Barrick Gold Corp.’s new chairman John Thornton eliminated the chief executive officer position in a management shakeup that sees Jamie Sokalsky leave as CEO and cements the former banker’s authority at the top of the world’s biggest gold producer.
Mr. Sokalsky will step down in September and be replaced by two of the company’s senior managers, Kelvin Dushnisky and Jim Gowans, who have been promoted to co-presidents in charge of operations and strategy.
Barrick’s chief financial officer Ammar Al-Joundi will gain a senior executive title, which formalizes the close working relationship the CFO has developed with Mr. Thornton, a former Goldman Sachs executive.
The management shuffle comes less than three months after Mr. Thornton took the reins of Barrick, as it works to right itself after an extended period of setbacks including huge writedowns, a major project suspension and a lagging share price.
The shakeup lays bare the tenuous relationship between Mr. Sokalsky and the new chairman.
Mr. Sokalsky, a 21-year Barrick veteran who has been credited with guiding the miner through the toughest year in its history, was increasingly sidelined under Mr. Thornton, sources familiar with the matter said.
Under the new structure, Mr. Al-Joundi will work with Mr. Thornton to develop “strategic initiatives” – a move that was under way when Barrick and Newmont Mining Corp. were in merger talks earlier this year. During those discussions, Mr. Thornton relied more on Mr. Al-Joundi instead of Mr. Sokalsky, the sources said.
Under the terms of the failed merger proposal, Mr. Sokalsky would have become CEO of the smaller spinout company instead of the flagship Barrick-Newmont deal.
Mr. Thornton characterized the management changes as building on Mr. Sokalsky’s work to streamline the company and said Mr. Sokalsky agreed.
“In the case of Newmont, he was going to be the CEO of spinco. That was a selfless thing to do,” Mr. Thornton said in an interview. “Same thing here. He said if that’s where we should go and if I am in effect out of a job, we should do it,” he said.
The former banker rebuffed suggestions that it was a move to consolidate power.
“My job hasn’t changed one iota,” Mr. Thornton said. “My role is the same as yesterday.”
Barrick has a history of operating under a strong chairman. Its former chair and founder Peter Munk orchestrated the company’s mergers and plucked Mr. Thornton to replace him.
Some analysts speculated that the removal of the CEO position opened the door for Barrick to resume merger talks with Newmont.
But Mr. Thornton said he was not talking with the Colorado gold miner nor was it on the table. “It’s not on our mind,” he said.
Mr. Sokalsky was appointed chief executive in 2012 when the company’s former CEO Aaron Regent was ousted amid a weakening share price. In the following two years, he helped put Barrick on sounder financial footing by raising funds to pay down the company’s debt load, suspending a key gold project in the Andes and selling off underperforming mines.
Just in April, Mr. Munk had used his last annual meeting of shareholders to praise Mr. Sokalsky and say he was part of the team that would restore the company to its glory days. Mr. Sokalsky declined comment.
“Sokalsky has steered the company through some of its most difficult times and made measurable and positive change for the company,” said Robert Gill, vice-president and portfolio manager at Lincluden Investment Management, which holds $3.3-billion in assets including Barrick.
“The goodwill and credibility that Sokalsky has built with the investment community will now be lost. Management’s track record is now reset to day one,” he said.
Mr. Dushnisky, a senior executive responsible for corporate and government affairs, and Mr. Gowans, chief operating officer, have been appointed as co-presidents and will report to the board.
Mr. Al-Joundi will report directly to Mr. Thornton. The rest of the senior management team will report to either the co-presidents or the CFO.
The co-presidents will further evaluate Barrick’s mines, a process that started under Mr. Sokalsky and led the company to divest assets that were considered non-core like some of their mines in Australia and Nevada.
In a shift in strategy, Mr. Thornton said he was “much more open to the idea of keeping” African Barrick, which Barrick has been trying to sell. Earlier this year, Barrick unloaded a 10-per-cent stake in the African miner, a decision Mr. Thornton said he did not make.
“The fact that a CEO has not been named suggests that [Thornton] will continue to be very active in the management of the company in a de facto CEO role,” Greg Barnes, the head of mining research at TD Securities, said in a note to clients.
Mr. Sokalsky will receive a compensation package that will be in line with “typical legal and contractual entitlements,” the company said. The amount was not disclosed.
Mr. Sokalsky’s resignation is effective Sept. 15 and he will help with the transition, the company said. In a recent interview, Mr. Sokalsky said he loved Barrick and wanted to help take the company to the next stage.
Barrick Gold Corp.’s new co-presidents bring different skills to their joint role: one is particularly strong on the legal and regulatory side of the business while the other is an operations guy. The company says having the two in charge reflects the “interconnected nature” of Barrick’s day-to-day mining business and its relationships with governments and communities.
Mr. Dushnisky, 50, is a lawyer, but he also has a couple of science degrees from the University of Manitoba and the University of British Columbia. Before joining Barrick he worked with many mining companies, in executive roles and directorships. He was vice-president of regulatory affairs at Sutton Resources, president of International Vestor Resources Ltd., senior vice-president of Redfern Resources Ltd. and vice-chairman and general counsel Eurozinc mining.
He moved to Barrick in 2002, and worked his way up in the regulatory and legal side of the business, becoming senior executive vice-president in 2012. He is also Chairman of Barrick subsidiary African Barrick Gold PL and will continue to be when he becomes co-president of Barrick.
Mr. Dushnisky received $4.4-million (U.S.) in compensation in 2013, down from $6.6-million the year before.
A much more recent hire than Mr. Dushnisky, Mr. Gowans, 62, was brought in to Barrick early this year as executive vice-president and chief operating officer, part of the move to strengthen management after Peter Munk’s retirement.
He has more direct mining experience than Mr. Dushnisky, having worked in operations roles at mining ventures around the world. He has a degree in mineral engineering from the University of British Columbia.
Mr. Gowans was chief executive officer at De Beers Canada from 2006 until 2010, when he was named chief operating officer and chief technical officer of the De Beers group. He then became managing director of the Debswana diamond joint venture between De Beers and the Botswana government. Before his stint at De Beers, he worked at Placer Dome for eight years, and he also worked at Inco and Cominco.