Barrick pins its hopes on a new leader

Barrick's shares have dropped 12% in the past year

By Manuela Saragosa BBC World Service business reporter

Most gold miners are doing rather well these days thanks to the precious metal's rising price.

But not so Barrick Gold the Canadian mining company which ranks as one of the world's top three producers.

Management there is so unhappy with the company's recent performance it has sacked its chief executive, Randall Oliphant.

He has been replaced by Barrick's former chief financial officer Gregory Wilkins

Poor year

Mr Oliphant, Barrick Gold's chief executive for the past four years, is certainly leaving the company on a low note.

Barrick's shares have dropped 12% in the past year even though gold prices have surged to a six-year high.

The company was hit by profit warnings, a string of production problems at its mines around the world, an antitrust lawsuit in the US and an income tax dispute in Peru.

Barrick Gold's chairman and founder Peter Munk said a change of leadership was necessary in order to restore the company's leading position.

He's chosen an old friend and former chief financial officer of the company, Gregory Wilkins, to take over immediately.

Analysts say that Mr Oliphant was useful to the company while the price of gold was low, but now that it's rising he's lost his relevance.

New strategy

The sacked chief executive was credited for developing a policy of selling some of Barrick's gold before it is mined in order to protect against a drop in bullion prices.

The gold was sold against forward prices - a system known as hedging.

In the 1990s, thanks partly to that system, Barrick shares almost tripled even though the gold price dropped.

More recently the policy of hedging has come under sharp criticism.

Analysts say it has left Barrick unable to benefit as much as its rivals from a surge in bullion.

The company has also been taken to court by a US gold dealer who alleges that the system amounts to manipulation of the gold market.

Barrick's hedging program is expected to be scaled down significantly this year.