Thursday, February 10, 2011

Newcrest Mining CEO Ian Smith resigns as profits soar to record

Business with the Wall Street Journal reports -

.Newcrest Mining CEO Ian Smith resigns as profits soar to record UPDATED David Fickling From: Dow Jones Newswires February 11, 2011 10:55AM Increase Text SizeDecrease Text SizePrintEmail Share

Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?NEWCREST Mining chief executive Ian Smith unexpectedly resigned from the world's fifth-largest gold miner today, as the company announced record first-half net profits up 148 per cent to $437.8 million.

Mr Smith, who took over as head of the company in July 2006, said he was leaving to "pursue other areas of personal interest" and would be handing over to Greg Robinson, the company's executive director finance.

His resignation surprised many in the market, who had expected to see Mr Smith enjoy the fruits of his labours after turning round the company and completing the acquisition of its smaller rival Lihir Gold in September.

The Lihir deal put Newcrest in the first division of global gold miners behind Barrick Gold, Newmont Mining, AngloGold Ashanti, and Gold Fields.

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The company is also in a sweet spot for global gold miners, with gold and Newcrest's main by-products copper and silver all around record prices.

"Obviously (Mr Smith's departure) is a net negative but if you look at what he's done, from here on it's about delivery of what he's set up," said Michael Slifirski, an analyst at Credit Suisse.

Another analyst, who asked not to be named, said that Mr Smith could be eyeing a role at one of Australia's diversified miners, Rio Tinto or BHP Billiton.

"People have speculated in the past about him stepping up to higher roles and it would make sense," he said.

Mr Smith is a former executive at Rio Tinto and was a senior resources manager at WMC Resources., the Australian company which was taken over by BHP Billiton in 2005 in the company's last major corporate acquisition.

"He's probably the best CEO in Australia so for people looking for a best CEO it's an obvious look," said Mr Slifirski.

Mr Smith's ability to execute the Lihir takeover, made at the low end of an independent expert's valuation for the company, may be a particular asset at a time when the mining sector is buzzing with mergers and acquisitions activity.

Rio Tinto has launched a $US3.9 billion ($3.89bn) takeover offer for Mozambique-focused coking coal miner Riversdale Mining closing March 4, while BHP Billiton has promised to continue its policy of pursuing major takeover deals despite the failure of chief executive Marius Kloppers to complete a major transaction since taking over in 2007.

Chairman Don Mercer said that it was now "the most appropriate time in the company's on-going development for the transition to occur" from Mr Smith to a new chief executive.

"Newcrest has been through substantial change over the past five years and the threats and opportunities facing the company that were apparent at the start of my tenure have largely been addressed and outcomes delivered," Mr Smith said in a statement.

A spokeswoman for Newcrest said there was no particular reason for Smith's departure now. "It's just he's been there for five years, and all these things have been achieved and addressed," she said.

Mr Robinson worked in BHP’s petroleum and energy divisions in finance roles before joining Newcrest in 2006, prior to which he was a director of investment banking at Merrill Lynch & Co.

The company said the record results were a result of gold production rising 70 per cent over the previous half-year as a result of the acquisition of Lihir's mines and increased production from its mines at Cadia Valley in NSW, Gosowong on Indonesia's eastern Maluku island, and Hidden Valley in Papua New Guinea.

Newcrest said its revenue rose 66 per cent to $1.97bn from $1.19bn while a first-half dividend of 10 cents per share, unfranked, was declared, compared to 5c at the same time last year.

The company said that underlying profit, which excludes losses on restructured hedges and costs associated with acquisitions, rose 96 per cent to $523.1m from $266.6m.

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