BlackRock World Mining Trust takes aim at missed opportunity for gold