Former Kinross CEO Tye Burt.MIKE CASSESE/Reuters
Canada's third-largest gold company, Kinross Gold Corp., has abruptly replaced its chief executive officer, the second high-profile dismissal of a major gold company president since June.
Kinross shares are trading at about a third of their value of one year ago. The company said on Wednesday that J. Paul Rollinson, who was executive vice-president of corporate development, would replace Tye W. Burt as chief executive officer. Mr. Rollinson has also replaced Mr. Burt on the Kinross board of directors.
The company cited "current market and industry fundamentals," among the reasons for the change, which comes amid investor discontent over a massive writedown at the company earlier this year.
Mr. Burt led Kinross to the largest acquisition in the company's 19-year history in the summer of 2010, when it bought Red Back Mining Inc. for $7.1-billion. The deal won it possession of the massive undeveloped Tasiast gold deposit in Mauritania, but it also brought headaches as the company was forced to write down $2.49-billion on the project (the biggest loss in its history) amid soaring costs and changing project parameters.
"I'm shocked," said Pawel Rajszel, an analyst with Veritas Investment Research in Toronto. "He bet the company on this asset and it didn't turn his way."
The price of shares in gold miners are flagging despite booming prices for the precious metal. All eyes have been on Mr. Burt since June 6, when Barrick Gold Corp., the world's largest gold producer, ousted CEO Aaron Regent, citing poor performance of the company stock and concerns about cost controls. Last week, it announced a massive cost overrun and a one-year delay at its key Pascua-Lama gold project, shelved other development projects and pledged to refocus its operations and management on rates of return rather than the amount of gold it produces.
The Tasiast gold mine was to be the centrepiece of the Kinross portfolio, transforming the Toronto-based company into one of the fastest-growing gold miners in the world. Instead, the acquisition has angered some investors and left Mr. Burt battling to retain his credibility.
"The objective of this process is to improve capital efficiency and investment returns while optimizing the company's major projects at Tasiast, Lobo Marte and Fruta Del Norte," Kinross Gold said in a statement late on Wednesday, alluding to the three key development projects on which the company will focus its efforts.
At the end of the first quarter, Kinross had about $1.5-billion (U.S.) in cash, and Mr. Burt said in May it would focus spending on only those priority projects, confident that eventually the market would begin to place greater value on the company.