Barrick Gold shakes up top management
Co- president model dropped with surprise news of Gowans’ retirement
Barrick Gold Corp. is scrapping its unusual “co- president” management structure less than a year after it went into effect.
Co- president Kelvin Dushnisky has been appointed Barrick’s sole president, the company said Monday. Until now, Dushnisky was sharing the president duties with Jim Gowans. Barrick announced that Gowans will retire at the end of 2015, which came as a surprise since he only joined the company last year.
A couple of other management appointments were made in conjunction with these moves. Chief of staff Richard Williams has been named chief operating officer and will report directly to Dushnisky. Williams is a very unconventional choice for a COO, as he has a military background rather than a technical mining background. However, he will be assisted by Basie Maree, a mining veteran who was promoted to chief technical officer.
“As we work to accelerate Barrick’s return to the lean, decentralized model that drove the company’s early success, the time is right to put a structure in place that supports this vision,” chairman John Thornton said in a statement.
Spokesman Andy Lloyd added that given the difficult market conditions in the gold sector, the time was right for Barrick to “accelerate” the transitions in the organization, with the ultimate goal of maximizing free cash flow. He called this move a natural evolution for the company.
The departure of Gowans leaves Barrick with very little mine operating experience among its senior executives.
BMO Capital Markets analyst Andrew Kaip noted there could be some “trepidation” among investors as they get used to the management changes. “( Barrick) will need to show investors that the replacement of Jim Gowans by the team of Mr. Williams and Mr. Maree enables ( it) to execute on the company’s ‘ value realization’ strategy,” he said in a note.
Toronto- based Barrick will continue to go without a chief executive officer, which is highly unusual for such a large company.
However, Thornton takes a very hands- on role and is viewed by investors as the de facto CEO. He has made enormous changes to Barrick since becoming chairman last year, cutting middle management jobs and re- focusing the company on its gold business.
It is all part of a “back to the future” strategy he has outlined to get Barrick back to its entrepreneurial roots.
A big part of Thornton’s plan has been to give more authority and accountability to the mine managers at the company’s operations. He noted that Gowans has been training and mentoring them prior to his retirement announcement. As COO, Williams will continue to work with those managers to help them succeed in their plans.
“Richard’s role is about empowering and enabling those guys,” Lloyd said. “His expertise is in rallying teams around common objectives.”
Barrick has been struggling throughout the current bear market for gold, as it entered the downturn with too much debt. Over the last year, it has focused on cost reductions and non- core asset sales to clean up its balance sheet.
The company is close to meeting its debt reduction target of US$ 3 billion this year, and it plans to reduce spending by an additional US$ 2 billion by the end of 2016.
However, its debt levels are still too high and further moves to improve the balance sheet are expected.
( Barrick) will need to show investors that the replacement of Jim Gowans enables ( it) to execute on the company’s ‘ value realization’ strategy