We are beginning to see carnage at the CEO level in ‘underperforming' gold mining companies (which in current markets means most of them). No sooner had it been announced that Aurico Gold's CEO, Rene Marion, had stepped down for health reasons two days ago than today it was announced that Avocet Mining's CEO, Brett Richards had resigned and was being replaced in this position by David Cather, the company's former COO.
In Rene Marion's case it is reported that indeed he is suffering from an ongoing, but not life-threatening, degenerative medical condition and this was almost certainly the main cause of his stepping down. However running a gold mining company at the present time, when virtually all have performed badly in the markets and are under pressure from stockholders large and small, has to be an extremely stressful business which means dealing with an illness at the same time is not conducive to fighting it.
Re Avocet, one London broker notes that although Brett Richards was viewed as a good figurehead and was well liked, his departure will likely have been primarily affected by the ongoing operational issues and the recent negative update, at the company's flagship Inata gold mine in landlocked Burkina Faso in West Africa. Operational disappointments and disastrous share price performance had led to some major market dissatisfaction. However the hiring of Cather - more of an operating expert - does suggest that the handover was in the pipeline already.
As was reported on Mineweb last month (Avocet Mining cuts FY production outlook after tough Q2), Avocet downgraded anticipated 2012 gold production at Inata to between 135,000 and 140,000 ounces, down from the original forecast of 160,000 ounces. At the time Richards noted: "We have had a difficult second quarter in 2012, with issues related to equipment availability continuing to affect mining rates and capacity." The production downgrade was accompanied by an anticipated very significant rise in cash costs to a range of $1,000 to $1,050 per ounce from $800 to $850 per ounce.
But of course it is not only the smaller producers where it is particularly tough to retain the CEO position in these difficult times for the sector - as witness the recent toppling of Barrick Gold's CEO Aaron Regent, despite Barrick having actually performed better than most of its peers during this difficult time for gold stocks. (see Was Regent the heavy or the fall-guy for Barrick's missteps?).
Other gold mining company CEOs who have resigned and been replaced in recent months include Kevin Keough of PC Gold, Konstantin Sobolevskiy of High River Gold, Robert Baldock of Yukon Nevada Gold, Dick Whittington of PNG Gold, Blane Wilson of Klondex Mines, Lucas Ewart of Bison Gold. . .A couple of these are little known gold explorers, but even so the CEO turnover is indicative of how difficult it is to operate in the sector at the moment and keep the major shareholders happy. (See: It's a tough time to be running a mining company).