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X2 Resources

Big investor backing a blessing and curse for failed X2 Resources – by Rachelle Younglai (Globe and Mail – March 7, 2018)

https://www.theglobeandmail.com/

In the end, why X2 Resources failed was a blessing and a curse. When former Xstrata PLC chief executive Mick Davis launched his billion-dollar private equity firm during the commodities downturn in 2013, there was excitement that X2 would make big acquisitions and give cash-strapped miners a lifeline.

Mr. Davis and his elite team of former mining executives amassed up to US$5.6-billion – an unprecedented amount that reflected investor confidence in X2’s future.

But with financial heft came the expectation that the deals would be huge. And no one knew whether metal prices had hit rock bottom. “That was both its strength and also the challenge for it.

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Mick Davis’s X2 Said to Give Up London Office in Deal Drought – by Dinesh Nair, Firat Kayakiran and Jack Sidders (Bloomberg News – February 24, 2017)

https://www.bloomberg.com/

X2 Resources, the $5.6 billion private equity firm founded by former Xstrata Plc Chief Executive Officer Mick Davis, is giving up the lease on its London office and putting a hold on investments amid higher commodity prices, according to people familiar with the matter.

The firm, which Davis founded in 2013 with former executives of Xstrata, has no plans to renew the lease of its office on King Street, near Buckingham Palace in London, when it expires next month, the people said, asking not to be identified as the information is private. A representative for X2 declined to comment.

The fund hasn’t announced a single deal since raising capital from backers, including Noble Group Ltd., TPG Capital and other sovereign-wealth and pension fund investors, as volatile commodities prices made bidding for mining assets tricky.

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Fund set up by former Xstrata boss Mick Davis comes up short – by Martin Strydom (The Australian – December 28, 2016)

http://www.theaustralian.com.au/

A fund set up by mining veteran Mick Davis to snap up bargains during the commodities downturn has spent more than £11m ($18.8m) on pay, rent and other costs over the past two years with nothing to show for it.

Three years after unveiling plans to build a “mid-tier diversified mining and metals group” and raising about $US5bn ($7bn) from private equity groups and sovereign wealth funds, X2 Resources has yet to strike a deal.

The accounts for the past two years show it has received £15.1m in advisory fees and spent £11.1m on administrative expenses. This includes £2.3m in office rent in central London.

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X2 Resources frees investors from financial commitments – by Arash Massoudi and Neil Hume (Financial Times – October 25, 2016)

https://www.ft.com/

Mick Davis’s investment fund restructures after it fails to agree any deals in 3 years

The investment vehicle launched by mining executive Mick Davis has released investors from their financial commitments after the fund failed to agree any deals in three years.

X2 Resources has restructured the fund and changed its governance so that key investors no longer have a veto over potential acquisitions, according to sources close to the fund. It will consider raising capital on a deal-by-deal basis as Mr Davis and his team continue their search for bargains in metals and mining.

Mr Davis is one of the highest profile figures in the mining industry. He made a fortune building Xstrata into a FTSE 100 company before selling it to Glencore in a $30bn deal.

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Mick Davis rethinks mining fund after failing to complete deals – by Neil Hume (Financial Times – July 18, 2016)

https://next.ft.com/

Former Xstrata boss is considering removing veto over potential investments

Launched three years ago with $5.6bn of commitments, Mr Davis’s X2 Resources has yet to complete its first acquisition. Relatively high valuations for mining assets and an investor veto on deals have frustrated Mr Davis and his team in their search for bargains in metals and mining.

They came close to buying a group of coal mines from Rio Tinto a year ago, only for the deal to fall apart after it was blocked by key investors on environmental grounds.

Mr Davis also approached BHP Billiton with an offer to buy a collection of its non-core mines but the Anglo-Australian miner decided to stick with to a plan to spin off the non-core assets into a newly listed company.

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Mick Davis’ X2 Said to Consider Bid for Anglo Mines in Brazil Cristiane Lucchesi, Juan Pablo Spinetto and Thomas Biesheuvel (Bloomberg News – February 10, 2016)

http://www.bloomberg.com/

X2 Resources, the private-equity firm founded by former Xstrata Ltd. chief Mick Davis, is among companies considering a bid for Anglo American Plc’s Brazilian niobium and phosphate mines, said two people with knowledge of the matter.

Anglo hired Goldman Sachs Group Inc. and Morgan Stanley to sell the assets as a package valued at $1 billion, and is expecting to receive bids next week, the people said, asking not to be identified because discussions are private.

Anglo American, X2, Goldman Sachs and Morgan Stanley declined to comment.

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An Interview with Sir Mick Davis – by by Adam Treger (Tregernomics.com – November 23, 2015)

http://www.tregernomics.com/

Mick Davis was the CEO of mining company Xstrata, which merged with Glencore in 2013. He is now CEO of a new company, X2 Resources. For services to Holocaust Commemoration and Education, he was knighted as part of 2015 Queen’s Birthday Honours.

