BLBG:Kinross Gold Fires CEO Tye Burt, Replacing Him With Rollinson
Kinross (KGC) Gold Corp., a Canadian gold producer that has lost almost a third of its value this year, fired Chief Executive Officer Tye Burt and promoted J. Paul Rollinson to replace him.
Rollinson, who was executive vice president of corporate development, also replaces Burt on the company’s board, Toronto- based Kinross said yesterday in a statement. The board decided the CEO change was needed to guide Kinross through its “capital and project optimization process,” the company said.
Kinross said in February it took a $2.49 billion writedown on the Tasiast mine in Mauritania it bought 17 months earlier in its all-stock C$8 billion ($7.96 billion) acquisition of Red Back Mining Inc. The company said at the time it was using stricter criteria for spending and project approvals amid rising costs and would delay development of mines in Ecuador and Chile.
“It’s pretty clear that they’re taking this step due to shareholder pressure,” David Christensen, CEO of ASA Ltd. in San Mateo, California, which manages $600 million and invests in precious-metals companies, said in a telephone interview.
Kinross, currently the fourth-largest Canada-based gold producer by market value, has fallen 31 percent this year in Toronto. That compares with a 19 percent decline in the 16- company NYSE Arca Gold BUGS Index. (HUI) Kinross has lost 59 percent of its value since the Red Back deal closed.
‘Value-Destroying’
The CEO change “is not a surprise,” George Topping, a Toronto-based analyst at Stifel Nicolaus & Co., said by phone. The shares have fallen “because of two value-destroying acquisitions: Tasiast and Fruta del Norte.”
Kinross bought the Fruta del Norte project in Ecuador in 2008 when it acquired Aurelian Resources Inc. for C$614 million in shares. The company has yet to reach an agreement with the government to develop the project.
Burt, 55, was appointed CEO of Kinross in March 2005. He joined the company from Barrick Gold Corp. (ABX), where he had been vice chairman and executive director for corporate development.
The announcement comes less than two months since Toronto- based Barrick, the biggest producer, ousted CEO Aaron Regent and replaced him with Jamie Sokalsky, who had been chief financial officer, after the company said it was “disappointed” by its share-price performance.
Rollinson joined Kinross as executive vice president of new investments in September 2008, according to the company’s website. Before that he was deputy head of investment banking at Scotia Capital, a unit of Toronto-based Bank of Nova Scotia.
‘Project Optimization’
“The board has determined that in view of current market and industry fundamentals, stakeholder interests will best be served by an executive management team focusing on the implementation and oversight of the comprehensive capital and project optimization process,” Kinross said in the statement.
The announcement was made after the close of regular trading yesterday in New York, where Kinross rose 2.4 percent to $8.13 at 7:29 p.m.
Kinross said in January it was reviewing its plans and schedule for an expansion at Tasiast amid industry cost inflation and because it had gained an “increased understanding” of the gold deposit.
Kinross said in May it expected to give an update on the project plans, including what type of ore processing it will use, when it reports second-quarter earnings, which are scheduled to be released Aug. 8.
Kinross also has operations in the U.S., Brazil, Chile, Russia and Ghana.
Barrick, Goldcorp Inc. (G) and Yamana Gold Inc. (YRI) are the three largest Canadian gold producers by market value.
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net
