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TORONTO – The Lundin magic touch is paying off right now for Lundin Mining Corp. But it is not doing much for RB Energy Inc.
On Monday, Lundin Mining announced it has put together a US$2.2-billion financing package for a copper acquisition. It was a major achievement in a volatile commodity market, and shows how much faith investors have in chairman Lukas Lundin and his Lundin Group of Companies.
Meanwhile, RB Energy said Wednesday it has to shut down its Quebec Lithium mine because it failed to raise the funds needed to keep it going. Most of the staff were laid off, and three directors resigned.
While not officially listed as part of the Lundin Group, RB shares its Vancouver head office with the Lundins and is led by the same management team that ran Red Back Mining Inc., which was the crown jewel of the Lundin Group. Red Back was sold in 2010 for US$7.1-billion.
The Red Back team, led by chief executive Rick Clark, got control of the Quebec lithium mine early this year through a merger with Canada Lithium Corp. It was an exciting time: construction of the mine was nearly complete, and it was poised to be the only significant lithium producer in North America, just as demand for the silvery-white metal was likely to soar because of its use in batteries for electric vehicles.
But since then, almost everything has gone wrong.
A frigid winter in northern Quebec forced RB to stop its crushing and grinding operations as the ore in the storage silos froze. The company then ran into problems with its processing infrastructure, meaning commercial production was delayed and its treasury got depleted.
RB’s management decided they needed more money, and raised $22-million through a bought deal in the spring. The company made its first lithium carbonate shipment in the summer, but decided to try raising another $78-million to $88-million in order to reach commercial production and get positive cash flows.
For the rest of this article, click here: http://business.financialpost.com/2014/10/08/rb-energy-shutters-quebec-lithium-mine-as-financing-fails/