big c on the block

I have just banged this together quickly and would encourage anyone else to add to the timeline. Simply stating the facts is helpful in holding people to account for what has been a truly woeful tale of poor management.

August 2009: Terry Burgess joined OZ Minerals as MD/CEO.

July 2010: Buys 19% stake in SFR. (Cash bal. $1.33 Bil)

March 2011: Buys Carrapateena for $325 mil. (Cash bal $900 mil).

July 2012: Plans to spend $110 mil on Big C. (Cash bal $750 mil)

Feb 2013: Buys tunnel boring machine for $15 mil, sends it to China for refit, imports it and then mothballs it.

Feb 2103: Announces $45 mill fall in profit and comments re Big C:
"We're really now ready to say this is where we're heading next. This is important for everyone associated with Prominent Hill. It's important for our employees to see there's a long-term future there. It's important for the community to see we've got a presence in that area around Coober Pedy for many years to come."

2012-2013: Over 100 FIFO employees are allocated to C, a 100 room (with private suite) accommodation village has been built including a gymnasium, and millions spent on drilling, feasibility studies, etc., etc.

March 2014: Burgess announces he will retire late 2014.

April 2014: Big C now on the block.

So, what's it own us? Well over $1 Billion, not including unallocated diversion of resources, operational focus, etc. So if we get $1 Billion for it (a big 'if'), that's the equivalent of $300 mill less than the cash we had when Burgess bought it.

On the plus side, he also now says the he will sell the SFR stake. (I have no problem with this decision as I could never understand the strategy of buying it unless it was with a view to a takeover - which was quickly ruled out at the time. And the capital gain should have been crystalized months ago.) So why the decision to sell? - Terry explains there was a crystal clear company strategy all along: "We are not there to make investments in a company, so ultimately, we need to make a decision on our holding." Er... so why did you buy it Terry? Are we an investment company?

None of the foregoig even begins to tell the whole story of steadily evaporating cash, poor returns including losses, and of course, the constant blows inflicted on the share price.

But what a brilliant distraction all this has been from that disgraceful operational performance and the management ineptitude of recent years. Now, that great destroyer of shareholder wealth - and with a record of brutal losses and underperformance - Terry Burgess goes off to retirement (no doubt with a golden handshake we will learn about later) having been paid between $1.5 million and $1.9 million a year - and the shareholders are left hoping he can sell the Big C for what it owes. Gee, thanks Terry!

It would have been better if he had disbursed the cash on hand on the day he joined the company and sold the operations for whatever he could have got. We would have been much better off (I haven't done the precise numbers, but they can be done pretty simply).

On the other hand though, those loyal employees beavering away at Carrapateena - the ones he spoke about just this time last year - wouldn't have "a long term future" with the company. Oh, wait a minute....