Endeavour Mining fires CEO for 'serious misconduct', shares tumble

(Sharecast News) - Endeavour Mining announced after the close of markets on Thursday that president and chief executive Sebastien de Montessus has been dismissed with immediate effect for "serious misconduct". The sacking follows an investigation by the board into "an irregular payment instruction issued by him in relation to an asset disposal undertaken by the company".

The amount of the payment instruction is $5.9m and Endeavour said the board recently became aware of it in the course of a review of acquisitions and disposals, which is ongoing.

In October 2023, allegations were made against de Montessus about his personal conduct with colleagues through the company's confidential whistleblowing channel.

"Following a recent external investigation, the board had received the findings and, at the point of termination, was considering the appropriate course of action," the gold miner said.

It has appointed Ian Cockerill - currently deputy chair of the board - as CEO and executive director with immediate effect.

It noted that Cockerill has more than four decades of experience in the global natural resources industry. He has held senior roles covering operational, project and executive positions around the world, having held executive roles at major international mining companies, including CEO of Gold Fields and Anglo Coal, a subsidiary of Anglo American, as well as non-executive positions.

At 0900 GMT, the shares were down 14% at 1,462p.

According to the Financial Times, de Montessus said he was given "48 hours' notice of the concerns and no proper opportunity to answer them" and is taking his time to consider his position with his advisers.

De Montessus said that he instructed a creditor in 2021 to offset a sum owed to Endeavour to pay for essential security equipment to protect its partners and employees in a conflict zone.

While admitting a "lapse in judgment" for not informing the board of the arrangement, he told the FT that "the decision had no additional cost to the company and did not benefit me personally in any way".

Russ Mould, investment director at AJ Bell, said: "The abrupt sacking of gold producer Endeavour Mining's chief executive Sebastien de Montessus has inevitably caused jitters among the company's shareholders.

"The fear, rightly or wrongly, will be that what has been reported to date is just the tip of the iceberg. Also, de Montessus' comments on his departure suggests he is unlikely to take the news lying down.

"Even if his explanation for the flagged irregular payment stands up, the allegations around personal conduct with colleagues add another layer to this scandal and are an uncomfortable echo of the departures of incumbent CEOs at BP and McDonald's in recent years. They may also pose questions about the wider culture of the mining business.

"The company will hope deputy chair and Anglo American alumni Ian Cockerill can prove a safe pair of hands as temporary CEO and help steer the business through the current turmoil. However, the exit of the man who has led the business since 2016 seems certain to lead to some disruption.

"With the company expected to announce its full year results before the end of the month, Endeavour will need to report a solid operational and financial performance if it wants to start the process of winning back the market's trust."

Berenberg, which rates the shares at 'buy', said the news was "unexpected" and that de Montessus "has been well regarded by investors in his role as CEO and played an instrumental part in making Endeavour Mining a successful, FTSE 100 goldmining business".

"We would also note that, in a period of instability and share price weakness, there is scope for Endeavour, which has attractive growth and, a strong balance sheet, to become an M&A target, although the appointment of Mr Cockerill as CEO with immediate effect is likely to offset this to an extent."

RBC Capital Markets said in a brief research note: "In our view, the termination could create substantial near-term uncertainty for the company and serve as an overhang as EDV looks to complete two key growth projects over the coming months."