Barrick Gold Fires CEO, Wants Higher Share Price (ABX, KGC, GG, AUY, NEM, FCX)

Commodities & Metals

Published: June 6, 2012 9:02 am

Barrick Gold Corp. (NYSE: ABX) announced this morning that it has replaced now-former CEO Aaron Regent and appointed the company’s now-former CFO, Jamie Sokalsky, as the new CEO, effective immediately. Sokalsky will also have the title of president and has replaced Regent on the Barrick’s Board of Directors.

Company founder Peter Munk said that Barrick is “fully committed to maximizing shareholder value, but have been disappointed with our share price performance.” That’s why Regent is gone and Sokalsky is in. Just how bad has Barrick performed under Regent?

Regent became CEO in January 2009. Since then the company’s share price has risen about 28%. In the same time period, shares of Kinross Gold Corp. (NYSE: KGC) are down -51%, shares of Goldcorp Inc. (NYSE: GG) are up 48%, Yamana Gold Inc. (NYSE: AUY) is up 129%, Newmont Mining Corp. (NYSE: NEM) is up about 39%, and Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) is up 127%.

The average gold price in 2009 was $1,087.50/ounce, and the yellow metal closed yesterday at $1,616.90/ounce, a gain of about 49%. Clearly Barrick’s board believes that the company’s share price gains should match up more closely with the price of gold. Tye Burt, President and CEO at Kinross since 2005, may also have something to worry about if share price accountability becomes the new vogue for gold miners.

As for Barrick and Sokalsky, the new CEO is a finance guy, not a mining exec. Regent was also a finance guy, but he had served as president and CEO of a mining company before arriving at Barrick. The company’s problem is that costs keep rising: in 2011, cash costs for gold production reached $460/ounce and Barrick expects that to increase to $520-$560/ounce this year. Sokalsky is going to have to deal with that either by cutting workers, lowering fuel costs, or mining higher quality deposits. Which do you think is easiest?

Barrick’s shares are up about 1.3% in pre-market trading at $42.61 in a 52-week range of $34.82-$55.95.

Paul Ausick

ALERT: Take This Retirement Quiz Now (Sponsored)

Take the quiz below to get matched with a financial advisor today.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Take the retirement quiz right here.