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Why New Gold Inc. Shares Jumped 19% Today

Travis Hoium, The Motley Fool

What happened 

Shares of miner New Gold Inc. (NYSEMKT: NGD) jumped as much as 19.4% in trading early Wednesday after the company announced a leadership change. Shares were hitting their high at 11:05 a.m. EDT and seemed to be gaining momentum.

So what

New Gold announced that CEO and board member Raymond Threlkeld has resigned and will be replaced by Renaud Adams, who will be president and CEO. Adams led Richmont Mines from 2014 to 2017, when the company was acquired by Alamos Gold. Investors might be thinking a buyout is now the goal of New Gold long term. 

Gold nuggets on a piece of raw wood.

Image source: Getty Images.

Threlkeld had only been CEO since May, but presided over a second-quarter earnings report that saw a large reduction in production guidance and a rising cost of production. Investors clearly weren't thrilled with his tenure.

Now what

Two CEO changes in a year are unusual, but for now, investors seem to like the move. There wasn't much detail given on Threlkeld's decision to leave the company, where he has been on the board since 2009. 

We also know very little about what Adams will do at the company to change course. Even though there isn't a fundamental driver of New Gold's jump today, sometimes investors like to see a change at the top of a company that's struggling, and that seemed to be enough to push shares higher today. 

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.