Crocodile Gold and Newmarket Gold agree to merge

12 May 2015 (Last Updated May 12th, 2015 18:30)

Crocodile Gold and Newmarket Gold have agreed to merge their operations, to create a new mid-tier gold producer.

Crocodile Gold and Newmarket Gold have agreed to merge their operations, to create a new mid-tier gold producer.

Called NewCo, the combined entity is said to be a strong gold producing company with enhanced capital markets exposure, the companies said.

The entity will gain access to Crocodile Gold's asset base, and gold production of over 200,000oz per year.

In Australia, Crocodile Gold operates Fosterville, Stawell, and Cosmo underground gold mines.

Crocodile Gold president and CEO Rodney Lamond said: "NewCo provides an opportunity for Crocodile Gold's shareholders to participate in the long-term value and advancement of our existing assets while growing through future acquisitions."

"NewCo provides an opportunity for Crocodile Gold's shareholders to participate in the long-term value and advancement of our existing assets while growing through future acquisitions."

NewCo will be renamed 'Newmarket Gold Inc.' up on completion of the transaction.

Crocodile Gold and Newmarket shareholders will own 80% and 12% stakes in NewCo, while investors participating in the private placement will own the remainder.

Subject to regulatory approvals and customary conditions, the transaction is expected to be concluded in the third quarter this year.

Newmarket president and CEO Douglas Forster said: "The combination of Newmarket and Crocodile Gold is designed to create a strong platform for future growth and consolidation in the gold sector.

"This transaction is a significant step in Newmarket's goal to deliver both immediate and long-term value to shareholders through the disciplined acquisition of quality gold assets in politically stable jurisdictions worldwide."

Newmarket has approached GMP Securities to complete a private placement of C$25m.

The underwriters will receive cash commission of 5% of the gross proceeds of the placement, and 5% equivalent of broker warrants from the number of subscription receipts sold in placement.

Proceeds from the private placement will be held in escrow until completion of the transaction.