With the announcement that Bob Buchan is stepping down as president and CEO of KINROSS GOLD, there are now two major Canadian gold companies looking for new leadership. The other is GOLDCORP, where last September Rob McEwen stated his intention to become chairman and turn over the CEO’s responsibilities to a successor as soon as one could be found.
Both of these companies are well-run, profitable, low-cost producers. Kinross is one of the top 10 primary gold miners in the world. The foundation of Goldcorp is its Red Lake mine, one of the world’s highest-grade gold mines. It is doubtful that either top executive was pressured into leaving.
The price of gold is high (about US$420/oz on Wednesday morning, Jan. 12). It has been steady at about that level for a year, following a run up from US$275 in May 2001. Part of the strength of the gold price is due to the faltering US economy, and perhaps the problems of our southern neighbours play a role in the high price of all mineral commoditiescoal, base metals, uranium and oil. The outlook for gold producers has rarely been better.
Buchan’s and McEwen’s decisions to step down might be part of a larger trend. PLACER DOME’s Jay Taylor stepped down in September 2004, and Peter Tomsett stepped into the role of CEO. Gregory Wilkins took over the reins as president and CEO of BARRICK GOLD only in February 2003.
Last year was one of intense corporate activity in the gold sector. The latest of these moves was Goldcorp’s November announcement that it planned a friendly takeover of WHEATON RIVER MINERALS. In that case, Wheaton’s Ian Tefler would become president and CEO of the new Goldcorp. Like other proposals before it, the move has drawn a hostile takeover bid; GLAMIS GOLD is chasing after Goldcorp. The issue is dependent on a vote by Goldcorp shareholders at the end of this month.
With two such choice job openings at Kinross and Goldcorp, I’m sure lots of people are imagining themselves in the corner office. What plum jobs they aregenerous salaries, bonuses and stock options plus the prestige of heading a world-renowned enterprise. It remains to be seen if the vacancies are filled from within the companies or if outsiders will be appointed. The thought of an outsider getting the job raises questions about how the corporate strategy might change and whether or not other outsiders would slip into other positions in the organizations.
The opening at the top of Kinross has raised another question in our offices: Will Kinross be seen as a leaderless takeover target? Given all the recent corporate pushing and shoving, we would not be surprised. The shift change at the helm will be orderly since Buchan said he would stay until the annual meeting in April 2005. In the meantime, there are four months during which anything could happen.
People have been intrigued by the shiny yellow metal for thousands of years. Now it seems there is an obsession with the companies that mine it.