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Newly appointed Kinross chief executive Paul Rollinson.

Kinross Gold Corp. investors are bracing for more bad news about a troubled expansion in Mauritania, with concern building after the company turfed its CEO ahead of a long-awaited update on the gold project.

Kinross stock was down 5.6 per cent to $7.56 a share on Thursday, even as some of its larger peers rose, pointing to market expectations that more bad news may be coming on the Tasiast gold project.

"We do not believe the timing of the CEO replacement and the Tasiast expected guidance update on Aug. 8 is coincidental," Credit Suisse analyst Anita Soni wrote in a report on Thursday, a day after Mr. Burt was dismissed in the wake of consecutive quarters of disappointing news. Kinross is one of the worst performers among major gold companies listed on the Toronto Stock Exchange.

"The timing suggests that an escalation of project costs will be forthcoming," she said.

Kinross says a change in CEO was needed to help guide a reevaluation of capital spending at the company, which has been focused on Tasiast and two other development projects, Lobo-Marte in Chile and Fruta del Norte in Ecuador. Mr. Burt's last day was Wednesday; he could not be reached for comment.

One person close to Kinross said the company's board has been divided for some time over the need to appoint a new chief executive officer. When the company unveiled plans in January to attack spiralling costs at Tasiast, a number of Kinross's directors opposed ousting Mr. Burt. Some of them argued that he should be given more time to improve results at the struggling mine that sent Kinross's stock price into a swoon at a time when gold prices were cresting record levels.

Supportive directors had a change of heart, however, as investors became increasingly outspoken with their complaints about Mr. Burt's leadership.

"Investor sentiment had really shifted and the board reached the conclusion that the organization needed a new leader," the source said.

Mr. Burt, a former investment banker, staked his reputation on Tasiast in the summer of 2010, when Kinross bought the project as part of a $7.1-billion takeover of Red Back Mining, the largest acquisition in the company's 19-year history. The deal was loudly applauded, and Tasiast was slated to become the centrepiece of a portfolio destined to make Toronto-based Kinross one of the world's fastest-growing gold miners.

But the accolades had barely subsided when a closer look at the project revealed soaring costs and changing project parameters, forcing Kinross to record the largest loss in its history in the shape of a $2.49-billion writedown earlier this year.

Kinross is not the sole victim of cost escalations in the resources sector, with even the biggest companies forced to reconsider projects.

Mr. Burt's position became increasingly tenuous since May, when shareholders increasingly began to publicly call for his resignation. Inspired by a CEO shuffle at larger rival Barrick Gold Corp. in June, critics even launched the website to call for his ouster.

Barrick replaced CEO Aaron Regent on June 6, barely weeks after taking him to task for the poor share performance at the world's largest gold company. Last week, after nearly two months of silence, the miner used its second-quarter report to disclose a cost overrun at a key development mine in Chile of as much as 60 per cent, stunning the market. It also said it is refocusing strategy to boost returns to shareholders, shelving major development projects and slashing a million ounces from its production outlook for 2015 – a reduction of more than 10 per cent.

"As we know from Barrick, the last time a CEO was fired there was very bad news coming down the line," said George Topping, an analyst with Stifel Nicolaus in Toronto. He said he was disappointed that Kinross did not use the management shuffle as an excuse to hire a high-powered mining executive.

Mr. Burt's dismissal was no surprise, but his replacement with insider J. Paul Rollinson was puzzling to the market because it put another investment banker at the helm of a company whose woes are seen as largely operational. Others disagree, saying Mr. Rollinson has mud on his boots as a geologist and mining engineer.

As Kinross's executive vice-president for corporate development, Mr. Rollinson knows the Tasiast project well, potentially best placed to shop it around, or best suited to make a go of it.

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