CORRECTED-UPDATE 2-Newmont CEO to step down, COO to succeed him

Mon Dec 3, 2012 2:14pm EST

(Corrects headline, bullet point and paragraph 2 to make clear O'Brien is stepping down as CEO and retiring from the board; corrects paragraph 5 to 'falling output' from 'depleting reserves')

* O'Brien step down as CEO March 1, retire from board

* New CEO faces falling gold output, rising costs

* Shares fall 2.2 percent to $46.06 on NYSE

By Julie Gordon and Bhaswati Mukhopadhyay

Dec 3 (Reuters) - Newmont Mining Corp said on Monday Chief Executive Richard O'Brien will step down on March 1, making Newmont the third major gold miner to announce the departure of its CEO this year.

The world's No.2 gold producer said its current chief operating officer and president, Gary Goldberg, will take the reins from O'Brien, who is also retiring from his position on the Newmont board.

The leadership change comes as the world's top gold miners are scrambling to replace reserves and boost production, all while keeping soaring costs under control.

The struggle has already claimed Aaron Regent, who was ousted from the top job at Barrick Gold Corp in June, and Tye Burt, who lost his job at Kinross Gold Corp in August.

Goldberg, who joined Newmont in December 2011, will face the task of reviving Newmont, which has seen its annual gold sales fall by about 15 percent since 2006 as it has struggled with rising costs and falling output.

"They have no growth and over the last five years production has actually fallen," said George Topping, a mining analyst with Stifel Nicolaus in Toronto, adding that Goldberg will need to address operational issues at Newmont's existing mines.

Topping also said Newmont will have to look for other assets to stabilize production.

"That's going to have to involve the acquisition of smaller mining companies," he said.

Greenwood Village, Colorado-based Newmont has struggled with its development stage projects, including a delay at its $5 billion Conga project in Peru after violent protests over the massive gold mine. It also took a write-down as it shelved its Hope Bay development in Nunavut, a northern Canadian territory.

On the operations side, the miner's third quarter income attributable to shareholders tumbled 26 percent as costs rose and output fell at mines in Indonesia, Ghana and Australia.

"The issue of rising costs and mine development delays is industry wide," said Elizabeth Collins, a mining analyst at Morningstar in the Chicago area.

"The new CEO will be facing the same issues. It is getting increasing hard for the largest gold companies to grow production without suffering from extremely high costs."

Barrick has grappled in recent months with soaring costs and delays at its Pascua-Lama mine in South America, while Kinross took a massive write-down related to its Tasiast mine in Mauritania, which has so far failed to live up to expectation.

Newmont, which has projects around the world, said last month that it expects 2012 production to be at the lower end of its target range of 5 million to 5.1 million ounces.

Increasing that output will likely be a key focus for Goldberg, who served as chairman of the U.S. National Mining Association from 2008 to 2010 and worked at top global miner Rio Tinto for three decades before joining Newmont.

Shares of Newmont fell 2.2 percent to $46.06 on Monday on the New York Stock Exchange, amid a drop in the broader gold sector on uncertainty over the outcome of U.S. budget talks. (Reporting by Julie Gordon in Toronto and Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila and Marguerita Choy)

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