African Barrick Gold (LSE:ABG) Becoming a Disaster

African Barrick Gold (LSE:ABG), the spin-off from Barrick Gold (NYSE:ABX), is becoming a disaster, as poor management and what appears to be a grossly incompetent human resources department are causing the company to lower production forecasts for the second time in the last 60 days or so.

The inability to protect their assets and hire good people has caused the gold miner to lower their gold production estimates from 800,000 to 850,000, down to 716,000. That was in relationship to the original numbers.

Gold production targets had been downwardly revised to 750,000-800,000 ounces in between that time.

Allegedly a criminal syndicate infiltrated the Buzwagi mine and stole fuel from the facility. Consequently 60 workers were suspended, along with several contractors.

Responding far too optimistically in our opinion, Numis Securities analyst Cailey Barker said in a research note, "We remain cautious in the short term on ABG but still remain firm on the longer term re-rating prospects from a low 1.1xNAV (net asset value), making this one of our key picks in the mid-tier gold sector."

I wouldn't touch this stock until the obvious corruption in the company is completely rooted out.

One step taken was to appoint a new general manager at the mine with 28 years of experience in mining, Boyd Timler.

But at this time it's not an experience issue, but a character issue. If African Barrick doesn't completely clean house, this will happen over and over again. Somebody is obviously turning their head the other way and allowing it to happen.