The CEO’s departure and plans for a new mine strategy to be unveiled with third-quarter financial results are a reflection of growing investor impatience, sources say.MICHAEL DALDER/Reuters
The chief executive officer and a co-founder of Timmins Gold Corp., Bruce Bragagnolo, is departing in a management shakeup as the company struggles with a plummeting share price and difficult market conditions for the precious metal it mines.
Montreal-based Timmins said on Tuesday that Mr. Bragagnolo has "ceased to be" the CEO and a director of the company. Replacing him is independent director Mark Backens, a mining and finance veteran.
The company also warned of a "significant impairment charge" in its upcoming third-quarter results.
"I wasn't given a reason" for the board decision to end his nine-year tenure as CEO, Mr. Bragagnolo, 58, said in a telephone interview from Vancouver. "Nothing was really explained to me."
But the CEO's departure and plans for a new mine strategy to be unveiled with third-quarter financial results are a reflection of growing investor impatience, sources say.
Timmins's stock price has fallen to less than 40 cents per share from the $1.50 range over the past year.
"The board felt it was time for a leadership change," Timmins chairman Bryan Coates said.
"The company will continue to to execute its plan to build its asset base in Mexico."
Last year, Timmins got into a proxy fight with Toronto-based asset manager Sentry Investments Inc., a major investor. Sentry sought major changes at the board level to reflect greater representation from independent mining-company veterans who could bring a fresh perspective. The issue was apparently resolved, but the sudden departure of Mr. Bragagnolo indicates that some outstanding issues remained, said one analyst who spoke on condition he not be identified.
Sentry also alleged last year that Timmins was not receptive enough to interest shown by potential buyers.
Timmins says it is positioning itself as an "emerging intermediate, Mexican-focused gold producer."
Its assets include the San Francisco open-pit mine in the state of Sonora as well as recently acquired gold projects in Caballo Blanco and Ana Paula.
Officials at Sentry did not immediately respond to requests for comment.
RBC Dominion Securities analyst Sam Crittenden said in a research note Tuesday that the leadership change and impairment charge add up to a negative for the company.
Timmins Gold had already announced technical problems at its San Francisco site and lowered its 2015 production guidance while raising its cash cost forecast due to lower grades at the mine, Mr. Crittenden said.
Mr. Bragagnolo, a Vancouver lawyer, founded Timmins with current president Arturo Bonillas.
Timmins said on Tuesday that Anthony Hawkshaw, the chairman of the finance committee, will provide consulting services to the company "in its efforts to improve its financial position and seek new capital for project developments."
The company is also reviewing the carrying value of its assets and "anticipates that it will incur a significant impairment charge" for the quarter ended Sept. 30.
The price of the yellow metal – usually viewed as a safe-haven asset – is currently around $1,140 (U.S.) per ounce, a 40-per-cent drop from its 2011 peak.
Bertrand Marotte