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TORONTO – Several mining industry heavyweights have teamed up in a deal they hope will be the first of many as they seek to build a new mid-tier gold producer.
Newmarket Gold Inc. and Crocodile Gold Corp. announced a friendly $190 million merger on Monday that will give Newmarket control over most of the combined board and management team.
Crocodile is an established gold producer in Australia, while Newmarket is little more than a shell company at present. However, Newmarket boasts some very big names on its board, including entrepreneurs Lukas Lundin, Randall Oliphant (of New Gold Inc.) and Raymond Threlkeld (of Rainy River Resources Ltd.). The company’s plan is to use the Crocodile mines as a platform to buy more high-quality gold assets under the “Newmarket” name.
“There is lots of competition for assets, but that’s why we put this team together,” Newmarket chief executive Doug Forster said in an interview.
“Assets are not going to walk through our door. They will be found with our deep relationships in the capital markets and in the mining sector.”
Forster and Blayne Johnson, his longtime business partner, put the Newmarket team together two years ago. They were looking at various opportunities in the mining sector when the price of gold abruptly crashed in April 2013. Bullion fell roughly US$125 an ounce in a single day, and they decided it was a great opportunity to acquire gold assets.
They looked at more than 100 assets before settling on Crocodile. The Toronto-based company checked all the boxes for Newmarket: It is in a mining-friendly country (Australia), produces more than 200,000 ounces a year, has a large resource base of more than four million ounces, and has relatively low operating costs.
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