Zinifex hunts for new chief as Gailey prepares to exit

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http://www.theaustralian.news.com.au/story/0,20867,21609732-643,00.html
Zinifex hunts for new chief as Gailey prepares to exit

    * Andrew Trounson
    * April 24, 2007

LEAD and zinc giant Zinifex is on an urgent search to replace long-time chief executive Greig Gailey, who yesterday announced he planned to retire before the end of the year.
Mr Gailey, 61, is expected to stand down once Zinifex completes a multi-billion-dollar deal to sell its metal smelters and refiners into a joint venture with Belgium-based Umicore in September 2006.

The new London-based smelting business, to be named Nyrstar, is expected to be spun off and listed in Europe, with Zinifex tipped to reap around $2 billion in proceeds.

The incoming cash, coupled with Zinifex's focus on mining assets, is likely to make it a prime takeover target in a market where new zinc production is thin on the ground. And if Zinifex is to defend any unwanted approach it will need a new CEO in the chair as soon as possible to set out an alternative vision.

Mr Gailey's departure could stoke long-running speculation of a possible merger with fellow Melbourne-based miner Oxiana, which is being aggressively expanded by CEO Owen Hegarty.

After the Nyrstar float, Zinifex is planning to aggressively grow its mining business, which the board believes is a 3-5 year project. But Mr Gailey couldn't commit to another stint, forcing the board's hand.

The company is now scouring the globe to bring in an external replacement. The only obvious internal successor, chief operating officer Paul Fowler, is already leaving to head Nyrstar.

"With the establishment of Nyrstar, Zinifex will reach another milestone in its evolution and is poised to commence the next phase in its transformation into a major global mining house," Mr Gailey said.

The CEO position is likely to appeal to many mining executives seeking a licence to expand, and money to do it.

"Zinifex will be looking for someone to formulate a vision and growth strategy to take the company aggressively forward, and they will have cash to do it from the Umicore acquisition," UBS resources analyst Glyn Lawcock said.

Mr Gailey has been the key driver in the resurrection of Zinifex, which, as Pasminco, collapsed in 2001 under the weight to soaring debt, falling prices and out-of-the money hedging.

A former senior executive with BP and boss of New Zealand-based Fletcher Challenge, Mr Gailey was headhunted into Pasminco in a late attempt to turn the business around, but it collapsed just four weeks later.

Mr Gailey stayed on to nurse the business out of administration, and to refloat it as Zinifex in 2004. Since relisting at $1.80 a share, the company has successfully ridden the commodity boom and is now trading at $15.45 a share, valuing the company at $7.5 billion.

Mr Gailey stands to be handsomely rewarded for his efforts. He will be entitled to a termination benefit equivalent to a year's pay, which last year amounted to just over $3 million.

There are also share awards. Last fiscal year $6.5 million worth of reward shares vested to Mr Gailey.