Kinross Replaces CEO – Could This Signal a Takeover?
Kinross Gold has announced the replacement of long-running CEO Tye Burt. Burt has been CEO since 2005, but had made some controversial decisions lately while share prices have fallen 34% in 2012. Paul Rollinson, formerly Vice President of Corporate Development, is taking over as CEO.
Burt’s most contentious decision was the takeover of Red Back Mining in 2010 for $8 billion, resulting in an eventual $2.49 billion write-down as the subsidiary failed to live up to expectations.
Analysts now believe Kinross – Canada’s 4th largest gold producer – is now poised for a taker, or sell-off of business units. With production costs rising, mature mining companies have been looking for strategic takeovers.
A Kinross statement said that the company was reviewing their “capital and project optimization process” as further doubts are raised at Red Back’s Tasiast mine in Mauritania. The Tasiast project is now expected to cost $4 billion, much higher than previous estimations of $3.2 billion. Development projects in Ecuador and Chile have also been delayed to get a better assessment of the project’s value.
As a result, Kinross is now trading below book value making them very attractive to takeovers.
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