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For many investors, Gerald Panneton was Detour Gold Corp.
It was Mr. Panneton, a veteran geologist, who saw the potential of the Detour Lake gold property back in 2006, long after most of the industry lost interest in it. He acquired the Ontario-based project for a mere $75-million, incorporated Detour Gold and took it public. Under his leadership, the company identified more than 15 million ounces of reserves at Detour Lake. And earlier this year, it began production at what is now Canada’s biggest gold mine.
But for Mr. Panneton, it is all over. Toronto-based Detour stunned the street by announcing his resignation on Monday. The stock dropped 12% on the day (after falling as much as 33% at one stage), as investors worried about the future of the company without its chief executive and visionary.
“Investors are obviously shocked by the news, the suddenness of it,” interim CEO Paul Martin said in an interview. “And they’re wondering if it has anything to do with the operational performance of the mine, which we confirmed that it does not.”
Mr. Panneton did a great job of financing and building the Detour Lake mine, but the board was becoming fed up with the miner’s stock performance. It was down more than 80% in 2013 even before he resigned. The stock, currently worth $3.77, peaked at nearly $40 in 2011.
Put simply, Mr. Panneton’s key mistake was allowing the company’s balance sheet to get stretched amid a falling gold price environment, experts said.
Detour had bad luck, as it started to ramp up production at the mine just as the gold price collapsed earlier this year. The company decided to issue $176-million of stock in May to shore up its finances during the ramp up, and that came after two separate bought deal financings in 2012. Detour also negotiated a US$135-million credit facility.
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