* Regent departs; CFO Sokalsky promoted to top job
* Company disappointed with stagnating share price
* Shares drop 1.5 pct to C$43.03 on TSX
By Julie Gordon and Euan Rocha
TORONTO, June 6 (Reuters) – Barrick Gold Corp
, the world’s largest gold miner, has ousted Aaron
Regent as chief executive, saying it was frustrated that its
stock has languished since he took the helm three years ago
while bullion prices have surged.
The company said on Wednesday that Chief Financial Officer
Jamie Sokalsky, a 1 9- year veteran of the company, will replace
Regent, whose tenure was marred by what some analysts consider
to be strategic mistakes.
But investors were not immediately impressed by the surprise
shuffle, and Barrick shares had turned negative by midday after
rising 2 percent at market open.
The stock has risen just 3.9 percent since the market close
on Jan. 15, 2009, the day before Regent became chief executive
at the age of 43. By comparison, the SP/TSX Global Gold Index,
which includes Barrick, has risen 18.8 percent in the same
Barrick was hit particularly hard in the aftermath of its
C$7.3 billion ($7.02 billion) takeover of Equinox Minerals last
year. The deal boosted the company’s exposure to the cyclical
copper market without adding gold assets. Some shareholders saw
that as a misstep.
“It could be that they’re looking for a fall guy after the
disastrous Equinox acquisition, which we believe they overpaid
for by about 50 percent,” said George Topping, a mining analyst
at Stifel Nicolaus, an investment banking and brokerage firm in
The Lumwana copper mine in Zambia, acquired as part of the
Equinox takeover, has struggled with high costs and operational
Topping speculated that the company could have more bad news
“You’ve got to ask yourself, why now?,” he said. “Does it
mean perhaps that there’s more problems, particularly with the
Equinox assets, that are still to come?”
Analysts and investors have said the stock’s lackluster
performance may also reflect what they consider to be a
less-than-generous dividend. Gold miners, reaping record profits
on the high price of gold, are facing mounting pressure to give
more cash back to shareholders.
Barrick pays a quarterly dividend of 20 cents a share.
Newmont Mining Corp, by comparison, pays a quarterly
dividend of 35 cents a share, and its shares have risen more
than 25 percent since the beginning of 2009.
In the same period, gold prices have climbed more than 85
percent, hitting a high of more than $1,920 an ounce last year
as uncertainties over the global economy pushed investors into
Canaccord Genuity analyst Steven Butler said Regent’s
decision to spin out the company’s African resources into a
separate company, African Barrick Gold, has failed to
ignite the gold miner’s share price.
“Management has also been too vague and unclear on how it
will attain its stated medium-term production goal of 9 million
ounces a year,” said Butler in a note to clients.
Barrick plans to produce 7.3 million to 7.8 million ounces
of gold this year, plus some 550 million pounds of copper.
The company is building the Pueblo Viejo gold mine in the
Dominican Republic and the massive Pascua Lama gold-silver
project on the border between Chile and Argentina. Production
from the new mines is due in 2012 and 2013 respectively.
Toronto-based Barrick, which declined interview requests
from Reuters, said in a statement that Sokalsky would replace
Regent as president and CEO and on the Barrick board of
directors, effective immediately.
“We are fully committed to maximizing shareholder value, but
have been disappointed with our share price performance. Our
board has every confidence in Jamie’s experience and commitment
to take our company forward,” founder Peter Munk said in the
Sokalsky joined Barrick as treasurer in 1993 and became CFO
in 1999. He previously worked at grocery holding company George
Weston Ltd for 10 years.
Barrick named an existing director, John Thornton, as
co-chairman of the board, a role he will share with Munk.
African Barrick said its parent would nominate a replacement
to its board after Regent’s departure. Regent was non-executive
chairman of the 74 percent-owned Africa-focused subsidiary.
John Hughes, a senior mining analyst with Desjardins
Securities in Toronto, said the CEO shuffle could play out well
among traditional Barrick investors, who are looking for a pure
play gold company, not a diversified miner.
The departure of Regent could be seen as a strategic shift
in focus back to the yellow metal, he said, adding that while
gold prices rose sharply last year, most gold miners lost value.
“They cited share price, but do you know how many CEOs would
be out the door for the same reason, in the event that was the
only concern that the board may have had?,” said Hughes. “We
would have dozens of companies that would be looking for new
Barrick shares slid 1.5 percent to C$43.04 on the Toronto
Stock Exchange on Wednesday at midday.