[miningmx.com] – X2 Resources, the privately-owned mining and metals company founded by former Xstrata CEO, Mick Davis, said it had raised a further $1bn in new investment and was looking for new potential investors.
Total funds available to X2 Resources now stands at $4.8bn of which $3.3bn was committed equity capital for immediate draw-down. A further $1.5bn was in conditional equity capital, the company said in an announcement today.
It added that discussions with new potential investors remained ongoing and that it was reviewing a number of opportunities in the mining and metals market.
The fact X2 Resources was considering seeking further funding is an interesting adjustment on statements made by Davis in an interview with Miningmx in June in which he said $3.5bn to $4bn in funds was “a very good number”.
“We just want to raise a bit more money to get around about $3.5bn to $4bn within the fund itself. We think that’s a very good number for us to actually have in terms of doing the sort of transactions that we feel we’d like to do,’ he had said.
The improvement in funds to $4.8bn may suggest that investors are increasingly acknowledging Davis’s view that the mining market will return to a supply deficit before long.
In the same interview, Davis said that the market would eventually enter a period of constrained supply owing to the retrenchment of growth capital by mining companies, declining grades, and the complexity of investments.
“For me, it’s just a very simple equation that translates into again a period of sustained rising prices,’ Davis said at the time.
The potential of an increase in funds beyond $4.8bn may also suggest that X2 Resources would prefer to rely less on bank debt to fund future investments, or that there was no shortage of investment targets.
Commenting on bank debt, Davis said in June that the company could raise more capital than would be prudent to borrow. “Depending on the nature of the assets we invest in, the company would be able to take quite a bit of leverage, but not the sort of leverage that makes us look stupid,’ Davis said in the interview.
“With almost $5bn in equity and access to significant additional debt funding, X2 Resources is uniquely positioned and we are currently reviewing a number of opportunities in the metals and mining sector,” the company said in its statement today.
