Breaking News

Morgan Stanley to Pay $275 Million to Settle Subprime SEC Charges
Tweet TWEET

Barrick Gold Shakeup Leaves Chairman Thornton in Control

Barrick Gold Corp. (ABX) Chief Executive Officer Jamie Sokalsky will depart two years into the job, leaving Chairman John Thornton in control of the world’s largest producer of the metal.

Sokalsky will step down effective Sept. 15, the Canadian company said today in a statement. Barrick didn’t name a new CEO and said two other executives will become co-presidents.

The absence of an immediate replacement for Sokalsky suggests that Thornton “will continue to be very active in the management of the company in a de facto CEO role,” said Greg Barnes, an analyst at TD Securities Inc. in Toronto.

The lack of a CEO also may leave the door open for the resumption of merger talks with Newmont Mining Corp., Barrick’s biggest rival, Barnes said in a note. Discussions between the companies broke down in April, two weeks before Thornton, a former Goldman Sachs Group Inc. president, became chairman when he succeeded company founder Peter Munk.

While Barrick is still open to a combination, the reshuffle announced today doesn’t change the prospects for a deal, Thornton said in an interview at Barrick’s Toronto headquarters. The companies aren’t currently talking, he said.

“The door’s not closed but it’s not open either,” Thornton, 60, said. “It’s not on my mind right now.”

He said the management changes don’t mean his role or authority have changed. The board, including Sokalsky, decided that the CEO position should be eliminated and the responsibilities shared among other executives to create a “more horizontal, less hierarchical” company, Thornton said.

Gold Slump

The past two years at Barrick have been turbulent as the price of gold slumped, forcing the company to take billions of dollars of writedowns. It fired Sokalsky’s predecessor and saw massive cost increases and delays at its biggest construction project, which was eventually suspended. Barrick announced a shakeup of its board in December, including the retirement of Munk, after some investors criticized a lack of independence among directors.

Sokalsky has worked at Barrick for more than two decades and was chief financial officer until becoming CEO in June 2012. Since then, Barrick has sold smaller and less-profitable mines, cut operating costs, and sold shares to reduce debt. The gold price dropped last year by the most in more than three decades.

Sokalsky Mantra

Sokalsky’s mantra as CEO was that returns must drive production, not the other way around. Barrick now has 19 mines, down from 27 last year. Its production forecast for 2014 would be the lowest in nine years. Barrick’s average mining costs in the first quarter fell to the lowest in at least two years, according to data compiled by Bloomberg.

Kelvin Dushnisky, Barrick’s executive handling government and corporate affairs, and Chief Operating Officer Jim Gowans will become co-presidents, the company said today.

Other changes announced include the appointment of Darian Rich as executive vice president for talent management, and Chief Financial Officer Ammar Al-Joundi becoming a senior executive vice president.

Talks between Barrick and Greenwood Village, Colorado-based Newmont Mining Corp. degenerated in April into a public dispute. Both companies issued statements accusing each other of scuppering a deal. Newmont called talks with Thornton on key issues “unproductive,” while Barrick said Newmont reneged on key points of the proposed deal.

Under the merger plan considered by both companies earlier this year, Sokalsky would have led a company to be spun out from the combined Barrick-Newmont.

Barrick rose 2.9 percent to C$20.28 in Toronto. The shares have risen 8.4 percent this year.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Robin Saponar

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.