Q: Which emerging markets are you most optimistic about?

A: Well, I think emerging markets are generally not in great shape, for a whole range of reasons. This is partly because they are experiencing a decline of their large export markets, as world growth has not been stellar.

Clearly the most dominant emerging market, China, is going through a very important structural adjustment that is impacting its growth rates and is compounded by the anti-corruption drive, which I think is stultifying economic activity in that country.

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X2 Said to Be Last Remaining Bidder for Rio Australia Mines – by Brett Foley, Dinesh Nair and Thomas Biesheuvel (Bloomberg News – October 12, 2015)

http://www.bloomberg.com/

X2 Resources, the private-equity firm founded by former Xstrata Ltd. chief Mick Davis, has emerged as the last remaining bidder for control of two Rio Tinto Group coal mines in Australia, people with knowledge of the matter said.

X2 is progressing in negotiations with Rio as the other interested parties, including Glencore Plc and New Hope Corp., are no longer in talks to buy the assets in New South Wales state’s Hunter Valley region, according to the people. The mine stakes may fetch more than A$3 billion ($2.2 billion), one of the people said, asking not to be identified because the talks are private.

Rio Chief Executive Officer Sam Walsh has sold $4.5 billion of less-profitable assets since January 2013, reducing its coal portfolio amid falling prices in order to focus on larger iron ore and copper operations. Any deal would be the first purchase for Davis’s X2 fund since he raised several billion dollars from investors to pursue mining acquisitions.

New Hope, which agreed last month to buy Rio’s 40 percent stake in the Bengalla coal venture in Australia for $606 million, isn’t pursuing the other mines Rio is selling in the country, according to the people.

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Glencore Needs a Little Privacy – by Liam Denning (Bloomberg Business – September 28, 2015)

http://www.bloomberg.com/

Could Mick Davis save Glencore?

That might seem like an odd (or churlish) question to ask: After all, it was Glencore’s decision to buy Xstrata, the mining behemoth that Davis built, which saddled the commodity trading firm with a lot of the debt now weighing on its shares.

The latter slumped 27 percent on Monday to about 70 pence each after Investec Securities released a report speculating that depressed commodity prices could wipe out Glencore’s equity value. That report came just days after one from Goldman Sachs throwing doubt on Glencore’s investment-grade credit rating — a big deal for a trading firm. The shares sank below 100 pence for the first time since 2011’s initial public offering, when they priced at 530 pence apiece.

That 87 percent drop since the IPO makes Glencore the worst-performing major mining stock aside from Vale — which at least has the excuse of being listed in Brazil. Apart from Glencore’s balance sheet having made its stock a pinata for analysts, the crisis raises a more fundamental question: Should Glencore exist in its current form?

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Even the stars of mining deals are sidelined in sinking market – by Eric Reguly (Globe and Mail – September 19, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME — You know that something is seriously awry in the global mining industry when the two smartest men in the room – Ivan Glasenberg and Mick Davis – are crouching under rocks. Mr. Glasenberg, CEO and co-founder of Glencore , the world’s top commodities trader, is busy whittling down a mountain of debt in the wake of the company’s submarine performance on the London Stock Exchange. Mr. Davis, the former CEO of Xstrata , launched X2 Resources a couple of years ago but has yet to do a deal.

The mining market, in other words, is moribund. No one is selling, no one is buying and values are still in retreat. If either Mr. Glasenberg or Mr. Davis were convinced the bottom had been reached, you would think they would find ways to swing back into deal-making mode, for that was what they did best.

Today’s commodities markets are not about growth; they are about survival, and the body language of the industry’s biggest players suggests that won’t change any time soon.

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Mick Davis’ timing haunts Glencore’s Glasenberg – by Robert Gottliebsen (The Australian – September 9, 2015)

http://www.theaustralian.com.au/

Former Xstrata founder Mick Davis may have a wry smile at the sight of Glencore being forced to raise $US2.5 billion in new equity to reduce its debt.

Davis has a remarkable record for being part of groups that buy assets cheaply and sell them at high points in the market.

Glencore is in trouble partly because in 2013 it paid some $US40bn for the two thirds of Xstrata it didn’t own. Mick Davis had sold at the top of the market. It is true Xstrata shareholders received Glencore shares but they had time to sell them before the market declined sharply.

That sale was Davis’s second coup. Back in 1997 he became chief financial officer and an executive director of Billiton, which sold out to BHP four years later in 2001. BHP never made a success of most of those Billiton assets and a large number were floated off in South32 earlier this year.

After BHP took control of Billiton, Davis made his exit and established Xstrata in the belief that around Australia there were a large number of mining assets that were underpriced because there was a looming boom coming on the back of a big rise in demand for minerals from China.

