Struggling junior gold producer Detour Gold Corp. is on the hunt for a new permanent chief executive officer, weeks after its stock got pummelled following a series of bad-news announcements around its flagship Ontario mine.
On Friday, Detour announced that Paul Martin is retiring as CEO and vacating his board seat as of June 1.
Michael Kenyon will leave his current role as chairman of the board and take over as CEO on an interim basis. Alex Morrison, currently a director, becomes chair.
The Toronto-based miner expects to announce a permanent replacement for Mr. Martin by early 2019.
Detour’s main asset is its Detour Lake open pit mine in Northeastern Ontario, which went into production in 2013. Detour is planning on expanding the mine, but has encountered a number of setbacks lately.
Late last month, Detour spooked investors by cutting its gold production forecast for the year, increasing its costs estimates and slashing its free cash flow projections.
In a preliminary “life of mine” plan, Detour also predicted materially higher costs for the expansion of the Detour Lake mine compared with earlier estimates.
In addition, the company has been encountering problems securing necessary mine permits on a timely basis at Detour Lake which will cause production delays. Detour said a local aboriginal group has not yet voiced its support following the filing of an environmental report in 2017.
Following the various updates, shares in Detour plunged 30 per cent on April 27, its worst single-day stock performance as a public company, according to data from Thomson Reuters.
“I appreciate that we have changed or modified our mine plan numerous times,” Mr. Martin said on a conference call with analysts the same day. He also characterized the permitting problems as “frustrating.”
Mr. Martin, 57, joined Detour as chief financial officer in September, 2008. He took up the CEO position initially on an interim basis in November, 2013, and was named on a permanent basis in February, 2014. He earned $3-million in compensation last year, an 18-per-cent increase over 2016.
Owing to its beaten-down stock market valuation, Detour is now seen as a takeover target.
In a note earlier this month, RBC Dominion Securities analyst Dan Rollins wrote that a number of senior or intermediate gold producers could potentially buy the company.
“While costs have increased, Detour Lake remains a rare asset given scale, tenure and location,” he wrote.
Building a similar project from scratch would cost up to $2.5-billion and take between eight and 10 years, Mr. Rollins said.
Last year, the Detour Lake mine produced roughly 571,500 ounces of gold and holds about 22 years’ worth of reserves.
Detour shares rose 10 cents, or 1 per cent to close at $10.20 Friday on the Toronto Stock Exchange.
Niall McGee