Pike River mine boss Peter Whittall was surprised to learn his company's major shareholder had lost confidence in him in the months before 29 workers were killed.
Mr Whittall, who took over as chief executive at Pike River Coal about six weeks before the lethal gas explosions last November, accepts the mine was plagued by severe delays, technical problems and a frustrating staff turnover in key roles.
However, he rejected the view that there was an "air of despondency" in the workforce before the deaths.
Mr Whittall took the stand to give evidence yesterday in the second week of the royal commission of inquiry.
The inquiry heard that in August last year, David Salisbury - chief executive of Pike River Coal's major shareholder, New Zealand Oil and Gas - conveyed to Pike River chairman John Dow a loss of confidence in Mr Whittall.
Mr Salisbury resigned for personal reasons last month.
Mr Whittall - who held other senior management roles from 2005 at Pike River before becoming chief executive - told the inquiry the first he became aware of this loss of confidence in him was when he read Mr Salisbury's submission to the inquiry.
"That was a quite interesting thing to read," Mr Whittall said. "Mr Salisbury and I spoke often, and Mr Salisbury directly indicated to me his potential for me to maybe assume a CEO's role with Pike, and once I did, congratulated me roundly."
Under questioning by commission lawyer Simon Mount, Mr Whittall agreed with a report by mineral consultants Behre Dolbear Australia (BDA) that Pike River Coal was plagued with severe delays and unexpected technical problems.
BDA reported that equipment units at the mine were so poor that efforts to get them to work effectively were "largely wasted". It found there was an "air of despondency or resignation" among the workforce.
Mr Whittall said: "It wasn't the general perception that I got back through another way of finding out. I actually found the place a very buoyant and driven place to work."
The person in the role of statutory mine manager at Pike River "frustratingly did change on a number of occasions" between 2008 and 2010. But Mr Whittall said there was consistency in other key roles such as his own.
Asked if any of the mine managers who left raised any unresolved safety issues with him, he said they did not.
Mr Whittall said the mine had various gas sensors designed to set off alarms or trip off power.
His evidence continues today.
* The Royal Commission on the Pike River Coal Mine Tragedy will seek to establish what happened at the mine - where 29 workers died in a series of explosions last November - and how to avoid a repeat of the tragedy.
* Phase one of the hearings - providing context for the inquiry - is scheduled to run until tomorrow.
* Three further phases will follow, before the commission reports to the Governor-General by March 31 next year.
* The commissioners are High Court judge Justice Graham Panckhurst, former Electoral Commission chief executive David Henry, and the commissioner for mine safety and health in Queensland, Stewart Bell.