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Coal bid sets up clash of mining heavyweights – by Neil Hume (Financial Times – July 1, 2015)

http://www.ft.com/intl/companies/mining

Ivan Glasenberg and Sir Mick Davies set to go head-to-head over the Hunter Valley

It is a tantalising prospect for deal junkies: Sir Mick Davis going head-to-head with his arch rival Ivan Glasenberg in a takeover fight.

And one that has become a possibility with news that X2 Resources, the private equity vehicle set up by Sir Mick, is in discussions with Rio Tinto about a possible bid for its Hunter Valley coal business in Australia.

There is no love lost between Sir Mick and Mr Glasenberg, two of the biggest names in the mining world. Their relationship soured three years ago when Glencore reworked its friendly merger with Xstrata into a full-blown takeover that ousted Sir Mick as chief executive.

Since then Sir Mick has come back leaner and, arguably, hungrier. He’s raised $5.6bn from investors to buy mining assets for X2, with additional debt backing from at least one leading bank. His notoriously large frame, which inspired part of his nickname, has slimmed down. But standing between Sir Mick and his first deal is the hyper-competitive man who removed him from his last job.

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Mick Davis is ready to make a contrarian bet on thermal coal – by James Wilson and Neil Hume (Financial Times – June 30, 2015)

http://www.ft.com/intl/companies/mining

Mick Davis, former chief executive of Xstrata, knows coal. By the time Xstrata was sold to Glencore in 2013, Mr Davis had turned the miner into the world’s largest exporter of thermal coal, the type used in power stations. Coal lay behind Xstrata’s decade-long record as a corporate success story, riding the commodities boom.

So it is no surprise that Mr Davis could make coal his first deal for X2, the private company he has established with the aim of creating a mid-tier mining group. Having secured equity commitments of up to $5.6bn from investors, X2 is talking to Rio Tinto, the miner with listings in London and Sydney, about acquiring its Australian coal assets in New South Wales.

No deal has been finalised and X2 and Rio both declined to comment, but Mr Davis appears ready to take a contrarian bet on coal.

The commodity has been suffering from a supply glut for years. The price of thermal coal has halved since 2011, and opposition to fossil fuels’ role in contributing to climate-changing carbon dioxide emissions is growing.

But Mr Davis is probably focused on the opportunity to buy coal assets at a low point in the commodities cycle.

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Ex-Xstrata CEO’s X2 Said to Be in Talks With Rio on Coal – by Javier Blas and Firat Kayakiran (Bloomberg News – June 29, 2015)

http://www.bloomberg.com/

X2 Resources, the private-equity firm founded by former Xstrata Chief Executive Officer Mick Davis, is in talks to buy Rio Tinto Group’s controlling stake in three Australian coal mines, according to two people familiar with the matter.

The negotiations are at an early stage and any deal, which may fetch $2 billion to $4 billion, could take two months to finalize, said one of the people, who asked not to be identified because the talks are private. The Rio mines in New South Wales have positive cash flow, despite the current coal-price slump, the person said.

A deal would mark the latest move by Rio CEO Sam Walsh to exit less-profitable assets as the London-based company focuses on iron ore and copper. It would also be the first purchase for Davis since he raised several billions of dollars from investors to pursue mining acquisitions.

“They’re good mines, they’re large scale, long-life and have relatively low costs. If you have an interest in thermal coal you could do a lot worse than buying these assets,” Chris Drew, a Sydney-based analyst with RBC Capital Markets, said by phone. “Thermal coal is looking pretty difficult right now, but if you take a more positive view on the long term, then there’s potentially an opportunity there.”

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Mick Davis, Glencore among bidders for Anglo’s Chile copper mines – by Silvia Antonioli and Freya Berry (Reuters U.S. – June 17, 2015)

http://www.reuters.com/

LONDON, June 17 (Reuters) – Mining and trading company Glencore and X2, a vehicle set up by former Xstrata CEO Mick Davis, are among the companies that placed bids last week for two Anglo American copper mines in Chile, sources said this week.

British investment firm Audley Capital was also among the first round of bidders, the sources added.

The Mantos Blancos and Mantoverde copper mines in Chile together could fetch up to $1 billion, according to banking sources, but two mining sources familiar with the mines gave more conservative valuations of around $500 million or less.

“The deadline to submit the bids was a week ago and X2 is still in the running,” a first banking source said. “Mick (Davis) seems keen on those assets.” An industry source said although Glencore was still in the process it was unlikely to make a high enough bid to win the assets.

“They are both mines towards the end of their life although with some investment Mantoverde’s life can be extended,” a second industry source said. “I would think a smaller firm like Audley is more likely to get them. Certainly the John MacKenzie connection is strong.”

Audley Capital’s mining CEO John MacKenzie was Anglo American’s head of copper until 2013.

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