Kinross CEO's ouster may presage bad news at mine
By Julie Gordon
TORONTO (Reuters) - Last week's ouster of Tye Burt as Kinross Gold Inc's (K.TO: Quote) CEO may signal that the miner is about to hit investors with more bad news about the African mine that formed the centerpiece of the Canadian company's 2010 acquisition of Red Back Mining.
Kinross's stock has tumbled 60 percent since the $7.1 billion takeover closed on September 17, 2010, a sure sign that Burt's days at the helm were numbered.
Burt, who championed the Red Back deal, took the fall for setbacks Kinross has encountered in expanding the Tasiast mine in Mauritania, the acquisition's centerpiece. The takeover, which also included the Chirano mine in Ghana, led to a $2.9 billion write-down earlier this year.
The ouster was timed come a week ahead of Kinross' second-quarter results, due Wednesday. Analysts are bracing for everything from cost increases to delays and production cuts, not to mentioned weaker earnings.
"I think they could use the second quarter results to take the skeletons out of their closet," said Morningstar mining analyst Joung Park. "They can use the opportunity to pin the blame on former management."
That would mirror a tactic taken by Barrick Gold Corp (ABX.TO: Quote), which fired its CEO Aaron Regent in a surprise move in June.
Just weeks after dismissing Regent, Barrick used its second-quarter results to announce a 50 to 60 percent increase in capital costs at its largest development project, Pascua-Lama, and delayed completion of the massive South American gold mine by a year.
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