Newmarket Gold CEO Talks Crocodile Gold Merger

Mineweb’s Kip Keen published an interview with Douglas Forster, president, CEO and director of Newmarket Gold Inc. (TSXV:NGN).

Newmarket announced Monday that it’s entered into a definitive arrangement agreement to merge with Crocodile Gold Corp. (TSX:CRK), and the interview covers how the two entities arrived at that decision. It also looks at what the combined company will look like.

Keen begins by giving an overview of the situation:

This week Newmarket Gold and Crocodile Gold did a deal. It sees a near-shell, Newmarket Gold, with no physical assets to speak of, take over the management and board of Crocodile, a gold producer doing about 200,000 ounces gold production a year, and meantime get a nice chunk of shares in the process. It’s the kind of deal that almost purely prices personality, reputation and along with it a strategy backstopped by pedigree. For Newmarket, which ends up with about 12% of the combined company (but management will own more), is in the end only this: People. It comes with a slate of well-known Canadian resource guys: Douglas Forster, Raymond Threlkeld, Lukas Lundin, Randall Oliphant and Blayne Johnson. These guys are best known for leading roles in companies, some takeover successes like Rainy River, Terrane Metals, International Royalty, Lundin Mining and New Gold. To make it go, Newmarket convinced Crocodile’s majority shareholder Luxor Capital Group, a New York hedge fund, and Crocodile, of course, that with its people at the helm – Douglas Forster as President and CEO, Raymond Threlkeld as Chairman – the new combined company, to go by Newmarket, would be a greater success. Luxor would like that. It’s long been heavily underwater on its ~C$100 million investment in Crocodile made back in 2012, then for 70% of the company.

Here’s an excerpt from the interview:

KK: You basically had to convince them to bring in your team to – I don’t quite want to say to turn around assets – but to build onto the company according to your vision. Newmarket is obviously built around a management team, rather than assets.

DF: Absolutely. It’s the capital markets and access to capital strategy from the Newmarket side, combined with the superb operational team at Crocodile. We like the assets. We like the assets a lot. But both the major shareholder and management concurred with that strategy; not only the strategy to combine the teams and the assets, but also the strategy of gold consolidation. All parties are on side to grow this company to be the next quality mid-tier gold producer.

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