Aurizon Mines Ltd. has a new boss in town, and his success is anything but guaranteed.
In late June, the company announced that George Paspalas would take over as president and chief executive officer for David Hall, who has been with the company for decades. (Mr. Hall is staying on as chairman.) Mr. Paspalas started work on Monday, and the mining community hopes that he can put is experience building mines to work.
Before joining Aurizon, Mr. Paspalas had been chief operating officer at Silver Standard Resources Inc., and before that he held various senior roles at Placer Dome where he was responsible for constructing complex open pit and underground mines in Africa. That experience will be put to good use because Aurizon has been trying to grow organically in Quebec, where it currently operates the Casa Berardi underground mine.
Aurizon’s main development is the Joanna project, and Mr. Paspalas will no doubt devote attention to building it out. Without any production growth expected until 2014 when Joanna could start producing, Aurizon has little to boost its stock price, which has has barely gained ground in the past year even though the price of gold has skyrocketed.
Analysts were hoping that a feasibility study for the Joanna project would come out in the third quarter of this year, but that has now been pushed forward to 2012. That’s likely because the new CEO needs some time to wrap his head around the project. Aurizon also wants to spend more time studying it, because the company announced in its quarterly earnings last week that capital and operating costs for the projected are now estimated to be “significantly higher” than anticipated.
On top of the higher costs, Aurizon must now also account for Quebec’s new resource tax that bumped the company’s effective tax rate by about 3 per cent in 2011, and will boost it 4 per cent in 2012.
Still, even though Aurizon’s stock hasn’t had much traction of late, some analysts like the long-term prospects. Brian Christie at Desjardins Securities, for instance, sees potential in the ongoing exploration activity at Casa Berardi.