Detour Gold Corp.’s chief executive and founder Gerald Panneton has resigned, the Canadian company said in a surprise announcement that sent its stock tumbling and fuelled speculation that the miner would soon take steps to bolster its financial position.
Shares of Detour Gold dropped 30 per cent to $2.97 on the Toronto Stock Exchange, a level not seen since the rocky days of the financial crisis and lower than the $3.50 share price the company set when it went public in 2007. The stock recovered to close at $3.77.
The company’s chief financial officer, Paul Martin, will serve as interim CEO and Detour Gold’s vice president of finance, James Mavor, will serve as interim CFO, as the miner searches for a new chief executive.
The abrupt departure of Mr. Panneton, a geologist with decades of experience in the mining industry, comes one day after he had a discussion with Detour Gold’s board of directors that resulted in him tendering his resignation, according to the company.
Mr. Martin would not provide further detail but said: “It would be fair to say that none of us are satisfied with the share performance. What we need to do is to deliver on our operating parameters to improve that situation.”
Detour Gold started producing gold from its only mine in Northern Ontario earlier this year and has been under pressure to improve its balance sheet with the price of gold trading dangerously close to what it cost the company to produce an ounce of the precious metal.
For the third quarter ended Sept. 30, the company produced 75,672 ounces of gold and said it cost on average $1,214 (U.S.) to produce one ounce. On Monday, the price of gold hovered around $1,227 an ounce.
“We expect the departure could speed up initiatives to strengthen the balance sheet,” RBC Capital Markets’ analyst Dan Rollins said in a note to clients.
The company’s Detour Lake gold mine in northeastern Ontario is on track to become one of largest gold mines in Canada with production levels of 657,000 ounces of gold per year over a 20 year period once the mine is fully operating.
But the company, like others gold miners, has been beset by the weakening bullion prices and cut its production forecast when it announced quarterly results early in November.
On Monday, Mr. Martin said he was confident that Detour Gold would meet its production target of between 240,000 and 260,000 ounces of gold and said there were no plans to raise funds from public markets.
At the end of the third quarter, the company had about $161-million (Canadian) in cash and short-term investments.
“We are not at this time thinking of doing an equity raise,” Mr. Martin said. “We are liquid at this point.”
In June, the company raised $176-million in a share offering where its stock was priced at $8.75 per share.