By Brenton Cordeiro
July 19 West Africa-focused Avocet Mining Plc has named engineering veteran David Cather as its new chief executive, as it seeks to reassure the market on its operations and boost shares battered by reduced output outlook and worries over expansion plans.
The miner said on Thursday it had accepted Brett Richards' resignation, appointing mining engineer Cather, who joined the company in May 2012 as chief operating officer, in his place.
Last month, Avocet cut its production outlook for the full year citing equipment availability issues and lower recoveries and processing rates at its flagship Inata mine in Burkina Faso, and raised cost forecasts by a quarter.
"What the company needs at this juncture is somebody who is strong operationally and that is my good self," Cather, who has worked with European Goldfields, Anglo American Plc and De Beers, told Reuters. "The imperative for Avocet going forward is to have an operational focus and I am an operator at heart."
Avocet has a pipeline of exploration projects across 21 exploration licenses in Burkina Faso and Guinea. Its only operational mine is Inata, which produced 167,000 ounces of gold in 2011, and that has been the focus of analyst worries.
"The market may have mixed views on the announcement but given it appeared that Avocet has struggled to get a handle on the Inata operation, Cather's promotion appears sensible," Numis Securities analyst Cailey Barker said.
In its statement on June 29, the miner cut its 2012 gold production guidance to between 135,000 and 140,000 ounces, down from 160,000 ounces it originally estimated.
The stock was up 1.1 percent at 0900 GMT on Thursday, off earlier highs but outperforming a 0.3 percent rise in the sector. At just under 70 pence, though, the stock is still worth less than half what it was before the June announcement.
"Ever since I joined Avocet I've spent a lot of time at the Inata mine and I see a huge opportunity to improve what we're doing down there," Cather said. "We've really got to get back to mining 101 and deliver on the forecasts we put out on June 29."
Cathers said the Inata project was the company's key priority from an expansion perspective and would get preferential treatment for financing, but added that the Guinea assets were "very much part of our value proposition."
Earlier this month, Richards had told Reuters in an interview that it expects to cut spending on exploration projects in Guinea and might even sell its assets in the country to preserve cash.
"The change at the helm of the company and associated switch in strategy and direction is encouraging ... but credibility must be proven," Canaccord Genuity analyst Dmitry Kalachev said in a note.