Business in Vancouver September 4-10, 2007; issue 932
Sudden exits thin mining’s CEO ranks
Executive talent becoming most difficult resource to find for B.C. miners
A sudden exodus of top-level management is leaving an increasing number of Vancouver exploration and mining companies wedged between a rock and a hard place.
Junior resource companies especially are scrambling to find replacements for a wave of departing presidents, CEOs and chief financial officers. About a dozen Vancouver companies have reported management disruptions in the past month alone, at a time when stocks are plunging.
Some executives have quit for better pay packages elsewhere, but others have left surreptitiously, citing “personal reasons” – which more often refers to leaving under a cloud of disapproval than a sudden need to spend more time with family.
Plummeting stock prices are likely why some have jumped – or were forced to jump – ship, according to a Vancouver mining recruiter whose firm has seen an increase in requests.
Andrew Pollard, president of Mining Recruitment Group Ltd., the only mining-focused recruitment company in Vancouver, said most junior mining company stocks have dropped in the current market downturn.
He said stock prices have been hit hard by a knock-on effect of the U.S. sub-prime mortgage crisis and Canadian short-term credit concerns. Pollard’s own junior mining-weighted stock portfolio was down about 20%.
“You’re starting to see investors getting a little worried, a little more skeptical [about] what they’re putting their money into. So I think these CFOs, these presidents, are getting a lot more heat on them from the shareholders, from their board, and they don’t necessarily have the answers for them.”
Industry stalwart Tookie (Stuart) Angus agreed.
“A lot of these companies have been drastically re-rated downward in the last few weeks. Speculative companies get hit hardest in these kinds of corrections, and that makes shareholders very unhappy.”
There’s little that companies can do about it.
“I would say it’s panic selling in some parts,” said Angus. “And this whole liquidity issue is a scary thing for some people. They can see market losses right in the face. It’s tough.”
Angus is chairman of China-focused Dynasty Gold Corp. (TSX-V:DYG), whose president and CEO, Brian McEwen, left effective September 1 to become CEO of Vancouver rival Buffalo Gold Ltd. (TSX-V:BUF.U).
Dynasty CFO Ivy Chong will temporarily fill McEwen’s shoes, and while Chong is a suitable permanent replacement, filling her finance post will be equally daunting, said Angus.
“One of the hardest things to do in the mining business is to find people.”
Pollard added that the task is made more difficult by the age and skills gap between senior level incumbents and those next in the line.
“There’s probably an age gap of 10 to 15 years,” he said. “If [incumbents] are leaving completely, then there’s going to be a major crunch.”
In August, Goldex Resources Corp. (TSX-V: GDX) president and CEO Donald Rippon was replaced on an interim basis by CFO Charles Ross.
Jay Friesen, the company’s corporate development manager, said the departure had been part of the company’s and Rippon’s plans for some time.
Rippon, a former stockbroker, stock researcher and founder of several junior mining companies, left Goldex August 10 to “pursue other opportunities.” Friesen, however, couldn’t say what those opportunities were.
He added that, with the revolving door in full swing in an industry that’s upping the pace of projects, finding suitable CEO material is a formidable task.
“Whether you’re looking for a geologist, whether you’re looking for someone to fill key roles, it’s no doubt a challenge,” Friesen said. “I think it’s going to get worse before it’s going to get better.”
He added that a tight labour market has reduced the staying power of top executives and other key staff.
“You have to treat geologists and other senior team members with a great deal of care and respect.”
Universal Uranium Ltd. (TSX-V:UUL) is also without a top executive following the August 31 resignation of president and CEO Clive Massey. The exploration company’s board of directors has taken on responsibility for overall management while a replacement is being sought, but a company spokesman couldn’t explain Massey’s departure.
Other companies affected include Pine Valley Mining Corp. (TSX:PVM), whose president and CEO, Robert Bell, left for a new job on August 31 after his employment agreement was terminated, allegedly without cause, following the sale of a Pine Valley coal subsidiary to Cambrian Mining Plc. Pine Valley chairman Jeffrey Fehn also resigned.
Meanwhile, Southwestern Resources Corp. (TSX:SWG) president and CEO John Paterson quit in July amid controversy stirred by charges that assay samples from its Boka gold project in China were inaccurate. Southwestern is now suing Paterson for, among other things, fraudulent conduct and insider trading.
The company has since withdrawn all previous results for the project.
Last week, Southwestern said the mineral resource was “significantly less than previously reported.”
Citing personal reasons, Paterson had also resigned as president of Vancouver-based Superior Diamonds Inc. (TSX-V:SUP).