Shares of DGC are down 31% at the time of wrting

Shares of DGC are down 31% at the time of wrting

Although maybe not surprising given the share price performance, the market doesn't like the fact that Gerald Panneton has resigned as President and CEO of Detour Gold (DGC:TSX) with shares down over 30% at the time of writing.  Given the year-to-date share price performance (down over 80%) and the fact the stock has dramatically underperformed both the index and its peers, the move to put Paul Martin (the CFO) as interim CEO isn't too surprising.  However, this may be a signal to the markets that a potentially dilutive equity financing may be on the horizon.

Paul Martin noted that "the Company's priority remains on optimizing the operation of the Detour Lake gold mine to achieve nameplate capacity. Our near-term objectives are well defined and include finalizing the 2014 budget after we have had the benefit of seeing the results of the remainder of 2013." Mr. Martin added that "as previously disclosed, we intend to complete our life of mine and a reserve update in early 2014 which will be followed with an updated NI 43-101 report."

Given the weakness in the gold price, mid-tier gold companies ramping up production have been raising capital to shore up their balance sheets.  Recently, Clive Johnson's B2Gold (BTO:TSX), known for its financial prudence, completed a $260 million financing of convertible notes in order to strengthen their balance sheet in light of weak metal prices.

Stories that are ramping up production are some of the most vulnerable to the gold price given that they are at the 'point of no return' for capital spending.  At least companies in the development stage, can defer capital costs.

Read: Detour Gold Announces Management Changes