TORONTO/VANCOUVER (Reuters) - Barrick Gold Corp said on Wednesday its chief executive officer will step down in September and not be replaced, concentrating power in the hands of the miner’s new executive chairman, John Thornton.
The world’s biggest gold miner appointed two co-presidents to help run the company after Jamie Sokalsky’s departure as CEO.
Thornton, who earlier this year took the reins from Barrick founder and long-time chairman Peter Munk, has already driven many of the company’s recent moves, including an ill-fated attempt to merge with rival Newmont Mining and a joint venture with Saudi Arabian Mining Co, which is known as Ma‘aden.
Sokalsky and Thornton did not see eye to eye, sources familiar with the situation said, making Sokalsky’s departure unsurprising. Sokalsky did not lead the talks with Ma‘aden and was cut out of the failed negotiations with Newmont, according to several sources. If the Newmont deal had succeeded, sources said that Barrick was set to name Newmont’s current chief executive, Gary Goldberg, as its new CEO, and move Sokalsky out to head a spinoff entity with noncore assets.
Thornton, in an interview on Wednesday, played down talk of tension with Sokalsky and praised him for stabilizing Barrick as the miner grappled with soaring costs and heavy debt.
“When Jamie stepped in, it was really a battlefield type of promotion and he came in at a very difficult time,” Thornton told Reuters at Barrick headquarters in Toronto. “He started driving the business toward lowering costs, focusing on cash flow and everything else.”
“To his credit, he knew that by going this direction, he was going to be effectively restructured out of a job.”
Sokalsky, a Barrick veteran, took on the role of CEO in 2012 when the company was struggling. He moved fast to mothball key projects, sell noncore assets and raise more than $3 billion via an equity offering.
Thornton, 60, who was hand-picked by Munk to succeed him, said Barrick remains open to a tie up with Newmont although the two sides are not in talks.
“If and when Newmont comes back to the table, we will look at it at that time, and see what it looks like at the time,” he said, putting the ball in Newmont’s court.
Thornton, a former second-in-command at Goldman Sachs, said his three priorities for Barrick are operational excellence, to be the world’s leading gold company but not necessarily the biggest gold miner, and to be a leading copper company.
The exit of Sokalsky after just two years in the job, and the fact that he is not being replaced, cements Thornton’s dominance just three months after he moved into the chairman’s job. He had previously spent two years on the board.
“The perception of investors was that there were internal management conflicts between the board and the executive team,” said Josh Wolfson, a gold analyst at Dundee Securities.
“Now there is no question on who is in control.”
Barrick named Kelvin Dushnisky, senior executive vice president for corporate and government affairs, and Chief Operations Officer Jim Gowans as co-presidents with overall responsibility for execution of the company’s strategic priorities and operating plans.
The miner said the co-president approach recognizes the importance of jointly managing daily mining operations and relationships with governments, local communities and other external stakeholders.
Thornton, who has experience sharing a senior management role from his days at Goldman, where he was co-chief operating officer, said there may be scope to roll out joint management positions within Barrick at the mine level too.
“If we have a truly outstanding mine manager and a truly outstanding country head and they work together, then it stands to reason that we will get the best results out of the mine,” he said.
Also in the management shuffle, Chief Financial Officer Ammar Al-Joundi adds the role of senior executive vice president and will work with Thornton on the development and execution of strategic initiatives.
Asked about market speculation that Barrick may sell its Lumwana copper asset in Zambia, Thornton said that as far as he is concerned “that is fiction”.
Shares in Barrick closed 3.1 percent higher at $18.89 on the New York Stock Exchange.
Editing by Amran Abocar, Meredith Mazzilli, Peter Galloway and Richard Chang