By Euan Rocha
TORONTO Aug 1 Canadian miner Kinross Gold Corp
named Paul Rollinson its new Chief Executive late on
Wednesday, replacing long-time CEO Tye Burt, who spearheaded its
massive acquisition of Red Back Mining that has so far failed to
live up to expectations.
The announcement, just ahead of Kinross's quarterly results
next week, has some on Wall Street fearing further bad news from
the miner which has already seen its share price halve within
the last year.
The gold miner paid a staggering $7.1 billion to acquire
West African-focused Red Back Mining in 2010. However, earlier
this year, Kinross booked a $2.94 billion non-cash goodwill
impairment charge related to its acquisition of the Tasiast gold
mine in Mauritania and the Chirano gold mine in Ghana - both of
which were acquired from Red Back.
"Given the recent trend of weak second-quarter earnings and
capital expenditure over-runs, there is a risk that Kinross
delivers further bad news and effectively assigns the blame on
former management," said Deutsche Bank analyst Jorge Beristain
in a note to clients.
Barrick Gold, the world's largest gold miner, less
than two months ago replaced its CEO Aaron Regent. Just last
week, Barrick announced disappointing quarterly results and a
big spike in capital costs at Pascua-Lama, one of its largest
"Recent management change-outs appear to be a delayed
reaction to the several years of underperformance of North
American gold majors vis-à-vis the gold price and missed
delivery targets on project capital expenditure and M&A
turn-arounds," said Beristain, who suggested Burt's departure
could spark a relief rally in Kinross' shares.
Shares of Kinross have fallen 53 percent in the last twelve
months. Its stock closed Wednesday at $7.94 on the New York
Rollinson, who takes over from Burt after his seven-year
tenure as CEO, was formerly head of corporate development at
Kinross. Like Burt, he is also a former investment banker, who
has worked for Scotia Capital and Deutsche Bank, among others.
Credit Suisse analyst Anita Soni said Rollinson may have
been tapped to lead portfolio reshuffling at the company.
"We believe Mr. Rollinson has been hired to lead the asset
rationalization and restructuring process for Kinross which may
include a divestment of Tasiast," said Soni, in a research note.
Kinross is in the middle of a "comprehensive capital and
project optimization process" that was announced earlier this
year, with an eye to improving its investment returns.
"Paul understands all facets of the mining industry,
including exploration and mining, mining finance and mining
transactions. He is highly regarded and well-known throughout
the industry, and possesses the leadership qualities we need to
oversee and implement our strategy," said Kinross Chairman John
Oliver, in a statement.