The Kumtor gold mine, in Kumtor, Kyrgyzstan, on May 28, 2021.Vladimir Voronin/The Associated Press
Canadian gold miner Centerra Gold Inc. CG-T is replacing its chief executive officer, Scott Perry, after the company was forced to sell its biggest gold mine at a large discount to the government of Kyrgyzstan and suspend production at another mine in Turkey.
The Toronto-based gold miner announced Tuesday that Mr. Perry had stepped down and that Paul Wright, a director with Centerra, will assume the CEO position on an interim basis, while the company looks for a permanent replacement.
Centerra gave no reason for the departure of Mr. Perry, who had been in the job since 2015, but the past two years have been turbulent for the company.
In April, Centerra announced it was selling its Kumtor mine for $972-million, a fraction of what it was once worth, to Kyrgyzstan. The former Soviet Republic nationalized the mine in 2021 after alleging Centerra committed environmental infractions and tax fraud. Centerra denied the allegations and later accused a former company director of conspiring to steal the mine.
The loss of Kumtor left Centerra with a gigantic production hole. Kumtor previously accounted for more than half of Centerra’s gold output.
Centerra also blindsided investors in March after it said it detected mercury in the production process at its Oksut mine in Turkey. The heavy metal is highly toxic to humans and Centerra later suspended production at the mine. Last month, Centerra cut its production forecast for the year to roughly 255,000 ounces of gold from 425,000 ounces.
Since the troubles at Oksut began, Centerra’s share price has fallen by more than 50 per cent.
Despite the mounting problems at Centerra, the unexplained nature of Mr. Perry’s departure took some analysts by surprise.
Trevor Turnbull, an analyst with Scotia Capital Inc., said in a note to clients that the lack of information about Centerra’s plans to fix its Turkish operations and specifics about why it cut ties with Mr. Perry raise questions about what else might have contributed to his departure.
“We are awaiting additional clarity,” Mr. Turnbull said.
Michael Siperco, an analyst with RBC Dominion Securities Inc., said Mr. Perry’s departure is good news for investors.
“Despite management’s successful close of the Kumtor transaction, we believe investors had become frustrated with other operational problems, most notably the suspension of gold production at Oksut,” Mr. Siperco said in a note.
The change at the CEO level “should be taken positively by the market, with an opportunity for a change in direction and clarification of strategy,” he added.
Before joining Centerra as a director in 2020, Mr. Wright was best known as long-time CEO of Eldorado Gold Corp., another mid-tier Canadian gold miner with operations in Turkey. When he retired from Eldorado in 2017, he had been CEO for 18 years.
Apart from fixing Oksut, Mr. Siperco said the eventual permanent CEO will need to clarify the strategy around the long-term future of Centerra, including whether the roughly US$640-million in cash on its balance sheet could be returned to shareholders or put to use in mergers and acquisitions, and whether the company might be put up for sale or merged with a competitor.
Centerra estimated Mr. Perry’s cash severance at $3.94-million, plus $588,691 in benefits and retirement-plan payouts, as of Dec. 31 last year. Mr. Perry is also eligible for the acceleration of his share awards; the company estimated the value of his restricted stock at $1.94-million, based on a per-share price of $9.75 at the end of last year.
Mr. Perry joined Centerra after the retirement of the company’s previous CEO, Ian Atkinson. Before that, Mr. Perry was the CEO of AuRico Gold Inc. for two years before it was acquired that year by Alamos Gold Inc. Earlier in his career, he spent nine years at Barrick Gold Corp. in various roles, including chief financial officer of its Russian and Central Asia unit.
Apart from Mr. Perry, Centerra also recently replaced its chief operating officer, Dan Desjardins, who retired in May, with Paul Chawrun. A mining engineer, Mr. Chawrun was previously COO of Teranga Gold Corp.
Shares in Centerra were flat in trading on Tuesday on the Toronto Stock Exchange, closing at $5.91 apiece.
With a report from David Milstead
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