Newcrest Mining boss Greg Robinson has admitted the company got a lot wrong following its much-maligned $9.5 billion 2010 acquisition of Lihir Gold.
The Papua New Guinea-based gold project and its operational problems were at the centre of Newcrest’s $5.8 billion full year loss, which culminated in Mr Robinson and chairman Don Mercer naming exit dates.
However Australia’s largest gold miner avoided the wrath of shareholders at its AGM on Thursday who didn’t follow proxy advisers’ guidance to vote down the remuneration report and not re-elect three directors linked to this year’s disclosure scandal.
Mr Robinson said Newcrest should have worked harder on the maintenance of Lihir’s operations to ensure it ran properly.
The operational breakdowns there have contributed significantly to Newcrest consistently missing production targets, including current guidance of 2-2.3 million ounces which is 15-25 per cent below market expectations.
The share price has also plunged since Lihir was brought in, with more than $24 billion in shareholder value wiped out.
They fell a further 18 cents, or 1.62 per cent, to $10.91 on Thursday.
“In hindsight we didn’t go hard enough and fast enough at the maintenance of Lihir,” Mr Robinson said.
Mr Robinson and chairman Don Mercer acknowledged that the company’s reputation had been battered but generally defended their strategy.
Factors such as the largest gold price fall in 30 years during the June quarter and soaring production costs were either completely or partially out of the company’s control.
The fact that the gold price fell from $US1,800 an ounce to $US1,200 and it experienced production problems as it delivered $3.5 billion in projects at its major Lihir and Cadia projects was a perfect storm, Mr Robinson said.
“I am obviously disappointed that it happened as we achieved major project milestones that are really going to set up the company for next 10 years,” he said, predicting the gold price would rebound soon.
“I’m disappointed with those circumstances (as he announced his departure).
However he said the time to leave the company next year was right, as it would mark eight years at Newcrest (three as CEO), to be replaced by new chief operating officer Sandeep Biswas.
Directors Rick Lee, Tim Poole and John Spark were re-elected following protest votes of between 22 per cent and 30 per cent.
The three board members all sit on the group’s audit and risk committee, which proxy advisers and some shareholders said should have made them accountable for the disclosure scandal in which regulators are investigating alleged selective investor briefings.
The remuneration report also passed with Mr Robinson receiving no bonuses in his $2.7 million package and overall short term executive bonuses paid out down to $544 million from $3.7 million the previous year.