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Former Xstrata chief Mick Davis, shown in this file photo, started X2 Resources during the commodities downturn in 2013.

Justin Sutcliffe

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.

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"That was both its strength and also the challenge for it. You need to be very, very confident to deploy very large amounts of capital when you are really at the bottom of the cycle," Andrew Latham, one of X2's founding partners, told reporters Tuesday on the sidelines of a mining conference in Toronto. "You need to be very brave and very confident. And I think for all of us, be it the management team or for the investor group, that's really where the challenge lay."

Backed by big investors, including Canadian pension funds, the London-based X2 planned to buy distressed mines and projects to create a new mining company. (Mr. Davis along with Mr. Latham built Xstrata into a mining powerhouse before it was taken over by Glencore PLC.)

X2 was invited to look at virtually every asset that was up for sale. But month after month, quarter after quarter, year after year, X2 failed to acquire.

The private equity firm did not get BHP Billiton Ltd.'s unwanted mines. It was shut out of the process for Barrick Gold Corp.'s top copper mine. A plan to take smaller base metal miners private never got off the ground.

It soon became a running joke in the industry that X2 was looking at everything but never buying anything. The bids either came in too low or its investors vetoed the proposal, sources said at the time.

"There were opportunities but it was up to us to collectively agree," Mr. Latham said. "I am not going to sit here and say that anyone is right or wrong. That's not the case. It's about … getting comfortable with what you are trying to do."

By 2016, some commodity prices had rebounded and other mining-focused private equity firms had completed several acquisitions.

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"X2 quietly realized that for all participants, something like that served its purpose and run its course," said Mr. Latham. "It was a great group of people and great investor base … It is very unfortunate," he said.

Late last year, Mr. Latham joined Rio Tinto to head the global mining company's new private equity-like unit called Rio Tinto Ventures.

He said his time at X2 enabled him to work with a broader range of people from a broader range of backgrounds, which would help him in his new job.

Ventures is seeking industrial commodities that will complement Rio Tinto's existing core business of aluminum, iron ore, diamonds, copper, thermal and coking coal.

Mr. Latham said he could consider a "pure financial investment" and won't shy away from gold. Though he said he is seeking commodities that will "benefit from the way the world economy is developing," which could mean purchases of lithium, cobalt and nickel.

Mr. Latham, who was Xstrata's head of business development, said the size of the deals could be upwards of $50-million.

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He would be willing to spend big bucks on high quality mines that are in good jurisdictions.

"Those sorts of assets tend to cost more than $1-billion, so under that circumstance, would we look at it? Yes, we would," he said.

When Mr. Latham reflects back on his time at X2 he said he is sad it did not work out.

"Ideally what you're doing is you are investing and the point of investing is to advance businesses and to grow and generate opportunity. So to not have that come together, of course one is sad that it doesn't happen," he said. "We all have those things happen to us and then we progress on and go to the next thing."

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