BUSINESS

Kinross replaces CEO Tye Burt as it seeks better return on investments

08/01/2012 07:13 EDT | Updated 10/01/2012 05:12 EDT
TORONTO - Kinross Gold Corp. has replaced president and chief executive Tye Burt in a decision it says is necessary to move forward with its plan to improve the Toronto-based miner's lagging performance.

J. Paul Rollinson, formerly executive vice-president of corporate development for the Toronto-based gold miner, has been appointed CEO, the board said in a statement Wednesday.

While the board thanked Burt for his "significant contributions" to Kinross, it added shareholders would be best served by an executive team focused on implementing a capital and project "optimization process" announced in January.

The company (TSX:K) announced that process — aimed at improving capital efficiency, project sequencing, and investment returns — after it reported that soaring costs at the Tasiast mine in Africa would require months of delay.

In 2010, the company purchased Red Back Mining for US$7.1 billion, acquiring the Chirano Gold Mine in Ghana and the Tasiast Gold Mine in the process.

Shares in Kinross were hit earlier this year after it slowed the development of its three major projects, including its Tasiast mine. The shares have lost nearly 40 per cent of their value since January, falling from above $13 per share that month to $8 per share Wednesday.

The gold miner has also said feasibility studies at its Fruta del Norte project in Ecuador and Lobo-Marte project in Chile would be delayed in order to optimize capital costs.

"The objective of this process is to improve capital efficiency and investment returns while optimizing the company's major projects at Tasiast, Lobo Marte and Fruta Del Norte," Kinross said Wednesday.

"The board has also determined that a change in CEO is required to guide Kinross through this capital and project optimization process."

Rollinson also replaces Burt on the Kinross board.

"I am honoured to accept the opportunity to lead Kinross," Rollinson said in a statement.

"The company has many strengths and great assets, including outstanding people at all of its operations, development projects and corporate offices. I look forward to working with all of our employees to realize the company's great potential."

In May, Kinross Gold Corp. (TSX:K) agreed to sell its 50 per cent interest in the Crixas gold mine in Brazil to AngloGold Ashanti of South Africa for US$220 million.

AngloGold Ashanti already holds, through its subsidiaries, the other 50 per cent of the project and it's the operator of the mine.

The sale came after Kinross reported a first-quarter profit of US$105.7 million, down from $250.1 million a year ago, as production slipped. Sales totalled $1.04 billion, up from $937 million.

Toronto-based Kinross — which reports second-quarter results next week — has mines and projects in Canada, the United States, Brazil, Chile, Ecuador, Russia, Ghana, and Mauritania.