(Bloomberg News) Evy Hambro, portfolio manager of BlackRock Inc.'s $16 billion World Mining Fund, said he's been adding "significantly" to his holdings in the past few weeks as mining-stock valuations are "unrealistically low."

"If you can buy producing assets for less than it costs you to build stuff in the future, then that's a great deal," Hambro said in an interview in London. "We went into the market and we added to our holdings significantly," he said, declining to identify specific stocks.

A 23 percent slump this half in the FTSE 350 Mining Index, which includes BHP Billiton Ltd. and Rio Tinto Group, has outpaced the 8.2 percent drop in the U.K.'s benchmark FTSE 100 Index. Rio, the world's second-largest miner, said last week that concerns arising from Europe's debt crisis don't reflect the "real economy" and demand for iron ore and coal is strong.

An indicator of value used by BlackRock is the cost of replacing or building mining assets versus the cost of acquiring them, said Hambro, 39. That measure has dropped recently with mining stocks trading at as low as 70 percent of replacement costs, he said, adding that the ratio declined to about 50 percent in the financial crisis of late 2008.

"We are buying these assets well below their replacement cost and over three, five, 10 years we think they are going to do very well," he said. "We've got to an unrealistically low point in valuations relative to what's going on, but that doesn't mean that the risk of what's going on is low."

Rio Tinto, BHP

BlackRock's World Mining Fund, which counts Rio, BHP, Vale SA, Freeport-McMoRan Copper & Gold Inc. and Teck Resources Ltd. as its top five holdings, is down 24 percent this year through Oct. 14, according to data compiled by Bloomberg. That compares with a 22 percent drop in the HSBC Global Mining Index over the period, the data show. The fund returned 29 percent last year.

An index of six metals on the London Metal Exchange has fallen 18 percent this half on signs economic growth is slowing in the U.S. and as speculation increases that Europe's debt crisis is spreading. European Central Bank President Jean-Claude Trichet said Oct. 11 the crisis threatens the region's financial system, while officials race to draft a plan to end the turmoil.

European Union leaders won't provide the quick solution to the euro-area crisis that global policy makers are pushing for at an Oct. 23 summit, German Chancellor Angela Merkel's chief spokesman Steffen Seibert told reporters in Berlin today.

The FTSE 350 mining index, down 28 percent this year, fell 0.4 percent by 2:28 p.m. London time. It has rebounded about 21 percent from its 2011 low on Oct. 4.