Detour Gold shares tumble after CEO resigns

Mon Nov 25, 2013 10:42am EST
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By Allison Martell

TORONTO Nov 25 (Reuters) - Shares of Detour Gold Corp slid more than 20 percent on Monday after the miner said Chief Executive Officer Gerald Panneton had resigned.

The news came as spot gold prices touched their lowest point since July.

Panneton resigned effective immediately, and Chief Financial Officer Paul Martin will replace him on an interim basis, the company said in a release.

Detour Lake, the company's flagship low-grade gold project, is ramping up to full capacity, but unless the price of the metal recovers or costs improve, it may struggle to turn a significant profit next year.

Detour said earlier this month that it expected all-in sustaining costs of between $1,150 and $1,250 per ounce in 2014. Gold was trading at about $1,240 on Monday.

But the company has also said it planned to update its mine plan in the first quarter of 2014. A new plan may lower its operating costs.

Credit Suisse analyst Anita Soni downgraded Detour to "neutral" from "outperform" on the news of Panneton's departure.

In a note to clients, she said that based on the company's forecasts, Detour might fail a completion test with a Sept. 30, 2014 deadline, defaulting on a $90 million credit facility. Soni said the company should renegotiate the completion test or raise more equity.

Detour was not immediately available for comment.

Shares of the company were down 20.8 percent at C$3.38 in morning Toronto Stock Exchange trading. (Reporting by Allison Martell; Editing by Jeffrey Hodgson and Lisa Von Ahn)