Published: 21:14 GMT, 14 June 2014 | Updated: 14:14 GMT, 16 June 2014

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The UK has just begun to dig its first new metal mine in decades. Keeping a close eye on progress at the tungsten deposit near Plymouth is Will Smith and his co-managers at City Natural Resources High Yield Trust.

The investment trust has not bought into firms extracting this hard metal, despite its value and wide-ranging uses. This is primarily because the managers lack confidence in where the metal will be sold. But Smith says: ‘We will monitor developments.’

China is the main reason for their reluctance to dabble in tungsten, as the country is the world’s dominant user and producer, making it difficult to make a strong case for it either way, says Smith.

With economic growth stalling in China, the trust is generally responding by cutting exposure to resources where the country dominates. Smith says: ‘We are underweight in coal and iron ore-related stocks because of China.’

Oil and gas stocks are more in favour, accounting for 37 per cent of the fund. Smith is particularly excited by ‘horizontal drilling’ opportunities in Canada and the US.

Caution: China is causing Will Smith to adjust his portfolio

This technology enables the extraction of previously hard to reach gas and oil. For this reason the team has invested in PHX Energy Services, a Canadian specialist in the field.

Agricultural firms provide a theme for the trust, particularly those producing palm oil. Smith also likes Plant Impact, a small UK company whose products are said to have helped improve the yield of the Brazilian soya bean crop by at least six per cent. He says: ‘We are seeking out small companies including seed makers in Australia and Indonesia.’

A key attraction of the trust is its yield – now 4.3 per cent – with Smith’s team constantly searching for good dividend-paying shares.

Darius McDermott of broker Chelsea Financial Services is wary of the fund’s weak performance over the past few years, in line with many resource-based stocks in a cyclical market.

But he says the shares are trading at a 16 per cent discount to asset value – reflecting their current unpopularity – which provides an opportunity for those wanting exposure to the resources sector.

McDermott prefers BlackRock Commodities Income, another investment trust. He says: ‘This has better long-term investment performance and a higher yield at just over five per cent.’